Corporate Officers Receive Prison Sentences in Case Involving Adulterated Food

Quality Egg will also pay a $6.8 million fine as a result of the judgment. Although no deaths were reported due to the sale of the contaminated eggs, the US Centers for Disease Control and Prevention (CDC) is said to have linked approximately 2,000 illnesses to the outbreak. In addition, health officials estimate that up to 56,000 people may have been sickened by the outbreak.

The owners of Quality Eggs, Austin DeCoster and his son, Peter DeCoster, acknowledged as part of their plea agreement that at the time the contaminated eggs were sold, had they known about the contamination, they were “in a position of sufficient authority” to “detect, prevent and correct the sale” of those eggs. The government did not allege, and the DeCosters did not admit, to having any direct, personal knowledge that their company was selling contaminated eggs, much less that they intended for the contaminated eggs to be sold. Nevertheless, proceeding under the strict liability theory permitted under the Federal Food, Drug, and Cosmetic Act (FFDCA) for responsible corporate officers, the government persuaded the district court judge to impose prison sentences on both defendants, notwithstanding the fact that the government’s investigation failed to identify any Quality Egg personnel or associates that had direct knowledge that the company was selling contaminated eggs during the relevant time period.

The government argued that prison sentences were justified in this case because the “strict-liability standard plainly advances the federal government’s efforts to protect public health and safety. The FFDCA regulates not only the distribution of food, such as the shell eggs at issue here, but also drugs, cosmetics, and medical devices, which are products that are ‘largely beyond self-protection’ for consumers.” In addition, the government argued that “responsible corporate officers such as defendants have a much greater ability than consumers themselves to discover, correct, or prevent adulteration or other violative conditions.” Finally, the government argued that “absent a strict-liability standard, responsible corporate officers would have an added, and perverse, incentive to insulate themselves from information that might reveal a violation of the law.”

Under a strict-liability regime, by contrast, a responsible corporate officer who knows, either generally or specifically, about potential adulteration will be encouraged to investigate further and take appropriate ameliorative action. Indeed, the FFDCA’s imposition of strict liability not only gives responsible corporate officers a strong personal incentive to seek out problems and have them corrected; it also gives them ample reason to seek to prevent such violations altogether.

The prison sentence in this matter sends a strong message about the importance of following food safety rules as only a handful of similar cases have resulted in jail time. Further, the message to responsible corporate officers in the businesses covered by the FFDCA could not be clearer: Violations of the FFDCA that cause potential wide-spread harm to the public carry extremely high risk. Not only could the financial costs to the company in the form of fines, civil penalties, or civil suits be enormous, but criminal prosecution of responsible officers has clearly become a very real possibility for FDA-regulated businesses.