The recent oil spill disaster in the Gulf of Mexico and ensuing questions of accountability have brought a controversial legal tool to the forefront, the “responsible corporate officer doctrine.” This doctrine allows courts to hold individuals who exercise control over business policies or activities personally liable for failing to prevent statutory offenses by subordinates, even if they themselves were not aware of any wrongdoing.
For corporate officials, the RCO doctrine is dangerous because of its ability to sidestep the usual requirements that apply to holding corporate agents responsible. Moreover, from their viewpoint, the doctrine is troubling in that it extends statutory duties of legal entities to their “responsible corporate officers” as an additional class of defendants. Examined from a broader perspective, the RCO doctrine may also result in additional costs, contribute to overdeterrence, and undermine the notion of limited liability.
This Article explains how the RCO doctrine runs contrary to established tort, criminal, and corporate law principles and why it represents an unwarranted augmentation of corporate agents’ duties. It then proceeds to explain that current justifications of the doctrine are not convincing and explores the doctrine’s negative effects. Finally, the Article advances the idea of a “cautious approach” to applying the RCO doctrine, arguing that legislatures and courts should reduce the RCO doctrine to rare and clearly delineated instances of statutory liability for intentional or knowing misconduct.