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Comment by scotty79 | Hacker News Reader

Should all involved companies be sued/fined into oblivion? If not, why not?

Punishing the company into bankruptcy is one thing, but the company is made up of individuals who will go work at other companies and likely escape lawsuits since they were operating within the umbrella of their job. So ultimately the shareholders who weren’t involved in the catastrophe will be punished and not the people that ultimately caused the issue.

No argument from me that the shareholders should take a major financial loss (they should demand better safety controls), but to prevent this from happening again (which I think is the key goal, rather than plain old retribution), I am arguing that there should be strict liability for the individuals as well - throw them in jail, bankrupt them, etc, so that a message is sent that employees of all companies owe, at a minimum, a duty of care to protect the safety of the general public. Essentially take away the employees’ ability to say “I was just following orders to try to maximize shareholder value”. Give the employees, in response, some protection from being fired for upholding this new obligation.

This is the only approach that will work. Punish all those involved with stiff criminal charges and punishments that include jail time and loss of all personal assets. Avoidable incidents like these would become a thing of the past.

> who will go work at other companies and likely escape lawsuits since they were operating within the umbrella of their job.

And who'll exactly hire people responsible for the death of their previous company?

It happens all the time. Do you think the accounting employees of Enron are all unemployed right now? People downplay their involvement.

I'm in favor of a corporate death penalty. In cases where a company is found guilty of gross negligence leading to terrible disasters and loss of life, give a jury the option to give the death penalty. All equity holders AND debt holders are washed out and the assets are sold off to pay victims and severance pay for low level employees.

Revoking their charter and seizing their assets seems just for a lot of this stuff.

Their charters are often from other states (such as Delaware). This would complicate the issue by entwining state's rights and federal rights.

For the USA, an easy mechanism for a corporate death penalty (for large enough corporations) without running afoul of takings clause would be to bar the corporation from engaging in interstate commerce, and to bar the equity holders from selling to themselves or relatives.

If you're talking about judicial action, the Takings Clause isn't a problem. If you're talking about Congressional action, your proposed alternative runs into the prohibition on Bills of Attainder.

In my view, the L&E approach of punitive damages calculated to be greater than the profit incentive of the negligent/reckless behavior is the best approach. Additionally, to the extent that an executive's actions were clearly not in the long-term interest of the corporation, they should be made personally liable.

To avoid the bill of attainder issue the companies wouldn't be individually named. All corporations that fit the bill would be subject to the bill. And since Congress is forbidden from passing ex post facto laws, such a law would obviously not be a bill of attainder, as it could not guess who would be subject to it.

IANAL. I believe that there are limits to the penalties a judicial action can impose. A corporate death penalty presumably wouldn't survive appeals without an underlying law. I guess the 8th amendment might still be a barrier to my alternative.

> In my view, the L&E approach of punitive damages calculated to be greater than the profit incentive of the negligent/reckless behavior is the best approach.

I agree. But I also want a corporate death penalty beyond this.

Are you willing to lose your job because your CEO did something wrong?

No. But that has never stopped a layoff.

It would be better to do this the way the FDIC treats failed banks: sell off obligations of the company, including buildings, equipment, and employees, to competitors. For a straightforward business such as a train logistics company with direct competitors who do effectively the same business, this seems relatively simple.

Selling to competitors sounds like a great way to create monopolies and perverse incentives.

Your idea is full of holes.

You do know that the FDIC requires spin offs as necessary to eliminate monopolies?

Ok, so going with your idea. We kill a company, then sell to competitors. FDIC says "that's anti-competitive".

Now what?

Part of the merger plans include the spin-off plans. This is typical even in large mergers that aren't government negotiated.

So you're not killing the company? You're justing selling it (bad safety culture and all) to another company?

You'd be selling the pieces of it. There would be no corporate charter, shareholders, board of directors, or other corporate structure left.

And no workers.

The invisible hand of the labor market will solve this issue.

Only if they quit. Otherwise they'd be transferred to the new company or one of the anti-monopoly spin-offs along with their part of the business, just like bank branches and headquarters are today.

Under such a system I wonder if people who quit from unsafe jobs more often because the companies would be perceived as less stable.

Even if a purely free market solution doesn't work the employees could be lumped in with victims as the assets are liquidated. Bankruptcy courts handle more complex but similar situations already.

Norfolk Southern has a 54 billion dollar market cap. Punitive damages are often capped as a percentage of actual damages, and proving enough actual damages for the total damages to materially harm Norfolk Southern is a big reach.

Because they don't price actual damage accordingly. How much would you price you getting cancer at? For me I would price that at a few billion easily, because I value my life quite high. I'm sure bill gates would put the price of him getting cancer in the billions too. There's of course no telling which child you are harming in the ohio river valley might be the next bill gates, so you might as well price them all at that valuation. That would put the costs of remediation well beyond what northfolk southern's market cap is, and would justify either closure or if its truly essential, having those assets and infrastructure being taken over by the public, much like how any other debt collection agency would take your assets if you lack liquidity.

Punitive damages are broken and this is one of the many reasons why.

Maybe. But ultimately, they're a symptom. Per the last paragraph, it's Congress that dropped the ball.

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