Amendment 53 – Criminalize Management Incompetence

An amendment to the Colorado Revised Statutes extending the criminal liability of a business entity to its executive officials for the entity’s failure to perform a specific duty imposed by law, and, in connection therewith, conditioning an executive official’s liability upon his or her knowledge of the duty imposed by law and of the business entity’s failure to perform such duty; and allowing an executive official who discloses to the attorney general all facts known to the official concerning a business’s criminal conduct to use that disclosure as an affirmative defense to criminal charges.

This initiative is part of the union’s response that will destroy the Labor Peace Act of 1943.

Further info at Colorado Ballot – The Liability of Business Entities and Their Executive Officials Initiative.

Arguments Against

This will negatively impact a business climate in which most businesses and their executives comply with the law. For example, the new criminal penalties could drive higher insurance costs for law-abiding executives, which may ultimately be passed along to consumers. Additionally, fear of prosecution could hinder recruitment of top business talent and may leave community leaders reluctant to serve on nonprofit boards.

State and federal laws already hold business executives accountable. For example, executives can be prosecuted under Colorado law for their own criminal conduct on behalf of their business. Recent federal laws have strengthened criminal and civil penalties for business executives who commit fraud. Criminal prosecution when it is clearly deserved already exists.

This will lead companies who call Colorado home to leave the state, and those who are considering moving here to relocate to other places. It’s a job killer.

Arguments For

Amendment 53 addresses a gap in state law. While business entities themselves can be prosecuted, their executives can currently avoid responsibility for their businesses’ failure to follow state law. The measure helps ensure that these executives are held accountable when they know of a legal duty that their business has failed to perform. Over time, Amendment 53 can foster a business environment that attracts and retains responsible employers.

Amendment 53 may encourage a healthy and moral economic climate for Colorado. When businesses fail to comply with state law, the state’s economy can be impacted in a variety of unexpected or far-reaching ways.

Vote NO! Devastating Impact Vote No

You want to drive businesses out of Colorado – this is a great start. This measure criminalizes traditionally civil and regulatory conduct. Any violation of any statute, ordinance, regulation, health standard, etc., would constitute a criminal offense under the statute. And the thing is, there are so many rules & regulations that probably every executive, no matter how hard they try, is probably violating some rule somewhere.

There are already numerous penalties for clearly illegal acts, starting with the fact that the executives involved will be fired and no other company will hire them. There are also numerous civil remedies as well as criminal for the most egrarious cases. This is unnecessary.

In addition, to continue with the incredibly successful Colorado Labor Peace Act of 1943, this (and the other 6 peace act violators) must be defeated.

My vote on 53

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34 Community Comments, Facebook Comments

  1. davebarnes says:

    for igniting a war that no one wanted.

    • DavidThi808 says:

      for starting a war by passing an executive order that some nuts on the right then viewed has holy writ.

      All Bill Ritter did was take us back to BBO (Before Bill Ownes).

      • Lone Wolf McQuade says:

        If by “nuts on the right” you mean those of us that don’t want tax dollars paying for the apparatus that collects funds for the purpose of filling the coffers of the Democratic Party to a ratio of 99 to 1.

        Doesn’t seem very right wing to me. But ok

        You can blame this on Owens all you want here in the friendly confines of your blog David; but face it if there is one thing that has come up over and over again it is that if Unions Bosses don’t have the power to force workers to pay dues they would no longer exist.

        • DavidThi808 says:

          if Unions Bosses don’t have the power to force workers to pay dues they would no longer exist.

          If car dealerships didn’t have the power to force payment, we would all take cars for free.

          If government didn’t have the power to force payment of taxes, we’ld live in the equivilent of Somalia.

          Keep in mind that every union exists because the workers voted it in, either through signed cards or a ballot. A union has never been imposed on workers by an outside force.

          • Lone Wolf McQuade says:

            I’ll try to use your analogy.

            You go to a dealership to buy a car on your own; not with every one that will ever buy a car there.  If you could Collectively Bargain (Collude) with every consumer that would go to that dealership my guess is that the dealership would go out of business.  If nobody were to offer a price higher than $100, the dealership would have the choice of selling the car for $100 or sell no cars.

            Now back to the labor issue at hand.  Yes currently Unions are voted into a company.  If 51 out of 100 employees want to Unionize they have that right; you want to force the other 49 to pay dues for something they don’t want or in fact may be fundamentally opposed to.  

            Hey, while you’re at it why don’t we allow a majority of employees to impose the Catholic Church on all of their co-workers?  You could cut down on all of that Spiritual “freeloading.”

            Please don’t do that.

            • redstateblues says:

              but they benefit from it just like everyone else.

              I don’t like all the fees I have to pay at CU, but I benefit from them anyway.

            • DavidThi808 says:

              …since I didn’t vote for G.W. Bush I don’t have to pay my taxes?

              • Lone Wolf McQuade says:

                I’ll take that as a concession to my point if you say something that stupid.

                Perhaps you’re suggesting that we give Unions ALL of the rights of the Federal Government since you are so keen on using this tax analogy.

