Thursday, July 28, 2016

Prison Sentences Upheld For Egg Company Executives Even Though Government Conceded They Had No Knowledge of Salmonella Contamination.


The defendant was an executive (in the capacity of a trustee of the trust that owned the company) of a large-scale egg production company in Iowa, and his son was the Chief Operating Officer of the company. They both pled guilty as “responsible corporate officers” to misdemeanor violations of 21 U.S.C. §331(a) (Food, Drug and Cosmetic Act (FDCA)) for unknowingly introducing eggs that had been adulterated with salmonella into interstate commerce from the beginning of 2010 until approximately August of 2010. They each were fined $100,000 and sentenced to three months in prison. They appealed their sentences as unconstitutional on the basis that they had no knowledge that the eggs at issue were contaminated at the time they were shipped. They also claimed that their sentences violated Due Process and the Eighth Amendment insomuch as the sentences were not proportional to their “crimes.” They also claimed that incarceration for a misdemeanor offense would violate substantive due process.

Trial Court Decision

The trial court determined that the poultry facilities were in poor condition, had not been appropriately cleaned, had the presence of rats and other rodents and frogs and, as a result, the defendant and his son either “knew or should have known” that additional salmonella testing was needed and that remedial and preventative measures were necessary to reduce the presence of salmonella.

Appellate Court Affirms, But Not Unanimously

A split panel of the appellate court agreed, finding that the evidence showed that the defendant and son were liable for negligently failing to prevent the salmonella outbreak and that FDCA provision at issue did not have a knowledge requirement. The majority of the appellate court panel also did not find a due process violation. The defendant and son claimed that because they did not personally commit wrongful acts, due process is violated when prison terms are imposed for vicarious liability felonies where the sentence of imprisonment is only for misdemeanors. However, the court held that vicarious liability was not involved, and that the FDCA provision holds a corporate officer accountable for failure to prevent or remedy “the conditions which gave rise to the charges against him.” Thus, the majority on the appellate court panel determined, the defendant and son were liable for negligently failing to prevent the salmonella outbreak. The court determined that the lack of criminal intent does not violate the Due Process Clause for a “public welfare offense” where the penalty is relatively small (the court believed it was), the defendant’s reputation was not “gravely” damaged (the majority believed that it was not) and congressional intent supported the penalty (the court believed it did). The court also determined that there was no Eighth Amendment violation because “helpless” consumers of eggs were involved. The court also found no procedural or substantive due process violation with respect to the sentences because the court believed that the facts showed that the defendant and son “had reason to suspect contamination” and should have taken action to address the problem at that time (even though law didn’t require it).

One judge wrote a stinging dissent.  This judge pointed out that the government stipulated at trial that its investigation did not identify any corporate personnel (including the defendant and son) who had any knowledge that eggs sold during the relevant timeframe were contaminated with salmonella. The dissent also noted that the government conceded that there was no legal requirement for the defendant or corporation to comply with stricter regulations during the timeframe in issue. As such, the convictions imposed and related sentences were based on wholly nonculpable conduct and there was no legal precedent supporting imprisonment in such a situation. The dissent noted that the corporation “immediately, and at great expense, voluntarily recalled hundreds of millions of shell eggs produced” at its facilities when first alerted to the problem. As such, according to the dissent, due process was violated and the sentences were unconstitutional. 


Historically, the key case involving this area of the law was decided by the U.S. Supreme Court in 1975.  In that case, United States v. Park, 421, U.S. 658 (1975), the Court allowed the Food and Drug Administration (FDA) to pierce the corporate veil to hold the chief executive officer of the food company strictly liable for unsanitary conditions at the company warehouse on the basis that the FDCA is a “public welfare” statute.  The Court’s decision freed-up federal prosecutors to go after jail sentences for the executives of food companies that have FDCA violations just by virtue of having an executive title.  Historically, however, federal prosecutors reserved the heavy hammer for only those executives who had notice of problems at their facility or facilities.  Under the current Administration, the prosecutorial position has changed to go after executives of food companies that were merely negligent or just on the basis of the strict liability nature of the FDCA.  For instance, in a recent case involving a peanut company executive that knew about the shipping of salmonella-contaminated peanuts, federal prosecutors sought a life sentence, but got 20 years for the executive. 

In the Iowa case, even though the FDCA provision is a strict liability provision, two of the judges thought that culpable intent should have to be proven in some fashion, and they believed the plaintiffs were negligent.  That could mean that there’s a good shot that the plaintiffs might ask the Supreme Court to take another look.  We’ll have to see.

The case is United States v. Decoster, No. 15-1890, 2016 U.S. App. LEXIS 12423 (8th Cir. Jul. 6, 2016).

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