Washington and Lee Law Review Volume 74 | Issue 1 Article 7 1-1-2017 Commercial Bribery: Choice and Measurement Within a Remedies Smorgasbord Doug Rendleman Washington and Lee University School of Law, [email protected] Follow this and additional works at: https://scholarlycommons.law.wlu.edu/wlulr Part of the Legal Remedies Commons Recommended Citation Doug Rendleman, Commercial Bribery: Choice and Measurement Within a Remedies Smorgasbord, 74 Wash. & Lee L. Rev. 369 (2017), https://scholarlycommons.law.wlu.edu/wlulr/vol74/iss1/7 This Article is brought to you for free and open access by the Washington and Lee Law Review at Washington & Lee University School of Law Scholarly Commons. It has been accepted for inclusion in Washington and Lee Law Review by an authorized editor of Washington & Lee University School of Law Scholarly Commons. For more information, please contact [email protected]. Commercial Bribery: Choice and Measurement Within a Remedies Smorgasbord Doug Rendleman∗ Abstract Searching for the most suitable money remedy for a simple commercial bribe promptly lands a lawyer, judge, professor, student, or researcher in a remedial smorgasbord. De- emphasizing injunctions, commercial bribery offers a spectrum of monetary remedies. The plaintiff has two defendants, the briber and the bribee. He has two major remedies, damages and restitution. The overlapping policies consist of compensating the plaintiff, preventing the defendants’ unjust enrichment, deterring the defendants and others, and punishing the defendants. Courts implement these policies with compensatory damages, restitution, and punitive damages. A bribe can be returned as damages or restitution, a significant distinction. Punishment points the court’s remedial compass at punitive damages. The law distinguishes between legal restitution and equitable restitution. Equitable restitution distinguishes between constructive trust and accounting-disgorgement; if a defendant has other creditors, the distinction takes center stage. Recovery from the briber adds the possibility of duplication. The possibilities of confusion and excess lurk in the wings. Bribery is a private law-public law hybrid; commercial bribery is on the private law side. Commercial bribery plays a role in three recent Restatements; Employment, Restitution, and ∗ Robert E.R. Huntley Professor of Law, Washington and Lee University School of Law. Thanks to research assistants Trista Bishop-Watt and Christina Rossi. Professor Andrew Gold’s leads deepened the analysis. Earlier drafts benefitted from presentation at conferences, Obligations VII, Hong Kong and the Remedies Discussion Forum, Universite Paris Dauphine. Thanks for support from the Frances Lewis Law Center. 369 370 74 WASH. & LEE L. REV. 369 (2017) Agency. Courts in the United States cite persuasive authority from other common-law jurisdictions to fill gaps in local positive law. Domestic courts may learn from others about alternative solutions to shared problems. Some differences, for example, in jury trial, statutes, punitive damages and equitable restitution, frustrate complete unification. Stating the courts’ choice and measurement alternatives proves to be a daunting task. In addition, this Article is generous with advice about the routes lawyers and courts should take. This Article adduces legal theory in an effort to clarify the better choices. Plaintiffs’ lawyers have a wide range of possibilities. The courts’ demanding duty is to align policies, remedies rules, and solutions. The results turn out to be challenging at best, often problematic. The risk of inaccuracy and over-correction is pervasive. The search has not found a substitute for human judgment. Principles of confinement, understanding of alternatives, and careful contextual analysis will improve courts’ decision making. Table of Contents I. Introduction .....................................................................371 A. Gift or Bribe? .............................................................372 B. Civil and Criminal Remedies ....................................374 II. Civil Remedies: The Employer Sues the Employee ..........................................................................381 A. Breach of Duty? .........................................................383 B. Salary Forfeiture .......................................................389 C. Compensatory Damages ............................................392 D. Restitution .................................................................394 E. Damages and Legal Restitution ................................400 F. Equitable Restitution ................................................405 1. Constructive Trust ...............................................405 2. Accounting-Disgorgement ...................................410 3. Constructive Trust or Accounting? ......................416 III. Civil Remedies: The Employer Sues the Briber ..............427 A. The Briber’s Duty? .....................................................428 B. Compensatory Damages ............................................429 COMMERCIAL BRIBERY 371 C. Unjust Enrichment, Restitution, and Disgorgement ............................................................ 