DOJ Begins Criminal Investigation of Blue Bell Food Safety Violations

Dec 30, 2015   

The trend of federal criminal investigations into food safety violations continues as the Department of Justice has reportedly begun investigating Blue Bell Creameries, LP (“Blue Bell”) resulting from the Listeria monocytogenes outbreak earlier in 2015 that killed three people. As discussed further below, criminal investigations and charges for violating federal food safety regulations may become the new norm in the food industry in 2016 and beyond.

In March, April, and May 2015, the FDA inspected Blue Bell’s Oklahoma, Alabama, and Texas facilities and found multiple products contaminated with Listeria, among other food safety regulation violations at all three manufacturing plants. The company subsequently implemented a temporary shutdown of the three factories and issued a recall of all Blue Bell products. The FDA’s inspection reports and Blue Bell’s responses can be found by clicking here. The CDC reported in mid-2015 that the Listeria contamination affected consumers in four states resulting in three deaths and ten hospitalizations.

Besides the obligation to respond to FDA’s inspectional observations and identified violations, Blue Bell entered into agreements with the Texas Department of State Health Services and the Oklahoma Department of Agriculture, Food and Forestry. These agreements outlined the steps the company had to take to resume operation in compliance with state law, including onerous and costly hold and test procedures that were required to be enacted prior to release and distribution of Blue Bell’s finished ice cream products. The Texas agreement can be found here.

All three Blue Bell facilities are now operational and the company is distributing ice cream to multiple retail chains. As recently as November 13, 2015, Blue Bell updated the FDA of its progress in implementing corrective actions to remedy its food safety violations at its Texas facility. However, despite Blue Bell’s continued agreements and communications with FDA and state agencies, the DOJ has not relented.

On top of the plant shut downs, recalls, and extensive corrective procedures required to be designed and implemented by the company, Blue Bell’s problems could just be starting. Specifically, this DOJ criminal investigation could lead to consequences for Blue Bell individual directors and employees, particularly if the DOJ is looking into what Blue Bell personnel knew about the food safety problems and exactly when they knew of them.

In 2014, executives and managers of Peanut Corporate of America (“PCA”) were found guilty on multiple felony counts stemming from charges of introducing adulterated food into interstate commerce. That company’s food safety violations led to a Salmonella outbreak in 2008 and 2009 that left 714 people ill and killed nine people. Stewart Parnell, the former PCA owner, was sentenced to 28 years in prison and his brother, Michael Parnell, a peanut broker for the company, was sentenced to 20 years in prison. The Parnells received the largest criminal sentence in a food safety case in history, mostly due to the fact that the jury found them guilty of intentionally violating the law and defrauding “their customers by shipping salmonella-positive peanut products before the results of microbiological testing were received and falsifying microbiological test results.” The DOJ’s press release can be found here.

To make matters worse for food company executives, like Blue Bell’s, in September 2015, the DOJ issued a memorandum, which can be found here, with the subject line “Individual Accountability for Corporate Wrongdoing.” The memo, commonly referred to as the “Yates Memo,” applies to “any investigation of corporate misconduct” and requires the government to focus its investigations on potential individual responsibility from the outset of investigations. The Yates Memo also states that corporate investigations into civil and criminal charges against companies cannot be resolved unless there is a written plan to resolve investigations into responsible individuals. The Yates Memo also specifically states that the DOJ will not release individuals from liability as part of a corporate resolution. While the Yates Memo applies to all DOJ investigations, not just those of food companies, it will likely have a drastic impact on the food industry in the future.

Should the DOJ’s investigation into Blue Bell and its management result in discovery of culpability, the company and individuals involved could be one of the first case studies of the practical application of the Yates Memo in food safety cases.

Since the enactment of FDA’s Food Safety Modernization Act in 2011, the FDA’s focus on food safety has increased, as have its enforcement actions. That increased enforcement activity in combination with the DOJ’s willingness to investigate and charge food companies and individuals will likely lead to an increased number of criminal investigations and charges in the upcoming year. Food manufacturers and distributors must make food safety compliance a top priority as they proceed in this regulatory environment.

FIDJ is continuing to follow developments in the Blue Bell investigation. For answers to questions about food safety regulations and FDA or DOJ enforcement actions, please contact FIDJ’s attorneys at contact@fidjlaw.com.