The United States Court of Appeals for the Eighth Circuit recently upheld the sentences of two corporate executives at an Iowa egg production company who were each sentenced to three months in prison, and fined $100,000 for their role in a 2010 salmonella outbreak that affected as many as 56,000 people.

Facts of the Case

The case United States of America v. DeCoster, No. 15-1890, 2016 WL 3615684 (8th Cir. Jul. 6, 2016) focused on Jack DeCoster, owner of Quality Egg, LLC, and his son Peter DeCoster, the company's COO, who operated six farms with 73 barns and five million egg laying hens, along with several processing plants. Beginning in 2006, and with increasing frequency through 2010, environmental tests at the Iowa facilities and of the hens came back positive for salmonella. In April 2009, Quality Egg was notified of a restaurant in Minnesota that had a salmonella outbreak. In response to this outbreak, Quality Egg performed one salmonella test on its eggs, but the test came back negative. Quality Egg then hired two consultants, who recommended certain measures be implemented to eliminate the salmonella, but these measures were never successfully instituted. Despite continuing to receive positive environmental and hen tests for salmonella at its facilities, Quality Egg performed a single test for salmonella on its eggs, and did not otherwise test or divert its eggs from the market.

In August 2010, federal and state authorities concluded that a salmonella outbreak that had affected 56,000 people in the U.S. had originated at Quality Egg's facilities. During its inspection, FDA found live and dead rodents and frogs throughout the Iowa facilities, one building had manure piled to the rafters, and employees were not wearing protective clothing or properly sanitizing the equipment. Tests showed that the company's eggs tested positive for salmonella at a rate 39 times higher than the national rate. FDA ordered Quality Egg to euthanize all of its hens and repair and disinfect its facilities.

A criminal investigation revealed that Quality Egg had previously falsified food safety records, lied to auditors about sanitation practices, falsely claimed that it had performed flock testing, bribed a USDA official to release eggs that were substandard, and altered the packing dates on eggs and sold them into interstate commerce. One employee was prepared to testify that Jack DeCoster had reprimanded him for not concealing a pallet of eggs from a health inspector, and it was determined that Peter DeCoster had made inaccurate statements to Walmart about Quality Egg's food safety and sanitation practices.

Legal Proceedings

Quality Egg pleaded guilty to a felony violation of 18 U.S.C. § 201(b)(1) for bribing a USDA inspector, and felony and misdemeanor violations of 21 U.S.C. § 331(a) for introducing misbranded and adulterated eggs into interstate commerce with intent to defraud and mislead.

Jack and Peter DeCoster each pled guilty to misdemeanor violations of 21 U.S.C. § 331(a) as responsible corporate officers under the Food Drug & Cosmetic Act (FDCA). In their plea agreements, the DeCosters stated that they had not known that the eggs were contaminated at the time of shipment, but stipulated that "they were in positions of sufficient authority to detect, prevent, and correct the sale of contaminated eggs had they known about the contamination." The district court judge imposed fines of $100,000 and sentenced Jack and Peter DeCoster to each serve three months in prison. The judge ruled that, even though the DeCosters did not have actual knowledge that the eggs they distributed had salmonella, Quality Egg's sanitation practices were "egregious," they willfully ignored previous indications of salmonella, and they had "created a work environment where employees not only felt comfortable disregarding regulations and bribing USDA officials, but may have even felt pressure to do so."

The DeCosters appealed the prison terms, arguing that their prison sentences under 21 U.S.C. § 333(a)(1) were unconstitutional, in essence, because there was no "mens rea," (i.e., they did not know specifically that the eggs they were releasing to the consuming public were tainted with salmonella). However, the Court of Appeals upheld the prison terms, relying onUnited States v. Park, 421 U.S. 658 (1975), a Supreme Court case which held that, under the FDCA, "individuals who by reason of their position in the corporation have the responsibility and authority" to prevent violations of the FDCA and fail to do so may be held criminally liable as "responsible corporate agents." The court ruled that the FDCA "punishes neglect where the law requires care, or inaction where it imposes a duty" because the "public interest in the purity of its food is so great as to warrant the highest standard of care on its distributors."

Even though the DeCosters did not have specific knowledge beforehand that the eggs that were the source of the salmonella outbreak were tainted, they knew the conditions on the Iowa farms were unsanitary, that there were repeated positive environmental test results for salmonella at their facilities, and they "knew or should have known" that additional salmonella testing needed to be performed on the eggs before they were distributed to consumers. Thus, the DeCosters' sentences were upheld based on their own inaction.

Takeaway

The facts in this case are rather extreme, with a salmonella outbreak that affected 56,000 people. The court noted one child was hospitalized in an ICU for eight days. Food industry executives with authority over safety and sanitation practices need to be sure they are (and are seen to be) responsive to such issues when they arise, and should be advised to document their responses in case of future evidentiary need.