Petition — United States v. Park

Supren,@ court, U.

FILED

AUG 30 1974

MICHAEL RODAK, JR.,CLERK

y

wo 4° 21 5

Gn the Supreme Court of the United States

OcToBER TERM, 1974

UNITED STATES OF AMERICA, PETITIONER

Vv.

JoHN R. Park

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT

ROBERT H. BORK,

Solicitor General,

THOMAS E. KAUPER,

Assistant Attorney General,

HOWARD E. SHAPIRO,

JOHN J. POWERS, III,

Attorneys,

Department of Justice,

Washington, DC. 20530.

PETER BARTON HUTT,

Assistant General Counsel,

Food and Drugs Division

Department of Health, Education, and Welfare,

Rockville, Md. 20852.

Page

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CITATIONS

Cases:

Fong Foo v. United States, 369 U.S. 141_----- 14

H. B. Gregory Co. v. United States, No. 73-

1744, decided March 14, 1974, petition for a

writ of certiorari pending, No. 74-142___-_ 11

Lelles v. United States, 241 F. 2d 21, certiorari

gE ee 12

United States v. Ball, 163 U.S. 662__....---- 14

United States v. Calderon, 348 U.S. 160___-_- 16

United States v. Cassaro, Inc., 443 F. 2d153__. 11-12

United States v. Diamond State Poultry Co.,

Be Ws CN GPE UE da ceemaeccnese 12

United States v. Dotterweich, 320 U.S. 277__. passim

United States v. Freed, 401 U.S. 601______--- 12

United States v. Jenkins, No. 73-1513, cer-

tiorari granted, May 28, 1974____.____--- 14

United States v. Kaadt, 171 I. 2d 600_____-_- 12, 13

(1)

Cases—Continued ven

United States v. Kaufman, 453 F. 2d 306_-_--- 15

United States v. Parfait Powder Puff Co.,

163 F. 2d 1008, certiorari denied, 332

eee ee eee 12

United States v. Ross, 321 F. 2d 61, certiorari

I, Ge We Ge w kc acccccnccecceccs 15.

United States v. Shapiro, 491 F. 2d 335_____- 11

United States v. Sisson, 399 U.S. 267_______. 14

United States v. Wiesenfeld Warehouse Co.,

a ie 12

United States v. Woods, 484 F. 2d 127___.__.. 7,15

Statutes:

Federal Food, Drug, and Cosmetic Act of

1938, 52 Stat. 1040, as amended, 21 U.S.C.

301 et seq.:

Section 301, 21 U.S.C. 331______- 7-8, 9, 13, 14

Section 301(k), 21 U.S.C. 331(k}_..-___- 2, 3,8

Section 402(a)(3), 21 U.S.C. 342(a)(3)__- 3

Section 402(a)(4), 21 U.S.C. 342(a)(4)__- 3

I a a al nee 13.

Gu the Supreme Court of the United States

OCTOBER TERM, 1974

No.

UNITED STATES OF AMERICA, PETITIONER

' Vv.

JoHN R. Park

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT

The Solicitor General, on behalf of the United

States, petitions for a writ of certiorari to review the

judgment of the Court of Appeals for the Fourth Cir-

cuit in the above-captioned case.

OPINION BELOW

The opinion of the court of appeals (App. A, infra,

pp. 1A-12A) is not yet officially reported.

JURISDICTION

The judgment of the court of appeals (App. B,

infra, p. 138A) was entered on July 2, 1974. On

July 26, 1974, Mr. Chief Justice Burger extended

the time within which to file a petition for a writ of

certiorari to and including August 31, 1974. The

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

(1)

2

QUESTIONS PRESENTED

1. Whether, in a prosecution of a corporate officer

for doing or causing acts resulting in the adulteration

of food, an instruction that the jury may convict if it

finds that the defendant had a responsible relation to

the situation, but which does not also require a finding

of particular acts of omission or commission or gross

nevligence by the officer, accords with the standards of

United States v. Dotterweich, 320 U.S. 277.

2. Whether evidence that the president of a super-

market chain was on notice of insanitary conditions

in his firm’s Philadelphia warehouse in March 1970,

was admissible to rebut his defense of justifiable re-

liance on subordinates, or to show his failure ade-

quately to supervise them, with respect to insanitary

conditions in the chain’s Baltimore warehouse in 1971

and 1972.

STATUTE INVOLVED

Section 301(k) of the Federal Food, Drug and Cos-

metic Act of 1938, 52 Stat, 1042, as amended, 21

U.S.C. 331(k), provides:

The following acts and the causing thereof are

prohibited :

* * %: * *

(k) The alteration, mutilation, destruction,

obliteration, or removal of the whole or any

part of the labeling of, or the doing of any

other act with respect to, a food, drug, device,

or cosmetic, if such act is done while such ar-

ticle is held for sale (whether or not the first

sale) after shipment in interstate commerce

and results in such article being adulterated or

misbranded,

3

STATEMENT

In a five-count information filed in the United

States District Court for the District of Maryland,

the United States charged Acme Market, Inc., a large

food store chain, and respondent, its president, with

violating Section 301(k) of the “ood, Drug, and Cos-

metic Act, supra, p. 2. The information alleged that

the defendants had received food that had been

shipped in interstate commerce and held for sale in

Acme’s Baltimore warehouse following the interstate

shipment, and that, because Acme’s Baltimore ware-

house was infested by rodents, the defendants had

caused the food to be adulterated by being exposed to

contamination by rodents.’ .

Each count of the information charged that the food

was adulterated because it consisted in part of a filthy

substance and was rodent-gnawed (see 21 U.S.C. 342

(a)(3)) and heeause the food was held under in-

sanitary warehouse conditions whereby it may have

become contaminated (see 21 U.S.C. 342(a)(4)).

