From the FDA Law Blog – Feb 2, 2011 (reference below):
“… a corporate official can be convicted of a misdemeanor based solely on his position of responsibility and control to prevent the underlying violation of the FDCA. There is no requirement that the official acted personally in the wrongdoing, or that he even had knowledge of it. The Supreme Court determined that the FDCA “imposes not only a positive duty to seek out and remedy violations when they occur but also, and primarily, a duty to implement measures that will insure that violations will not occur.” Park, 421 U.S. at 672.”This is not limited to the processors, but to those who utilize contract manufacturers. From the FDA Law Blog – May 28, 2013 (reference below):
“The letters cite Park and Dotterweich to support the legal theory that a distributor that uses contract manufacturers or labelers may be liable (or convictable) for Current Good Manufacturing Practice ("CGMP") violations by its contractors.”
This is different than the PCA Peanut Butter cases, where officials knew they were shipping contaminated product. As seen in the Jensen case, it is more of a point that they should have known and taken preventive actions.
FDA Law Blog
February 06, 2011
FDA Finally Releases “Non-binding” Park Doctrine Criteria
By Anne K. Walsh –
Eleven months after telling Senator Grassley (in a letter available here) that “[c]riteria now have been developed for consideration in selection of misdemeanor prosecution cases and will be incorporated into the revised policies and procedures that cover appropriate use of misdemeanor prosecutions,” FDA just last week finally released those criteria. The idea behind such criteria is to increase misdemeanor prosecutions against corporate officials under the Park doctrine.
As the amount of penalties paid by corporations for violations of the Federal Food, Drug, and Cosmetic Act ("FDCA") has increased, there has been a corresponding increased focus on deterring continued violations by holding individuals responsible. Under the theory derived from the U.S. Supreme Court case of United States v. Park, 421 U.S. 658 (1975), a progeny of United States v. Dotterweich, 320 U.S. 277 (1943), a corporate official can be convicted of a misdemeanor based solely on his position of responsibility and control to prevent the underlying violation of the FDCA. There is no requirement that the official acted personally in the wrongdoing, or that he even had knowledge of it. The Supreme Court determined that the FDCA “imposes not only a positive duty to seek out and remedy violations when they occur but also, and primarily, a duty to implement measures that will insure that violations will not occur.” Park, 421 U.S. at 672.
While we are grateful to finally have a glimpse into the criteria, there are numerous problems with them. First, the non-binding nature of these criteria provides no guidance or comfort to individuals who are potentially subject to Park liability. FDA goes to great lengths to state that the criteria “do not create or confer any rights or benefits for or on any person, and do not operate to bind FDA. Further, the absence of some factors does not mean that a referral is inappropriate where other factors are evidence.” So the criteria are not really criteria at all.
More significantly, there is nothing groundbreaking or enlightening contained in the criteria. The seven listed criteria (see here under "Special Procedures and Considerations for Park Doctrine Prosecutions"), in addition to 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, include:
(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.
These criteria are the same as those considered in any decision of whether to proceed criminally, misdemeanor or felony. They are hardly unique to this incredibly stringent strict liability standard against responsible corporate officials. Indeed, FDA refuses to provide any examples of “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.”
Lastly, while it may make FDA feel powerful to articulate principles for prosecution, the true power and authority for proceeding criminally lies with the U.S. Attorneys’ Offices throughout the country and the Department of Justice. The enforcement discretion ultimately lies with the prosecutors, despite whether the criteria laid out by FDA are satisfied.
Thanks to our colleagues at Ropes & Gray for being persistent in their FOIA request for the publication of these criteria. While it is generally helpful to see the factors for criminal prosecution under the Park doctrine published in FDA’s Regulatory Procedures Manual, the public has waited a long time for an obvious statement of factors that the Supreme Court, subsequent case law, and DOJ policy has already made clear.
May 28, 2013
FDA Law Blog
FDA Cites Park Doctrine in a Different Context
By Paul M. Hyman –
As we have discussed previously, the Park doctrine allows the government to seek a misdemeanor conviction against a company official for alleged violations of the Federal Food, Drug, and Cosmetic Act ("FDCA") without having to prove that the official participated in or was even aware of the violations. The government need only demonstrate that the official was in a position of authority to prevent or correct the alleged violation. The Park doctrine, in effect, renders FDCA violations strict liability crimes for corporate officials in positions of responsibility or authority.
Several FDA Warning Letters, issued last month and this month, appear to be the first letters in recent memory in which FDA has cited United States v. Park and its predecessor, United States v. Dotterweich. On closer reading, however, the recent letters do not cite the Park doctrine for the usual theory of strict liability for company officials or even as a clear threat to prosecute individuals. The letters, instead, appear to cite Park and Dotterweich to make a point about vicarious liability.
Each letter was addressed to a dietary supplement distributor. The letters cite Park and Dotterweich to support the legal theory that a distributor that uses contract manufacturers or labelers may be liable (or convictable) for Current Good Manufacturing Practice ("CGMP") violations by its contractors. The letters state as follows:
Although your firm may contract out certain dietary supplement manufacturing operations, it cannot . . . contract out its ultimate responsibility to ensure that the dietary supplement it places into commerce (or causes to be placed into commerce) is not adulterated for failure to comply with dietary supplement CGMP requirements (see United States v. Dotterweich, 320 U.S. 277, 284 (1943) (explaining that an offense can be committed under the Act by anyone who has “a responsible share in the furtherance of the transaction which the statute outlaws”); United States v. Park, 421 U.S. 658, 672 (1975) (holding that criminal liability under the Act does not turn on awareness of wrongdoing, and that “agents vested with the responsibility, and power commensurate with that responsibility, to devise whatever measures are necessary to ensure compliance with the Act” can be held accountable for violations of the Act)[)]. . . .The Act prohibits a person from introducing or delivering for introduction, or causing the delivery or introduction, into interstate commerce a dietary supplement that is adulterated under section 402(g) for failure to comply with dietary supplement CGMP requirements. . . . Thus, a firm that contracts with other firms to conduct certain dietary supplement manufacturing, packaging, and labeling operations for it is responsible for ensuring that the product is not adulterated for failure to comply with dietary supplement CGMP requirements, regardless of who actually performs the dietary supplement CGMP operations.
The idea that a distributor might be responsible for CGMP violations by its contract manufacturers or labelers is, of course, nothing new. The letters include, almost verbatim, statements about distributor liability from the 2007 FDA notice announcing the final dietary supplement CGMPs. The citations to the Park doctrine simply appear to add teeth to the prior guidance and possibly suggest (or hint) – without any overt discussion – that a distributor and its officers might be held liable.
That a company official could be convicted of a misdemeanor based on the acts of a third party contractor appears possible under the Park doctrine. While Park involved an officer’s vicarious liability for his own company’s acts, Dotterweich involved an officer’s vicarious liability for the acts of third party manufacturers. Despite the facts of the 70 year-old Dotterweich decision, however, the conviction of an officer for third party acts is not a foregone conclusion – especially at this point.
Both Park and Dotterweich were split decisions with strong dissents. Moreover, as we have pointed out previously, what is a misdemeanor now is much more serious than what it was even 20 years ago in terms of potential monetary penalties and prison sentences. If the penalty sought against a corporate official appears particularly severe – or the alleged FDCA violation appears more technical than dangerous – juries and courts may be wary of finding guilt based on strict liability. By the same token, the more tenuous the connection appears between an official and those who actually violated the FDCA, the more juries and courts may be willing to cut off vicarious liability.