United States v. DeCoster

• Decision Date: 06 July 2016
• Docket Number: No. 15-1891,No. 15-1890,15-1890
• Citation: 828 F.3d 626
• Parties: United States of America, Plaintiff–Appellee v. Austin DeCoster, also known as Jack, Defendant–Appellant. National Association of Manufacturers ; Cato Institute; Washington Legal Foundation; Chamber of Commerce of the United States; Pharmaceutical Research and Manufacturers of America, Amici on Behalf of Appellant(s). United States of America, Plaintiff–Appellee v. Peter DeCoster, Defendant–Appellant. National Association of Manufacturers ; Cato Institute; Washington Legal Foundation, Amici on Behalf of Appellant(s).
• Court: U.S. Court of Appeals — Eighth Circuit

828 F.3d 626

United States of America, Plaintiff–Appellee

v.Austin DeCoster, also known as Jack, Defendant–Appellant.

National Association of Manufacturers ; Cato Institute; Washington Legal Foundation; Chamber of Commerce of the United States; Pharmaceutical Research and Manufacturers of America, Amici on Behalf of Appellant(s).

United States of America, Plaintiff–Appellee

v.Peter DeCoster, Defendant–Appellant.

National Association of Manufacturers ; Cato Institute; Washington Legal Foundation, Amici on Behalf of Appellant(s).

No. 15-1890

No. 15-1891

United States Court of Appeals, Eighth Circuit.

Submitted: March 17, 2016

Filed: July 6, 2016

Rehearing and Rehearing En Banc Denied September 30, 2016^*

Counsel who presented argument on behalf of the appellants was Peter D. Keisler, of Washington, DC. The following attorneys also appeared on the appellants' brief; Mark Daniel Hopson, of Washington, DC., Thomas C. Green, of Washington, DC., Frank Robert Volpe, of Washington, DC., Kwaku A. Akowuah, of Washington, DC., Tobias S. Loss–Eaton, of Washington, DC., Stuart J. Dornan, of Omaha, NE.

Counsel who presented argument on behalf of the appellee was Jeffrey Eric Sandberg, AUSA, of Washington, DC. The following attorneys also appeared on the appellee brief; Scott R McIntosh, AUSA, of Washington, DC., Peter E. Deegan, Jr., AUSA, of Cedar Rapids, IA., Lisa Hsiao, AUSA, of Washington, DC., Douglas N. Letter, of Washington, DC.

The following attorneys appeared on the amicus brief of Pharmaceutical Research and Manufacturers of America and Chamber of Commerce of the United States of America; David W. Ogden, of Washington, DC., Paul Reinherz Wolfson, of Washington, DC.

The following attorneys appeared on the amicus brief of Washington Legal Foundation; Cory L. Andrews, of Washington, DC., Mark S. Chenoweth, of Washington, DC.

The following attorneys appeared on the amicus brief of The National Association of Manufacturers and The Cato Institute; Linda E. Kelly, of Washington, DC., Scott Steven Bernstein, of Washington, DC., Matthew Gardner Kaiser, of Washington, DC., Patrick N. Forrest, of Washington, DC., Ilya Shapiro, of Washington, DC., Randal J. Meyer, of Washington, DC.

Before MURPHY, BEAM, and GRUENDER, Circuit Judges.

MURPHY, Circuit Judge.

Austin “Jack” DeCoster and Peter DeCoster both pled guilty, as “responsible corporate officers” of Quality Egg, LLC, to misdemeanor violations of 21 U.S.C. § 331(a) for introducing eggs that had been adulterated with salmonella enteritidis into interstate commerce. The district court¹ sentenced Jack and Peter to three months imprisonment. The DeCosters appeal, arguing that their prison sentences and 21 U.S.C. § 333(a)(1) are unconstitutional, and claiming in the alternative that their prison sentences were procedurally and substantively unreasonable. We affirm.

I.

Jack DeCoster owned Quality Egg, LLC, an Iowa egg production company. Jack's son Peter DeCoster served as the company's chief operating officer. Quality Egg operated six farm sites with 73 barns which were filled with five million egg laying hens. It also had 24 barns which were filled with young chickens that had not yet begun to lay eggs. Additionally, the company owned several processing plants where eggs were cleaned, packed, and shipped.

Jack also owned and operated several egg production companies in Maine, and Peter worked at those facilities. In 2008, salmonella enteritidis (“salmonella”) tests conducted at the Maine facilities came back positive. The DeCosters succeeded in eliminating salmonella from their Maine facilities by following the recommendations of hired consultants, including poultry disease specialist Dr. Charles Hofacre and rodent control expert Dr. Maxcy Nolan.

Periodically the DeCosters also tested the Iowa hens and facilities for salmonella. Some of these tests came back positive in 2006, and the positive test results increased in frequency through the fall of 2010. Until the USDA adopted its new egg safety rule in July 2010, Quality Egg was not legally obligated to conduct salmonella tests of its eggs after receiving positive environmental test results. Nevertheless, Quality Egg tested its eggs in April 2009 after being notified that a Minnesota restaurant purchaser had had a salmonella outbreak. The sample of its eggs tested negative for salmonella.

