United States v. New England Grocers Supply Co.

• Decision Date: 30 April 1980
• Docket Number: Crim. A. No. 76-368-C.
• Citation: 488 F. Supp. 230
• Parties: UNITED STATES of America, Plaintiff, v. NEW ENGLAND GROCERS SUPPLY CO. et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

488 F. Supp. 230

UNITED STATES of America, Plaintiff, v. NEW ENGLAND GROCERS SUPPLY CO. et al., Defendants.

Crim. A. No. 76-368-C.

United States District Court, D. Massachusetts.

March 5, 1980.

As Amended April 30, 1980.

Walter B. Prince, Asst. U. S. Atty., Boston, Mass., for plaintiff.

Robert Y. Murray, Ramsey, Serino & Murray, Patricia G. Curtain, Moulton & Looney, Albert F. Cullen, Jr., Cullen & Wall, Boston, Mass., for defendants.

OPINION

CAFFREY, Chief Judge.

This is an appeal from defendants' convictions for violating § 301(k) of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 331(k). On July 6, 1976 the government filed a seven count information charging New England Grocer Supply Co. (NEGSC) and five individual defendants with causing certain foodstuffs to become adulterated, within the meaning of 21 U.S.C. §§ 342(a)(3) and (4),¹ while being held for sale after shipment in interstate commerce, in violation of 21 U.S.C. § 331(k).² The defendants waived their right to trial by jury before a district court judge and consented to be tried before a United States magistrate, pursuant to 18 U.S.C. § 3401. After a trial before the magistrate, NEGSC and three of the individual defendants, Julian J. Leavitt, president of NEGSC, Joel A. Leavitt, vice-president of NEGSC, and Julian Schultz, vice-president of NEGSC and general manager of the facility where the foodstuffs became adulterated, were found guilty on all counts of the information.³ The corporation was fined $1,000 on each count, Julian Leavitt was fined $250 on each count, and Joel Leavitt and Julian Schultz were both fined $500 on each count.

The scope of review by a district court on appeal from a conviction before a magistrate is "the same as on an appeal from a judgment of a district court to a court of appeals." 18 U.S.C. § 3402; Rule 8(d), Rules of Procedure for the Trial of Minor Offenses Before United States Magistrates. The defendants challenge the conviction below on several grounds.

I

The first ground of appeal relates solely to the defendant Julian Leavitt, president of NEGSC. He contends that he was found guilty by the magistrate solely because he was company president at the time the violations occurred. This was error, defendant argues, because the Supreme Court's decision in United States v. Park, 421 U.S. 658, 95 S.Ct. 1903, 44 L.Ed.2d 489 (1975), requires a finding of negligence or other blameworthiness in order to sustain a conviction for violation of the Food, Drug, and Cosmetic Act.

In Park, the Supreme Court reconsidered and reaffirmed the standard of liability set forth in United States v. Dotterweich, 320 U.S. 277, 64 S.Ct. 134, 88 L.Ed. 48 (1943), for conviction of a corporate officer under the Act. Dotterweich established two propositions. First, the Act "dispenses with the conventional requirement for criminal conduct — awareness of some wrongdoing." Id. at 281, 64 S.Ct. at 136. Second, the scope of liability includes all those who have "a responsible share in the furtherance of the transaction which the statute outlaws . . .." Id. at 284, 64 S.Ct. at 138. In Park, the Court reaffirmed the first proposition and elaborated somewhat on how the government establishes a "responsible relationship" under Dotterweich.

The Park Court stated that Dotterweich and the cases following it establish that "the Act imposes on responsible corporate agents 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." 421 U.S. at 672, 95 S.Ct. at 1911. The government establishes a prima facie case against corporate officer "when it introduces evidence sufficient to warrant a finding by the trier of the facts that the defendant had, by reasons of his position in the corporation, responsibility and authority either to prevent in the first instance, or promptly to correct, the violation complained of, and that he failed to do so." Id. at 673-74, 95 S.Ct. at 1912. The Court made it clear however, that a finding of guilty cannot be predicated solely on the defendant's corporate position. Id. at 674-75, 95 S.Ct. at 1912-13.