Acme entered a plea of guilty to each count of the

information. On May 10, 1973, after a jury trial, re-

spondent was found guilty on all five counts of the

information, and was subsequently sentenced to pay a

total fine of $250.

1. At trial, the government introduced evidence

establishing that the adulterated food had been

* Acme is a nationwide food store chain that employs approxi-

mately 36,000 persons and does business through 874 retail out-

lets. The company has twelve main warehouses and four special

warehouses located in various parts of the country. The com-

pany headquarters, including respondent’s office, is located in

Philadelphia, Pennsylvania (App. A, infra, p. 5A, n. 5).

4

shipped in interstate commerce and was being held

for sale in the Baltimore warehouse. An inspector

from the Food and Drug Administration testified that

he inspected this warehouse in November and Decem-

ber 1971 and found extensive evidence of rodent in-

festation (J.A. 20-22).* Following this inspection,

FDA sent respondent a ietter advising him of the

conditions at the Baltimore warehouse (J.A. 30, Exh.

23). Robert W. McCahan, Baltimore Divisional Vice-

President, responded to the letter on behalf of re-

spondent (J.A. 32, Exh. 24). A second inspection by

FDA in March 1972 revealed further evidence of

rodent infestation (J.A. 22-23). The first four counts

of the information (App. A, infra, p. 2A) described

violations discovered during the inspection in Novem-

ber and December 1971, while the fifth count described

violations discovered during the inspection in March

1972 (ibid.).

McCahan testified that he replied to the FDA letter

on behalf of respondent (J.A. 35). Acme’s general

counsel identified respondent as the president and

chief executive officer of Acme and read the company

bylaws describing respondent’s duties. The bylaws

provide that the chief executive officer “shall, subject

to the board of directors, have general and active

supervision of the affairs, business, offices and em-

ployees of the company”’ (J.A. 40).

Respondent was the only defense witness. He testi-

fied that, while all company employees were under his

direction, he employed a system of delegated respon-

2“J.A.” refers to the Joint Appendix filed in the court of

appeals.

5

sibilities under which he had delegated the responsi-

bility for dealing with sanitation problems to various

other persons within the corporation (J.A. 43-46).

He admitted that he had seen the letter sent to him

by FDA following the first inspection, advising him

of the conditions at the Baltimore warehouse, but

stated that he had delegated the responsibility of in-

vestigating the situation to MeCahan (J.A. 46-48).

On cross-examination, respondent admitted that he

had received and read a letter from FDA dated April

24, 1970 (J.A. 53-55). This letter (Exh. 27) stated

that evidence of rodent infestation had been found in

Acme’s Philadelphia Warehouse.’ Respondent ack-

nowledged that, with the exception of the divisional

vice-president, the same corporate officials have re-

sponsibility for sanitation in both Baltimore and

Philadelphia (J.A. 55-56). He also conceded that

sanitation problems occurred in Philadelphia and then

again in Baltimore, that these incidents indicated that

his system for handling sanitation matters was not

working perfectly, and that he had the ultimate re-

sponsibility to make whatever changes were necessary

to make the system work (J.A. 56-57).

The district court instructed the jury on the issue

of respondent’s responsibility as follows (J.A. 64):

The statute makes individuals, as well as cor-

porations, liable for violations. An individual is

lable if it is clear, beyond a reasonable doubt,

that the elements of the adulteration of the food

as to travel in interstate commerce are present.

* Respondent objected to all questions concerning the Phila-

delphia incident.

6

As I have instructed you in this case, they are,

and that the individual had a responsible rela-

tion to the situation, even though he may not

have participated personally.

The individual is or could he liable under

the statute, even if he did not consciously do

wrong. However, the fact that the Defendant

is president * and is a chief executive officer of

the Acme Markets does not require a finding

of guilt. Though, he need not have personally

participated in the situation, he must have had

a responsible relationship to the issue. ‘The issue

5 is, in this case, whether the Defendant, John

R. Park, by virtue of his position in the com-

pany, had a position of authority and responsi-

bility in the situation out of which these charges

arose.

Respondent objected to this instruction on the

ground that it was not consistent with this Court’s

decision in United States v. Dotterweich, 320 U.S.

277 (J.A. 64-65). The jury returned a verdict of

guilty on all five counts of the information (J.A. 2).

2. A divided panel of the court of appeals reversed

the judgment of conviction and remanded the case

for a new trial. The majority held that the jury in-

struction “might well have left the jury with the

erroneous impression that Park could be found guilty

in the absence of ‘wrongful action’ on his part” (App.

A, infra, p. 5A). The court stated that the requisite

“wrongful action”’ could consist of respondent’s “gross

negligence and inattention in discharging his corpor-

‘Although the transcript says “present,” the court obviously

meant, and presumably said, “president.”

7

ate duties and obligations or any of a host of other

acts of commission or omission which would ‘cause’

the contamination of the food’’ (td. at 6A), but that

respondent could not be found guilty simply beeause

of ‘“‘his relation to the corporation” as its president

(id. at 5A).

The court also held that testimony concerning the

Philadelphia incident should have been excluded as

being unduly prejudicial (id. at 8A), although the

court nevertheless suggested that the testimony might

be admissible at retrial depending upon ‘‘the prosecu-

tion’s new approach to the presentation of its case’’

(td. at 9A) and the district court’s application of the

standards for admission of evidence of prior offenses

set forth in the court’s recent decision in United

States v. Woods, 484 F. 2d 127, 134 (C.A. 4) (App.

A, infra pp. TA-8A).

