The Responsible Corporate Officer Doctrine

In United States v. Park, 421 U.S. 658 (1975), the U.S. Supreme Court held that corporate employees can be convicted under the FDCA for any offensive conduct that they, by reason of their position, could have corrected but failed to do so. John Park, the CEO of a national food chain, was repeatedly warned by the FDA that his warehouses were unsanitary. The conditions went uncorrected and food shipments were exposed to rodent contamination. Park was found guilty after a jury trial and fined $50 per count. He appealed, challenging not the constitutionality of the FDCA, but rather the jury instructions. The conviction was upheld.

The Park Court found that, taken as a whole, and in light of the facts presented at trial, the jury was adequately instructed on the elements of the charged offense. The Court further held that proof of criminal liability did not require proof of wrongful intent or wrongful action, stating: “In the interest of the larger good [the FDCA] puts the burden of acting at hazard upon a person otherwise innocent but standing in responsible relation to a public danger.” Id. at 668. The Court noted that Congress perceived public health interests to outweigh any hardship suffered by responsible corporate officers who may be convicted despite not having any consciousness of wrongdoing. Dismissing due process concerns, the Court declared that, in light of the minor penalties, application of the statute could be regulated by the judgment of prosecutors, jurors, and judges.

The Court appeared to permit strict criminal liability, while at the same time relying on Park's personal and repeated negligence, as well as prosecutorial discretion. In other words, while the statute contains no requirement to prove criminal intent, and thus imposes strict liability, the Court seemed to expect that prosecutors would limit their charging decisions to cases where there is proof of wrongdoing. The Court was not, however, at all clear as to what that standard of wrongdoing must be. That confusion mattered less at the time, as Park was written before the FDA declared its intent to increase its enforcement of strict liability offenses — before the 2015 Yates memo (describing the DOJ's Individual Accountability Policy, available at http://bit.ly/2ckSFaw) raised the specter of more frequent strict liability prosecutions (as it obligates prosecutors to target more corporate employees), and before so-called Park violations resulted in prison sentences.

Jury Instructions in Park

While the facts of Park may have supported a finding of negligence, the Park jury was not instructed that it must find negligence. Instead, the district court told the jury: “The [defendant] is or could be liable under the statute even if he did not consciously do wrong. … ” Park, 421 U.S. 658 at 665 n.9. The district court continued: “The issue is, in this case, whether the Defendant, John R. Park, by virtue of his position in the company, had a position of authority and responsibility in the situation out of which these charges arose.” Id. After Park, Congress considered amending the FDCA to explicitly require proof of “negligence, knowledge, or intent” as a prerequisite to the imposition of FDCA penalties. S. Rpt. No. 94-684, at 78-79 (1976).

The Department of Health, Education, and Welfare (HEW; then parent agency to the FDA) opposed the amendment, stating that “properly construed,” it was the “officer's personal neglect that [was] punishable.” Id. HEW did not stop there, listing a litany of FDA pre-prosecutorial protections and promising that “in no other area of Federal law enforcement is the decision to prosecute subject to as extensive and careful review.” Id.

A New Reality

But these pre-prosecutorial protections are no longer the norm, as FDCA cases now typically arise from whistleblowers or consumer illness and originate from the DOJ, not the FDA. As a result, prospective defendants do not have the right to an administrative hearing on these misdemeanor allegations — as they would if cases were originating from the FDA — at which they could seek a non-criminal resolution.

In July, in the most important Park doctrine case since Park itself, the U.S. Court of Appeals for the Eighth Circuit upheld the three-month prison sentences of Austin and Peter DeCoster, the respective owner and COO of Quality Egg, LLC. United States v. DeCoster, No. 15-1890 (8th Cir. July 6, 2016). The two pleaded guilty to misdemeanor violations of the FDCA after their company shipped salmonella-contaminated eggs. They appealed, challenging their sentencing and the FDCA's penalties provisions.

The Eighth Circuit affirmed the sentences and explicitly addressed an issue that Park did not — namely, what is the mental state the government must prove if it seeks to incarcerate those guilty of FDCA misdemeanors? The court's decision — the culmination of three judges writing three different opinions — highlights the uncertainty surrounding Park and its application today.

Judge Diana E. Murphy, writing for the court, upheld the sentences after concluding that “the FDCA punishes neglect where the law requires care” and that the record of the defendants' guilty pleas showed that the DeCosters negligently failed to prevent the salmonella outbreak. Decoster, slip op. at 7, 9. In his concurrence, Judge Raymond W. Gruender agreed, and went one step further, reasoning that, by extension, the logic of Park established a negligence standard as an absolute prerequisite to imposing a sentence of imprisonment under the FDCA. Id. at 15. But by finding that negligence was proven against the DeCosters, the Eighth Circuit avoided having to decide whether the imposition of prison sentences, without proof of intent, is constitutional.

At the same time that DeCoster requires proof of wrongdoing, other courts are instructing juries, at the request of the DOJ, that no such proof is required. A prime recent example is United States v. Facteau, No. 15-10076, now pending in the District of Massachusetts. There, the former CEO and the former VP of Sales of a medical device company were found not guilty of all offenses requiring proof of criminal intent. Yet they were convicted of Park misdemeanors after the jury — in stark contrast to the standard set forth in DeCoster — was instructed:

[Y]ou may find the defendant guilty of causing the introduction of adulterated or misbranded devices into interstate commerce, even if he did not intend the devices to become adulterated or misbranded and did not personally know about the specific circumstances that caused the devices to become adulterated or misbranded. … “

The court continued:

Good faith, which I will discuss in more detail shortly, is not a defense [to the FDCA misdemeanor violations] because the law does not require a defendant to know about or to have actively engaged in wrongdoing in order to be held responsible.

The district judge, apparently feeling constrained by the jury instruction given in Park, told defense counsel: “I share your distaste for Park, but there's nothing I can do.”

Sharing this distaste, the dissent in DeCoster noted, consistent with long-standing views of criminal due process, that mere “negligence in performing executive functions” has never been thought sufficient to justify putting a supervisor behind bars. The Eighth Circuit nonetheless extended the Park doctrine to permit a prison sentence, provided there is ample evidence of negligent conduct. And it did so despite the reliance in Park itself on the comparatively minor nature of the penalty imposed. DeCoster, slip op. At 25.

Conclusion

With motions to vacate the convictions expected in Facteau, and with the benefit of DeCoster, the district court will again have to grapple with the issue of whether (and if so, what) proof of criminal intent is necessary under the Park doctrine. And the U.S. Court of Appeals for the First Circuit will no doubt face the issue thereafter.

The tension between the due process principle of not incarcerating the blameless and jury instructions permitting just that has its roots in Park itself. And this tension, which exists whenever the DOJ evaluates whether to bring Park charges, starkly presents itself in DeCoster and Facteau. It seems inevitable that this tension will ultimately have to be resolved by the Supreme Court. After more than 40 years, moreover, it is time for the Court to revisit and clarify the Park doctrine, making explicit that no one should be convicted, or at a minimum imprisoned, absent proof of criminal intent.

***** Joseph F. Savage, Jr. is a partner in the Boston office of Goodwin LLP. Kate E. MacLeman is an associate in same office.