The Yale Law Journal


What Booker Means for Convicted Corporations

22 Mar 2007
Much has been written on how the Supreme Court’s decision in United States v. Booker affects individual sentencing. Little attention, however, has been paid to Booker’s impact on organizational sentencing. Booker holds that courts violate individuals’ right to a jury trial when they sentence individuals using judge-found facts in combination with mandatory sentencing guidelines. Though Booker’s implications for organizations are not immediately clear from the Supreme Court’s opinion itself, I argue in a recent issue of this Journal that Booker’s logic should apply to the Organizational Sentencing Guidelines just as it does to the rest of the Sentencing Guidelines.

Federal courts sentence roughly two hundred organizations, mostly corporations, each year. Although the average sentence requires payment of several million dollars, judges may order organizations to pay hundreds of millions of dollars in fines and restitution. Just as when sentencing individuals, judges craft these sentences based on provisions of the U.S. Sentencing Guidelines. Courts determine individual sentences using the first seven chapters of the Guidelines (the “individual guidelines”). They set an organization’s sentence using Chapter 8 (the “organizational guidelines”).

The individual guidelines provide judges with a range of prison terms. Similarly, the organizational guidelines give judges a range of fines from which to sentence convicted organizations. Until recently, these fine ranges were binding on judges. After Booker, however, the organizational guidelines, like the individual guidelines, are no longer mandatory.

When the Sentencing Guidelines were mandatory, they required judges in many cases to increase the sentence, based on their own fact-finding, above the sentence that could have been imposed under the guidelines based solely on the jury verdict or guilty plea. Booker held that this system, allowing judges to change the maximum authorized sentence, violated individuals’ right to a jury trial.

Rather than trash the entire guidelines system, however, the Booker Court instead merely excised the statutory provision that made the guidelines mandatory, on the theory that advisory guidelines do not violate the Sixth Amendment because they do not increase the maximum sentence a court is authorized to impose. That statutory provision did not distinguish between the individual and organizational guidelines, referring only to the “sentencing guidelines.” Thus, even though Booker never discusses the organizational guidelines, Booker’s holding applies equally to the individual and organizational guidelines.

This holding might seem to end the discussion: the organizational guidelines are no longer mandatory, end of story. Congress and the Justice Department, however, are considering reinstating the Sentencing Guidelines’ authority as much as is constitutional. Booker’s reasoning provides an intriguing loophole that someone seeking to reinstate mandatory organizational guidelines might try to exploit. Since Booker was premised on individuals’ right to a jury trial, one could argue that Booker’s reasoning does not reach the organizational guidelines because organizations have a narrower right to a jury trial than do individuals.

The Supreme Court has recognized that organizations sometimes have a right to a criminal jury trial under the Sixth Amendment but has never decided precisely when that right applies. Instead, the court has suggested that, like individuals, organizations are entitled to a jury trial whenever they are charged with a “serious” crime. For individuals, the Court’s definition of a “serious” crime is fairly clear: a crime is “serious” whenever it carries a statutory maximum penalty of more than six months in prison. This rule provides no guidance for organizations, however, because organizations obviously cannot be sentenced to prison.

Lacking clear guidance from the Supreme Court, circuit courts have tried to come up with a way to decide when organizations are entitled to a jury trial. They have adopted two different approaches, the “case-by-case” approach and the “bright line” approach. Under the case-by-case approach, a court weighs a crime’s statutory maximum penalty against the resources of the organization: a crime is “serious” only if its maximum penalty is high enough to impose a “serious deprivation” on the defendant organization. Thus, whether or not an organization is entitled to a jury trial depends not only on the crime charged but also on the size and nature of the organization: after all, many fines that would devastate a small business would hardly be noticed by a large multinational corporation.

The alternative is the bright-line approach, which argues that if the criminal statute permits the court to levy a fine over a certain amount ($100,000 in the Second Circuit), then the crime is serious, regardless of the size of the organization. If the maximum fine is less than $100,000, then the court must revert to the case-by-case approach. The primary rationale for this approach is that the jury right is supposed to be keyed to society’s view of the seriousness of the crime charged, and society’s view of a crime’s seriousness is measured by the maximum sentence threatened, irrespective of the resources of the charged organization.

Currently, these approaches are the only ones on the table; if Congress did try to reinstate mandatory organizational guidelines using judge-found facts, courts would doubtless assess the constitutionality of the reinstated guidelines under one of these approaches. Despite their differences, however, both approaches yield roughly the same result: the restored guidelines would be unconstitutional.

Under the bright line approach, mandatory organizational guidelines would necessarily be unconstitutional—at least assuming the bright line is set at $100,000. The organizational guidelines apply only to felonies and class A misdemeanors. By statute, any felony committed by an organization carries a statutory maximum of at least $500,000, and any class A misdemeanor carries a maximum of at least $200,000. Thus, any organization sentenced under the guidelines must be charged with a crime that carries a statutory maximum of at least $200,000. Unless the bright line were set over $200,000 (something no court has done), all organizations sentenced under the guidelines would be entitled to a jury, and Booker’s reasoning would fully apply to the organizational guidelines.

Analysis under the case-by-case approach is a bit more complicated. In theory, mandatory organizational guidelines could be constitutional under the case-by-case approach if enough of the organizations sentenced were large corporations facing modest fines and thus not entitled to a jury trial. A cursory glance at organizational sentencing statistics, however, reveals that actual organizational sentencing differs greatly from this scenario. The vast majority of organizations sentenced are small, closely held corporations. Given their small size and limited resources, many organizations cannot even pay their fines: in fiscal year 2005, for instance, over thirty percent of organizations had their fines reduced because of an inability to pay, even though the median fine that year was only $85,000. Thus, in 2005, the fines imposed were certainly “serious” for a third of organizations sentenced and presumably serious for far more. Accordingly, even under the case-by-case approach, mandatory organizational guidelines could only be used for the sentenced organizations in the rare cases where the defendant is a large corporation facing a modest fine. Creating a separate set of mandatory guidelines for such a narrow set of cases hardly seems worth Congress’s trouble.

Thus, any attempt to restore the organizational guidelines to mandatory status would likely run afoul of the constitutional standard set out in Booker. Moreover, such an effort appears to be unnecessary. Studies suggest that many of the claimed benefits of mandatory organizational guidelines—deterring crime, achieving uniformity in sentencing—could potentially be achieved as effectively with advisory organizational guidelines as with mandatory ones. Moreover, nonmandatory guidelines give judges greater flexibility and allow them to provide more feedback to the Sentencing Commission about how the guidelines might be improved—an important ability given that the organizational guidelines’ formulas for calculating fines were written more by guesswork than by science.

In sum, then, Booker grants organizations much the same jury trial rights as it gives to individuals—all “serious” crimes deserve a jury trial—and makes the application of both the individual and the organizational guidelines nonmandatory. Thus, after Booker, judges have the discretion to tailor sentences to the circumstances of each defendant—whether that defendant is an individual or an organization—a change that, at least for organizations, is an improvement.

Timothy A. Johnson is a recent graduate of Yale Law School and the author of Sentencing Organizations After Booker, a Note on organizational sentencing that appeared in Issue 3 of Volume 116 of The Yale Law Journal.

Preferred Citation: Timothy A. Johnson, What Booker Means for Convicted Corporations, 116 Yale L.J. Pocket Part 301 (2007),