Judge Craven dissented on the ground that the ma-

jority opinion was inconsistent with United States

v. Dotterweich, supra. He coneluded that the govern-

ment had presented sufficient evidence to send the

ease to the jury and that the jury was properly

instructed. He also noted that the government had

not argued to the jury that it could find the defendant

guilty simply because he is the head of the company

(App. A, infra, pp. 9A-12A).

REASONS FOR GRANTING THE WRIT

In United States vy. Dotterweich, 320 U.S. 277, this

court held that individual corporate officers and em-

ployees, as well as corporations, may be convicted for

doing or causing the acts prohibited in Section 301 of

8

the Federal Food, Drug and Cosmetic Act of 1938 (52

Stat, 1042, as amended, 21 U.S.C. 331). In that deci-

sion, the Court also construed the standard of respon-

sibility laid down by Congress for the officers and

agents through whom corporations handling food and

drugs must act: a person standing ‘‘in responsible

relation’’ to the prohibited acts may be criminally

liable for their occurrence even though he is not aware

of the wrongdoing. 320 U.S. at 281.

Thus, officials of business entities whose activities

affect the public health have been subjected to one of

the highest standards of public accountability. This

standard, unchanged by Congress, has protected the

publhe for more than 30 years since Dotterweich. The

decision of the court of appeals in this case, however,

has lowered the level of accountability defined in Dot-

terweich by adding a new element—a requirement of

a finding that the responsible corporate official also be

guilty of gross negligence or other particular acts of

omission or commission causing the violation (App.

A, infra, p. 6A). This ruling conflicts with Dotter-

weich and decisions of other courts applying Dotter-

weich. Moreover, it defeats the purpose of Congress in

enacting Section 301 by inviting corporate executives

to insulate themselves from active supervision of mat-

ters vitally affecting the public health, and by diffus-

ing responsibility for such matters.

1. Despite this Court’s warning in Dotterweich that,

in construing Section 301, “[l]iteralism and eviscera-

tion are equally to be avoided” (320 U.S. at 284), the

court of appeals gave an unduly rigid reading to Sec-

tion 301(k), the provision involved here. That section

9

prohibits the “doing’’ or the “causing” of any “act

with respect to, a food, * * * if such act is done while

such article is held for sale (whether or not the first

sale) after shipment in interstate commerce and re-

sults in such article being adulterated * * *.” The

court of appeals concluded that liability under this

statute requires proof of some “wrongful” act.

Dotterweich is to the contrary. That case in-

volved prosecution under Section 301(a) of a drug

jobbing corporation, and its president and general

manager, Dotterweich, for shipping misbranded drugs

in interstate commerce. A jury failed to agree as to

the corporation, but nevertheless convicted Dotter-

weich as the responsible corporate officer even though

he had no personal knowledge of the misconduct in-

volved, and there was no evidence of any “personal

guilt” on his part. 320 U.S) at 286 (Murphy, J. dis-

senting). The court of appeals set aside the conviction

on the ground that only the corporation could be

convicted for the offense charged. In reinstating

the conviction, this Court defined standards of cor-

porate and individual responsibility imposed by Sec-

tion 301 which are now regarded as fundamental in

the food and drug industries.

The Court held, first, that the statute ‘‘dispenses

with the conventional requirement for criminal con-

duct—awareness of some wrongdoing. In the interest

of the larger good it puts the burden of acting at

hazard upon a person otherwise innocent but standing

in responsible relation to a public danger. United

States v. Balint, 258 U.S. 250.’’ 320 U.S. at 281.

10

Second, it rejected a reading of the statute based

upon fears that it ‘‘might” operate too harshly by

sweeping within its condemnation any person how-

ever remotely entangled in the proscribed shipment”

(id. at 284). As the Court stated (¢bid.) :

To speak with technical accuracy, under § 301

a corporation may commit an offense and all

persons who aid or abet its commission are

equally guilty. Whether an accused shares

responsibility in the business process resulting

in unlawful distribution depends on the evi-

dence produced at the trial and its submission—

assuming the evidence warrants it—to the jury

under appropriate guidance. The offense is com-

mitted, unless the enterprise which they are

serving enjoys the immunity of a guaranty, by

all who do have such a responsible share in the

furtherance of the transaction which the statute

outlaws, namely, to put into the stream of inter-

state commerce adulterated or misbranded

drugs. * * *

Third, the Court recognized the practical conse-

quences of the high standard it was adopting, and

found support for it in the balance struck by Congress

between the relative situations of the corporate official

in a position to learn of problems in the business he

is running, and that of consumers who might inno-

cently suffer grave injuries to their health (id. at

284-285) :

Hardship there doubtless may be under a stat-

ute which thus penalizes the transaction though

consciousness of wrongdoing be totally wanting.

Balancing relative hardships, Congress has pre-

ferred to place it upon those who have at least

11

the opportunity of informing themselves of the

existence of conditions imposed for the pro-

tection of consumers before sharing in illicit

commerce, rather than to throw the hazard on

the innocent public who are wholly helpless.

The decision in Dotterweich thus rested on Con-

gress’ clear purpose to impose upon corporate officers

with supervisory responsibilities an affirmative duty

to assure that food and drugs are not adulterated or

misbranded. The Court eschewed any attempt to define

or clarify “the variety of conduct whereby persons

may responsibly contribute in furthering a [violation

of the Act].” Id. at 285. Rather, it held that “[i]n

such matters the good sense of prosecutors, the wise

guidance of trial judges, and the ultimate judgment

of juries must be trusted.” Zbid. The question of indi-

vidual responsibility, therefore, is properly a matter

for the jury in the light of its assessment of evidence

showing the individual defendant’s duties within his

firm.

These criteria have been followed in numerous ¢ases.