                Please understand I have read what you have said in the past and while I believe you are hopelessly partisan I do not believe you are stupid.  

                • DavidThi808 says:

                  We set up systems where a majority decides for all. The government is one. Homeowners associations is another. You have it also with professional associations you must join to work from the ABA and AMA to many engineering specialities.

                  And in the case of unions we try to address a fundamental fact in our economy, that management has immense power compared to a single worker in jobs that are not highly skilled. The only way to give the workers some power by which they can negotiate with management is via unions.

                  But the tragedy of the commons means that it is in each individual’s interest to have everyone else join the union while they freeload.

                  And so to address this conundrum, and it is critical to address it for the health of our economy, they set up unionization in this manner.

                  And the health of our economy does require this because again, while each individual employeer would like to pay $0.01/hr, they also are best off if every other company pays very well so those employees can purchase the stuff made by the first company.

                  So this union support is also in the interests of the business community. The trick is for everyone to work together to make it operate more productively rather than wasting time beating the shit out of each other.

          • Libertad says:

            It is un-American to force people to join unions and pay union fees as a condition of their employment.

            Union growth has demonstrated its strongest growth when Right-to-Work is in place. Given this small incentive, Unions have been much more responsive to their members.

            Being focused on your members needs will drive greater membership, thus strengthening America through the labor movement.

          • Bondo says:

            But car dealerships cannot force me to buy the car, neither should unions force me to buy into them.

            • DavidThi808 says:

              If your salary is increased due to union efforts, you have to pay for those efforts.

              • Bondo says:

                I should be allowed to win or lose on my own if I so choose. Your argument is “coercion through mandatory dues is necessary because of the coercion of mandatory benefits.” Though I still maintain that there is little evidence that RtW will change outcomes, I recognize the collective action concern you express. But I don’t see why we shouldn’t change both aspects of coercion so that it is no longer problematic for people not to pay dues.

                You say unions are efficient for employer and employee in the contract process. If that is true, they should be able to pay those joining in on the union contract more than those who go solo. This would make being in a union beneficial and more people would CHOOSE to be in the union.

                As labor supply increases, bargaining power for employees will decrease and vice versa…you know, the free market. Right now the job market sucks for prospective employees right now…I’d love to take a lower salary in order to get a position. Especially where unions are present, I cannot compete on price, and thus I’m unemployed. Suddenly unions are not working so well for me. Not to mention unions help keep less capable employees secure in their position rather than making that position competitive fore more capable job seekers.

                Even if unions help wages, do you argue they help create more job openings? Because for me and many of my cohort who are graduating into unemployment, a lesser wage beats no wage.

  2. Bondo says:

    I don’t know, it seems to me that if someone breaks the law, they should be held criminally accountable, not just fined in civil court. Why would we want a world where the laws we pass don’t really mean anything.

    If, as you claim, execs can already be held criminally liable at state and federal levels, than this does nothing. After all, passing this Amendment does not by itself any any new statutes.

    • Libertad says:

      If this passes it is only statutory. We can rely on the Governor to call a special session to overturn this labor led economic ballot terror.

      I know the Governor looks forward to calling a special late December session to act before the damage is done. As a non profit board member I trust he can get that done without great taxpayer expense.

  3. BlueCat says:

    Unclear on what it would really accomplish  except a lot of money spent dragging things through court and, as noted, there are already laws against clearly criminal acts. Likely to scare good execs away while unlikely to result in more successful prosecution of bad execs. “No” sounds right on this one

    • DavidThi808 says:

      Speaking as someone who is the CEO of a company and has been at others – I don’t really care if this passes. If I do something illegal today, there are laws to charge me and this initiative doesn’t change that.

      What worries me is that if out of all 7 anti-worker bills, just this one passes, we’ve still then ended the Labor Peace Act and we’ll have dueling initiatives going forward.

      That’s the large potential harm of this measure.

  4. Something Is Brewing says:

    I thought Senator Salazar said a deal would be made and this issue removed from the ballot?

    Waht happened to the deal?

    • DavidThi808 says:

      but until it’s official, I will continue to work my way through all the amendments.

      • Libertad says:

        Here is what I am picking up deal wise…

        Acting as proxies for labor Messers Farber, Hamill, Isenberg, Ritchie, Blake and a few others have continued to furiously work the phones this afternoon for cash [checks they can deposit today].

        As we have heard the offer is $5 million to Labor and Labor will remove Amendments 53, 55, 56, and 57.

        Governor Ritter, Jess Knox, Sen. Salazar, Ernie Duran, Mayor Hickenlooper, Rep Perlmutter, former Rep Mike Cerbo, and Rep Udall have the third tier proxies [Farber et. al.] convinced that these measures won’t come off the ballot unless they act now to fund Labor in exchange for amendment removal.

        The third tier proxies apparently have no concerns about running directly into a 5 alarm blaze to save the Governor. Their problems are at least threefold:

        They have $2.75M cash in hand, but a commitment for $5M was made. The plan is to offer Labor the $2.75M and see if they will take it. A key concern, this number fails to meet the costs expended to date by Labor.

