A corporation’s decision to take certain actions in its internal investigation at the behest, or the specific direction, of the government can have repercussions for the company that reverberate throughout a criminal investigation and prosecution. Those issues rose to the fore when the Second Circuit concluded in United States v. Stein that actions taken by KPMG at the urging of the government constituted state action and violated the Sixth Amendment. While the U.S. Department of Justice (DOJ) subsequently revised its policies, the government’s most recent pronouncements concerning corporate cooperation reinforce and even enhance the coercive factors that were at the core of that decision: The Yates Memo and subsequent interpretative communications confirm at high volume that companies are required promptly to report and to develop evidence of the wrongdoing of individual employees, and to package that information for the government—or receive no cooperation credit. As the extent of corporation investigative activity increases, so does the likelihood that cooperation with the government will impact disclosure obligations, and even expose the company to liability based on assertions that the corporation’s actions—whether through the taking of statements, imposition of discipline or termination, or seizure of evidence—are state action and subject to constitutional constraints.
This article will discuss decisions addressing the impact of a corporation becoming entwined in governmental actions, including the Second Circuit’s recent decision in Gilman v. Marsh McLennan, 826 F.3d 69 (2d Cir. 2016), and pending motions predicated on the internal investigation that preceded the indictment in United States v. Blumberg, No. 14-cr-00458 (D.N.J.).
