From Peanuts to Prison: Criminal Liability for Food Contamination

Size: px

Start display at page:

Download "From Peanuts to Prison: Criminal Liability for Food Contamination"

Lora Bond
6 years ago
Views:

1 From Peanuts to Prison: Criminal Liability for Food Contamination

2 Panel* Michael Blume Director of the Consumer Protection Branch Department of Justice Alyssa Rebensdorf Co-moderator Counsel Faegre Baker Daniels Peter Deegan Assistant U.S. Attorney Northern District of Iowa Nick Klinefeldt Co-moderator Partner Faegre Baker Daniels Jann Eichlersmith Assistant General Counsel The Scouler Company * The thoughts and opinions expressed here are those of the individual panelists and do not necessarily reflect the views of their employers.

3 Statutory Basis for Criminal Prosecutions: Federal Food, Drug and Cosmetic Act 21 U.S.C. 331 Prohibited acts FDCA outlines dozens of prohibited acts subject to prosecution Most common provision in criminal prosecutions: 21 U.S.C. 331(a) The introduction or delivery for introduction into interstate commerce of any food, drug, device, tobacco product, or cosmetic that is adulterated or misbranded.

4 Statutory Basis for Criminal Prosecutions: Federal Food, Drug and Cosmetic Act 21 U.S.C. 333(a)(1) Any person who violates a provision of [21 U.S.C. 331 ( prohibited acts )] shall be imprisoned for not more than one year or fined... or both. NOTE: No knowledge or intent requirement Compare to 21 U.S.C. 333(a)(2) if any person... commits such a violation with the intent to defraud or mislead, such person shall be imprisoned for not more than three years or fined... or both.

5 Strict Liability and the Birth of the Park Doctrine: United States v. Dotterweich The prosecution to which Dotterweich was subjected is based on a now familiar type of legislation whereby penalties serve as effective means of regulation. Such legislation dispenses with the conventional requirement for criminal conduct awareness of some wrongdoing. In the interest of the larger good it puts the burden of acting at hazard upon a person otherwise innocent but standing in responsible relation to a public danger. United States v. Dotterweich 320 U.S. 277, (1943)

6 Strict Liability and the Birth of the Park Doctrine: United States v. Park

7 Strict Liability and the Birth of the Park Doctrine: United States v. Park in providing sanctions which reach and touch the individuals who execute the corporation mission and this is by no means necessarily confined to a single corporate agent or employee the Act 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. United States v. Park 421 U.S. 658, 672 (1975)

8 Consequences of Strict Liability Misdemeanor Convictions: Statutory Penalties Fines 21 U.S.C. 333(a) and 18 U.S.C (1984) allow: $100,000 per count for individuals ($250,000 if death occurs) $200,000 per count for corporations ($500,000 if death occurs) Fines can be increased to up to double the amount of defendants pecuniary gain or victims pecuniary loss Loss of Liberty FDCA provides for jail time up to a year Alternatives: Home detention, probation

Recent Prosecutions for FDCA Violations:

commerce Sentenced to 5 years probation, 6

9 Recent Prosecutions for FDCA Violations: Jensen Farms Eric and Ryan Jensen (2013) Pled guilty to 6 misdemeanor counts of introducing adulterated cantaloupe into interstate commerce Sentenced to 5 years probation, 6 months home detention $150,000 restitution Jensen Farms is bankrupt

10 Recent Prosecutions for FDCA Violations: Peanut Corporation of America Stewart Parnell (2015) Convicted of 67 counts of mail and wire fraud, conspiracy, felony shipment of adulterated products, obstruction of justice Sentenced to 28 years incarceration (Parnell is 61 y.o.) Peanut Corporation of America is bankrupt

Recent Prosecutions for FDCA Violations: ConAgra Foods ConAgra (2015) ConAgra Grocery Products Company (a ConAgra Foods subsidiary) pled guilty to one misdemeanor count

11 Recent Prosecutions for FDCA Violations: ConAgra Foods ConAgra (2015) ConAgra Grocery Products Company (a ConAgra Foods subsidiary) pled guilty to one misdemeanor count of introducing adulterated foods into interstate commerce No individuals charged Company agreed to pay $8.01 million fine, forfeit $3.2 million in assets Sentencing pending

12 A Prosecutor s Perspective: United States v. DeCoster

13 United States v. DeCoster June 3, 2014 Plea Hearing Jack DeCoster, Peter DeCoster, and Quality Egg, LLC pled guilty to misdemeanor distribution of eggs contaminated with Salmonella Enteritiditis Corporation also pled guilty to bribery of a USDA Inspector and felony distribution of misbranded eggs with false dates

14 United States v. DeCoster April 13, 2015 Sentencing Jack DeCoster and Peter DeCoster were sentenced to 3 months imprisonment and fined $100,000 each Quality Egg, LLC was ordered to pay a $6.79 million fine and forfeit $10,000 All defendants were ordered to pay victim s restitution in the total amount of $83,008.19

15 United States v. DeCoster Appeal arguments: Their custodial sentences are unconstitutional; and In any event, the sentences imposed were unreasonable and should be reversed

16 FDCA Violations and Investigations What conduct or issues cause DOJ to investigate? What are the different ways DOJ initiates an investigation? How do companies help/hurt themselves during an investigation? Does the government differentiate between good companies and something else? Do even good companies have blind spots? Are there certain common mistakes that the government sees in the food industry? What role can corporate counsel play?

17 How Can Companies, CEO s and Management Team Protect Themselves? Be a company where the culture demands rigorous compliance with food safety standards and regulations Promote food safety at the C-suite and board level, not just the Quality department Take notice of each and every food safety issue personally and promptly remedy Create a clear food safety reporting process Document every food safety issue and response Do not drive compliance simply by auditing Retain qualified outside food safety experts (though counsel) before and after a recall to help you identify your blind spots

18 How Can Companies, CEO s and Management Team Protect Themselves? Listen carefully for the sound of a whistle blowing Listen to customers, suppliers, distributors, licensees, franchisees and others in your supply chain for signs of quality issues Conduct mock inspections and mock recalls Earned the respect and trust of regulators before a recall Publicly express your remorse, and mean it Be prepared for the need to retain separate counsel for company and individuals

19 Questions* Michael Blume Director of the Consumer Protection Branch Department of Justice Alyssa Rebensdorf Co-moderator Counsel Faegre Baker Daniels Peter Deegan Assistant U.S. Attorney Northern District of Iowa Nick Klinefeldt Co-moderator Partner Faegre Baker Daniels Jann Eichlersmith Assistant General Counsel The Scouler Company * The thoughts and opinions expressed here are those of the individual panelists and do not necessarily reflect the views of their employers.

THE PARK DOCTRINE AND PROSECUTION OF MISDEMEANOR VIOLATIONS UNDER THE FEDERAL FOOD, DRUG, AND COSMETIC ACT (OR FARMER BILL GOES TO JAIL)

THE PARK DOCTRINE AND PROSECUTION OF MISDEMEANOR VIOLATIONS UNDER THE FEDERAL FOOD, DRUG, AND COSMETIC ACT (OR FARMER BILL GOES TO JAIL) DANIEL G. GURWITZ Atlas, Hall & Rodriguez, LLP McAllen, Texas 78501