For example, in H. B. Gregory Co. v. United States,

No. 73-1744 (C.A. 7), decided March 14, 1974,

pending on petition for a writ of certiorari, No. 74-

142, the Court of Appeals for the Seventh Circuit

expressly rejected a contention that the strict personal

liability recognized in Dotterweich was an improper

legal standard because it “fails to require a causal

relation between the individual and the violation of

the Act.” Slip op. p. 8. See also United States v.

Shapiro, 491 F. 2d 335, 337 (C.A. 6) ; United States y.

Cassaro, Inc., 443 F. 2d 153, 157 (C.A. 1); Lelles vy.

United States, 241 F. 2d 21, 22-25 (C.A. 9), certiorari

12

denied, 353 U.S. 974; United States vy. Kaadt, 171 F.

2d 600, 604 (C.A. 7); United States vy. Parfait Powder

Puff Co., 163 F. 2d 1008 (C.A. 7), certiorari denied,

332 U.S. 851; United States vy. Diamond State Poultry

C'o., 125 F. Supp. 617, 619, 620 (D. Del.).

Moreover, the principles of Dotterweich that are

controlling here have been reiterated and reaffirmed

by this Court in United States v. Wiesenfeld Ware-

house Co., 376 U.S. 86, 91, and United States v. Freed,

401 U.S. 601, 609.

The court below purported to distinguish Dotter-

weich on two grounds. First, it emphasized the size of

the supermarket chain of which respondent was presi-

dent and chief executive officee (see p. 3, supra, n.

1). But nothing in Dotterweich indicates that a cor-

poration’s size is an exculpatory factor; the test of

constructive participation is official responsibility,

whether the corporation be large or small. Assessment

of that responsibility, in the light of such facts as the

corporation’s size and other defensive matters raised at

trial, is a matter for the jury under proper intructions.

See United States v. Wiesenfeld Warehouse Co.,

supra,

Second, the court of appeals relied upon a sentence

in Dotterweich suggesting that all who aid and abet

a corporation In commission of an offense are equally

guilty. 320 U.S. at 284. Read in context, however,

that language was intended simply to emphasize the

concept of individual responsibility, not to restrict

the independent offense, so carefully defined in Seec-

tion 301, to prosecutions for aiding, abetting or con-

2 —————————OeEOEEOEOOOEOEOEOEO_OEOE_E_E_E_E___ eee

13

spiring with the corporation.’ This is shown by the

fact that it was not fatal to the validity of the officer’s

conviction in Dotterweich that the jury had disagreed

as to the guilt of the corporation.

The jury instructions upheld by this Court in

Dotterweich (320 U.S. at 285) show that proof of a

wrongful act by a corporate official is not necessary

to establish his liability under Section 301.° These in-

structions did not require the jury to find ‘‘wrongful

action,’’ but simply to determine responsibility. Simi-

larly, the charge in the instant case instructed the

jury to determine whether respondent *‘had a position

of authority and responsibility in the situation out of

which these charges arose” (Statement, supra, p. 6).

As Judge Craven recognized in his dissent, the gov-

ernment has never argued that respondent is guilty of

°18 U.S.C. 2(a) provides:

“Whoever commits an offense against the United States or

aids, abets, counsels, commands, induces or procures its commis-

sion, is punishable as a principal.”

‘The district court in the Dofterweich case instructed the

jury as follows:

“We also have as a defendant here, Joseph Dotterweich. As

far as the question of his guilt regarding the charges in the

information is concerned, the question is, if you find the prod-

uct to be misbranded and adulterated. ‘Was he responsible for

the shipment of them in interstate commerce?’ In other words,

are you satisfied from the evidence that the shipment of the

caseara compound and the shipment of the digitalis were made

under his supervision by him as ‘General Manager.’ It is not

necessary for the Government to prove (hat he personally and

physically made the shipment himself. It is sufficient if the

evidence establishes to your satisfaction that it was made under

authority conferred by him as general manager upon his sub-

ordinates, including the receiving and shipping clerk.” (Record

on Appeal in [United States v. Joseph H. Dotterweich at 164.)

See also 'nited States v. Kaadt, supra, 171 F. 2d at 604.

14

violating Section 301 solely because he is president of

the corporation. As the trial judge noted in his in-

structions (Statement, supra, p. 6) corporate titles do

not necessarily prove responsibility for the situations

resulting in violation of the Act. Rather, the govern-

ment must offer proof of actual supervisory respon-

sibility relating to the prohibited acts. It did so in this

case, and it was, accordingly, for the jury to deter-

mine, in the light of that proof and respondent’s ex-

culpatory evidence, whether he was in fact respon-

sible.” The decision of the court below to the contrary

would substantially curtail the effectiveness of both

(1) the governnent’s enforcement program under

the Food, Drug and Cosmetic Act and (2) that Act’s

inducement of responsible corporate self-policing on

which the protection of the public in this field so

largely depends.

2. Respondent testified in his own defense that he

had employed a system in which he relied upon his

subordinates to handle sanitation problems, for which

he acknowledged ultimate responsibility. On cross-

examination, the government showed that twenty

months before discovery of the unsanitary conditions

alleged to exist at Acme’s Baltimore warehouse, FDA

* Although the court of appeals has remanded the instant case

for retrial under its new standard, there is no assurance that

adverse decisions of lower courts applying that standard will

be appealable by the government. If the government fails to

present proof of “wrongful conduct,” the trial court may grant

a motion for acquittal. Under the double jeopardy clause, such a

judgment might not be appealable by the government. See United

States v. Ball, 163 U.S. 662, 671; Fong Foo vy. United States, 369

US. 141; United States vy. Sisson, 399 U.S. 267. But see United

States v. Jenkins, No. 73-1513, certiorari granted, May 28, 1974.

