Analyze how business tort liability can escalate to criminal liability
In this article we analyze how business tort liability can escalate to criminal liability in the United States. But before we discuss business torts and criminal liability, it is important to understand what torts are under US law.
Torts, generally, are civil wrongs (acts or omissions) committed by an individual known as tortfeasor against another that give rise to an injury or harm and for which courts in the United States impose liability. Tort law is governed by state common law and state statutory law and there are generally three categories of torts including negligence, intentional torts and strict liability torts. The law of each state determines the elements of each tort and tort law is made the courts of each state. Some examples of tort include assault and battery, falser imprisonment, trespass, invasion of privacy, intentional infliction of emotional distress, defamation, products liability, professional malpractice, car accident, negligence, and others. Tort law imposes liability on the person causing the injury and aims to compensate the injured party for the harm.
Unlike tort law, criminal law seeks to punish people for conduct that is harmful to society and to deter others from similar conduct in the future. Criminal law has vastly different consequences than civil law and, for that reason, crimes are more precisely defined than torts. One special types of crimes for businesses are computer crimes which result in losses worth hundreds even millions of dollars but there are other crimes against property that are harmful to businesses. Computer crimes usually involve the use of computer to steal money, personal information or remove business and personal data or tamper with information. Such crimes include unauthorized use of computer, theft of computer software, hardware or secrets, theft of data, and others. Crimes against properties affecting businesses include larceny, embezzlement, forgery, bad checks, and others.
Business tort liability can arise in the context of product liability. Product manufacturers and suppliers may be liable under state tort law for placing a defective product in the hands of a consumer. Liability usually extends to all sellers of the product who are in the distribution chain. However, federal law provides for criminal sanctions for certain, specific acts, such as introducing an adulterated or misbranded product, making a false statement to the government, or violating established reporting requirements.
Two federal statues can transform standard tort liability into criminal liability in the blink of an eye – the criminal False Statements Act and the criminal False Claims Act. With these statutes the U.S. federal government is pursuing an aggressive theory that failing to warn about a product’s potential limitations amounts to a false statement or false claim when the product ends up in state, local or federal projects. For example, the federal False Statements Act, which is generally applicable to information submitted to all government agencies, subjects a company or individual that makes statements that are not true to substantial criminal penalties. Individuals who make false statements risk a fine of up to $250,000 and up to five years in prison. Corporate fines can run as high as $500,000. In the pharmaceutical context business tort liability can escalate to criminal liability rather quick due again to federal law.
Contact us, your business attorney in Florida to help you analyze how business tort liability can escalate to criminal liability.