431 IV. Loose Ends ....................................................................... 437 V. Double Recovery, Punitive Damages, and Multiple Damages ........................................................... 438 A. Employer Sues Both the Briber and the Employee ................................................................... 438 B. Punitive Damages ..................................................... 442 C. Multiplied Recovery .................................................. 445 VI. Principled Choice and Measurement Decisions ............. 449 VII. Conclusion ....................................................................... 462 I. Introduction This Article will examine civil courts’ money remedies to deal with private commercial bribery through the lens of the following hypothetical. Sam Sailer “gives” Ben Beyer’s purchasing agent, Alice Aggie, a sound system worth $8,000. Sailer’s “gratuity” facilitates Aggie’s decision to buy Sailer’s speakers to sell in Beyer’s NoisiStan Stores. Beyer learns about Aggie’s new speakers and consults a lawyer. My Remedies course in the spring of 2014 spent two class sessions on commercial bribery.1 The students began the course thinking of Remedies law as having separate pigeonholes named contract and tort, law and equity, damages and restitution; overall, they were baffled during our commercial bribery sessions. My experience with commercial bribery in the classroom drew me to develop further the subject that David Mills and Robert Weisberg refer to as “a fascinatingly under- explored area.”2 1. See DOUG RENDLEMAN & CAPRICE ROBERTS, REMEDIES 857–63 (8th ed. 2011) (supplying the hypothetical for this article and providing a rough first draft for it). 2. David Mills & Robert Weisberg, Corrupting the Harm Requirement in White-Collar Crime, 60 STAN. L. REV. 1371, 1406 (2008). 372 74 WASH. & LEE L. REV. 369 (2017) A. Gift or Bribe? A bribe is a transfer that often takes the ostensible form of a gift. In property law, the elements of a gift are the donor’s intent to give plus a transfer to the donee; a gift does not require an exchange of consideration.3 But a bribe concealed as a gift involves the parties’ surreptitious exchange of consideration whereby the bribe recipient agrees to “earn” the transfer.4 In this shadow world, we inquire whether Sailer and Aggie created a corrupt bargain. Was Sailer’s transfer to Aggie a gift that stemmed from his friendship and altruism? Or was it a bribe based on his self-interest? Was there a quid pro quo, Aggie’s promise or a wink and nod? Standing alone, the parties’ consideration may not be illegal on either side; but the addition of the bribe element is an illegal performance.5 Some employment-related transfers to agents are not bribes.6 A “gift” to an employee that her employer knows about— a tip, for example—is not a bribe.7 One rule of thumb is: “If you can eat it and drink it in a single sitting, it’s not a bribe.”8 In the grey area between a bribe and a gift, many “gifts” are based less on the “donor’s” altruism than on his interest in 3. See WALTER B. RAUSCHENBUSH, BROWN ON PERSONAL PROPERTY § 7.1 (3d ed. 1975) (“A gift may be defined as a voluntary transfer of his property by one to another without any consideration of compensation therefor.” (quoting Gray v. Barton, 55 N.Y. 68, 72 (1873))). 4. See United States v. Sun-Diamond Growers of Cal., 526 U.S. 398, 404– 05 (1999) (“[F]or bribery there must be a quid pro quo—a specific intent to give or receive something of value in exchange for an . act.”). 5. See GEORGE PALMER, THE LAW OF RESTITUTION §§ 8.5, 8.5 nn.6–7 (1978) [hereinafter PALMER, THE LAW OF RESTITUTION] (describing one form of illegal contract as where two parties agree to a transaction that, in and of itself, is illegal (citing Oscanyon v. Arms Co., 103 U.S. 261, 267 (1880))). 6. RESTATEMENT (SECOND) OF AGENCY § 388 cmt. b, illus. 5 (AM. LAW INST. 1958). 7. See Jaclyn, Inc. v. Edison Bros. Stores, 406 A.2d 474, 486, 491–92 (N.J. Super. Ct. Law Div. 1979) (stating that there is “no fraud perpetrated” where the employer is aware of the bonus, gift, or commission and consummates an agreement for business anyway). 8. Stephanie Francis Ward, Want to Be a Federal Judge by 35? 9th Circuit’s Alexander Kozinski Shares Some Tips, A.B.A. J. (July 20, 2015, 12:11 PM), http://www.abajournal.com/news/article/want_to_be_a_federal_judge_