=

15

had given respondent notice of unsanitary conditions

in the firm’s warehouse at Philadelphia. This testi-

mony tended to show that respondent was on rotice

that he could not rely upon his system of delegation

to subordinates to prevent unsanitary conditions in

the firm’s warehouses, that he was aware of the

deficiencies of this system before the Baltimore viola-

tions were discovered, and that he had the respon-

sibility and power to take steps to insure that it

worked in compliance with the Act. Cf. United States

v. Ross, 321 F. 2d 61, 67 (C.A. 2), certiorari denied,

375 U.S. 894; United States v. Kaufman, 453 F, 2d

306, 310-311 (C.A. 2).

The panel majority viewed this evidence as if it

were evidence of an unprosecuted prior crime, the ad-

missibility of which depended on a balancing of prej-

udice to the defendant against the needs of justice.

See United States v. Woods, supra, 484 F. 2d -at

134-135. The court found that the evidence was

prejudicial and that no need for it had been shown

under the theory on which this case was tried. The

evidence demonstrated, however, both respondent’s

awareness of prior sanitation deficiencies in Acme’s

warehouse sanitation system, and his admitted respon-

sibility for correcting them, thus tending to rebut his

defense that he had justifiably relied upon subordi-

nates to handle sanitation matters. This evidence was

therefore directly relevant to the jury’s determina-

. |

tion of whether respondent shared the responsibility

for the conditions in issue.*

Under the standard adopted by the court of appeals

here, corporate officials would be encouraged to avoid

the active supervision necessary to protect the public

from adulterated food and drugs. As construed in

Dotterweich, however, the Act was intended to prevent

top officials from seeking refuge behind delegations of

responsibility and restrictions on the reporting up-

ward of information that might trigger accountability.

CONCLUSION

For the reasons stated, it is respectfully submitted

that the petition for a writ of certiorari should be

granted.

Rosert H. Bork,

Solicitor General.

THomas E. Kavuper,

Assistant Attorney General.

Howarp E. SHaptro,

JOHN J. Powers, ITI,

Attorneys.

Perer Barton Hutt,

Assistant General Counsel,

Food and Drugs Division, Department of

Health, Education, and Welfare.

Avaust 1974.

* Such evidence may be considered under [’nited States v. Cal-

deron, 348 U.S. 160, which held that “reviewing courts * * *

can seek corroborative evidence in the proof of both parties

where, as in this case, the defendant introduces evidence in his

own behalf after his motion for acquittal has been overruled.”

Jd. at 164. See also /d. at 164, n. 1.

a

6 ee

a a RD, CUE TE

APPENDIX A

Unrtep States Court or APPEAIS FOR THE

FourtH Crrcvit

No. 73-1953

Unitep States OF AMERICA, APPELLEE

v.

JoHN R. Park, APPELLANT

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF MARYLAND, AT BALTIMORE, JOSFPH H. YOUNG,

DISTRICT JUDGE,

Argued November 7, 1973—Decided July 2, 1974

Before Boreman, Senior Circuit Judge, and Craven

and Fre.p, Circuit Judges

Gregory M. Harvey (J. Cookman Boyd, Jr., Rob

Ross Hendrickson on brief) for Appellant; Leonard

M. Linton, Jr., Assistant United States Attorney,

(George Beall, United States Attorney, on brief) for

Appellee.

BoremaNn, Senior Circuit Judge:

John R. Park, President of Acme Markets, Ine.

(hereafter Acme), was tried and convicted by a jury

of violating 21 U.S.C. § 331(k)--causing the adultera-

(1A)

2A

tion of food which had traveled in interstate commerce

and which was held for sale." The evidence is undis-

puted that an inspector of the Food and Drug Admin-

istration (F.D.A.) made an inspection of Acme’s Bal-

timore warehouse in November and December of 1971

and again in Mareh of 1972. On both of these ocea-

sions the inspector found evidence of rodent infesta-

tion of food stored in the warehouse. As a result of

these inspections an informal hearing was held in

June 1972 at the F.D.A.’s Baltimore office. Although

Park was not present, he was invited to attend the

hearing and was represented by Robert W. MeCahan,

Baltimore Divisional Viee President of Acme.

In March of 1973, a five-count information was

filed charging Acme and Park with the offenses cited

above; four counts stemmed from the 1971 inspection

and the fifth count from the 1972 inspection. Prior to

trial Aeme pleaded guilty to all counts. Park was

tried on the theory that he ‘‘was a corporate officer

who, under law, bore a relationship to the receipt and

storage of food which would subject him to criminal

liability under United States v. Dotterweich, 320 U.S.

277 (1943).” The jury found Park guilty on all counts

and he was fined a total of $250.’

91 U.S.C. $331 provides, in part: “The following acts and

the causing thereof are prohibited:

* * < ¥ *

“(k) The alteration, mutilation, destruction, obliteration, or

removal of the whole or any part of the labeling of, or the

doing of any other act with respect to, a food, drug, device, or

cosmetic, if such act is done while such article is held for sale

(whether or not the first sale) after shipment in inter-

state commerce and results in such article being adulterated or

misbranded.”

* Park stated that a controlling factor in his decision to

appeal this conviction was the fact that a second conviction

under 21 U.S.C. $331 is a felony, punishable by a term of

3a

Park appeals his conviction alleging (1) the court

erred in its instructions to the jury and (2) pre-

judicial evidence of warnings of alleged prior viola-

tions of the Act was improperly admitted.

