Earlier this year, judge Reed O’Connor made the headlines when he rejected a plea agreement between the Ministry of Justice (“Doj”) and Boeing. O’Connor rejected the agreement because he forced the Doj to consider his policies in the selection of a business instructor, and the judge concluded that this term focused on the responsibility of the court to select the instructor solely on merit.
The decision led to a public examination, but it was legally allowed because rule 11 of the federal rules of criminal procedure requires the judicial approval of the advocacy agreements. But if the Doj and Boeing had executed a deferred prosecution agreement (“DPA”) – which is the functional equivalent of a guilt in the company’s criminal context – then O’Connor would not have had the authorization to reject the agreement even if it required unknown penalties, had not succeeded in repairing the victims, or failed to assert a legitimate legal offense.
In a new article, I focus on this incongruous treatment of business DPAs, based on other research to emphasize that, unlike advocacy agreements, ADVs are not subject to a significant judicial examination. This means that judges never evaluate if the APDs can be based on real guilt, impose sufficient penalties or require a structural reform which is properly adapted. I argue that the government and organizational defendants should have to request the significant approval of the courts before becoming effective and that the courts should make several concrete conclusions before approving the DPA.
My call for concrete judicial conclusions is based on normative and empirical reasons. Normatively, the function of determining the sentence is – and must remain – a basic judicial function. When the DoJ and the defendants of companies resolve criminal affairs with APDs, they do not only make accusation decisions. They also effectively impose sentences with fines, forfeiture and corporate governance changes. The advocacy agreements which lead to convictions obtain these same results, but the federal law and the separation of power considerations rightly require that the courts approve the advocacy agreements before they are effective. In short, if the judiciary never reviews the DPAs for the accuracy and the reasonable nature of the sanctions, it has given up its fundamental control over the executive power in the criminal context of the company.
Empirically, I analyzed a set of data from the 39 corporate DPAs that were executed between 2021 and 2024. Two-thirds of these ADPs imposed financial penalties below the fine ranges recommended by the United States determination directives. Many of these differences were substantial, imposing fines which were 25%, 40%, or even 82%lower than the low end of the applicable indications. More disturbing and excellence corporate recidivists like Deutsche Bank and Credit Suisse have received these important discounts despite significant criminal history involving a similar fault.
In particular, many DPAs do not provide enough information for researchers to check the relevance of sanctions. Their guidelines are incomplete if not entirely missing, and the justifications declared for the updated penalties are so vague that they offer no significant explanation. In short, an examination of these APDs suggests that without judicial intervention, the government and organizational defendants have failed to guarantee that the application of criminal companies achieves its objectives.
The solution I offer is a concrete standard of DPA judicial review. Other researchers have carefully offered flexible multi-factory balancing tests. But similar standards abroad (for example, in the United Kingdom) and in other contexts (for example, the approvals of regulation of collective appeal) led to a surface review or a rubber stamper of the settlement agreements. Thus, I believe that an optimal standard of judicial control must oblige the courts to make it at least three specific conclusions before approving the APD.
First, the courts should see that the declarations of the facts in the APDs could support the accused offenses if they were proven beyond reasonable doubt. This conclusion would restore the role of the Court in the verification of the probable guilt in the absence of a trial. The examination required to make this observation does not need to be expensive; The courts regularly carry out comparable determinations without juries when resolving sufficient complaints of proof and approval of guilt pleas.
Second, the courts should see that the financial sanctions imposed in the APDs are sufficient but not more important than necessary and are in accordance with the directive of the sentence. Despite criticism, the directives reflect political judgments and in -depth research on the sanctions necessary to achieve various objectives of determining the sentence, and they generally recommend reasonable fines in most cases. Without a doubt, declining variances or departures are justified in many cases. There is no reason to abandon them when the convictions are negotiated through DPA rather than plea agreements. But judges must always ensure that DPA sanctions are appropriate because the sanctions are, in fact, criminal penalties.
Third, the courts should note that any reform of corporate governance required by the DPAs is closely adapted to prevent future faults without unduly interfere with the activities of the defendants. A company that commits a type of offense may need additional compliance programs but does not need to fire all of its board of directors. Meanwhile, however, neutral referees should ensure that any reform is not as close as it does not make sense. Prosecutors do not have the specific knowledge of industry and structural incentives to find this balance. Concended, judges also do not have this knowledge, but with the contribution of independent experts and parties, the judges can at least impose a more informed and personalized reform.
In addition to these three results, the courts must retain flexibility to make additional results according to the specific context for the company and the industry. A DPA involving a small business may require a meticulous examination of the question of whether the agreement threatens insolvency or third parties unduly burden. A DPA involving a financial institution may require results on internal controls or report systems. In the end, what matters is that the courts have a defined framework anchored in concrete results which can guide their examination.
DPAs are increasingly used in business criminal affairs with high issues and high issues. But their current structure undermines the transparency, responsibility and confidence of the public in the judicial system. My article offers a clear examination standard which is specific enough to prevent abuse but flexible enough to adapt to the variation between cases. A judicial examination requiring conclusions would be a step to the guarantee that the APDs are credible tools of business responsibility and that the courts retain their legitimate role in the supervision of the criminal justice of companies.
This message comes from Professor Kaleb Byars to the Mercer University School of Law. He is based on his recent article, “a Concrete Standard of Judicial Review for Corporate Remest Prosements”, available here.
