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New Jersey Section 2C:2-7 – Liability of corporations and persons acting, or under a duty to act, in their behalf

New Jersey Law on Corporate Criminal Liability

New Jersey law allows corporations to be held criminally liable for offenses committed by their agents and employees. Section 2C:2-7 of the New Jersey Code of Criminal Justice specifically addresses the liability of corporations and persons acting on their behalf.

Key Provisions

The key provisions of 2C:2-7 are:

• A corporation can be convicted of an offense committed by an agent acting within their scope of employment and on behalf of the corporation. There are exceptions for offenses that indicate legislative intent not to impose liability on corporations.
• Other people acting on behalf of a corporation, or who have a legal duty to act for a corporation, can also be held liable for offenses they commit in that capacity.
• For most offenses, prosecutors must prove the agent or person acting had the requisite mental state. But absolute liability applies to certain regulatory offenses.
• Corporations can assert a due diligence defense, proving they employed due diligence to prevent the offense. But this defense is not allowed for absolute liability offenses.
• Imposing liability on a corporation does not limit the liability of individuals involved for the same offense.

Policy Rationale

Holding corporations criminally liable serves important public policy goals. It incentivizes companies to monitor their agents’ conduct and prevents them from benefitting from criminal acts. Strict liability for regulatory offenses helps ensure compliance with important public safety rules.

Corporate liability laws try to balance accountability with fairness. The due diligence defense recognizes that corporations act through agents, making it unjust to automatically hold companies responsible. Overall the law aims to improve corporate compliance and ethics.

Scope of Liability

Companies can face liability for a wide range of criminal offenses under 2C:2-7. Common areas include financial crimes, environmental violations, consumer fraud, and workplace safety offenses.

Liability requires proving the agent’s conduct was within the scope of employment. Acts that solely benefit the agent personally usually fall outside the scope. But scope of employment is interpreted broadly in New Jersey.

For complicity offenses like conspiracy, a corporation can be liable if one agent conspires with another person. Liability attaches even if no single agent commits all the elements alone.

Litigation Considerations

Prosecutors must consider many factors in charging a corporation criminally. These include the pervasiveness of wrongdoing, how high up it goes, compliance programs, and cooperation with investigations.

Defending a corporation often involves arguing the agent was not acting within scope of employment. Asserting the due diligence defense is also common by showing compliance procedures were in place.

Settlements avoiding conviction are common. They allow prosecutors to impose reforms while limiting collateral consequences for corporations. An effective compliance program is usually part of any settlement.

Sentencing Considerations

If convicted, a corporation faces sentencing like an individual defendant. The court can impose fines, restitution, probation, or a suspended sentence. Reputational harm and loss of licenses or government contracts also occur.

Federal sentencing guidelines expressly consider a compliance program’s existence and effectiveness. New Jersey uses similar factors in sentencing corporations under 2C:2-7.Judges can order reforms in probation conditions. Fines aim to deprive companies of ill-gotten gains. Restitution repays victims. Suspended sentences deter future violations.

Relation to Other Laws

Section 2C:2-7 works together with other parts of the criminal code. The requirements for accomplice and conspiracy liability in 2C:2-6 apply. And 2C:2-7 incorporates mental state and justification principles from the code.

The law also complements regulatory statutes that impose specific duties on corporations. Violating those duties under 2C:2-7 can result in criminal liability for both the company and responsible individuals.

At the federal level, respondeat superior principles hold corporations liable for agents’ crimes under some statutes. The approach is similar to 2C:2-7, though federal law is considered more expansive in some ways.

Conclusion

New Jersey’s corporate criminal liability law serves an important role in deterring and punishing misconduct. By holding companies accountable, it incentivizes them to monitor internal wrongdoing and comply with the law. The statute balances fairness to corporations with the public’s strong interest in corporate ethics and responsibility.