The court charged the jury that the sole question

was ‘‘whether the Defendant held a position of au-

thority and responsibility in the business of Acme

Markets”; that Park could be found guilty “even if

he did not consciously do wrong” and even though he

had not “personally participated in the situation’’ if

it were proved beyond a reasonable doubt that Park

“had a responsible relation to the sitaution.” We con-

clude that this charge does not correctly state the law

of the ease, that the conviction of Park on all counts

must be reversed and a new trial awarded.

The Government asserts that this case is controlled

hy the decision of the Supreme Court in United States

v. Dotterweich, 320 U.S. 277 (1943),° and contends

imprisonment up to three years. Although violations of food

and drug laws are punishable without regard to proof of

scienter, the Supreme Court has indicated that it is an open

question whether, in the absence of proof of scienter, an ac-

cused could be incarcerated for violating a “regulatory” statute.

Morissette v. United States, 342 U.S. 246 (1952); see also

United States vy. International Minerals & Chemical Corp., 402

U.S. 558, 564 (1971). We note that due process standards with

respect to the loss of liberty appear to be higher than those

with respect to loss of property. C/. Argersinger v. Hamlin, 407

U.S. 25 (1972). We, too, consider this to be an open question

and intimate no opinion on it.

*As Dotterweich was postured when it reached the Supreme

Court the primary question was whether “only the corporation

was the ‘person’ subject to prosecution” under the Act. There-

fore, the Supreme Court's opinion reveals very little about the

factual setting in that case. Mr. Dotterweich was President and

General Manager of Buffalo Pharmacal Company, Inc. The

company was small, employing only twenty-six employees, all of

whom worked on one upper floor of the building. Mr. Dotter-

4a

that Dotterweich specifically held that the Federal

Food, Drug, and Cosmetic Act (Act), 21 U.S.C.

§§ 301-392, ‘‘dispenses with the conventional require-

ment for criminal conduct—awareness of some wrong-

doing.”’ 320 U.S. at 281. From this the Government

argues that the conviction may be predicated solely

upon a showing that the defendant, Park, was the

President of the offending corporation. The error here

is that the Government has confused the element of

“awareness of wrongdoing” with the element of

“wrongful action’’;* Dotterweich dispenses with the

need to prove the first of those elements but not the

second.

As a general proposition, some act of commission or

omission is an essential element of every crime. For

an accused individual to be convicted it must be proved

that he was in some way personally responsible for

the act constituting the crime. The Supreme Court

recognized this in Dotterweich: “The offense is com-

mitted * * * by all who do have such a responsible

weich was responsible for “general overseeing” of the Company

operations; he was the direct supervisor of all employees. The

trial transcript establishes that Mr. Dotterweich personally

made every executive decision and had direct personal super-

visory responsibility over the physical acts which resulted in

the interstate shipment of misbranded and adulterated drugs.

In the instant case Park is the chief executive officer of Acme,

a multistate corporation giant. Sce note 5, infra. It is clear that

his supervisory responsibility over most of the employees is

indirect. There is no allegation or proof that Park was respon-

sible for the executive decisions which resulted in contamina-

tion of the food. The facts of Poftteriweich established the per-

sonal responsibility which we find lacking in the case before us.

*The Federal Food, Drug, and Cosmetic Act §331(k) pro-

hibits “causing” the adulteration of food which has traveled in

interstate commerce an! is held for sale. We would define

“wrongful action” in this context as acts of the accused which

cause the adulteration of such food.

———

> Ree eee

5A

share in the furtherance of the transaction which the

statute outlaws * * *’’ 320 U.S. at 284. The criminal

acts which were the subject of Acme’s conviction can-

not be charged to Park without proof that he par-

ticipated directly or constructively therein or that the

acts were done to further some criminal conspiracy

in which he took part.’ To use the language of Dotter-

wetch, ‘‘under § 301 [21 U.S.C. $331] a corporation

may commit an offense and all persons who aid and

abet its commission are equally guilty.’’ 320 U.S. 284

(emphasis added). It is the defendant’s relation to the

criminal acts, not merely his relation to the corpora-

tion, which the jury must consider; 21 U.S.C. § 331 is

concerned with criminal conduct and not proprietary

relationships.

In sum, the court told the jury that Park would be

guilty if it were shown that he “‘had a position of

authority and responsibility in the situation out of

which these charges arose.’’ This instruction, taken in

combination with the other parts of the charge related

above, might well have left the jury with the erroneous

impression that Park could be found guilty in the ab-

sence of “wrongful action’’ on his part.

Upon a subsequent trial the jury should be in-

structed that a finding of guilt must be predicated

*Acme toaintained its principal corporate offices and head-

quarters in Philadelphia, Pennsylvania. As president, Park also

maintained principal executive offices there. As Acme’s presi-

dent and chief executive officer, Park was theoretically in

charge of approximately 36,000 employees in 874 retail outlets,

12 main warehouses and 4 special warehouses located on the

east and west coasts of the United States. To hold Park

criminally liable for the wrongful actions of each and every

one of these employees by merely showing his position with

the corporation is manifestly unjust, unfair and beyond the

realm of reasonableness.

OA

upon some wrongful action by Park. That action may

be gross negligence and inattention in discharging

his corporate duties and obligations or any of a host

of other acts of commission or omission which would

“cause”® the contamination of the food.’ “Whether

an accused shares responsibility in the business process

resulting in unlawful distribution depends on the evi-

dence produced at the trial and its submission—assum-

ing the evidence warrants it—to the jury under appro-

priate guidance.” Dotterweich, supra, 320 U.S. at 284.

It is argued by the prosecution that the requirement

of such proof will make enforcement more difficult.

Nevertheless, the requirements of due process are in-

tended to favor fairness and justice over ease of en-

forcement. We perceive nothing harsh about requir-

ing proof of personal wrongdoing before sanctioning

the imposition of criminal penalties.

