When Food Production Leads to Prosecution
Over the last few weeks, two big stories have made headlines in the food industry. Beginning in early February, news media across Europe began reporting that food products tested in several European countries contained horsemeat, purportedly marketed as beef. The reports also indicated that it was highly likely that consumers had eaten this mislabeled, and in some cases tainted, product. A few weeks later, word came that the U.S. Department of Justice handed down a 76-count indictment against individuals formerly associated with the Peanut Corp. of America related to the company’s handling of a Salmonella outbreak in 2009. Both of these stories reflect the increased awareness of food issues among consumers, regulatory agencies and the media alike, and also provide lessons to be learned by food producers. The Peanut Corp. of America case is also part of a trend to criminalize conduct involving food safety that is alleged to present a danger to the public.
The now well-known scandal involving horse meat began when the Food Safety Authority of Ireland issued a press release in January saying that some hamburgers labeled as “beef” had tested positive for horse DNA. The British Food Standards Agency immediately commenced a countrywide survey of food authenticity in processed meat products. Shortly thereafter, the European Union instructed member states to conduct random tests for horse meat and report the results. As the scandal unfolded, French authorities placed much of the blame on a food company named Spanghero, which has since had its government licenses revoked. Within three weeks, one of the world’s largest food companies began a voluntary recall of products sold in Italy, France, and Spain, citing positive tests for horse DNA. IKEA, the Swedish furniture giant, also identified positive tests in its popular Swedish meatballs sold across Europe. On Feb. 24, the EU scheduled a meeting to demand more accountability on food labeling violations, including strengthened criminal enforcement.
On this side of the pond, prosecutors made waves in the food industry by indicting individuals over a company’s involvement in a Salmonella outbreak in 2009. The government’s indictment against the former executives of Peanut Corp. of America read like a Hollywood thriller. It alleged that Stewart Parnell, an owner of PCA, Michael Parnell, a food broker, and Samuel Lightsey and Daniel Kilgore, both operations managers, “participated in a scheme to fabricate certificates of analysis (COAs) accompanying various shipments of peanut products. COAs are documents that summarize laboratory results, including results concerning the presence or absence of pathogens. … [O]n several occasions these four defendants participated in a scheme to fabricate COAs stating that shipments of peanut products were free of pathogens when, in fact, there had been no tests on the products at all or when the laboratory results showed that a sample tested for salmonella.” The indictment further claimed that the defendants, including Mary Wilkerson, a quality assurance manager, “gave untrue or misleading answers to … questions” posed by Food and Drug Administration inspectors after the outbreak, which sickened more than 700 people. And if their fall from corporate grace wasn’t enough, each of the defendants could face up to 20 years in prison if convicted. Following the indictment, FDA Commissioner Margaret Hamburg said, “The charges announced today show that if an individual violates food safety rules or conceals relevant information, we will seek to hold them accountable.” Ms. Hamburg’s comments perhaps are the most telling of the government’s renewed focus on protecting the public from foodborne illness, and its intent to punish those responsible for causing any perceived harm. The Peanut Corp. of America indictment contains felony charges, because the alleged conduct involved fraud and deceit, but as discussed below, the food safety laws in the United States also allow the government to bring criminal misdemeanor charges on a strict liability basis for responsible corporate officers.
It would be easy to disregard the PCA case as an outlier and the horse meat scandal as a wake-up call for the European countries only, but those assumptions would be mistaken. Both warrant a closer examination by food company executives and general counsel alike to achieve an understanding about how quickly ensnared a company can become in a public relations nightmare and how to handle any potential investigation once the flames have spread.
In the United States, the Food Drug and Cosmetic Act establishes the basis to pursue criminal penalties against food producers who distribute adulterated products. Under the FDCA, anyone who “causes” any condition that violates the act, such as producing adulterated food, may be criminally liable. Unintentional violations are punishable as misdemeanors, and the accused may face fines and up to one year of prison. Commission of the crime requires only the act—the production of adulterated food. The accused need not have been intentional or reckless, or even negligent. It is irrelevant what the defendant knew or should have known. Importantly, courts have held that the FDCA's misdemeanor provision is sufficiently broad to encompass individual executives who neither participated in nor knew of a violation, but whose position put them in a “responsible relation” to it. This has become known as the “responsible corporate officer doctrine.” Historically, the government has been conservative in its use of that doctrine, primarily prosecuting only individuals who were personally involved in a violation or who had notice of it and failed to correct it. But that historical treatment may be changing.
Although the possibility of potential misdemeanor prosecution often serves as a deterrent, the government’s enforcement power does not end with the FDCA. The PCA indictment shows that the Department of Justice will use whatever tools at its disposal when the harm is widespread and the apparent cooperation with the government’s outbreak investigation is minimal. In that case, the government chose to use criminal conspiracy theories, which carry lengthier potential prison sentences, in addition to the standard strict liability charges under the FDCA. The result is a powerful and damning account of what allegedly transpired as the executives learned about the Salmonella outbreak and responded to it. Finally, FDA now has mandatory recall authority under the FDCA amendments made in the Food Safety Modernization Act.
The horse meat scandal has not yet moved to the United States and it may not, but it nevertheless provides a glimpse into the difficulties of managing a food adulteration issue in today’s marketplace. It also shows that companies who rely on others to provide product that is ultimately distributed to the public can quickly become the focus of media and government scrutiny when food adulteration is discovered. Had the horse meat scandal emerged in the United States, its repercussions would likely follow the path of the PCA indictment, and food producers and their executives, who may have unintentionally distributed tainted product, would quickly be in the crosshairs of the Department of Justice.
It is critical that the food industry be proactive in addressing brand impact events such as an outbreak. Advance planning is key because your company will have little or no time to plan once public health authorities or the media come calling after a food safety event. One component of an overall response strategy is to do a food safety legal audit offered by the food safety team at Davis Wright Tremaine. Included in our review is an examination of your company’s vendor relationships, food safety policies and procedures, insurance and recall plans. We can also work with you to develop a food outbreak response plan and typically perform this audit on a flat fee basis. Please contact our Food & Beverage team for more information.