State v. Casey's General Stores, Inc.
1998 Iowa Sup. LEXIS 283, 1998 WL 820441, 587 N.W.2d 599 (1998)
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Rule of Law:
A corporation cannot be held vicariously criminally liable for an employee's illegal sale of alcohol when the underlying criminal statute requires mental fault (mens rea) and the employee's act directly violated the corporation's established policies, unless a statute explicitly imposes such liability or high-level management authorized or tolerated the act.
Facts:
- Casey’s General Stores, Inc. and Hy-Vee, Inc. are corporations that operate stores in Oskaloosa, Iowa.
- Both corporations established policies and procedures to prevent employees from selling alcoholic beverages to minors.
- On October 26, 1996, cashiers at both a Casey's store and a Hy-Vee store sold alcoholic beverages to underage customers.
- The employees conducted these sales without requesting identification or attempting to ascertain the customers' ages.
- The employees' actions were part of a local police "sting" operation.
- The sales made by the employees violated their employers' corporate policies and procedures.
Procedural Posture:
- Casey’s General Stores, Inc. and Hy-Vee, Inc. were charged with the simple misdemeanor of selling alcoholic beverages to an underage person.
- A trial was held to the court, and both corporate defendants were found guilty.
- The defendants (as appellants) appealed their convictions to the Iowa district court.
- The district court, acting as an intermediate appellate court, affirmed the trial court's judgments of conviction.
- The defendants (as appellants) sought, and the Supreme Court of Iowa granted, discretionary review of the district court's decision.
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Issue:
Does a corporation commit the crime of selling alcohol to a minor under Iowa law when its employee makes such a sale in direct violation of established company policy and without the authorization, request, or tolerance of high managerial agents?
Opinions:
Majority - Ternus, J.
No. A corporation is not criminally liable under these circumstances. The statutes prohibiting the sale of alcohol to minors, Iowa Code §§ 123.47 and 123.49(2)(h), are not strict liability offenses; they require proof of mental fault (mens rea), such as "knowing" or "failing to exercise reasonable care." Under the general principles of criminal law, vicarious liability is disfavored, and an employer is not criminally liable for an employee's acts unless the employer personally possesses the required mental fault. The court will not read vicarious criminal liability into a statute that requires fault unless the legislature has explicitly done so, which it has not for these criminal offenses, unlike for related civil penalties. Furthermore, Iowa's general corporate liability statute, § 703.5, does not apply because there is no evidence that high managerial agents authorized, requested, or tolerated the sales (§ 703.5(2)), and the act of selling alcohol is a crime of commission, not an "omission to discharge a specific duty" as required by § 703.5(1).
Analysis:
This decision reinforces the principle that corporate criminal liability requires more than the mere fact of an employee's misconduct, especially for crimes requiring a specific mental state. It distinguishes corporate criminal liability from civil or administrative liability, where vicarious responsibility is more common. By refusing to impute a low-level employee's criminal intent to the corporation when the act violated company policy, the court sets a higher bar for prosecutors. Future cases against corporations for employees' crimes of commission will require evidence that high-level management was complicit in the conduct, as outlined in Iowa Code § 703.5(2).
