Criminal Liability Exposure Under the Food Safety Modernization Act: What Every CEO Should Know

Food retail executives are aware that on January 4, 2011, President Obama signed the Food Safety Modernization Act (FSMA) into law. And most are very aware that over the past 13 months, the U.S. Food and Drug Administration has issued a series of major regulations implementing the FSMA, and FDA is under a court order to finalize them by June 30, 2015. What many food retailers might not be aware of is that FSMA creates large new criminal liabilities for food industry firms up and down the supply chain, which includes food retailers and wholesalers. In accordance with the U.S. Supreme Court decision in U.S. v. Park–also known as the Park Doctrine–chief executive officers and other corporate officers can be held personally liable for misdemeanor violations of the Federal Food, Drug and Cosmetic Act (FD&C Act) regardless of whether or not they engaged in the violations or even had any actual knowledge of them.

FSMA created six new kinds of criminal violations under the FD&C Act and has triggered a seventh, which had previously been on the books but not implemented.

These violations are:

1. Operating a facility not in compliance with the FSMA Preventive Controls Regulations (for both Human and Animal Food)

2. Failure to comply with the FSMA Produce Safety Regulation

3. Failure to comply with the FSMA Food Defense Regulation

4. Refusal or failure to comply with an FDA recall order

5. Knowing and willful failure to comply with consumer recall notification requirements

6. The importing or offering for importation of a food if the importer does not have a foreign supplier verification program in compliance with the FSMA Foreign Supplier Verification Program Regulation

7. Failure to comply with the Sanitary Food Transportation Act Regulation

Under the Park Doctrine, the CEO of a company can be held personally liable for these and other violations of the FD&C Act for violations committed by their employees.

Examples of such violations include failing to properly verify that a foreign supplier adequately controls hazards, failure to implement preventive controls, and failure to properly maintain temperature of foods that could become hazardous or spoil during transportation operations.

Criminal penalties for these violations include significant fines and imprisonment. Misdemeanor convictions are punishable by up to one year of imprisonment and up to a $100,000 fine for an individual, unless the violation results in death, in which the maximum fine is $250,000. Fines are doubled for organizations.

In case you are wondering if this threat is real, FDA has recently taken action against corporate officers for FD&C Act violations. In September 2013, Colorado melon farmers Eric and Ryan Jensen were arrested for violations of the FD&C Act following a deadly Listeria outbreak linked to their produce. The Jensens pleaded guilty to the charges and were each sentenced to five years' probation, with the first six months in home detention, 100 hours community service and ordered to pay $150,000 in restitution to the victims of the outbreak. It is not hard to conceive of a scenario where the CEO of a food retail or wholesale operation involved in an outbreak is held criminally liable for violations of FSMA .

What actions can food retail CEOs take to reduce exposure to the criminal liability?

1. Be proactive when it comes to food safety: hire a compliance officer or create a compliance committee within your company; develop written food safety standards and procedures; implement comprehensive employee food safety training; and, establish a confidential disclosure program.

2. Follow up when you become aware of food safety problems within your operations. Ask to see evidence that food safety problems have been corrected and document your review of records of corrective action. Do not simply rely on the statement of an employee that "it's been taken care of."

3. Utilize robust third-party food safety standards such as the Safe Quality Food Institute, which requires annual unannounced audits.

4. Transfer risks to other parties. For example, transfer risk under the Foreign Supplier Verification Program by using an unrelated importer to import food from suppliers.

To protect themselves, it is essential that CEOs and other corporate officers of food industry firms become educated on the increased criminal liability risk FSMA has placed on them and take steps to mitigate it.

Enhancing the Effectiveness and Speed of Product Recalls

No company wants a recall, but when they inevitably happen, a food retailer's reputation requires a recall to be handled with speed and efficiency. To minimize the negative impact of a recall, it is critical that fast, accurate recall information reach the point-of-sale as soon as possible, so that affected product can be removed and the consumer is protected. Self-reported by FMI members, Class-I recalled products are removed from the shelf within two hours, which demonstrates the supply chain's reaction in crisis. Imagine if Class-III recalls were handled with the same efficiency and urgency.

Today, manufacturers must enter recall data multiple times–transmitting the same information different ways to different entities–duplicating work, causing delays and opening room for error. Consequently, retailers often are not the first to receive the required information in a fast and accurate way, meaning they are sometimes reduced to learning about and reacting to recalls via press releases and other web services.

Rapid Recall Exchange (RRE) powered by GS1 US, is an industry-standards-based utility–designed by the industry, for the industry–intended to create a common platform for brand owners to enter the recall data once and for retailers to receive fast, accurate, and complete information. RRE subscribers reap the benefits of improved consumer safety and enhanced industry reputation as well as efficiently eliminating duplicative work and reducing the chance of errors.

RRE features and capabilities include:

  • A standardized format and recall form;
  • Two-way communication between recalling firm and recipient;
  • Product handling instructions; and
  • A recall audit report that provides capabilities to verify notification and receipt.

While there remains work to be done to strive for industry-wide adoption rates, to date, RRE has 1,100 suppliers, retailers and wholesalers as subscribers. In 2011 RRE was the recipient of the Food Safety Innovation Award presented by the International Association for Food Protection.

For more information, visit or contact Pat Walsh at [email protected].

Erik Lieberman can be reached at [email protected].