by Jason Driscoll
This post is the second part of a two-part post by the author.

Introduction

In my previous post (DeCoster v. United States: Testing the Limits of the Responsible Corporate Officer Doctrine), I discussed how the Food and Drug Administration (“FDA”) and the Department of Justice (“DOJ”) have revived the Responsible Corporate Officer (“RCO”) doctrine in an attempt to increase compliance with the Federal Food, Drug, and Cosmetic Act (“FDCA”). In light of the incarcerative sentences in the Quality Egg case, I addressed the DOJ’s new strategy of seeking enhanced sanctions in RCO cases. In United States v. Quality Egg, LLC,[1] the government brought FDCA Section 333(a)(1) misdemeanor food adulteration cases against two corporate officers—Jack and Peter DeCoster—ultimately securing three-month prison sentences premised largely on the RCO doctrine.[2] On appeal, the DeCosters argued that the incarcerative sentences violated due process absent evidence of mens rea or actus reus.[3] The Eighth Circuit affirmed the sentences, however, holding that a three-month strict liability prison sentence was “relatively light” doing “no grave damage” to an offender’s reputation.[4] A petition for a writ of certiorari followed, inviting the Supreme Court to review the doctrine for the first time since 1975, but was denied.

The RCO doctrine’s amorphous “responsible relation” standard and its strict liability application provide prosecutors with vast discretion to pick and choose which defendants to charge with RCO liability. As seen in Quality Egg, this discretion is now being used to send corporate officers to prison. Despite a greater need for self-restraint in administering RCO liability, recent cases reveal inconsistent outcomes in RCO prosecutions traceable in part to disparate positions taken by prosecutors. The absence of principled enforcement guidelines increases the arbitrariness of RCO liability and decreases adherence to the traditional pillars of uniformity and proportionality. Indeed, the lack of a uniform RCO enforcement policy undermines the rule of law. In response, the FDA and DOJ should work to develop a revised enforcement policy with more exacting priorities to properly guide application of the RCO doctrine.

A. Heightened Discretion Demands Increased Self-Restraint in RCO Enforcement

Despite the “overriding public interest” in health and safety,[5] a prosecutor’s decision to advocate for a misdemeanor sentence of incarceration premised on the RCO doctrine should be subject to the strictest application of the uniformity and proportionality principles. This conclusion follows from two factors uniquely affecting FDCA enforcement. First, both Congress and the Supreme Court entrusted prosecutorial discretion as the main safeguard against arbitrary application of FDCA Section 333(a)(1)’s penalties, leaving the Executive Branch free of any substantive check in enforcing the Act. Second, the DeCoster opinion’s affirmance of incarcerative sentences greatly increases the magnitude of Section 333(a)(1)’s penalties relative to the evidence required to convict, buttressing the need for additional ex ante protections.

Congress recognized in FDCA Section 336 the unique role prosecutors must play in enforcing the Act’s incredibly high standard of care, thus endorsing heightened discretion in the public welfare offense context.[6] Section 336 outlines that the Secretary of Agriculture need not report minor FDCA violations if he believes the public interest will be adequately served by a suitable written notice of warning.[7] In fact, Section 336 was designed to give legislative sanction to the exercise of discretion in order to avoid trivializing enforcement of the act.[8] This exercise of enforcement discretion is in large part not subject to judicial interference.[9]

Although prosecutorial discretion over charging decisions has always been an “integral feature of the criminal justice system,”[10] the Supreme Court’s Dotterweich and Park decisions evidence even greater reliance on prosecutorial discretion to enforce the FDCA in particular. First, Dotterweich created an amorphous “responsible relation” standard as a proxy for RCO liability. Importantly, however, the Supreme Court declined to define who could be deemed a “responsible” corporate officer under this standard and instead stated that some determinations “necessarily depend[] on conscience and circumspection in prosecuting officers.”[11] In doing so, the Supreme Court reinforced Congress’s emphasis on prosecutorial discretion in enforcing the FDCA. In Park, the Supreme Court reiterated its reliance on the “good sense of prosecutors” in enforcing the Act.[12] Thus, both Congress and the Supreme Court have prescribed considerable discretion for prosecutors to pick and choose when to impose RCO liability. 

