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COOK COUNTY RECORD

Friday, March 29, 2024

Jail time for Maine egg distributors should prompt caution, diligence from other food execs, attorney says

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Food company executives should be on notice that a new federal emphasis on cracking down on food safety violations could land them in jail, should their company be found liable for food-borne disease outbreaks, after a federal appeals court upheld jail sentences for two corporate officers found responsible for failing to prevent the distribution of eggs contaminated with salmonella that affected 56,000 people.

The Eighth Circuit U.S. Court Appeals found Jack DeCoster and Peter DeCoster, the owner and CEO, respectively, of Maine-based Quality Egg LLC, violated the federal Food, Drug and Cosmetic Act (FDCA) by delivering adulterated food that contained a contaminating substance blamed in connection with a widespread salmonella outbreak.

The court imposed jail time for both men. The company had pleaded guilty to a felony count of bribing a federal inspector and two misdemeanor charges of unknowingly introducing adulterated food into interstate commerce. It also paid a $6.8 million fine. The Food and Drug Administration, howver, went further, seeking criminal charges against the individuals that ran the company. The DeCoster executives pleaded guilty to the misdemeanor charge under the FDCA of introducing adulterated eggs into interstate commerce.

Both DeCosters were sentenced to three months and filed an appeal in the Eighth Circuit. They argued the penalties were unconstitutional because they weren’t actually involved in the violations and there was nothing in the record that indicated the two actually knew about the contaminated eggs before they were distributed. The court rejected the argument and reasoned that individuals who are in positions of authority and have a responsibility to take actions to prevent violations under the FDCA are criminally liable, whether they were aware of the activities or not.

“The Eighth Circuit decision ... reinforces that under the responsible corporate officer doctrine, food and restaurant company executives face the possibility of jail time for their company’s food safety violations, even if they did not know contaminated food is being introduced or delivered into the marketplace and even if no one at the company is aware that contaminated food is being introduced or delivered into the marketplace,” said Jonathan L. Marks, a partner at the Chicago firm of Katten Muchin Rosenman LLP, who had followed the case.

“All that is required for criminal liability are food safety violations and evidence that the executive had authority to take steps to prevent the violations and failed to do so," Marks said. "With the U.S. Department of Justice’s recent announcement that it would partner with the FDA to aggressively enforce food safety laws through criminal investigations of companies and employees, the risks are real and significant.”

The court did maintain that corporate officers may have been able to avoid liability if they had shown that they were powerless in preventing a violation or correcting it. The Eighth Circuit, however, found Quality Egg created an environment in which employees felt comfortable to violate the FDCA and bribe federal officials, and may even have felt pressure to do so.

Companies that must follow the FDCA in order to prevent FDA violations, which may become more serious with the U.S. Department of Justice partnering with the agency, can reduce the risk of liability and violations in general by taking quality control measures to prevent these infractions.

“Having a compliance program and hiring safety and quality managers are of course important, but given the current risks, they are not enough,” said Marks. “Taking no additional steps is not an option. Executives must set the right tone, making it clear that safety and quality is a priority. They must ensure that they have the right people in positions of responsibility and those people have authority to stop production if an issue is discovered and authority to take necessary steps to protect the public.

"They should have mechanisms in place to allow full and frank reporting of issues, and a culture that encourages transparency concerning food safety issues. In connection with these efforts, the company should seek the advice of good legal counsel, including attorneys with white-collar criminal experience, not only in enhancing compliance systems but in establishing a crisis management plan to address a food outbreak before it happens," Marks said.

"Such steps are increasingly important not only to protect the company but to minimize the heightened risks to senior executives.”

The DeCosters have filed for a rehearing and are currently awaiting a ruling on their petition.

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