American law has been persistently unsettled about when corporations should be punished. In particular, American law has been persistently unsettled when answering what I call the food-chain issue: How high must misbehavior go in a corporate hierarchy before a corporation may be punished? When, if ever, can a corporation legitimately claim that punishment is inappropriate because misbehavior should be attributed only to an individual employee, and not to the corporation itself? More specifically, I will look at the food-chain question for criminal mens rea and civil scienter: when should such improper mental states by an employee be imputed to a corporation?

This article uncovers a schizophrenia regarding the food-chain issue which has not previously been explored. Both criminal law and the law of punitive damages feature a deep split of authority on the food-chain issue between states following a broad rule attributing the mental states of any employee to the corporation and those following a narrow rule only attributing the mental states of relatively important employees. Strikingly, the divisions of authority do not match. Many jurisdictions take different approaches to the food-chain issue in punitive damages and criminal law. More surprisingly, no one has analyzed or assessed this schizophrenia before.

In Part II of this paper, I set out the full menu of approaches that American jurisdictions take with regard to corporate punishment in either criminal law or the law of punitive damages. The broad or liberal rule in both fields tracks the traditional respondeat superior scope-of-employment rule for compensatory damages. Different sorts of narrow or restrictive rules, though, set different criteria for exactly when an employer can escape punishment even though an employee misbehaved in the scope of his employment.

Part III gives a complete picture of the current food-chain-issue schizophrenia. Slightly over half of the American jurisdictions (28 of 55, counting federal law, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands) take inconsistent positions on corporate crime and corporate punitive damages. All four possible approaches are well represented among American jurisdictions. Eleven jurisdictions are Consistently Liberal; sixteen are Consistently Restrictive; eighteen follow Liberal Rules for corporate crime but Restrictive Rules for corporate punitive damages, and ten follow Liberal Rules for corporate punitive damages but Restrictive Rules for corporate crime. A survey of the literature on corporate punitive damages and corporate crime reveals that almost no one, either courts or commentators, has given the issue any attention. This lack of cross-fertilization is particularly curious because there are many ways in which litigants might profitably point out the current schizophrenia to foster their own cases. Some litigants in almost all states can profit by pointing out the connections (and inconsistencies) between the resolution of food-chain issues in criminal law and punitive damages.

In Part IV, I consider whether corporate crime and corporate punitive damages should resolve the food-chain issue the same way. I argue that compelling reasons exist to think that criminal law and the law of punitive damages should apply the same rule to decide when to punish a corporation. Several distinctions might be offered to explain the divergence of approaches, but they do not justify it.