Because of decisions like DeCoster upholding prison sentences, the effects of RCO enforcement actions now move beyond what was debated in Dotterweich and Park. This point was well-articulated by amicus curiae in support of the DeCosters’ petition for writ of certiorari to the Eighth Circuit:

As is plain to see, federal prosecutors are testing the outer bounds of Park doctrine liability—well beyond the small-bore realm of Dotterweich and Park. By decoupling imprisonment from individual responsibility, prosecutors and judges have ushered in a disturbing trend in the criminal law that raises serious due process concerns.[13]

A corollary to the above is that robust ex ante protections are needed to properly administer RCO liability.[14] Because the Executive Branch remains the only real check to the exercise of this power, the FDA and DOJ should employ heightened self-restraint in carrying out RCO prosecutions.[15]

B. Inconsistent FDCA Enforcement Highlights a Lack of Self-Restraint

Despite a greater need for self-restraint in administering RCO liability, recent FDCA prosecutions reveal inconsistent applications of the RCO doctrine. Indeed, uniformity, predictability, and self-restraint are lacking.

On one end of the enforcement spectrum are cases where the government leaves open the possibility of incarceration by agreeing to advocate for a within-guidelines sentence. This includes Quality Egg, where DOJ agreed to leave sentencing to the district court’s discretion and ultimately defended incarcerative sentences on appeal despite “fully conced[ing] . . . that neither the DeCosters nor any other Quality Egg employees were aware of [violations].”[16] The government took a similar position in United States v. Hermelin.[17] In Hermelin the defendant pled guilty on a strict liability theory similar to the DeCosters, and the government sought a sentence “within the suggested advisory guidelines range” of zero to six months’ imprisonment.[18] The DeCosters received three-month prison sentences; Hermelin was ultimately sentenced to one month’s imprisonment.

In contrast are cases where the government advocates against prison time specifically noting the impropriety of incarcerative sentences in misdemeanor RCO cases. In Purdue Frederick, the government posited “that a sentence of incarceration . . . would be unusual based on the facts of the case.”[19] Yet, like the DeCosters, the Purdue defendants failed to prevent a “longstanding, flagrant, and potentially dangerous violation” of the FDCA.[20]

Another recent example where the government advocated against incarceration is United States v. Sen.[21] In Sen, a doctor was charged as a responsible corporate officer with violating Section 331(a)(1) when his practice purchased approximately $3.1 million in unapproved and misbranded chemotherapy drugs.[22] The government’s position stood in contrast to the position taken in Quality Egg, but reiterated the government’s position in Purdue:

While we may never know exactly the extent of Dr. Sen’s knowledge, the available evidence shows that his offense was one of reckless omission, a failure to perform a legal duty, as opposed to intentional and willful misconduct. Therefore, a probationary sentence is warranted. While the United States does not advocate for a sentence of imprisonment for Dr. Sen, a sentence without any punitive component, save the fact of conviction itself, will not show to the public that the Court considers these offenses serious and would promote disrespect for the law.[23]

Even the district court’s opinion in Quality Egg reveals a struggle to distinguish the culpability of the Purdue defendants from that of the DeCosters when fashioning the appropriate sentence.[24] Ultimately, the court focused on differences in the terms of the underlying plea agreements.[25] In the Purdue plea agreement (an 11(c)(1)(C) agreement), the government agreed to recommend no prison time in exchange for a $34.5 million fine.[26] The government did not take that position with respect to the DeCosters, who did not benefit from a negotiated plea. The discrepancy between these outcomes highlights the extent to which prosecutors exercising discretion in similar circumstances might differ in their approach to RCO liability.[27]

C. Increasing Adherence to the Rule of Law

The lack of uniformity and proportionality in RCO enforcement actions undermines the rule of law. Professor Jennifer Arlen argues in the deferred prosecution agreement context that “[e]xecutive branch discretion falls presumptively outside the rule of law when executive branch officials have authority to create and impose new duties both with little effective ex ante limitations on their authority and without any genuine ex post oversight.”[28] While FDCA enforcement routinely ends in a plea agreement—an instrument subject to greater ex ante and ex post oversight than DPA/NPAs—the strict nature of the liability imposed by a public welfare statute like the FDCA, combined with such expansive prosecutorial discretion to enforce the Act, undermines ex ante and ex post limitations on executive branch authority when compared to traditional criminal liability. In fact, some have said that the FDCA is so broad that prosecutors can conceivably bring enforcement actions whenever a violation occurs,[29] and can sidestep meaningful judicial review altogether.[30]

