## Facts

- Casey’s General Stores, Inc. and Hy-Vee, Inc. operated retail stores in Oskaloosa, Iowa.
- On October 26, 1996, police conducted an underage “sting” operation in which minors purchased alcoholic beverages at both stores.
- Store cashiers completed the sales without requesting identification or otherwise determining the purchasers’ ages.
- The sales violated the corporations’ internal policies designed to prevent alcohol sales to minors.
- The State charged the corporations (not the cashiers) with a simple misdemeanor for selling alcoholic beverages to an underage person under Iowa Code §§ 123.47 and 123.49(2)(h) (1995).
- After a bench trial, both corporations were convicted; the district court (appellate capacity) affirmed, and the Iowa Supreme Court granted discretionary review.

## Issues

1. Whether Iowa Code §§ 123.47 and 123.49(2)(h) implicitly impose vicarious criminal liability on corporate employers for employees’ unauthorized alcohol sales to minors.
2. Whether Iowa Code § 703.5(1) imposes corporate criminal liability on these facts absent proof that a high managerial agent authorized, requested, commanded, or ratified the unlawful sales.

## Decision

- The Iowa Supreme Court reversed both convictions and remanded with instructions to dismiss the charges.
- The court held that §§ 123.47 and 123.49(2)(h) do not, by text or necessary implication, create vicarious criminal liability for corporations based solely on employee misconduct.
- The court held that § 703.5(1) did not apply because the record lacked evidence that a corporate high managerial agent authorized, requested, commanded, or ratified the sales.
- Because the State conceded there was no proof of direct corporate culpability and failed to establish a statutory basis for vicarious criminal liability, the evidence was insufficient as a matter of law.

## Legal Principles

- Penal statutes are strictly construed; vicarious corporate criminal liability will not be inferred without a clear legislative statement.
- When a criminal statute includes a knowledge or fault element, liability generally attaches to the actor who commits the prohibited conduct unless the legislature extends liability to employers.
- Iowa Code § 703.5(1) does not make corporations automatic guarantors of employees’ criminal acts; corporate liability requires proof of authorization, request, command, or ratification by a high managerial agent (or other statutory conditions for corporate attribution).
- Legislative inclusion of vicarious liability in related civil provisions can weigh against implying vicarious liability in parallel criminal provisions.

## Conclusion

The court set aside the corporations’ convictions because neither the alcohol-control statutes nor Iowa’s general corporate-liability statute supported criminal punishment of an employer for an employee’s unauthorized sale to minors without proof of managerial authorization or ratification.


State v. Casey’s Gen. Stores, Inc., 587 N.W.2d 599 (Iowa 1998)