United States v. Automated Medical Laboratories, Inc.
770 F.2d 399, 1985 U.S. App. LEXIS 22314 (1985)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A corporation may be held criminally responsible for the illegal acts of its employees if the employees were acting within the scope of their authority and their actions were motivated, at least in part, by an intent to benefit the corporation, even if such acts were against corporate policy.
Facts:
- Automated Medical Laboratories, Inc. (AML), a Florida corporation, owned and operated several commercial plasmapheresis centers, including its wholly-owned subsidiary, Richmond Plasma Corporation (RPC).
- Beginning in 1977, RPC had a history of compliance problems with Food and Drug Administration (FDA) regulations, including overbleeding donors and poor recordkeeping, which led to temporary facility closures.
- To address these issues, AML created a special 'compliance team', led by regional manager Hugo Partucci, and tasked its members with ensuring AML's plasma centers, including RPC, complied with FDA regulations.
- Acting as agents of AML, Partucci and the compliance team instructed RPC employees to falsify logbooks and fabricate records to conceal regulatory violations from the FDA.
- This practice of falsifying records to avoid regulatory sanctions continued for several years, even after Partucci left AML in December 1979.
- In March 1980, AML Vice-President Mili Lamas was informed by multiple sources, including RPC's manager and another AML employee, about the ongoing falsification of records at RPC.
- Unbeknownst to AML management, several RPC employees had already gone to the FDA in mid-March 1980 to report the long-standing practice of falsifying records.
Procedural Posture:
- A federal grand jury indicted Automated Medical Laboratories, Inc. (AML), its subsidiary, and three individuals on charges of conspiracy and making false documents.
- The case was tried before a jury in the United States District Court for the Eastern District of Virginia (the trial court).
- The jury returned a verdict finding AML guilty on one count of conspiracy and three counts of making and using false documents.
- The district court entered a judgment of conviction against AML and imposed a fine.
- AML (appellant) appealed its conviction to the United States Court of Appeals for the Fourth Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Is a corporation criminally liable for the illegal acts of its employees when those employees acted within the scope of their employment and, at least in part, for the benefit of the corporation, even if the acts were contrary to corporate policy and not known to or authorized by high-level officers?
Opinions:
Majority - Sneeden, J.
Yes. A corporation may be held criminally liable for the acts of its agents if they were acting within the scope of their employment and for the benefit of the corporation. The government does not need to prove that high-level officers or directors knew of or authorized the illegal conduct. The court found that AML's agents—the compliance team—were acting within the scope of their employment because their assigned responsibility was to ensure compliance with FDA regulations. Falsifying records to conceal non-compliance was an unlawful means of performing this general line of work. Furthermore, the agents acted with the intent to benefit AML by helping the corporation avoid FDA sanctions and operational shutdowns. Even if an agent, like Partucci, was also motivated by personal ambition, he was acting at least in part to benefit AML because his professional advancement depended on the company's success.
Analysis:
This decision solidifies the doctrine of corporate criminal liability under the principle of respondeat superior. It clarifies that a corporation cannot insulate itself from criminal prosecution by establishing corporate policies against illegal conduct or by claiming ignorance on the part of its senior management. The ruling places a significant affirmative duty on corporations to actively monitor and control the actions of their employees. The key factors are not the employee's rank or the existence of a company policy, but whether the employee acted within their job function and with some intent to benefit the corporation, making it easier for prosecutors to hold companies accountable for widespread misconduct by lower-level agents.
Unlock the full brief for United States v. Automated Medical Laboratories, Inc.