United States v. Velsicol Chemical Corp.

• Citation: 498 F. Supp. 1255
• Decision Date: 30 September 1980
• Docket Number: Crim. No. 79-492.
• Parties: UNITED STATES of America, v. VELSICOL CHEMICAL CORPORATION, a corporation, formerly Michigan Chemical Corporation, Charles L. Touzeau, and William Thorne, Defendants.
• Court: U.S. District Court — District of Columbia

498 F. Supp. 1255

UNITED STATES of America, v. VELSICOL CHEMICAL CORPORATION, a corporation, formerly Michigan Chemical Corporation, Charles L. Touzeau, and William Thorne, Defendants.

Crim. No. 79-492.

United States District Court, District of Columbia.

September 30, 1980.

F. William Soisson, Ross Parker, Asst. U.S. Attys., Eastern District of Michigan, Detroit, Mich., for United States.

Vincent J. Fuller, Barry S. Simon, Williams & Connolly, Washington, D. C., for defendant Velsicol Chemical Corp.

William E. McDaniels, Williams & Connolly, Washington, D. C., for defendant Charles L. Touzeau.

Gregory B. Craig, Williams & Connolly, Washington, D. C., for defendant William W. Thorne.

MEMORANDUM OPINION

BARRINGTON D. PARKER, District Judge:

The indictment against the several defendants in this criminal proceeding was originally returned in the federal court for the Eastern District of Michigan in April 1979. Immediately thereafter various pretrial motions were filed presenting defenses and objections based on alleged defects in the institution of the prosecution and the indictment. At a later stage the proceeding was transferred to this Court upon a determination of possible prejudice and pretrial publicity preventing the defendants from obtaining a fair and impartial trial in the Eastern District of Michigan. Rule 21(a), Fed.R.Crim.P. The defendants' several pretrial motions seek dismissal of the indictment and raise issues of prosecutorial vindictiveness, prejudicial preindictment delay, prosecutorial abuse of the grand jury, multiple prosecutions and prejudice arising from the totality of circumstances preceding and including the return of the indictment.

Of the five motions, one is particularly troublesome. It concerns the role and conduct of the prosecutor in the course of this proceeding and the return of the indictment. The issue is whether the defendants were victims of prosecutorial vindictiveness. Simply presented the question is — may the government prosecutor threaten a defendant with the prospect of increased charges calculated to deter him from exercising his right to offer a nolo contendere plea under Rule 11(b), Fed.R.Crim.P.? And later, after the defendant has exercised that right and the plea is accepted, may the prosecutor then pursue and indict the defendant with additional and more serious charges which antedate the initial charging decision? The basic elements of the new charges were known to the prosecutor, or at least known to and shared by responsible government personnel intimately involved in the prosecution efforts, at the time of the initial charging decision, at the time the defendant tendered the nolo plea, and at the time the government prosecutor challenged that right.

A hearing on the various motions, particularly the prosecutorial vindictiveness issue, consumed several days. Extensive testimony was presented by the parties. After determining the credible testimony and reviewing the documentary evidence the Court enters its findings and concludes that the present indictment arises out of and is flawed by prosecutorial misconduct and as a consequence should be dismissed.

I. Factual Findings

In April 1979 Velsicol Chemical Corporation (formerly Michigan Chemical Corporation) (Velsicol or Corporation) and two officials were indicted in the District Court for the Eastern District of Michigan for criminal violations of the United States Code. A two-count indictment charged the Corporation and two employees, Charles Touzeau and William Thorne with (1) concealing, falsifying and covering up material facts relating to the contamination and adulteration of food and drug products and making false, fraudulent statements and representations in matters within the jurisdiction of a federal agency, the Food and Drug Administration (FDA). 18 U.S.C. § 1001; and (2) conspiring among themselves and with others to defraud the FDA in the performance of its lawful functions. 18 U.S.C. § 371.

The indictment was concerned with an alleged "cover-up" by Velsicol and its employees of an incident of contamination of animal feed resulting from intermingling of polybrominated biphenyl (PBB), a flame retardant, with magnesium oxide (MgO), used as an animal feed supplement. In 1973 and 1974 the Corporation operated in St. Louis, Michigan a plant producing and supplying both chemicals. Farm Bureau Services, Inc. used magnesium oxide supplied by the Corporation as an animal feed additive. Farm Bureau is not included in the present indictment. Touzeau and Thorne served as plant manager and operational manager, respectively, in the defendants' Michigan facility. The material facts alleged to have been concealed and which form the overt acts in the conspiracy count concern the following: (1) the time when defendants obtained knowledge of the cattle feed contamination involving PBB; (2) the manufacture of PBB in granulated form known as "Firemaster, FF-1" which is similar in appearance to MgO; 3) the manufacture and storage of PBB in close proximity to MgO; and 4) the packaging of FF-1 in bags similar to those used to package MgO.