The FDA Regulatory Procedures Manual provides too little relief in the way of encouraging uniformity and proportionality in RCO actions. FDA Commissioner Margaret Hamburg first introduced the RCO charging criteria in 2014 in order to create “revised policies and procedures that cover appropriate use of misdemeanor prosecutions.”[31] However, the factors introduced to guide decisions are quite vague.[32] The enforcement manual prioritizes factors such as whether a defendant had knowledge of or actually participated in the misconduct.[33] But, by definition, the most recent RCO doctrine prosecutions—including Quality Egg—do not involve such evidence given the lack of mens rea and actus reus associated with true RCO liability. Thus, although Sen and Purdue Frederick depict the government relying on a lack of intentional or willful misconduct when advocating for probationary sentences, such reliance is misplaced in an RCO enforcement action. Rather, when bringing a true RCO enforcement action, the FDA must fall back on extremely broad factors, such as whether a violation is “serious,” “obvious,” “widespread,” or “involves actual or potential harm to the public.”[34]

Given the size of the net prosecutors can cast in RCO cases, these factors are insufficient to properly guide discretion. The FDA manual is even explicit in recognizing the amorphous nature of the standard implemented by Park and what it means for enforcement:

As the Supreme Court has recognized, it would be futile to attempt to define or indicate by way of illustration either the categories of persons that may bear a responsible relationship to a violation or the types of conduct that may be viewed as causing or contributing to a violation of the Act.[35]

Nevertheless, an attempt should be made to delineate the categories of violations the FDA treats as most serious, and to illustrate common scenarios covered by the Act. More detailed descriptions of enforcement policy would aid both prosecutors and the regulated industry, reducing criticism, developing rapport, and increasing the likelihood of meaningful deterrence.

Conclusion

Certainly, RCO liability is an important tool in the public welfare space. However, because RCO liability is subject to no real ex ante or ex post check, the FDA and DOJ should exercise greater self-restraint when enforcing FDCA Section 333(a)(1). In doing so, the FDA and DOJ should increase uniform application of the RCO doctrine in order to more prominently conform enforcement to the rule of law. This is especially true in light of the incarcerative sentences upheld in DeCoster, and as the political branches reintroduce debate regarding mens rea reform and the value of individual accountability for corporate wrongdoing.

Footnotes

[1] United States v. Quality Egg, LLC, 99 F. Supp. 3d 920 (N.D. Iowa 2015).

[2] See United States v. DeCoster, 828 F.3d 626 (8th Cir. 2016), cert. denied, 137 S. Ct. 2160 (2017).

[3] Id. at 632.

[4] Id. at 633–34.

[5] Staples v. United States, 511 U.S. 600, 634 (1994).

[6] See 21 U.S.C. § 336 (“§ 336. Report of minor violations. Nothing in this chapter shall be construed as requiring the Secretary to report for prosecution, or for the institution of libel or injunction proceedings, minor violations of this chapter whenever he believes that the public interest will be adequately served by a suitable written notice or warning.”).

[7] Id.

[8] See Frederic P. Lee, The Enforcement Provisions of the Food, Drug, and Cosmetic Act, 6 Law and Contemp. Probs. 70, 76 (1939) (citing H.R. Rep. No. 2139, 75th Cong., 3d Sess. (1938)).

[9] Id.; see also Heckler v. Cheney, 470 U.S. 821 (1985) (an agency’s decision not to take enforcement action is an unreviewable act of agency discretion). 

[10] United States v. LaBonte, 520 U.S. 751, 762 (1997).

[11] United States v. Dotterweich, 320 U.S. 277, 285 (1943).

[12] United States v. Park, 421 U.S. 658, 669­–70 (1975).

[13] Brief of Washington Legal Foundation as Amicus Curiae in Support of Petitioners at 16, DeCoster v. United States, 137 S. Ct. 2160 (May 22, 2017) (No. 16-877).

[14] Another concern is that prosecutors now have the ability to sidestep judicial review altogether. See Richard A. Samp, Cory L. Andrews, Restraining Park Doctrine Prosecutions Against Corporate Officials Under the FDCA, Engage vol. 13 issue 3 (October 2012), (“[B]ecause of the breadth of the FDCA’s prohibitions, the very real danger exists that an FDCA misdemeanor, coupled with the harsh threat of exclusion, will be seen by federal prosecutors as a powerful leveraging tool to obtain convictions or extract pleas in vindication of suspicions that otherwise could never be proven.”). See also Brief of Washington Legal Foundation as Amicus Curiae in Support of Petitioners at 23, DeCoster v. United States, 137 S. Ct. 2160 (May 22, 2017) (No. 16-877) (“Given the breadth of the FDCA’s prohibitions, the decision below poses the very real danger that federal prosecutors will increasingly come to view an FDCA-misdemeanor charge, coupled with the threat of imprisonment, as powerful leverage by which to obtain settlements or extract guilty pleas to vindicate suspicions that the government otherwise could not prove. Rather than fully investigating alleged criminal conduct, government prosecutors will come to rely on the Park doctrine as an easy way to procure guilty pleas without lengthy investigations and court trials.”). Now that prosecutors can threaten prison as a leveraging tool, this criticism becomes much stronger, and the consequences more severe.

