July 14, 2017

Strict Liability for FDA Crimes? DOJ Suggests in Decoster That It Will Focus on Individuals with Personal Knowledge of Unlawful Conduct

7 min

Summer is the time for law professors and lawyers to put out their annual Supreme Court (Court) roundups. It is a time to review the Court's just-finished term, and to begin the ongoing process of analyzing its pronouncements. For food and drug lawyers, though, this year's Supreme Court term was notable more for what the Court did not do, than for what it did do.

The Court did not grant cert in DeCoster v. United States, nor did it accept an explicit invitation to revisit its 1975 decision in United States v. Park. The law with respect to strict criminal liability under the federal Food, Drug, and Cosmetic Act (FDCA) remains just as it has been for decades, as does the law with respect to the culpability of so-called responsible corporate officers. Perhaps a disappointment to those seeking to overturn Park, or at least to cabin it, the DeCoster case is nevertheless a vital guide for those who wish to follow its instruction. And that instruction is contained in the briefs that the U.S. Department of Justice (DOJ) filed in the Court of Appeals and in the Supreme Court.

The DOJ's briefs in the DeCoster appeal are priceless. Not since Park itself has the DOJ laid out, in a reliably formal way, the DOJ's views on what kind of conduct will prompt it to bring a strict liability criminal case under the FDCA. Sure, we've heard from DOJ officials over the years—myself, a former DOJ official, included—about what Park means and when the DOJ will use it. Now, with DeCoster, we have court filings, vetted and approved at the highest levels of the DOJ, to look to. And look you must.

Jack and Peter DeCoster, father and son, were the owner and chief operating officer, respectively, of Quality Egg, an Iowa egg producer. At one time, the Quality Egg facilities housed approximately five million hens. In the spring and summer of 2010, an estimated 56,000 people throughout the United States fell ill after eating Salmonella-tainted eggs traced to Quality Egg. An FDA investigation, which soon turned criminal, found the Quality Egg facilities to be plagued with filth: live and dead rodents, and frogs in the laying areas; manure piled to the rafters and pushing open doors; dark liquids seeping through concrete foundations.

The criminal investigation culminated in guilty pleas from, among others, the DeCosters. The DeCosters each pleaded guilty, as responsible corporate officers of Quality Egg, to misdemeanor violations of the FDCA. That is, the DeCosters admitted that, even if they did not pack or ship the contaminated eggs themselves or even if they did not know of the contamination of the eggs, they nonetheless were in positions of sufficient authority to prevent their sale. These violations do not contain a mens rea, or intent, element. A federal district court sentenced each of the DeCosters to three months in prison. The DeCosters appealed their sentences; the circuit court upheld those sentences. They then sought review by the Supreme Court, which denied to hear their case.

In examining the DeCosters' saga for clues to the government's thinking about criminal liability under the FDCA, one must recognize the limitations that the case presents. Note that the DeCosters did not challenge their convictions as responsible corporate officers under Park—they pleaded guilty after all. Their challenge was whether a defendant could be sentenced to prison if the underlying criminal violation did not contain an element of intent. Therefore, the boundaries of Park itself—which defines who is subject to criminal liability—were never directly at issue, nor were the particular elements of the FDCA violation. Whether there is an element of intent in the underlying crime—whether it is a strict liability crime, in other words—was also not a direct subject of the appeal. It was no surprise, then, that the Supreme Court declined to review the case, let alone Park or the strict liability nature of FDCA misdemeanors.

So why look at DeCoster at all? Because, in defending the case on appeal, the government said a great deal about criminal liability under the FDCA.

And what do we see when we examine what the government said? First, expect more prosecutions of responsible corporate officers. That is, expect to see more Park-like cases. The government won. Don't underestimate the importance of the validation that the courts gave in DeCoster to the government's enforcement efforts.

Second, don't be surprised if there is some pressure from Justice Department leadership to step up those efforts. Remember the Yates memo? It still applies. That memo—applicable department-wide—encourages prosecutors to use all the resources available to them to identify and prosecute individual executives in corporate fraud cases. The memo itself identified several challenges inherent in such cases, among them the facts that corporate decision-making is often "diffuse," making it difficult to prove that any individual had culpable criminal intent, and that high-level executives are often "insulated" from the day-to-day activities that give rise to the unlawful activity at issue. Curiously, the Yates memo did not mention strict criminal liability, or the responsible corporate officer doctrine. It is an important omission, the meaning of which remains open to debate. But if you look at some of the language in the DeCoster briefs, you'll see that the government describes criminal liability under the FDCA as meeting the very challenges that the Yates memo describes. Before the Supreme Court, the government noted that the FDCA has long imposed "legal duties not merely on the lower-level employees who physically produce, package, and ship a covered product, but also on corporate officials who control the production and distribution process." Under the FDCA, no matter how diffuse the decision-making may be, if you are in a position with the authority to prevent the unlawful conduct, then you are potentially liable for that conduct. And in its papers before the Court of Appeals, the government noted that the responsible corporate officer doctrine gives executives a "robust incentive" to seek out information about unlawful activity in their companies so that they do not "insulate themselves" from that conduct.

Third, even assuming stepped-up efforts, you should be surprised if you see a so-called pure Park case, one in which a corporate executive had no involvement in or knowledge about the criminal conduct. Again and again, throughout its papers, the government took great pains to emphasize that the DeCosters had actual knowledge of Salmonella contamination in their facilities, knew what steps to take to eradicate it, but chose not to take those steps. The government endeavored to make clear that it viewed Park as imposing liability directly—not vicariously—on the DeCosters for what they themselves did and did not do.

In that same vein, the government sounded an important note at the very end of its papers before the Supreme Court. It stated that the "fear that Park … will lead to widespread incarceration of innocent executives with no personal involvement in FDCA violations is unsubstantiated." That sentence is telling, and worthy of special attention. Fairly read, the government seems to be saying that, as past is prologue, it will bring Park prosecutions only against executives who had "personal involvement" in the unlawful conduct. Of course, there are no promises here. But the government is not signaling that it intends to push the boundaries of Park liability.

The DeCoster case is an important data point in any analysis of the Park doctrine. Imperfect as it may be, the case is a must-have guide for those who wish to understand the government's thinking with respect to criminal liability under the FDCA.

* * * * * * * * * *

Michael Blume joined Venable in June 2017, after serving as Director of the Consumer Protection Branch at the U.S. Department of Justice for several years. During his tenure, he prioritized financial fraud, food safety, and mass marketing cases leading to precedent-setting prosecutions, and, among other matters, supervised the DeCoster case.