FDA Criminal Liability – PCA and the DOJ Yates’ Memo

Peanut Corporation of America executives Stewart Parnell and Michael Parnell were sentenced yesterday following a conviction last year for their role in the salmonella outbreak linked to their tainted plant (click here for media coverage). Stewart Parnell will spend 28 years in jail while his brother Michael will spend 20 years.

The family owned company based in Blakely Georgia was the source of a 2009 salmonella outbreak. The outbreak lead to one of the largest US food recalls and resulted in hundreds of illnesses and one death.

Criminal prosecution for violations of the Food Drug and Cosmetic Act have become rare occurrences. This was not always the case, however, with robust period period of criminal prosecution from 1940 through 1980. This period of time provided two prominent Supreme Court precedents set in United States v. Dotterweich, 320 U.S. 277 (1943), and United States v. Park, 421 U.S. 658 (1975), which still set the standard for personal criminal liability of corporate executives.

The timing of the PCA sentence coincides with the release of a memo from the Department of Justice revising the “Principles of Federal Prosecution of Business Organizations,” set forth in the U.S.A.M. 9-28.700et seq. and the civil litigation provisions in USAM 4-4.000 et seq. The memo written by Deputy Attorney General Sally Quillian Yates to all DOJ attorneys applies beyond companies involved with FDA regulated products. It made quite a splash calling for increased enforcement of so-called “white collar crimes.” The new memo outlines six principles for prosecutors to target individual business people for criminal prosecution and civil sanctions.

The PCA sentencing and the Yates memo may point to a return to the robust period of criminal enforcement for food, drug, cosmetic, dietary supplement, medical device, and tobacco products. What may be new in this era of criminal prosecution are statutory changes, like FSMA, Part 111 dietary supplement GMP requirements or device and drug regulations, that set the compliance bar higher than before.