The most important Park doctrine case in over forty years may be heading to the Supreme Court – but not if the federal government has its way. On April 12, 2017, the Acting Solicitor General of the United States filed his brief in opposition to the U.S. Supreme Court’s potential review of United States v. DeCoster and the Responsible Corporate Officer doctrine (“RCO doctrine”). The RCO doctrine, commonly referred to as the Park doctrine, permits the government to prosecute employees for corporate misconduct when they are in a “position of authority” and fail to prevent or correct a violation of the Food, Drug and Cosmetic Act (FDCA). Not only is it a strict liability offense, it is a vicarious liability offense and is rarely used by the Department of Justice (DOJ) to seek prison time for supervisory employees.
In the DeCosters’ January 10 Petition for Writ of Certiorari, the company’s executives contend that their convictions as responsible corporate officers are based on vicarious liability, because they did not have “actual knowledge” that their egg distribution company sold contaminated eggs. Therefore, they argue, federal precedent dictates that imprisonment violates due process. Anticipating the government’s argument that the DeCosters’ own negligence as responsible corporate officers is the source of their liability, the DeCosters state that Park doctrine liability has historically not been based on negligence by the responsible corporate officer. Rather, the argument continues, the Park doctrine is a strict liability offense based on the corporate officer’s position of authority and the presumption that the officer is in a position to prevent violations of the FDCA. A sentence of imprisonment for a strict liability violation, they maintain, violates due process. Accordingly, the DeCosters argue that the Eighth Circuit’s holding, affirming the conviction and sentencing of both executives to three months’ imprisonment, gravely expands the RCO doctrine and an “innocent” supervisor convicted of vicarious criminal liability should not face imprisonment. Secondarily, the DeCosters argue that the Park doctrine itself should be overruled because it “creates a nearly boundless risk of arbitrary enforcement” whereby it exposes “essentially anyone in the chain of command of a company, large or small, with at least nominal responsibility for a given activity” to criminal liability. The latter argument was advanced in the cert. petition even though it had not been raised in the lower courts.
The Acting Solicitor General, however, opposes the Supreme Court’s review and contends the DeCosters’ prison terms were based on their acts and omissions, not vicarious liability. The government cites United States v. Park to explain the prison terms are appropriate because the FDCA “imposes not only a positive duty to seek out and remedy violations when they occur but also, and primarily, a duty to implement measures that will insure that violations will not occur.”
If the Supreme Court reviews DeCoster, it will provide long-sought-after guidance for corporate executives in the food and drug industries. Additionally, the DOJ’s defense of the DeCosters’ conviction and sentencing, coupled with its ongoing focus on prosecuting individuals for corporate misconduct, both via the Yates Memo and recent guidance from the Fraud Section, which we highlighted in a prior blog post, suggests that the government’s interest in holding individuals accountable and liable, including those in the c-suite, is not waning in the new administration.