We find another ground for reversal of Park’s

conviction. He contends that the admission in evidence

of a warning by F.D.A. as to conditions alleged to

have existed in 1970 in Aeme’s Philadelphia ware-

house was prejudicial error requiring reversal. There

Was no evidence of prosecution of either Acme or

Park following F.D.A.’s warning. In the recent case of

United States v. Woods, 484 ¥. 2d 127 (4 Cir. 1973),

this court examined in detail the admissibility of evi-

dence relating to prior alleged offenses not the subject

* See note 4, supra.

*It would appear that the question of causation will be a

principal issue upon a retrial. The question of causation is to

be «listinguished from that of intent. United States v. Sheridan,

$29 U.S. 379 (1946). Some guidance with respect to the ques-

tion of causation can be found in cases construing “aid and

abet” which phrase appears in United States v. Dotterweich,

820 U.S. 277, 284 (1943). See also United States y. Peoni, 100

F, 2d 401 (2 Cir. 1938).

7A

of conviction and we will not attempt to claborate

here.®

The Woods majority adopted a modern and liberal

approach concerning the admissibility of such evi-

dence. This court refused to decide the issue by

“nigeonholing’’ the evidence under one of a number of

recognized exceptions to the general rule that such

evidence is inadmissible. Opting for « more flexible

balancing test the court cited MeCormick on Evidence

§ 190, p. 453 (Cleary Ed. 1972).

“T]he preblem is not merely one of pigeon-

holing, but one of balancing, on the one side,

the actual need for the other crimes evidence

in the light of the issues and the other evidence

available to the prosecution, the convincingness

of the evidence that the other crimes were com-

mitted and that the accused was the actor, and

the strength or weakness of the other crimes

evidence in supporting the issue, and on the

other, the degree to which the jury will prob-

ably be roused by the evidence to overmaster-

ing hostility.” United States v. Woods, 484 F.

2d 127, 134 (4 Cir. 1973) (emphasis added).

In determining the admissibility of “prior crimes’’

evidence the Woods majority balanced the relevancy,

persuasiveness and need for such evidence against the

prejudice resulting to the defendant because of its

admission. In a dissenting opinion in Woods Judge

Widener favored the application of a traditional and

®In the case of United States v. Woods, supra, the defend-

ant was convicted of first-degree murder of an eight-month-old

infant. At trial evidence that other children in defendant’s

care had died or suffered respiratory difficulties was admitted to

prove the commission of the crime charged. On appeal this

court held that the evidence was admissible in general and also

admissible to prove corpus delicti. Although Woods was cle-

cided in a completely different factual setting, the legal prin-

ciples enunciated therein are clearly applicable to the present

case.

8A

less liberal balancing test.’ Regardless of the balancing

test applied, we are convinced that the evidence con-

cerning the Philadelphia incident was inadmissible

under the theory on which the case was tried.

Initially we conclude that there was no actual need

for the Philadelphia evidence. In his jury charge the

district judge stated that:

“TY jou need not concern yourselves with the

first two elements of the case. The main issue

for your determination is only with the third

element, whether the Defendant held a position

of authority and responsibility in the business

of Aeme Markets.”

Thus, as this case was submitted to the jury and in

light of the sole issue presented, need for the Phil-

adelphia evidence is not apparent. Absent a showing

of such need we are of the opinion that, even under

the liberal balancing test of Woods, the prejudicial

effect of this evidence outweighed any possible rele-

vancy or persuasiveness it might have had."

°*“Tn applying a balancing test, the considerations confronting

the district court may be summarized succinctly: assuming an

exception to the rule is applicable, before admitting evidence

of prior acts or crimes, the court should determine, first,

whether the evidence is relevant; secondly, whether the evi-

dence is unduly prejudicial notwithstanding its relevancy; and,

thirdly, having met both prior tests, whether the evidence is

truly needed by the prosecution.” United States vy. Woods, 484

F, 2d 127, 141 (4 Cir. 1973) (Widener, J., dissenting opinion).

” Such a conclusion is consistent with the result reached in

Woods, Throughout the opinion in Woods the court emphasized

the overriding need for “prior crimes” evidence because of the

particular and peculiar nature of infanticide cases. “Indeed, the

evidence is so persuasive and so necessary in case of infanti-

cide * * * if the wrongdoer is to be apprehended, that we think

that its relevance clearly outweighs its prejudicial effect on the

jury.” (United States vy. Woods, 484 F. 2d 127, 135 (4 Cir. 1973)

(emphasis added).

9A

We note in passing, without deciding, that in light

of our comments above evidence of ‘“‘prior crimes’’

might become sufficiently necessary and relevant to

warrant its admission on retrial. Our conclusion that

the prosecution must show some wrongful act by the

accused may effect the result of the balancing test

as prescribed in Woods by increasing the need for

“prior crimes” evidence. Whether the need for and

the persuasiveness and relevance of such evidence may

outweight its prejudicial effect will, in large part,

depend on the prosecution’s new approach to the

presentation of its case. Thus, on retrial, it will be in-

cumbent upon the district court to determine the ad-

missibility of this ‘‘prior crime” evidence in light of

developments.

Reversed and remanded for a new trial.

