Opinion: Bad Eggs and Prison Sentences

The legal troubles of the father and son executives of an Iowan egg farm could have repercussions for businesses everywhere: In a case involving a 2010 salmonella outbreak, an appeals court has decided that you can get prison time for violating federal regulations, even if you didn’t know you were breaking the rules.

It’s a unique decision, and one that the Supreme Court should examine.

The defendants — Jack DeCoster, owner of Quality Egg LLC, and his son Peter, the CEO — are hardly sympathetic. The Food and Drug Administration identified their facilities as the source of a July 2010 salmonella outbreak that sickened some 56,000 people nationwide. An FDA search found live and dead rodents and frogs, manure piled to the ceiling, and other things that you don’t want to hear about but that might make you stop eating eggs unless you buy them from the farmer yourself. The salmonella infection rate at their facilities was 39 times the national average.

A criminal investigation found that Quality Egg had failed to follow its own food safety and pest control measures, lied to auditors, falsified packing dates, and bribed a federal inspector to release eggs that were red-flagged for safety violations. The company pleaded guilty to three felonies and paid a fine of $6.8 million. The DeCosters personally pleaded guilty to federal misdemeanors under the Food and Drug Cosmetic Act and were fined $100,000 each.

A federal trial judge, though, went one step further: On the grounds that the DeCosters were not “mere unaware” corporate executives, he sentenced them to three months each in federal prison. This was a bold move, because they argued that under Supreme Court precedent, they shouldn’t be imprisoned if they were merely negligent in their failure to establish an effective salmonella protection regime. They had to have meant to commit a crime.

Until July 2010, there was no legal obligation to test eggs for salmonella, even after a company detected the bacterium in its egg-laying environment. (You read that right. Ugh.) Quality Egg did occasionally test its facilities before July 2010, and it did occasionally get positive results for salmonella. But it didn’t test its eggs, because it wasn’t required to.

In their appeal, the DeCosters argued that they didn’t know the eggs were contaminated at the time of shipment. They couldn’t be convicted of failing to test the eggs, because it wasn’t a crime before July 2010.

A split panel of the U.S. Court of Appeals for the Eighth Circuit upheld the prison sentences. It said the DeCosters’ convictions weren’t for vicarious liability — legal responsibility for the acts of others — but rather for their own failure to remedy the conditions which gave rise to the charges, namely the shipment of the tainted eggs. Given conditions at their facilities, they either knew or should have known that they might be shipping contaminated eggs. They were therefore criminally “liable for negligently failing to prevent the salmonella outbreak.”

The court further held that it didn’t matter that the DeCosters had no “mens rea,” law-Latin for guilty-mind knowledge that you are committing a crime. The three-month sentence, the court held, was relatively short, did not do any added damage to the defendants’ reputation, and was consistent with congressional intent.

The best legal support for the majority’s holding comes from a 1975 Supreme Court case that also applies to corporate executive liability under the FDCA. The court held that an executive could be found criminally liable if he had “the power to prevent or correct violations” of the law and didn’t do so.

Dissenting Judge C. Arlen Beam saw the case differently. He cited more recent cases in which the Supreme Court has supported the traditional mens rea requirement — unless Congress has said otherwise. He also pointed out that the 1975 case did not involve prison time, and asserted that “there is no precedent that supports imprisonment without establishing some measure of a guilty mind.”

This case is tough enough to justify consideration by the Supreme Court. On the one hand, it’s been established since 1943 that executives can be found guilty of a corporate crime based on acts of others — otherwise it would be impossible to criminalize many violations of administrative regulations. On the other hand, prison time for a merely negligent act deviates from the strong common-law tradition of requiring a guilty mind for a crime. Congress shouldn’t be assumed to have made such a deviation unless it says so clearly.

The best legal result here would have been to find the DeCosters guilty of misdemeanors but not sentence them to prison time. Their malfeasance isn’t pretty. But that’s at least partly the fault of the government for failing to establish adequate safety standards for eggs — and maybe ours for not looking too closely into the horrors of the industry.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.


About Noah Feldman, Bloomberg Opinion

Noah Feldman is a Bloomberg Opinion columnist and host of the podcast “Deep Background.” He is a professor of law at Harvard University and was a clerk to U.S. Supreme Court Justice David Souter. His books include “The Three Lives of James Madison: Genius, Partisan, President.” More from Noah Feldman, Bloomberg Opinion

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