The "Flat" World And New Risks

:
Toxic Torts And Criminal Law
T
he point of this article is to identify criminal law
risks that are more prominently emerging for
. corporate America with respect to "toxins"
KIRK T. HARTlEY
KENDRIC M. COBB
used in the workplace or
in products. We suggest
the risks will continue to
increase as the world
steadily "flattens" and as
science continues to evolve, thereby allowing more
precise knowledge of and better-informed decisions
regarding the effects of
1
'toxins."
Rare Prosecutions, and then New Laws and
Agencies
For many decades, corporate America used "toxins"
with little risk of criminal prosecution. This risk of crimi-
nal prosecution of corporations increased in the late
1960s and early 1970s as environmental consciousness
and the rise of administrative agencies brought new
statutes and regulations. Thus, by the early 1970s, new
regulatory frameworks were being put in place by OSHA.
NIOSH. CPSC and federal and state EPAs that subjected
corporations to criminal prosecutions.
Today, corporations, their officers, and directors
increasingly face criminal prosecutions for a wide range of
activities. The actual and potential sanctions are sometimes
dramatic and have resulted in lengthy prison sentences for
individuals, and the "deaths" of corporations such as
Arthur Andersen and Enron.
World-Wide Activism
As described by Thomas Friedman in The World is Flat,
Wholesale changes in technology and communications
"flatten" the world because information spreads rapidly.
This flattening is evident in that activists around the globe
use the Internet and other tools to rapidly disseminate
and share information on corporate behavior. For
example, one relatively mainstream website run by a
pro-worker group announced a London 2006 confer-
ence on "corporate manslaughter," health and safety
statutes, and rules. According to the website, the con-
A6 November 2006 CORPORATE COUNSEL
ference will be attended by UK government officials,
lawyers who typically represent injured workers and
various activist groups. See http://www.corporateac-
countability.org/conference/nov061dn.htm. Meanwhile,
that same group participated in the creation of a draft
statute that would allow for the prosecution of a
corporation for the crime of "corporate killing."
Http:/lwww.corporateaccountability.org/di/Corporateki
lling/CKBill.pdf.
Global Examples of Criminal Prosecutions
Related to Toxins
Existing statutes allow criminal prosecutions with
respect to facts involving "toxins" or deaths of workers.
For example, American corporate officials have been on
trial in Indonesia this fall on criminal charges for allegedly
contaminating a bay with allegedly excessive amounts of
substances such as mercury. http1/www.ibtimes.com/
articlesfl0060825/newmontexecutive-defendcompanyin-
court.htrn. In Spain, doctors and employees of an
tion and building products company were recently acquit-
ted of murder charges involving charges of exposing
employees to asbestos. http://www.tuc.org.uklh_and_s/
tuc- 12359-fO.cfm. A Swiss billionaire faced potential
criminal prosecution for the deaths of workers attributed
to asbestos. http1/online.wsj.com/article/O,SB I 03938693
7442593313.djm,OO.html. In September 2006, Alstom, a
power generator and train manufacturer, was convicted
in a French criminal court for exposing workers to
asbestos. http://www.businessinsurance.com/cgi-bin/
article.pl?articleiD= 19776.
China- Criminal Prosecution for Unsafe Products
Contrary to what some might assume, it is reported
that Chinese law allows criminal prosecutions for sale
or distribution of unsafe products. In this age of
sive "contract manufacturing'' in China. one might do
well to think about the consequences. According to a
US law-firm website, http1/www.dwt.com/related_links/
adv_bulletins/CPSpri 1999Uab.htm:
For example, the following acts constitute crimes
under Chinese law:
(i) Manufacturing and/or selling products knowing
that the quality of the products does not meet the
mandatory State or industry quality standards for
the protection of health and personal or property
safety of others; selling expired and deteriorated
products; adulterating or mixing improper elements
with products; passing off fake products for genuine
products or products of poor quality as quality
products, and substandard products as up-to-stan-
dard products.
(ii) Manufacturing and/or selling products, the
defects of which have caused personal injury or
death. To constitute a crime under China's Criminal
Law, the seller must commit a criminal act specifical-
ly listed in the law, and such act must be committed
with criminal intent or through negligence.
2006- U.S. Criminal Sanctions for Product
Liability?
In spring 2006, the Senate Judiciary Committee
considered draft legislation that would impose criminal
sanctions in some product liability situations. The
testimony is available at http://judiciary.senate.gov/
hearing.cfm/id= 1792. The draft bill is available at
http://emerginglitigation.shb.com/Portals/181 bfc4f-cc59-
46fe-9ed5-7795e6eea5b5/Specter _Proposal.pdf
Testimony from professors, the National Association
of Manufacturers and respected consumer groups yielded
conflicting conclusions regarding the legislation. In gener-
al, manufacturers objected that product defects are diffi-
cult to define and would impose criminal sanctions in
situations that involve judgment calls. Consumer groups
retorted that the judgment calls inherent in product liabil-
ity issues are sometimes more serious than are financial
decisions, and argued that the judgment issues are no
more difficult than the issues inherent in prosecutions
for insider trading.
The W.R. Grace Criminal Prosecution -Evolving
Science and Events Over Many Years
Several W.R. Grace officers and employees presendy
face federal criminal prosecutions related to regulatory
and mining/manufacturing operations conducted in the
1970s and 1980s. Specifically, W.R. Grace acquired an
existing vermiculite mine that had trace amounts of an
"asbestiform" substance commonly known as tremolite.
According to the Department of Justice, http://www.jus-
tice.gov/opaipr/2005/February/05 _ enrd_ 048.htm:
The indictment alleges that the defendants, begin-
ning in the late 1970's, obtained knowledge of the
toxic nature of tremolite asbestos in its venniculite
through internal epidemiological, medical and toxi-
cological studies, as well as through product testing.
The indictment further alleges that. despite legal
requirements under the Toxic Substances Control
Act to tum over to EPA the information they pos-
sessed. W.R. Grace and its officials failed to do so
on numerous occasions. In addition to concealing
information from EPA. the indictment alleges that
W.R. Grace and its officials also obstructed the
National Institute of Occupational Safety and
Health (NIOSH) when it attempted to study the
health conditions at the Ubby mine in the 1980's.
The roles of evolving science and corporate knowl-
edge take on added significance in the Grace case
because the government has sought to avoid statute of
limitations issues by trying to de years of events by vari-
ous persons into one large conspiracy. The trial judge so
far has dismissed some of the counts, and has ordered
separate trials for some of the accused. http:f/mt-govin-
fo.blogspot.com/2006_ 07 _0 l_mt-govinfo_archive.html
Conclusion
The potential for corporate criminal prosecutions
increases every day. Meanwhile, technology continues to
flatten the world at a frantic pace. Each day brings new sci-
entific tools and knowledge that prosecutors can use to
establish mens rea to support criminal prosecutions. As a
result, corporations, their officers, directors, and employ-
ees will inevitably face increasing scrutiny of their actions.
and more importantly, may subject themselves to criminal
prosecution for non-action in the face of known hazards.
Kirk T. Hartley is a partner of, and Kendric M. Cobb is an
assodate with, Buder Rubin Saltarelli & Boyd LLP, a Chicago
litigation boutique. Both are members of the (lrm's Legacy
Liability praaice group. The views expressed are personal to
the authors.
CORPORATE COUNSEL November 2006 A7

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