Other than conducting the single egg test in April 2009, Quality Egg did not test or divert eggs from the market before July 2010 despite receiving multiple positive environmental and hen test results. In 2009 the DeCosters hired Dr. Hofacre and Dr. Nolan to consult on the company's Iowa operations. The consultants recommended implementing the same measures in Iowa as had been used in Maine. Although the DeCosters claim they adopted all of the recommendations, the precautions implemented by Quality Egg failed to eradicate salmonella. The Centers for Disease Control and Prevention estimated that about 56,000 Americans fell ill with salmonellosis in 2010 after consuming contaminated eggs. In August 2010, federal and state officials determined that the salmonella outbreak had originated at Quality Egg's facilities. In response Quality Egg recalled eggs that had been shipped from five of its six Iowa farm sites between May and August 2010.

The FDA inspected the Quality Egg operations in Iowa from August 12–30, 2010. Investigators discovered live and dead rodents and frogs in the laying areas, feed areas, conveyer belts, and outside the buildings. They also found holes in the walls and baseboards of the feed and laying buildings. The investigators discovered that some rodent traps were broken, and others had dead rodents in them. In one building near the laying hens, manure was found piled to the rafters; it had pushed a screen out of the door which allowed rodents into the building. Investigators also observed employees not wearing or changing protective clothing and not cleaning or sanitizing equipment.

The FDA concluded that Quality Egg had failed to comply with its written plans for biosecurity and salmonella prevention. One government expert reported that “there were minimal to no records from the poultry [ ] barns to indicate that company personnel [had] implemented the written plans [to eliminate salmonella].” The agency also discovered that the company's eggs tested positive for salmonella at a rate of contamination approximately 39 times higher than the current national rate, and that the contamination had spread throughout all of the Quality Egg facilities. In October 2010 the FDA instructed Quality Egg to euthanize every hen, remove the manure, repair its facilities, and disinfect its barns to prevent the risk of another outbreak.

The government then began a criminal investigation of the company's food safety practices and ultimately filed a criminal information against Quality Egg and both of the DeCosters. The investigation revealed that Quality Egg previously had falsified records about food safety measures and had lied to auditors for several years about pest control measures and sanitation practices. Although its food safety plan stated that Quality Egg performed flock testing to identify and control salmonella, no flock testing was ever done. Quality Egg employees had also bribed a USDA inspector in 2010 to release eggs for sale which had been retained or “red tagged” for failing to meet minimum quality grade standards. Quality Egg also misled state regulators and retail customers by changing the packing dates of its eggs and selling the misbranded eggs into interstate commerce. The parties additionally stipulated that one Quality Egg employee was prepared to testify at trial that Jack DeCoster had once reprimanded him because he had not moved a pallet of eggs in time to avoid inspection by the USDA. The investigation also revealed that in 2008 Peter DeCoster had made inaccurate statements to Walmart about Quality Egg's food safety and sanitation practices.

Quality Egg pled guilty to: (1) a felony violation of 18 U.S.C. § 201(b)(1) for bribing a USDA inspector, (2) a felony violation of 21 U.S.C. § 331(a) for introducing misbranded eggs into interstate commerce with intent to defraud and mislead, and (3) a misdemeanor violation of 21 U.S.C. § 331(a) for introducing adulterated eggs into interstate commerce. Jack and Peter each pled guilty to misdemeanor violations of 21 U.S.C. § 331(a) as responsible corporate officers under the Food Drug & Cosmetic Act (FDCA). In their plea agreements, the DeCosters stated that they had not known that the eggs were contaminated at the time of shipment, but stipulated that they were in positions of sufficient authority to detect, prevent, and correct the sale of contaminated eggs had they known about the contamination. The parties also stipulated that the DeCosters' advisory guideline range was 0 to 6 months imprisonment, and both defendants agreed to be sentenced based on facts the sentencing judge found by a preponderance of the evidence.

Before sentencing, the DeCosters argued that sentences of incarceration would be unconstitutional because they had not known that the eggs were contaminated at the time they were shipped. The district court denied the motions, imposed $100,000 fines on both Jack and Peter DeCoster and sentenced them to three months imprisonment. See 21 U.S.C. § 333(a)(1) (explaining that anyone who violates section 331 “shall be imprisoned for not more than one year or fined not more than $1,000, or both”); 18 U.S.C. § 3571(b)(5) (setting maximum fine of $100,000 for class A misdemeanor not resulting in death). The court determined that although nothing in the record indicated that Peter and Jack had actual knowledge that the eggs they sold were infected with salmonella, the record demonstrated that their safety and sanitation procedures were “egregious,” that they ignored the positive salmonella environmental test results before July 2010 by not testing their eggs, and that they knew that their...