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Judge H. Lee Sarokin Headshot

Deaths Caused by Corporations Are Punished by Taking It Out of Their Allowance

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Decades ago my parents told me the story of visiting two friends, both psychiatrists, and while eating dinner discovered their 5 year old son in the living room sawing the leg of their beautiful grand piano. The mother without hesitation said: "Roger, we're going to take that out of your allowance!" Every time I hear of a corporation being fined for conduct that has caused serious illness or death, I am reminded of that story. G.M. has been fined $35 million "over its failure to promptly report a defect that G.M. has linked to 13 deaths". (N.Y. Times 5/17/14) G.M.'s misconduct goes back at least to the year 2009, when it knew that faulty ignition switches were prone to turn off, preventing the air bags from working.

I wrote in an earlier post that Brooke Melton apparently was killed as a result of the defect in 2010. The case was settled pursuant to a confidentiality agreement, part of the strategy to keep the public and the government in the dark about the defect. The N.Y. Times reveals that this was the fifth confidential settlement by G.M in fatal accident cases involving vehicles equipped with defective ignitions. (N.Y. Times 5/18/14) I have urged since I became a judge in 1979, and recently wrote, that "what is needed is an ethical rule that prohibits lawyers from demanding or accepting confidentiality as a condition of settlement if there is a good faith belief that a product is defective and dangerous. If the agreement is good for the client but bad for the public, the public interest should prevail. Lawyers should not be party to concealing dangerous products and putting the public at risk."

Nor is this my first rant about corporate fines. Corporations don't commit crimes--people commit crimes. Corporate fines do not punish the guilty. They obviously do not deter. The fine, in effect, is either passed on to the consumer or paid by shareholders, many of whom may not have owned the stock during the period of concealment or wrongdoing. It seems that corporations are "people" when it comes to politics and elections, but the "people" who run them seem to be virtually immune from criminal liability. Last year Halliburton pleaded guilty to destruction of evidence after the Gulf of Mexico oil spill and paid a fine of $200,000. Part of that bargain included an agreement by the government not to pursue any further criminal prosecutions. (N.Y. Times 7/26/13) The explosion which caused the spill killed 11 workers and soiled hundreds of miles of beaches. Many other corporations have suffered the same "fate" after egregious and despicable conduct that endangers or destroys lives or causes substantial financial loss.

There is talk of legislation to raise the maximum fine in this type of case. But raising the amount won't deter this type of corporate misconduct. Corporate executives have little to fear in endangering the lives or health of their consumers, because few are punished. Absent some examples of severe individual punishments, sales will continue to be more important than safety and profits more important than people. There must be a stronger deterrent and more severe punishment than taking it out of their allowance.