The Biggest Park Doctrine Ruling in Over 40 Years?

July 6, 2016

By Jennifer M. Thomas & John R. Fleder

On July 6, 2016, the Eighth Circuit upheld a district court ruling in United States v. DeCoster that imposed three-month prison sentences and $100,000 fines on Austin “Jack” and Peter Decoster, the owner and chief operating officer, respectively, of Quality Egg, LLC.  We have previously blogged about the Quality Egg case here, and written about it in FDLI’s Top Food and Drug Cases of 2015.

This case is among the first in decades to analyze the limits of the Park Doctrine (also known as the “Responsible Corporate Officer” doctrine).  The significance of the Decosters’ case is highlighted by the involvement of numerous amici:  The Washington Legal Foundation, Cato Institute, Chamber of Commerce of the United States, Pharmaceutical Research and Manufacturers of America, and the National Association of Manufacturers all submitted briefs to the Eighth Circuit on behalf of the Decosters.  And the Decosters’ legal war is unlikely to end with their defeat in this battle.  Three Eighth Circuit judges wrote three different opinions in this case, making it highly likely that the Decosters will seek en banc review of the decision and/or petition the Supreme Court for a writ of certiorari.

Despite the fractured nature of the Eighth Circuit’s ruling and the likelihood of further appeal, the multiple opinions issued today are of interest and worth reading in their entirety.  Importantly, while they wrote separately and reached different conclusions, the three Eighth Circuit judges appeared unanimous in finding that a penalty of imprisonment for a misdemeanor violation of the FDC Act would violate principles of due process if the offense is merely one of “vicarious liability,” defined as liability “for the actionable conduct of a subordinate . . . based on the relationship between the two parties.”  United States v. Austin Decoster, No. 15-1890, slip op. at 8 (8th Cir. Jul. 6, 2016).  

Judge Murphy, writing on behalf of the court, addressed the problem of “vicarious liability” by clarifying that Park liability under the FDC Act does not impose vicarious liability, but rather recognizes the “blameworthiness” of a corporate officer that “fail[s] to prevent or remedy the conditions which gave rise to the charges against him.”  Id.  (internal quotations omitted) (citing United States v. Park, 421 U.S. 658, 673, 675 (1975)).  Judge Gruender, in concurrence, further distinguished the present case from one involving “vicarious liability,” pointing to the fact that the district court had found the Decosters negligent.  See United States v. Austin Decoster, No. 15-1890, slip op. at 14 (8th Cir. Jul. 6, 2016).  He wrote separately from Judge Murphy to emphasize that, pursuant to the Supreme Court’s reasoning in Park, negligence is an absolute prerequisite to imposing a sentence of imprisonment on a responsible corporate officer under the FDC Act.  Id. at 14-18.  Finally, Judge Beam in dissent did not disagree with the other two judges that “vicarious liability” could not justify the imposition of imprisonment for a violation of the FDC Act, but he went further to conclude that a finding of negligence was also insufficient.  To impose a sentence of incarceration under the FDC Act, he opined, the government would have needed to demonstrate that the Decosters had the necessary mens rea or “guilty minds” – in other words, that they knew they were violating the law.  Judge Beam reasoned that the mens rea requirement applies to FDC Act violations because that statute contains no “express congressional statement to the contrary.”  Id. at 22-23.  Thus, he dissented from the majority opinion in favor of upholding the Decosters’ sentence.

We will continue to follow this case and keep blog readers informed, and may follow with further analysis of this Eighth Circuit holding at a later date.

Categories: Enforcement