DOJ Revisits the Yates MemoDecember 5, 2018 | Geoffrey R. Kaiser | Fraud and Abuse | Legislation and Public Policy | Litigation
In remarks delivered on November 29 at the American Conference Institute’s 35th International Conference on the Foreign Corrupt Practices Act, Deputy Attorney General Rod J. Rosenstein announced that the U.S. Department of Justice (DOJ) had revised its policy concerning individual accountability in corporate cases. That policy, previously set forth in a September 2015 memorandum issued by former Deputy Attorney General Sally Quillian Yates which came to be known as the “Yates Memo,” outlined a strategy to strengthen DOJ’s pursuit of individual corporate wrongdoing in both civil and criminal enforcement actions.
In his remarks discussing the revised policy, which has been incorporated into the DOJ Justice Manual, Rosenstein explained that “pursuing individuals responsible for wrongdoing will be a top priority in every corporate investigation” and that “absent extraordinary circumstances, a corporate resolution should not protect individuals from criminal liability.” Sounding a pragmatic note, however, he explained that DOJ will no longer require companies, in order to receive cooperation credit, to identify every employee who had some role in the misconduct as long as they “identify every individual who was substantially involved in or responsible for the criminal conduct.” A lack of good faith in identifying such individuals will forfeit the company’s entitlement to any cooperation credit.
Rosenstein went on to explain that in civil cases, the primary goal is recovering money and that “when criminal liability is not at issue, our attorneys need flexibility to accept settlements that remedy the harm and deter future violations, so that they can move on to other important cases.” Rosenstein noted that requiring a company engaged in wrongdoing to always “admit the civil liability of every individual employee as well as the company” may have been “attractive in theory,” but the policy “proved to be inefficient and pointless in practice” and that DOJ “cannot afford to delay resolutions because a bureaucratic rule suggests that companies need to continue investigating until they identify all involved employees and reach an agreement with the government about their roles.” Accordingly, in civil cases, DOJ is “revising the policy to restore some of the discretion that civil attorneys traditionally exercised – with supervisory review.” Most importantly, companies will now be required to “identify all wrongdoing by senior officials, including members of senior management or the board of directors” to earn any cooperation credit in a civil case and, in order to earn maximum credit, the company “must identify every individual person who was substantially involved in or responsible for the misconduct.”
According to Rosenstein, this new flexibility will avoid an “all or nothing” approach to cooperation, which interfered with civil resolutions. Additionally, DOJ civil attorneys will once again be “permitted to consider an individual’s ability to pay in deciding whether to pursue a civil judgment” so that attorneys do not “spend time pursuing civil litigation that is unlikely to yield any benefit…while other worthy cases are competing for [DOJ’s] attention.”
The real-world impact of DOJ’s revisions to the Yates Memo moving forward will bear close scrutiny. Of particular interest will be whether DOJ’s recent revisiting of the Yates Memo and renewed emphasis on individual accountability actually results in any increased enforcement activity in this area.