Beyond Regulation by Litigation: Food Safety Enforcement Through Criminal Prosecution

September 22, 2014

Federal and state regulatory agencies have long histories of using litigation as an enforcement tool. The plaintiffs’ bar frequently attempts to accomplish the same task by litigating claims for alleged violations (such as food labeling consumer class actions). Now a new weapon is being employed by the government, and it is more potent than garden-variety litigation. Instead of facing threats such as monetary penalties or injunctive relief, company executives now find themselves facing imprisonment.

This threat has become particularly acute in the food safety industry. Several high-profile criminal prosecutions of food industry executives have occurred recently, and it seems clear that these prosecutions are far from aberrations – they may be the new norm. Federal prosecutors appear to have made a conscious decision to target those in the food industry and are investing substantial time, energy and money in these prosecutions.

The most high-profile of these criminal prosecutions concluded on Sept. 19, 2014, and resulted in the convictions of three former executives of the Peanut Corporation of America (PCA): (1) Stewart Parnell, former owner; (2) Michael Parnell, former food broker; and (3) Mary Wilkerson, former quality control manager. This trial involved allegations that the Parnells knowingly shipped contaminated peanut butter and peanut paste to customers and faked lab tests intended to screen for salmonella, resulting in one of the largest food recalls in U.S. history. The 12-member jury found Stewart Parnell guilty of 67 federal felony counts, including conspiracy, wire fraud and obstruction of justice, while Michael Parnell was convicted of 30 counts related to falsification of lab results but was acquitted of actually shipping salmonella-tainted food. Mary Wilkerson was convicted on one count of obstruction of justice but acquitted on another; she faces a maximum of 10 years in prison and a $250,000 fine. The Parnells’ convictions are enough to send them to federal prison for the rest of their lives as each count carries a maximum sentence of five or ten years. However, neither is known to have any previous convictions and federal sentencing guidelines will come into play after a federal sentencing report is completed for each of the three.

The prosecution is significant because it is one of the first times that food processors have been criminally tried in a federal food-poisoning case. Criminal charges against individuals historically have been an unusual step for the government in cases involving food safety violations. Although both civil and criminal statutes and penalties against a company and individuals are available, the government has rarely used criminal provisions to charge individual food industry executives and employees. But that may be changing.

Also significant are the resources that the government devoted to this prosecution and how aggressively it prosecuted the case. The prosecution called 45 witnesses, and its case in chief lasted 26 days. The government indicted these individuals on 76 federal felony counts and went to trial on 71 of those counts. The charges carry prison sentences of up to 20 years apiece. Moreover, the government aggressively sought information from several law firms that formerly represented PCA by issuing subpoenas and demanded that these attorneys be available for testimony at trial. The law firms sought to quash the subpoenas (claiming attorney-client privilege and work product), and the judge never decided the issue before the case went to the jury. In addition, two of PCA’s former top managers (plant manager Samuel Lightsey and operations manager Daniel Kilgore) reached pretrial plea bargains with the prosecution and testified at trial on behalf of the government. Their plea agreements appear to contemplate jail time.

Criminal prosecution in the food industry has not been limited to the PCA case. Another recent groundbreaking prosecution targeted Eric and Ryan Jensen, two corporate executives of a cantaloupe farm that was linked to a 2011 listeria outbreak that reportedly resulted in 33 deaths. They were charged with misdemeanors and faced up to six years in jail. The government issued warrants for their arrest, and the Jensens were brought to their arraignments in shackles – unusual for misdemeanor prosecutions. They pled guilty and were sentenced in January 2014 to six months in home detention and five years of probation, and ordered to pay $150,000 in restitution. What is significant about this prosecution is that there was reportedly no evidence that these executives knew about any adulteration of their cantaloupes prior to sale.

Federal prosecutors invoked a little-known rule, known as the Park Doctrine, which is used to criminally prosecute a responsible corporate official for a violation without proof that the corporate official had any actual knowledge or participation in the specific offense. If the corporate official is responsible for ensuring the quality of a product that is later found to be contaminated or adulterated, then he or she can be individually criminally prosecuted. For many years, this rule lay dormant, but in the past few years, federal prosecutors have rediscovered this rule and used it to target corporate officials in the pharmaceutical and food and beverage industries. Specifically, the FDA announced in 2010 that it would revitalize its approach to corporate officers by increasing the use of misdemeanor prosecutions pursuant to the Park Doctrine, in response to a 2010 U.S. GAO report that criticized lax criminal enforcement of corporate officers.

Aggressive criminal prosecution of the food industry likely will not only continue, but increase over the next few years. This is for at least four reasons. First, the Department of Justice and the FDA have made food safety a priority, and they believe that one of the best ways to protect food safety is to criminally punish those who violate food safety laws and regulations, even if unknowingly. Stuart Delery, who until recently was head of the Department of Justice’s Civil Division, has said: “When those responsible for producing or supplying our food lie and cut corners … they put all of us at risk. The Department of Justice will not hesitate to pursue any person whose criminal conduct risks the safety of Americans who have done nothing more than eat a peanut butter and jelly sandwich.” Mr. Delery has recently been promoted to acting associate attorney general, which is the Justice Department’s third-ranking post.

Similarly, Special Agent in Charge Patrick J. Holland of the FDA Office of Criminal Investigations, Kansas City Field Office, recently said: “U.S. consumers should demand the highest standards of food safety and integrity. The filing of criminal charges in this deadly outbreak sends the message that absolute care must be taken to ensure that deadly pathogens do not enter our food supply chain.” It is clear that in the view of those in charge at the Department of Justice, criminal prosecution is a valid means of regulation for the food safety industry – and the Department of Justice and the FDA certainly have the resources to engage in this “regulation.” For instance, the FDA’s criminal investigation arm, OCI, has about 230 agents and a $41 million operating budget.

Second, the federal law used to prosecute those in the food industry is extremely broad. The federal Food, Drug, and Cosmetic Act makes it illegal to manufacture, introduce into commerce, deliver or receive any adulterated food item. A food is considered adulterated not only if it contains a substance that is harmful to health, but if it has been prepared, packed or even just held under unsanitary conditions whereby it may have become contaminated with filth. When this broad law is combined with the aforementioned Park Doctrine, there is very little limit to whom a federal prosecutor can target in the food industry. Those in the industry are potential targets if food is manufactured or even held under unsanitary conditions, even if the food does not become adulterated. The only limit on the Department of Justice’s authority is the exercise of its own discretion. While the PCA prosecution focused on allegations that defendants knowingly allowed contaminated food to be sold to consumers, the prosecution of the Jensen brothers made no such allegation – instead alleging that the two executives should have known that their cantaloupes were adulterated.

Third, there are a number of new rules and regulations governing the food industry. It is difficult enough for those in the food industry to comply with the existing rules and regulations, given that food safety and quality in the U.S. is governed by no fewer than 35 federal laws and regulations administrated by 15 federal agencies spending an estimated $2 billion annually. Now, with a host of changes to these rules and regulations in a number of areas, including safety rules for transported foods and new FSIS salmonella performance standards for beef and poultry (expected within the next 12 months), it will be even harder. With federal prosecutors closely watching the food industry, strict adherence to all of these rules and regulations will become more important than ever.

Finally, now that the most high-profile of these criminal prosecutions – the only one that actually went to trial – has ended successfully for prosecutors, the food industry is likely to see this weapon of criminal prosecution used more frequently. Success will no doubt beget more criminal prosecutions. Those in the food industry should be aware of this new means of regulation – regulation not by litigation but by criminal prosecution – and should take steps to protect themselves.