        The sales pitch to labor will need to include a promise of more to come based on pledges [the counter risk is they don’t have the pledges in writing]. It is too early to tell how Labor will manage this risk.

        Procurement of the banking vehicles to facilitate the payment has occurred; this qualifies as a paper trail. Further we have checks written by companies seeking the pay-off as consideration. This could become an important factor down the road.

        The Post is likely not happy. Without the removal of the EO and a complete accounting of mistakes by Governor Ritter, the Post will find it hard to endorse any activity…let alone one that is ethically challenging.

  5. Something Is Brewing says:

    Is this issue worth taking the time to discuss?

    Is it destined to be scrapped as part of a larger deal?  Anyone have information on the negotiations?

    • ohwilleke says:

      anyone to withdraw ballot measures at this point.

      The ballot has been finalized, and will start hitting mailboxes across Colorado in a couple of weeks.  The Blue Book has been written.

      These proposals don’t belong to the sponsors anymore.  They belong to the people of Colorado.

  6. ohwilleke says:

    The statutory change proposed (note that it is not a state constitutional amendment) is to the section of the criminal code describing when a corporation can be prosecuted for a crime.

    While it isn’t obvious from the Blue Book description of the measure, it only applies to duties involving crimes in the criminal code (Title 18) and only the organization has the appropriate criminal intent by virtue of the knowledge of senior executives that a crime was being committed.

    So, this does not impose criminal liablity, for example, on breaches of contract or manufacturing a defective product.  But, it does apply in circumstances where the business itself could be convicted of a crime.

    Allowing the executives whose knowledge caused a business to be eligible for a criminal conviction to themselves be criminally prosecuted is hardly radical.  When was the last time you saw a business in Colorado prosecuted?

    The last notable prosecution of a business for a criminal offense was Arthur Anderson, in relation to its handling of Enron (the conviction didn’t stick, but the indictment had already destroyed the business).

    Realistically, an executive culpable enough to be eligible for prosecution under this statute is usually going to be eligible for prosecution under RICO or a conspiracy theory in any case.  Also, federal securities laws have already been modified to hold senior executives personally responsible for the accuracy of their financial statements.  

    Nacchio and folks like Bob Schaffer’s business partner have learned the hard way that executives routinely are prosecuted for crimes that they conduct involving their businesses.  Indeed, the Bush Administration, for all its faults, has put near record numbers of corporate executives behind bars.

    The real power of this Amendment is as much symbolic as substantive.  It says clearly, what is already the law to a great extent already in practice, that committing criminal acts through a corporation does not immunize you from criminal liability.  It is aimed at the largely strawman argument that “corporate personhood” gives corporations power without accountability.

    Also notable is the fact that charges are only brought when a DA or the attorney general decides to bring them.  This statute doesn’t create a private right of action, and realistically, very few DAs spare much time or effort prosecuting white collar crimes that aren’t tied up with a bow containing a smoking gun.

    The likelihood that this statute would drive away legitimate businesses from Colorado is actually pretty low.  Also, the businesses most threatened by a statute like this one, those that operate close to the boundary of fraud and mere grossly misleading conduct, are mostly businesses that Colorado is better off without.  

  7. ohwilleke says:

    The Labor Peace Act of 1943 (most of which is pre-empted most of the time in the private sector by various national labor laws) basically makes it somewhat harder to establish a closed shop collective bargaining agreement than the minimum required under federal law, while not prohibiting closed shops entirely.

    In a unionized company, management and employees generally enter into a collective bargaining agreement.  Not everyone has to join a union, but everyone receives the benefits of, and adheres to the terms of, an employment contract entered into by the union and management.  The union has to get majority support from employees, however, to be recognized so that it has the authority to enter into a collective bargaining agree that binds all employees.  And, no collective bargaining agreement can be entered into without management consent.  The union is also duty bound to defend the rights of all employees in a unit it has unionized under the agreement, even if they aren’t union members.  All of this is basically a matter of federal law.

    What the FPA does, in a place reserves for state level decision making, is require approval by a majority greater than the majority required to unionize at all, to get a closed shop.

    In a closed shop, the union receives in exchange, every employee has to pay a fee that covers the part of the union’s costs attributable to negotiating the collective bargaining agreeement from which everyone benefits.  People who join the union, rather than simply being members of the collective bargaining unit, pay additional union dues that cover additional union activities.

    In an open shop, non-union members don’t pay any dues or fees to the union.

    Amendments 47 and 49 attempt to undo the Labor Peace Act of 1943 and make the state anti-union.

    The ballot measures proposed by the unions may have been provoked by 47 and 49, but they have absolutely nothing to do with the rights of workers under the Labor Peace Act.  The At Will amendments expressly excludes union shops.  The others too address issues that unions believe are important to workers and the general public, but are far afield from labor law.

    The Amendments should be judged on their own merits, not based upon the larger political picture.  Passing one does not mean forever war.  It means that business interests need to recognize that the general public disagrees with them and that they’ll have to live with that fact.  That’s just doing business in a democratic society.

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