On September 9, 2015, the Deputy Attorney General (DAG), Sally Quillian Yates, issued a memo to senior leadership at the U.S. Department of Justice (DOJ) entitled “Individual Accountability for Corporate Wrongdoing
.” In this memo, the DAG highlighted a new emphasis on not just holding corporations/entities responsible for corporate wrong-doing but also holding individual employees/officers responsible for any illegal activities. This new emphasis applies in both civil and criminal matters. The memo notes:
One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing. Such accountability is important for several reasons: it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public’s confidence in our justice system.
As part of this new emphasis, the memo highlights six new steps that DOJ is taking to “strengthen [the] pursuit of corporate wrongdoing” including:
- To qualify for any cooperation credit, corporations must provide to the [DOJ] all relevant facts relating to the individuals responsible for the misconduct;
- Criminal and civil corporate investigations should focus on individuals from the inception of the investigation;
- Criminal and civil attorneys handling corporate investigations should be in routine communication with one another;
- Absent extraordinary circumstances or approved departmental policy, the [DOJ] will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation;
- [DOJ] attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases, and should memorialize any declinations as to individuals in such cases; and
- Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay.
The memo highlights that there are “substantial challenges unique to pursuing individuals for corporate misdeeds” including the fact that “responsibility can be defuse and decisions are made at various levels.” This can make it difficult “to determine if someone possessed the knowledge and criminal intent necessary to establish their guilt beyond a reasonable doubt.” This is especially true for executives who may be removed from the day-to-day activities of the company.
This new emphasis on individual responsibility will likely complicate in-house investigations of potential illegal activity. It is best practice in a corporate in-house investigation for the attorney performing the investigation to issue an Upjohn Warning
to any employee the attorney questions.
Upjohn Co. v. United States
, 449 U.S. 383 (1981) was a Supreme Court case in which the court held that a company could invoke the attorney–client privilege to protect communications made between company lawyers and non-management employees. In doing so, thecourt rejected the narrower control group test that had previously governed many organizational attorney–client privilege issues. Under the control group test, only employees who exercised direct control over the managerial decisions of the company were eligible to have their communications with corporate lawyers protected.
While the Upjohn
decision did not explicitly mention a warning procedure, the case gave rise to a procedure called an “Upjohn warning,” in which a company’s lawyer explains that the lawyer represents the company and not the individual employee with whom the lawyer is dealing. This is intended to ensure that the employee understands that the company can waive the attorney-client privilege at any time and disclose the contents of the conversation between the lawyer and the employee, even if the employee objects. In subsequent cases, failure to give an Upjohn warning has led to the employee being able to claim privilege over communications with company lawyers.
An effective Upjohn
Warning contains five distinct parts:
- the attorney asking the questions of the employee represents the company, not the employee;
- the attorney-client privilege belongs to the corporation and not the employee;
- the privilege can be waived by the corporation at any time without notifying the employee;
- the conversation must be kept confidential for the privilege to apply; and
- the employee may wish to retain personal legal counsel if the employee might be facing personal legal exposure.
Prior to this policy shift, it was not uncommon for a corporation to fully cooperate in hopes of obtaining a favorable disposition to any government investigation. This new policy will place additional pressures on corporations not only cooperate generally but also to name specific individuals who might have played a part in any activity leading to the investigation. This could complicate any efforts to gain the cooperation of an employee in any internal investigation.