| Randy Stutz
DOJ, Class Actions
In a new paper, AAI finds that changes are necessary to harmonize the Department of Justice’s Model Corporate Plea Agreement with its Corporate Leniency Policy and to respond to recent case law developments.
In its criminal plea agreements, the Department of Justice (DOJ) routinely relies on private civil damages as a substitute for criminal restitution. However, DOJ plea agreements typically waive restitution based upon the mere filing of the civil action, without regard to whether it actually leads to the recovery of private damages. While the doctrine of collateral estoppel prevents guilty criminal defendants from contesting liability in overlapping civil damages actions, most such actions must be pursued as class actions to be economically viable. And nothing in the plea agreement places any prudential limitations on guilty defendants’ challenges to class certification.
AAI finds that the DOJ’s current policy of waiving restitution prior to class certification in plea agreements creates inefficient incentives for guilty criminal defendants to devote exorbitant amounts of time and resources trying to prevent antitrust class actions from being certified. Such defendants often do so by raising technicalities of class certification law that may be significant in so-called “statutory damages” class actions, but that do not vindicate any legitimate interests in procedural fairness or judicial efficiency in the context of antitrust class actions. When the strategy succeeds, these defendants often keep enormous ill-gotten gains from confessed crimes, undermine plea agreements and the broader criminal enforcement mission, and undermine the antitrust class action mechanism. Moreover, the strategy is in danger of becoming far more prevalent and effective because of recent developments in class action law.
In a detailed letter sent to the DOJ, AAI recommends three changes to the Model Corporate Plea Agreement that would help discourage inappropriate class certification challenges and align the restitution provisions in the DOJ’s criminal plea bargains with the restitution provisions in its Corporate Leniency Policy. The latter requires cooperating defendants to make restitution unless doing so is “impossible,” and it requires that such defendants provide “reasonably achievable” plans for making restitution and encourages them to do so through settlements that streamline damages determinations and make victims whole as swiftly as possible.
AAI makes the following recommendations:
- When a guilty criminal defendant chooses to rely on civil damages as a substitute for victim restitution in a corporate plea agreement, the Department should clarify that only the actual payment of damages, and not merely the filing of civil suits that “potentially provide for a recovery,” fulfills the defendant’s restitution obligation.
- When a guilty criminal defendant chooses to rely on a civil class action as a substitute for victim restitution in a corporate plea agreement, the Department should condition the waiver of restitution on class certification being granted.
- If the guilty criminal defendant wishes to contest class certification despite relying on the class action as a substitute for victim restitution, the Department should require the defendant to provide a “reasonably achievable” alternative plan for making restitution if class certification is denied.
The letter was written by AAI President Randy Stutz.
