03 Aug Food Contamination Part II: Potential Personal Criminal Liability
The last issue of Digital Fruit provided an overview of what can be a complicated area of the law, namely strict products liability as it applies to food products. The prior discussion centered on civil liability for money damages at the business organization or entity level. Part II, as provided below, will discuss the potential extent of personal criminal liability, and more specifically, the sentencing of jail time, in food contamination cases.
In this important developing area of law, the courts and regulatory authorities are still struggling with and deciding the possible extent of entity officer personal criminal liability and, more specifically, the sentencing of jail time in products liability cases involving food contamination. This issue becomes more complex in situations where the officer had no actual personal knowledge of or involvement in the contamination.
The DeCoster Decision
Except in limited circumstances, such as environmental cases, criminal liability and jail sentencing generally have not been imposed against entity officers. However, some courts are starting to impose liability, at least until the U.S. Supreme Court provides additional guidance. In U.S. v. DeCoster, the Court of Appeals for the Eighth Circuit upheld officer personal criminal liability and the sentencing of jail time (three months) for a misdemeanor violation under the Food Drug & Cosmetic Act (“FDCA”). A petition for writ of certiorari has been filed with the U.S. Supreme Court requesting the Court to review and overturn the DeCoster decision. The decision remains illustrative as an example of a court that has imposed criminal liability against entity officers. However, it is unknown whether the Supreme Court will accept review or will overturn the jail sentence.
In DeCoster, the two officer defendants pleaded guilty as responsible corporate officers to the misdemeanor violation of Section 331(a) under the FDCA. This section provides that “the following acts and the causing thereof are prohibited: The introduction or delivery for introduction into interstate commerce of any food, drug, device, tobacco product, or cosmetic that is adulterated or misbranded.” The defendants pleaded guilty to the misdemeanor violation for introducing eggs that had been adulterated with salmonella. The defendants were then sentenced to three months of jail time by the district court under the FDCA, which provides that “any person who violates a provision of [Section] 331 of this title… shall be imprisoned for not more than one year or fined not more than $1,000, or both.” In hindsight we can all argue whether it was strategically smart to plead guilty to misdemeanor violation of Section 331. However, the fact remains that neither defendant had direct knowledge that the eggs in question were contaminated, and both did not have any direct involvement in the contamination.
Although the District Court determined that nothing in the record evidenced that the defendants had actual knowledge that the eggs sold were infected with salmonella, the record demonstrated: (1) their safety and sanitation procedures were egregious; (2) they ignored prior positive salmonella environmental test results and the wrongful acts of employees; and (3) the record supported the inference that the DeCosters 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.” As a result, the District Court concluded that this was not a case involving an unaware corporate executive.
On appeal to the Eighth Circuit, the DeCosters argued that their prison sentences and the sentencing statute under the FDCA are unconstitutional, and that their prison sentences were procedurally and substantively unreasonable. In affirming the sentencing of jail time, the Eighth Circuit held the following:
- Under the FDCA responsible corporate officer concept, individuals who by reason of their position in the corporation have the responsibility and authority to take necessary measures to prevent or remedy violations of the FDCA, and upon failure to do so, may be held criminally liable as “responsible corporate agents,” regardless of whether they were aware of or intended to cause the violation. The FDCA punishes neglect where the law requires care, and inaction where it imposes a duty, for according to Congress, the “public interest in the purity of its food is so great as to warrant the imposition of the highest standard of care on distributors.” A corporate officer may avoid liability under this doctrine by showing that he was “powerless to prevent or correct the violation.” DeCoster, 828 F.3d at 632.
- Officer liability under the FDCA is not equivalent to vicarious liability. Under vicarious liability, a supervisory party is held liable “for the actionable conduct of a subordinate… based on the relationship between the two parties.” Under the FDCA, in contrast, a corporate officer is held accountable not for the acts or omissions of others, but rather for his own failure to prevent or remedy “the conditions which gave rise to the charges against him.” Thus, “some measure of blameworthiness” is “import[ed]” directly to the corporate officer. Id.
- As the owner of the offending entity, defendant Jack DeCoster decided which barns were subject to salmonella environmental testing, and as chief operating officer, defendant Peter DeCoster coordinated many of the company’s salmonella prevention and rodent control efforts. Neither of the DeCosters claim to have been “powerless” to prevent Quality Egg from violating the FDCA. Despite their familiarity with the conditions in the facilities, they failed to take sufficient measures to improve them. In light of this, the district court reasonably found that: (1) “the defendants ‘knew or should have known,’ of the risks posed by the insanitary conditions at Quality Egg in Iowa; (2) ‘knew or should have known’ that additional testing needed to be performed before the suspected shell eggs were distributed to consumers, and (3) ‘knew or should have known’ of proper remedial and preventative measures to reduce the presence of [salmonella].” Id. at 633.
Although the facts in DeCoster present a more extreme situation of alleged failure to act, the fact is that whether a corporate officer defendant failed to implement and oversee sufficient processes and internal controls to adequately ensure food safety is a determination that would be made separately in hindsight in each case depending on the facts and circumstances of that case as viewed by the judge or jury trier of fact. Due to the fact-intensive nature of food contamination suits, courts have so far not established a clear standard for determining officer entity liability. Thus, you can reasonably expect determinations about the adequacy of safety processes and internal controls will vary from case-to-case based on both the facts and on the judgment of the trier of fact.