When Should Courts Defer to White-Collar Prosecution Settlements?

Deferred prosecution agreements and their close relatives non-prosecution agreements (DPAs/NPAs) have become a major tool of white-collar prosecution in recent years. Typically, a business defendant in exchange for escape from the costs and perils of trial agrees to some combination of cash payment, non-monetary steps such as a shakeup of its board or manager training, and submission to future oversight by DoJ or other monitors. Not unlike plea bargains in more conventional criminal prosecution, these deals dispense with the high cost of a trial; they also dispense with the need for the government to prove its allegations in the first place. DPAs may also pledge a defendant to future behavior that a court would never have ordered, or conversely fail to include remedies that a court would probably have ordered. And they may be drawn up with the aim of shielding from harm — or, in some other cases, undermining — the interests of third parties, such as customers, employees, or business associates of the targeted defendant, or foreign governments.

So there was a flurry of interest last year when federal district judge Richard Leon in Washington, D.C., declined to approve a waiver, necessary under the Speedy Trial Act, for a DPA settling charges that Fokker Services, a Dutch aerospace company, sold U.S.-origin aircraft systems to foreign governments on the U.S. sanctions list, including Iran, Sudan, and Burma. While acknowledging that under principles of prosecutorial discretion the Department of Justice did not have to charge Fokker at all, Judge Leon said given that it had, the judiciary could appropriately scrutinize whether the penalties were too low.

Now a three-judge panel of the D.C. Circuit has unanimously overruled Judge Leon. It pointed out that under well settled law, charging decisions are entrusted to the DoJ or other executive branch prosecutors, not the judiciary, and that judges may not intervene to insist that additional or more stringent charges be filed – and that is what the pattern in this case amounted to, in the appeals panel’s view.

So far so good, you might think. But the language of the appellate ruling in places might be read to suggest that courts should simply defer to the Justice Department’s judgment and green-light the DPAs it may negotiate, period. And that would be disturbing, since over-lenience is only one of the possible problems with these devices. Noting the rule-of-law concerns that scholars have voiced about DPAs, Michael Greve writes that the new Fokker Services decision “in sharp contrast, oozes with ‘trust your friendly prosecutor’ language” and speaks of dispensing with “seeking a conviction that the prosecution may believe would be difficult to obtain or would have undesirable collateral consequences.” Greve adds: “Inquiring minds might want to know whether the conviction would be ‘difficult to obtain’ for practical reasons — or because the charges are preposterous and brought for reasons bordering on extortion. …No judicial scrutiny means more than boundless prosecutorial discretion. It means mobilizing the courts to create a due process façade for highly suspect bargains.” Let’s hope the ruling isn’t read that way.