Last Thursday, July 7, 2016, a divided panel of the U.S. Court of Appeals for the 8th Circuit upheld a three-month jail sentence against Austin “Jack” DeCoster and his son Peter, the CEO and COO respectively of Quality Egg LLC. The CDC determined that Quality Egg was responsible for a salmonella outbreak that ultimately sickened thousands of Americans. Both men pled guilty to unknowingly introducing adulterated food into interstate commerce, a misdemeanor violation of the Food, Drug and Cosmetic Act (the “FD&CA”)
DeCoster both illustrates the power of the government’s prosecutorial reach in this area, and provides some hope that the Supreme Court may change the law to rein in excessive prosecutorial zeal where Congress has not. The FD&CA remains essentially a strict liability criminal statute. The seminal food safety case of United States v. Park permits prosecutors to seek, and courts to impose, jail sentences against food and drug executives who did not know about safety problems at their company, did not participate in the problematic operations but instead merely supervised them, and were not even negligent for failing to prevent problems. And DOJ’s renewed focus on prosecuting individual executives in cases of supposed corporate wrongdoing raises the stakes.
Park was less troublesome when the government used it judiciously. But in 2011, the FDA changed its procedures manual to permit field agents to recommend criminal investigations and prosecutions of responsible executives who have no knowledge of, and did not personally participate in, the adulteration. Before that change, prosecution was reserved for executives who had some warning or knowledge about specific unsanitary conditions. The 2011 policy embraced more aggressive enforcement under the Park doctrine, dramatically expanding the range of prosecutable cases from knowing violations to negligent and even strict liability offenses. More recently, we’ve noted the government’s efforts to obtain decades-long sentences in other, more aggravated food safety prosecutions , as well as the increased investigative and enforcement resources the government is devoting to the food and beverage industry in areas besides food safety.
But DeCoster also provides a few reasons to hope that the Supreme Court will revise or clarify “responsible corporate officer” liability under Park. Two of the three panel judges interpreted Park and the FD&CA as requiring the government to prove negligence or more culpable intent even in misdemeanor cases. That’s an unorthodox reading – the consensus view is that Park permits strict criminal liability against executives for failure to prevent contaminated food from being distributed, even if his or her conduct was not negligent or otherwise blameworthy.
We can expect the DeCosters to seek Supreme Court review, as they were represented by prominent appellate counsel in the Eighth Circuit, and enjoyed the benefit of multiple amici filings from industry groups. We can also expect the United States to oppose certiorari because the circuits are not truly split: the district court and two of the three Eighth Circuit judges believed the DeCosters were indeed negligent, so the unorthodox reading of Park had no effect on the outcome even though shared by a panel majority.
The recent news that major criminal justice reform bills have stalled in both Houses of Congress may add wind to the DeCosters’ sails. Mens rea reform was a sticking point in criminal justice reform efforts, as industry-friendly groups sought Congressional repudiation of regulatory crimes that required no proof of culpability, like the Park doctrine. Congress’s unwillingness to address mens rea reform comprehensively may influence the Court to reexamine specific doctrines that enable overreach. And the Court has proved increasingly receptive to arguments that prosecutorial discretion cannot be trusted to ensure broad criminal laws are enforced only against blameworthy individuals.
DeCoster remains a case to watch for the industry. In the meantime, we continue to recommend that food and beverage companies prepare in advance to mitigate the risk of adulteration, and maximize the chances of quick remediation if it happens.