The defendant in Park was the president and chief executive officer of a national retail food chain. He was charged with the same crime as is the defendant in the instant case, viz., causing foodstuffs being held for sale following shipment in interstate commerce to become adulterated in violation of 21 U.S.C. § 331(k). Park contended as does the defendant here, that the jury instructions allowed the jury to convict him solely on the basis of his corporate position. The Supreme Court did not agree. Viewing the charge in its entirety, the Court was convinced that "the charge did not permit the jury to find guilt solely on the basis of respondent's position in the corporation; rather it fairly advised the jury that to find guilt it must find respondent `had a responsible relation to the situation,' and `by virtue of his position . . . had . . . authority and responsibility' to deal with the situation." Id. at 674, 95 S.Ct. at 1912. The Court was also satisfied from its reading of the trial record that "the jury could not have failed to be aware that the main issue for determination was not respondent's position in the corporate hierarchy, but rather his accountability, because of the responsibility and authority of his position, for the conditions which gave rise to the charges against him." Id. at 675, 95 S.Ct. at 1913.

The defendant in the instant case contends that the magistrate found him guilty solely because of his corporate position as chief executive officer and that this was error since Park requires a finding of negligence or other blameworthiness. Although the defendant makes only one argument with two conjunctive parts, he asserts two separate and distinct grounds for reversal and I will treat them as such. The first ground is that the magistrate erred by convicting him solely on the basis of his corporate position; the second ground is that the magistrate erred by not making a finding of negligence or other blameworthiness.

Reviewing the magistrate's memorandum and findings, I conclude that the magistrate misconstrued the Park decision with regard to defendant Julian Leavitt. Although it appears that the magistrate understood and correctly applied Park's requirement of a "responsible relationship" in finding two other individual defendants guilty, several statements in his opinion convince me that he did not do so in convicting Julian Leavitt. Early in his opinion, the magistrate made the following observation about the Park decision: "Park (President of the corporation `Acme') was individually convicted for violation of the Act by virtue of his position as president." (Opinion at 3) (emphasis added). Later on, the magistrate again noted that Park "stands for the proposition that the head of a corporation can be charged because of his position as a corporate chief." (Opinion at 7) (emphasis added). These two statements demonstrate a basic misinterpretation of Park, since the Supreme Court made it clear that a corporate officer cannot be convicted solely on the basis of his position in the corporate hierarchy. This misunderstanding of Park is reflected in the magistrate's finding that defendant Julian Leavitt was guilty of violating the Act. In his "general discussion" section, the magistrate stated explicitly that the "finding made by this court with respect to Julian was made only on the basis that in Park, the court stated that the position of the President made him liable, responsible and subject to prosecution." (Opinion at 10) (emphasis added). This comment clearly indicates that the magistrate applied the wrong legal standard in convicting Julian Leavitt, finding him guilty solely by reason of his position as president.

To be sure, as the government points out, there are some contrary indications. In his findings of fact, the magistrate found that, beyond a reasonable doubt, "Julian who was President, although active in the operation of the company, had no direct involvement in sanitation problems, except as senior officer with ultimate authority and responsibility for preventing any violations of the Act." (Opinion at 8). This finding could be interpreted as indicating that the magistrate based the defendant's conviction on his "responsible relationship" to the violation rather than on his position as president; this interpretation is, however, negated by the explanation which the magistrate gave for his finding in his "general discussion" section. The government also points to statements made by the magistrate in a section entitled "conclusions." The government appears to rely primarily on the following "conclusion" by the magistrate:

"That Julian, by virtue of office, as one in complete control is guilty within the meaning of the Act as interpreted by Park, supra, in that he possessed the final authority to institute whatever effective programs that were required." (Opinion at 9).

Although the last part of this "conclusion" does comment on the defendant's "authority" to prevent violations of the Act, the "conclusion" as a whole is tainted by the same misinterpretation of the Park decision. And, even if the "conclusion" could be read as a finding on the defendant's responsible relationship with the violations, it would not support a conviction because the magistrate did not make the finding "beyond a reasonable doubt." The government also points to other "conclusions" by the magistrate: that Julian Leavitt "had been consulted with respect to the condition at the warehouse and was in direct contact with" defendant Julian Schultz who was general manager and "in complete control"; that Julian Leavitt and other individual defendants could have prevented the violations had they used "higher standards of foresight and vigilance"; and that the defendant Julian Leavitt...