[15] This conclusion follows not only from Due Process Clause concerns, but also from policy-driven arguments focusing on deterrence theory: “Ill-defined crimes which are necessarily prosecuted on an infrequent and selective basis probably have little deterrent value.” United States v. Siegel, 717 F.2d 9, 25 (2d Cir. 1983) (Winter, J., dissenting).

[16] See DeCoster, 828 F.3d at 640 & n.2. Note that in front of the district court, the government agreed to leave to the court’s discretion the decision to impose a sentence of incarceration. See Government’s Memorandum Regarding Sentencing at 1, United States v. Quality Egg, LLC, 99 F. Supp. 3d 920 (N.D. Iowa 2015) (No. 14-CR-3024).

[17] United States v. Hermelin, No. 4:11-cr-85 (E.D. Mo. Mar. 11, 2011).

[18] Government’s Sentencing Memorandum at 1, United States v. Hermelin, No. 4:11-CR-85 (E.D. Mo. Mar. 11, 2011).

[19] United States v. Purdue Frederick Co., 495 F. Supp. 2d 569, 576 (W.D. Va. 2007).

[20] Patrick O’Leary, Credible Deterrence: FDA and the Park Doctrine in the 21st Century, 68 Food & Drug L.J. 137, 165–71 (2013).

[21] United States v. Sen, 24 F.Supp.3d 732 (E.D. Tenn. 2014).

[22] United States Sentencing Memorandum at 1, United States v. Sen, 24 F.Supp.3d 732 (E.D. Tenn. 2014) (No. 2:13-CR-56).

[23] Id. at 9–10.

[24] Quality Egg, LLC, 99 F. Supp. 3d at 942–43.

[25] Id.

[26] Purdue Frederick Co., 495 F. Supp. 2d at 571.

[27] The discrepancy also highlights a more general white collar sentencing concern, as the Purdue agreement might be viewed as merely a cost of doing business. For a more in-depth discussion, see Katrice Bridges Copeland, Enforcing Integrity, 87 Ind. L.J. 1033 (2012).

[28] Jennifer Arlen, Prosecuting Beyond the Rule of Law: Corporate Mandates Imposed Through Deferred Prosecution Agreements, Journal of Legal Analysis, vol. 8 issue 1, 191 (2016).

[29] See DeCoster, 828 F.3d at 638 (Gruender, J., concurring).

[30] See supra note 14.

[31] Letter from Margaret Hamburg, Comm’r, Food & Drug Admin., to Sen. Charles E. Grassley, Member, H. Comm. on Energy and Commerce 2 (Mar. 4, 2010), http://www.fdalawblog.net/files/fda-grassley-Itr.pdf.

[32] See U.S. Food & Drug Ass’n, Regulatory Procedures Manual § 6-5-3 (2017) (The FDA manual specifies the following: “When considering whether to recommend a misdemeanor prosecution against a corporate official, consider the individual’s position in the company and relationship to the violation, and whether the official had the authority to correct or prevent the violation. Knowledge of and actual participation in the violation are not a prerequisite to a misdemeanor prosecution but are factors that may be relevant when deciding whether to recommend charging a misdemeanor violation.

Other factors to consider include but are not limited to:

1. Whether the violation involves actual or potential harm to the public;
2. Whether the violation is obvious;
3. Whether the violation reflects a pattern of illegal behavior and/or failure to heed prior warnings;
4. Whether the violation is widespread;
5. Whether the violation is serious;
6. The quality of the legal and factual support for the proposed prosecution; and
7. Whether the proposed prosecution is a prudent use of agency resources.”).

[33] Id.

[34] Id.

[35] Id.

Jason Driscoll is a J.D. Candidate at New York University School of Law, Class of 2018 and a Student Fellow with the Program on Corporate Compliance and Enforcement.

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