UPUAA civil claims: Who is a “high managerial agent” for double damages?

Under the Utah Pattern of Unlawful Activity Act, a plaintiff seeking double damages in a civil case must show that the misconduct was, at a minimum, recklessly tolerated by a “high managerial agent” of the defendant.  The UPUAA does not define “high managerial agent,” so what does it mean under state law?

Utah’s criminal code does contain a definition of “high managerial agent,” similar to the definition in the Model Penal Code.  An argument could be made that the standard for high managerial agent required for criminal responsibility is, or should be, higher than that for civil liability.  But for discussion purposes, Utah Code Ann. § 76-2-204(2), “high managerial agent” in a criminal case means:

(a)        A partner in a partnership;

(b)        An officer of a corporation or association; [or]

(c)        An agent of a corporation or association who has duties of such responsibility that his conduct reasonably may be assumed to represent the policy of the corporation or association.

The first two categories are usually easy to apply.  It is the third category that is fodder for litigation.  One relatively recent opinion by the Missouri Court of Appeals is illustrative.  Like Utah, Missouri requires the involvement or toleration of a “high managerial agent” in order to impose criminal liability.  Under Missouri’s statute, a high managerial agent is “an officer of a corporation or any other agent in a position of comparable authority with respect to the formulation of corporate policy or the supervision in a managerial capacity of subordinate employees,” Mo. Rev. Stat. § 562.056.3(2).

In State v. Community Alternatives Missouri, Inc., 267 S.W.3d 735 (Mo. Ct. App. 2008), a corporation was criminally prosecuted for neglect of residents in one of 30 nursing homes operated by the defendant.  It was alleged that a woman named Mary Collura had engaged in and knowingly tolerated the conduct in question.  Collura was the “lead staff person for two of the group homes,” a management position that included management of residents’ care, evaluation and discipline of employees, and the authority to write checks on behalf of residents and take residents to the doctor.  Id. at 737.

The defendant argued that Collura did not qualify as a high managerial agent because, regardless of her authority at the individual group home, she did not have authority to make company-wide policy:

Defendant’s argument regarding whether Mary Collura was a high managerial agent and whether the actions she took, or failed to take, occurred on behalf of defendant within the scope of her employment is directed to Ms. Collura’s status in defendant’s overall corporate structure.  Defendant contends it cannot be held liable because Mary Collura lacked corporate-wide authority and lacked authority comparable to a corporate officer within that structure.  [Id. at 744.]

The Missouri Court of Appeals rejected that argument.  Explaining that “[i]t is the function within a corporate structure that must be considered, not merely job titles,” id. at 745, the court found that Ms. Collura qualified as a “high managerial agent” based on her supervisory duties at the home, authority over local expenditures and communication with patients’ doctors, and the limited oversight of company officers.  See id. at 744-46.  Regarding the scope of her authority, the court held that a corporation could not avoid criminal liability for what occurred at one of its units merely because it operated multiple units:

A question this appeal presents is whether the definition of “high managerial agent” is to be applied differently with respect to corporations that operate numerous business units than to corporations that operate a single business unit.  Is a corporation that operates numerous business units shielded from criminal liability when the same conduct would subject a corporation with a single business unit to criminal liability?  This court thinks not.  [Id. at 745]

Collura’s authority at the group home was such that, if the home had been a single unit, the defendant could not have denied her status as a high managerial agent, the court noted.  Id.  Accordingly, it would not make sense to allow the same defendant to deny her status just because it owned more than one unit:

In this case, defendant operated many facilities, or business units, under a single corporate ownership.  Each business unit had personnel responsibility for the care of the residents at its facility.  This court does not perceive the legislative intent that fostered enactment of [the high managerial agent requirement] to have been to treat large corporations with numerous operating units different from those that operate a single or a few business units.

See also People v. Lanzo Construction Co., 726 N.W.2d 746 (Mich. Ct. App. 2006) (crew chief in charge of safety on job site qualified as a “high management official” under similar criminal responsibility standard); People v. Mejia Real Estate, Inc., 672 N.Y.S.2d 645, 647-48 (N.Y. Sup. Ct. 1998) (jury could find that real estate agent was high managerial agent under similar corporate liability provision).

UPUAA conviction: former Vescor official

As reported on ksl.com, former Vescor executive Shawn H. Moore has been convicted on various state charges, including one under the Utah Pattern of Unlawful Activity Act.  The Moore case is No. 081908861, Third District Court.

Here are the Defendant’s proposed jury instructions, the State’s proposed jury instructions, the Court’s final jury instructions, and an interesting motion in limine asking the Court to prohibit the prosecution from using the loaded phrase “Ponzi scheme.”  (It was denied.)



Can a vindicated criminal defendant recover expenses under the UPUAA?

The Utah Pattern of Unlawful Activity Act has both criminal and civil components.  In a criminal case, the government is allowed to tack on “the costs of investigating and prosecuting the offense” if the prosecution is successful.  Utah Code Ann. Section 76-10-1603.5 says:

(1)  A person who violates any provision of Section 76-10-1603 [UPUAA] is guilty of a second degree felony.  In addition to penalties prescribed by law, the court may order the person found guilty of the felony to pay to the state, if the attorney general brought the action, or to the county, if the county attorney or district attorney brought the action, the costs of investigating and prosecuting the offense and the costs of securing the forfeitures provided for in this section.

But what if the defendant is acquitted?  Can the defendant get from the government his own “costs of investigating and [defending] the offense”?

Probably not, unless you’re in federal court.  (The federal Hyde Amendment allows a vindicated criminal defendant to recover fees if the prosecution was groundless and in bad faith, vexatious, etc.)  Utah does have a “reciprocal attorney fee” statute, but it is limited to civil cases, and only applies when a contract claims to allow just one of the parties to the contract to recover attorney fees:

A court may award costs and attorney fees to either party that prevails in a civil action based upon any promissory note, written contract, or other writing executed after April 28, 1986, when the provisions of the promissory note, written contract, or other writing allow at least one party to recover attorney fees.  (Utah Code Ann. Section 78B-5-826.)

Turley UPUAA case: motions to compel discovery, change venue

In the criminal case against former Provo city councilman Steve Turley for alleged violation of the Utah Pattern of Unlawful Activity Act (including underlying offenses of Communications Fraud), a motion for change of venue has been filed after a fourth judge recused himself.

Turley also filed a lengthy motion to compel discovery or to dismiss the case, accusing the government of withholding information – a copy is attached here.