Increased Criminal Prosecutions: An Additional Cost of Doing Business
By Kathy Hardee, Esq.
This country’s increased focus on healthy eating and the safety of its food supply is by all measures a positive change in attitude. As exemplified by the purposes behind the Food Safety Modernization Act (FSMA), we are becoming a country that is proactive about safety and health rather than simply reactive after the damage is done. This approach will reduce injuries and save lives, as well as allowing all of us to be healthier. But as with most things, change comes with struggles and growing pains. The pendulum of safe food is swinging further than most had anticipated. No one quite knows where that pendulum will stop or who will be knocked down as it swings through.
FSMA has increased standards and requirements for all facilities that fall within its purview. It also gives the U.S. Food and Drug Administration (FDA) increased authority to review a facility’s records, additional detention authority and the ability to force mandatory recalls. The FDA’s Office of Criminal Investigation has always had the ability to refer cases to the Department of Justice (DOJ) when it deemed appropriate. But it now appears that the DOJ’s Consumer Protection Branch has jumped on the bandwagon and announced that food safety has become one of its top new priorities. In December, it announced that it would not simply wait for an FDA referral or a whistleblower call but would instead investigate and pursue those it deems threatening to the safety of foods in commerce. While the DOJ will work with FDA in its investigations of food adulteration, it will initiate the process more frequently on its own initiative.
In comments made by Deputy Assistant Attorney General Johnathan Olin at a December 2015 Food & Drug Law Institute seminar, he pledged that the DOJ will not simply wait for adulterated food cases to come across its desk. Olin emphasized that the risk to consumers was too high:
“So that is why, working closely with our partners at the FDA, we will bring civil cases seeking to stop unsafe practices and to require appropriate compliance procedures.
And, depending on the facts of each case, we have and will continue to bring criminal prosecutions. Earlier this year, for example, a subsidiary of ConAgra, one of the largest food corporations in the country, pleaded guilty to an FDCA [Federal Food, Drug, and Cosmetic Act] misdemeanor charge in connection with a salmonella outbreak traced to contaminated peanut butter and agreed to pay $11.2 million in fines and forfeiture—the largest criminal amount ever in a food safety case.
And where the conduct we uncover goes beyond insanitary conditions or other FDCA violations to outright fraud, we will not hesitate to use every available tool to hold accountable those who put their own profits over the safety of the American consumer.”
The DOJ has committed that its enforcement efforts must be more than mere monetary fines that may be viewed by companies as simply the cost of doing business and, in some cases, less costly than the remedy. While fines are certainly a remedy still on the table, other civil and criminal consequences are becoming more frequent. The resolution of a civil action can occur via a consent decree that may include an admission of certain facts, an injunction precluding certain conduct, including the ability of the facility to do business at all and very significant monetary fines. The remedy more frequently being considered in cases involving repeated and flagrant violations and/or those causing more significant harm is the filing of criminal actions. Charges can include fraud, conspiracy, mail and wire fraud charges, obstruction, money laundering, securities fraud and the Racketeer Influenced and Corrupt Organizations Act of 1970.
There is also a commitment by the DOJ to hold not just companies criminally liable but to pursue those individuals responsible for the company’s actions. The DOJ announced last fall that it believed that the most effective way to ensure corporate accountability in the future was to hold the individuals behind the corporations individually accountable for unlawful conduct. Corporations will now be hard pressed to resolve matters with the DOJ until after all individuals and their responsibilities have been disclosed, all facts have been discovered and a new acceptable compliance plan has been agreed to. All of this is in addition to the monetary fines that will likely still be assessed.
In those cases that cause significant injury or death to consumers or cases that reveal repeated violations of safety standards, the DOJ will prosecute the company but will also particularly look for those individuals responsible for preventing such events from happening in the first place. One example of such action was the prosecution individuals deemed responsible for the Peanut Corporation of America (PCA) at the time it was linked to a Salmonella outbreak that resulted in more than 700 reported infections and 9 deaths. According to the DOJ at trial, PCA officials lied to their customers, fabricated certificates of analysis and ignored test results indicating that their peanut products might be contaminated. CEO Stewart Parnnell was convicted by a jury of 72 counts of fraud, conspiracy and the introduction of adulterated foods into interstate commerce. Parnell received a 28-year sentence, the longest ever imposed in a food safety case. Parnell’s brother and food broker, Michael Parnell, was sentenced to 20 years, and the plant’s quality assurance manager, Mary Wilkerson, was sentenced to 5 years.
It has been reported that the DOJ is currently investigating the Blue Bell Listeria outbreak. Although the recall is complete, the pathogen eliminated and the product is beginning distribution again, the DOJ is investigating whether management was reckless or committed some other type of wrongdoing in its handling of the outbreak or in monitoring the conditions of its plants. This continued interest is apparently fueled by a finding by the U.S. Centers for Disease Control and Prevention that the strain of Listeria associated with the Blue Bell outbreak was also found in earlier cases of Listeria illness, making the DOJ question whether the Blue Bell contamination existed long before the major outbreak and if so, why wasn’t it discovered and eliminated earlier.
Thus, while dealing with the interpretation and implementation of new FSMA rules under the watchful eye and stronger fist of FDA, food companies must now also be wary of a new focus by the DOJ on food-related cases. These potential consequences can result in safer food products for consumers, but will greatly increase the risks and costs of producing that food.
Kathy Hardee, Esq., is co-chair of the Food & Agriculture Industry Group at Polsinelli, PC, which is composed of a team of attorneys from every legal practice area and who each have a focused background in the food industry.