CravEN, Circuit Judge, dissenting:

I would affirm beeause I believe this case is con-

trolled by United States v. Dotterweich, 320 U.S. 277

(1943). To express my viewpoint, it is enough to

quote from Mr. Justice Frankfurther writing for the

Court in Dotterweich:

The Food and Drugs Act of 1906 was an

exertion by Congress of its power to keep im-

pure and adulterated food and drugs out of

the channels of commerce. By the Act of 1938,

Congress extended the range of its control over

illicit and noxious articles and stiffened the

penalties for disobedience. The purposes of this

legislation thus touch phases of the lives and

health of people which, in the circumstances of

modern industrialism, are largely beyond self-

protection. Regard for these purposes should

infuse construction of the legislation if it is to

be treated as a working instrument of govern-

ment and not merely as a collection of English

words. ... The prosecution to which Dotter-

weich was subjected is based on a now familiar

104

type of legislation whereby penalties serve as

effective means of regulation. Such legislation

dispenses with the conventional requirement for

criminal conduct—awareness of some wrong-

doing. In the interest of the larger good it puts

the burden of acting at hazard upon a person

otherwise innocent but standing in respon-

sible relation to a public danger * * *. And so

it is clear that shipments like those now in issue

are ‘“‘punished by the statute if the article is

misbranded [or adulterated], and that the arti-

cle may be misbranded [or adulterated] without

any conscious fraud at all * * *.”

Td. at 280-81 (citations omitted).

In Dotterweich the Supreme Court reversed a Sec-

ond Circuit decision that was said to be motivated by

“fear that an enforcement of §301(a) as written

might operate too harshly by sweeping within its

condemnation any person however remotely entangled

in the proscribed shipment.’’ 320 U.S. at 284. But

defendant Park was not just “remotely entangled”’

in the proscribed adulteration. Like Dotterweich, he

was president of the corporation with full power to

control its operations and to take measures to prevent

rat infestation of food. Although he had delegated the

day-to-day supervision of sanitation to subordinates,

Park retained both the power and responsibility to

see that the system of rodent control was effective,

and if it didn’t work, to change it.

As Mr. Justice Frankfurter said about Dotter-

weich:

“The offense is committed * * * by all who

* * * have such a responsible share in the fur-

therance of the transaction which the statute

outlaws, namely, to put into the stream of in-

terstate commerce adulterated or misbranded

drugs lw food]. Hardship there doubtless may

be under a statute which thus penalizes the

transaction though consciousness of wrongdoing

ee ee ee

11a

be totally wanting. Balancing relative hard-

ships, Congress has preferred to place it upon

those who have at least the opportunity of in-

forming themselves of the existence of condi-

tions imposed for the protection of consumers

before sharing in illicit commerce, rather than

to throw the hazard on the innocent public who

are wholly helpless.

Td. at 284-85.

The trial judge made it perfectly clear to the jury

that “the fact that the Defendant is present and is a

chief executive officer of the Acme Markets does not

require a finding of guilt. Though, he need not have

personally participated in the situation, he must have

had a responsible relationship to the issue. The issue

is, in this case, whether the defendant, John R. Park,

by virtue of his position in the company, had a posi-

tion of authority and responsibility in the situation

out of which these charges arose.”’

Thus, again in the language of Mr. Justice Frank-

furter, ‘‘the District Court properly left the question

of the responsibility of [Park] for the shipment to

the jury, and there was sufficient evidence to support

its verdict.’’ 320 U.S. at 285. ;

Moreover it is clear from examining the prosecu-

tor’s argument to the jury that there was no effort to

equate the presidency of the corporation with the

responsibility. Instead, the government argued that

Mr. Park was responsible because he had established a

system of rodent control that did not work in March

1970, November 1971 and March 1972 and that even so

he made no effort to change or improve the system."

‘! Park's testimony indicated the system was established before

he became president, but he conceded that if it didn’t work,

and needed changing, it was his responsibility to change it.

In addition, Park acknowledged having received a jetter from

the FDA in 1970 outlining unsanitary conditions an inspec-

tion team had found in the Philadelphia warehouse.

124

The government’s contention was not that the jury

should convict if they found that Mr. Park was presi-

dent (that was undisputed) but that they should con-

vict if they found it to be his responsibility for setting

up a system of sanitation and of delegating responsi-

bility in a way that does the job in a sanitary way.

I am sympathetic with my brothers’ sense of justice

that prompts them, it seems to me, to write into the

statute some small degree of mens rea or scienter as

a prerequisite to liability, but I share the govern-

ment’s fear that today’s decision will undermine the

congressional purpose of protecting “the innocent

public who are wholly helpless’’ to protect themselves

from contaminated food.

Because there will be a new trial, I want to align

myself with the majority’s suggestion that evidence

in the nature of ‘“‘prior offenses” may be admissible.

Indeed, I would go further. If an additional burden

of proof is to be put upon the government to show

that Mr. Park acted wrongfully, then it would seem

to me that evidence would clearly be admissible that

Park’s system of rodent control did not work in

March 1970 in Philadelphia, or in November 1971

or March 1972 in Baltimore. If the rule is otherwise,

I think the government cannot possipiy sustain its

new burden.

APPENDIX B

JUDGMENT

United States Court of Appeals for the Fourth Circuit

No. 73-1953

UniTep STaTEs OF AMERICA, APPELLEE

v.

JoHN R. PARK, APPELLANT

Appeal from the United States District Court for the District

of Maryland

This cause came on to be heard on the record from the

United States District Court for the District of Maryland,

and was argued by counsel.

On consideration whereof, It is now here ordered and

adjudged by this Court that the judgment of the said

District Court appealed from, in this cause, be, and the

same is hereby, reversed. The case is remanded to the.

United States District Court for the District of Maryland,

at Baltimore, for a new trial, consistent with the opinion

of the Court filed herewith.

WituiaM K. Stare, II,

A True Copy, Teste: wa:

Wituam K. Starr, II,

Clerk,

By Wiima Upsuur, Deputy Clerk.

(13a)

U.S. GOVERNMENT PRINTING OFFICE: 197