The government's attention was focused on the Corporation sometime prior to April 26, 1974. On that date an inspector from the FDA interviewed the individual defendants concerning PBB contamination of animal feed distributed by Farm Bureau Services. The government contends that at an earlier date the defendants were aware of the claim that PBB was possibly intermingled with MgO thereby leading to contamination of the animal feed. On that date and several times thereafter, FDA inspectors visited the Michigan plant and interviewed Touzeau and Thorne concerning the contamination problem, focusing on the manufacturing, packaging, storage and shipping of PBB and MgO as possible causes of cattle feed contamination. They are charged with covering up their knowledge of material facts and making certain false statements to the FDA inspectors on April 26 and 29, 1974.

In August 1974 the investigation had progressed to the point that the Detroit FDA office sought instruction from Washington for possible misdemeanor adulteration charges and authorization to proceed with a hearing under the Federal Food, Drug and Cosmetic Act (Act), § 305, 21 U.S.C. § 335.¹ Thereafter, in January 1975, the FDA advised the Corporation that it was a suspected violator of the Act. Certain individual employees, including Touzeau, were also targeted at that time. Several months later, in connection with the section 305 hearing, counsel for the Corporation and the individual employees submitted written arguments giving reasons why the FDA should not recommend to the Department of Justice that criminal prosecution be pursued.

The government pursued the PBB criminal investigation with the section 305 hearing through the spring of 1975. At that time the hearing focused in part on allegations of inconsistent statements made by Touzeau and Thorne in 1974 to the FDA inspectors. D. Ex. 48 at 4. Specifically, the FDA hearing officer noted that explanations given by the two defendants "changed with each FDA visit" and that Touzeau and Thorne "did not inform the FDA inspectors of the existence of the `FF-1' product." Id. The statements, questioned by the FDA in March 1975, are a major predicate for the two-count indictment presently before the Court.

At the time of the FDA criminal investigation, civil damage suits had also been initiated in the local courts of Michigan against Velsicol and Farm Bureau Services. In that litigation depositions of various employees, including Touzeau and Thorne, were taken 1975 and 1976. The trial of the first suit, Tacoma v. Michigan Chemical Corp., (Cir. Ct. Wexford City, Mich., Oct. 26, 1978), got underway in 1977. Beginning in 1975, voluminous discovery was taken and continued throughout that case. Touzeau and Thorne were deposed prior to the Tacoma trial and they, along with other employees of the corporation, testified at the trial itself. During the Tacoma pretrial proceedings the Government had access to their depositions and indeed monitored their trial testimony along with that of other employees for the purpose of evaluating individual criminal culpability. Summaries of the employees' testimony were prepared by FDA agents throughout 1977 and were used by the FDA's investigatory team in the course of its duties. The summaries contained specific allegations by plaintiffs' counsel in Tacoma that the Corporation was covering up facts from the FDA and were reviewed by a number of FDA employees. While the Tacoma depositions and trial testimony are in large part the basis of the present indictment charges, the government's criminal investigators neglected to pursue the false statements at that time.

During the first five months of 1977, a federal grand jury in the Eastern District of Michigan considered the question of individual culpability for the adulteration of animal feed, focusing in part on the Corporation's storage practice. This is an integral part of the present indictment. Count I, ¶¶ 8(b)(i), (c)(i), (d) and 9(b). That grand jury proceeding was conducted by the United States Attorney for the Eastern District, the Consumer Affairs Section of the Department of Justice and the FDA. The grand jury considered documents that now appear on the government's exhibit list for trial of the present indictment and presumably support the false statement and cover-up charges. D.Ex. 61. Yet no false statements or cover-up allegations were investigated at that time.

Finally, in the fall of 1977, the U.S. Attorneys' Offices of the Eastern and Western Districts of Michigan, and the Consumer Affairs Section of the Department of Justice, made the decision to charge both Velsicol and Farm Bureau Services² in an information with four misdemeanor adulteration counts. The information was filed in the Western District on November 28, 1977 and the defendants were arraigned before U.S....