New York University Public Law and Legal Theory Working Papers

Prosecuting Beyond the Rule of Law: Corporate Mandates Imposed Through Pretrial Diversion Agreements

Jennifer Arlen, NYU School of Law


U.S. corporate criminal enforcement policy encourages prosecutors to substitute pretrial diversion agreements (PDAs) for formal conviction and allows them to use PDAs to impose corporate reform mandates on firms, often without ex ante guidance or ex post review from the DOJ. This article finds that the discretion that prosecutors currently enjoy to use PDAs to impose corporate mandates violates the rule of law. The rule of law requires that government actors exercise their power over others for the public’s good; they should not be free to serve personal aims or exercise authority to achieve personal conceptions of the public interest. Executive discretion can be brought within the rule of law through both constraints on the scope of authority exercised and oversight of the decisions made. Prosecutorial discretion to sanction individuals through formal enforcement is constrained: prosecutors enforce legal duties but do not make them; their decisions are subject to external review by judges. By contrast, PDAs enable prosecutors to create and enforce new legal duties often free from external review by the DOJ or judges. This breadth of discretion pushes PDA mandates beyond the rule of law.