In my last few articles, I’ve been reviewing the concept of the deferred prosecution agreement (DPA) which has become a standard tool of the U.S. Department of Justice in dealing with white collar crime. A DPA is a contract between the DOJ and the target of an investigation – often a corporation or business entity – that resolves a federal criminal investigation short of a formal prosecution or guilty plea. It provides the DOJ with a middle ground between closing an investigation without further prosecutorial pursuit and indicting a corporation, which can have adverse collateral consequences to the corporation’s employees, investors, suppliers and customers. For its part, the corporation avoids full prosecution.
In addition to Noncontradiction Clauses and impacts on other civil discovery, here are two more collateral consequences that can occur when entertaining entering into a DPA with the government for corporations to consider.
Admissibility of the DPA. There is little precedent on whether a DPA is admissible evidence against the corporation in other litigation. For instance, in the BP Deepwater Horizon oil spill litigation the court granted a motion in limine to prevent the jury from receiving evidence about a DPA that resolved allegations about an earlier oil refinery accident in Texas. However, the court deemed the DPA potentially relevant to future trial proceedings, including whether punitive damages would be awarded. Courts are grappling over the admissibility of the DPA as evidence of other crimes, wrongs or acts, the inadmissibility of the DPA and the DPA discussions at settlement negotiations and plea negotiations. Corporations and their counsel must craft the DPA in a way that does not allow for its introduction into evidence in the future.
Punitive Damages. When courts determine a DPA is inadmissible in the early stages of a trial, the court may still find it more relevant and admissible in the context of a jury’s assessment of punitive damages or civil fines. The Deepwater Horizon court suggested that the DPA could potentially be admitted in a punitive damages phase, including in a case arguably unrelated to the specific conduct that is the subject of the DPA
DPAs are still in a nascent state, and DOJ prosecutors are continuing to create new ways to induce corporate cooperation. Corporations and their boards must not only consider the immediate and direct impacts of the terms of the DPA, but also how it may dictate strategy in collateral litigation.
Patrick Mincey is a trial lawyer in Wilmington, where he founded the Criminal Defense Group at Cranfill Sumner & Hartzog LLP. His criminal practice ranges from representing individuals and corporate clients who are targets, subjects or witnesses in federal and state white collar proceedings to “blue collar” defendants charged with murder, drug conspiracies and assaults. To contact Patrick Mincey, call (910) 777-6017 or email him at [email protected].
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