60 Journal of Regulatory Compliance Issue II
cases that originated the responsible-corporate-officer doctrine: United States
v. Dotterweich68 in 1943 and United States v. Park69 in 1975. In these cases,
both companies were indicted under the Federal Food, Drug, and Cosmetic
Act. 70 The Dotterweich case involved a drug company that shipped
incorrectly labeled cosmetics that had been tainted. 71 The Park case involved
a retail food chain with many sanitary issues in their warehouses. 72 In both
cases, the company officials’ liabilities were upheld by the Supreme Court. 73
At common law, officers and directors of companies are not held liable for
the tortious actions of their companies or employees due solely for their
titles. 74 There often is a focus on personal participation, duty, or statutory
liability by the officer or director in the wrongful act to determine liability. 75
However, there is a growing list of statutes than can impose civil and criminal
liability on individual officers and directors, 76 including SOX. From the
consumer perspective, there are benefits to the many ways that officers and
directors can be held personally liable. However, “an enlarged scope of duty
for supervision and management fails to distinguish between the
corporation’s duties and directors’ and officers’ duties; fails to align
corporate and tort law liability standards; neglects the corporate shield; and
misaligns costs and benefits.” 77
As a matter of law, a corporation is a legal entity that provides limited
liability to officers and directors. This distinguishes a corporation from a
partnership. 78 Directors and officers often represent the corporation
throughout their daily work for the business. They are not acting for their
Corporate Officer, A.B.A. (Dec. 22, 2010),
68. U.S. v. Dotterweich, 320 U.S. 277, 281 (1943).
69. Park, 421 U.S. at 672.
70. Dotterweich, 320 U.S. at 278; Park, 421 U.S. at 660– 61; Federal Food, Drug, and
Cosmetic Act, 21 U.S.C. § 301 et seq.
71. Dotterweich, 320 U.S. at 278.
72. Park, 421 U.S. at 660.
73. Dotterweich, 320 U.S. at 281; Park, 421 U.S. at 672.
74. Martin Petrin, The Curious Case of Directors’ and Officers’
Liability for Supervision and Management:
Exploring the Intersection of Corporate and Tort Law, 59 AM. U. L. REV. 1667 (2010),
75. Id. at 1667–71, 1672–74.
76. Id. at 1672–73.
77. Krigsten, supra note 67, at 1683.
78. Partners do not have limited liability. If a partnership is sued, individual partners can
be held liable for what the business has done, including any outstanding debts.