Cruel and Unusual Corporate Punishment

By Wagner, Robert | Journal of Corporation Law, Spring 2019 | Go to article overview

Cruel and Unusual Corporate Punishment


Wagner, Robert, Journal of Corporation Law


I am not an advocate for frequent changes in laws and constitutions,  but laws and institutions must go hand in hand with the progress of the  human mind. As that becomes more developed, more enlightened, as new  discoveries are made, new truths discovered and manners and opinions  change, with the change of circumstances, institutions must advance  also to keep pace with the times. We might as well require a man to  wear still the coat which fitted him when a boy as a civilized society  to remain ever under the regimen of their barbarous ancestors.                                                        --Thomas Jefferson  (1)  
I. INTRODUCTION                                                     560 II. CORPORATE FOUNDATIONS                                           561       A. Corporations and Human Beings Compared and Contrasted      561       B. How Corporations Are Punished                              567 III. CORPORATE CONSTITUTIONAL STANDING                              570 IV. CRUEL AND UNUSUAL PUNISHMENT                                    573       A. The History of Cruel and Unusual Punishment                573       B. Application of the Proportionality Principle to Cruel and  578          Unusual Punishment        C. The Case for Applying the Cruel and Unusual Punishments    583          Clause to Corporations  VI. CONCLUSION                                                      588 

I. INTRODUCTION

The Eighth Amendment of the Constitution states: "Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted." (2) This amendment has been interpreted in numerous ways over the centuries, recognizing different rights for different groups at different times. This right has not been extended to corporations. In this Article, I argue that it should be, if necessary.

To understand why it could be necessary, begin by considering a hypothetical. Imagine an environmental regulation involving how much quadrizine (a fictitious chemical) a company can release into the water system. The law exists because quadrizine causes water to turn green and develop an unpleasant odor if a certain amount is reached. However, it does not kill or even significantly harm anyone. Further, quadrizine can be cleaned up from the water system at a cost of $1 million per ton over the acceptable limit. However, the law says that there is a penalty of $10 million per ton over the limit. Further, if a violation occurs, the CEO must be terminated and a permanent overseer must be placed in the corporation. In this situation, it is possible that the corporation may spend millions of dollars more than the cost of cleaning quadrizine trying to avoid the penalty. For example, if the equipment could be insulated to a level that virtually guarantees no spill but at a cost significantly higher than cleaning up any spill. Furthermore, if there is a spill, the resulting fine could put the corporation out of business even though the harm may be completely contained at a fraction of the cost. This is a specific example of over deterrence, where the law can create an incentive to use resources in a way that causes more harm than good--or at least that causes an inefficient use of resources. The quadrizine example (if real) may not have involved cruel and unusual punishment, but the question should at least be available for inquiry. otherwise, either shareholders would not get the return that they should on their investments or in the second situation, shareholders would lose everything, as would all the workers and possibly the surrounding community that depended upon that corporation for a living. Clearly, this is an intentionally extreme scenario, but the extreme is what the Eighth Amendment is designed to protect against, and it is why it should apply to corporations.

Punishments against corporations can be extreme and not limited to monetary fines, even though fines can be extreme and possibly cruel and unusual. …

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