FSIS using civil injunctions as enforcement tool
The U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS) is empowered with numerous enforcement tools by the federal laws it implements. These include administrative actions such as suspension of inspection or product detention, civil injunctions to restrain violations of the acts and criminal enforcement against both companies and responsible individuals.
In our experience, FSIS has not typically relied on civil injunctions as an enforcement tool. Typically, if the agency is faced with a set of circumstances in which an establishment has repeat violations and those problems persist despite promises to abate the alleged violations, the agency would consider withdrawal of inspection services or possibly referring the matter to the Department of Justice for criminal enforcement. In contrast, the U.S. Food and Drug Administration (FDA) commonly uses civil injunctions as part of its enforcement approach with facilities.
We have recently encountered an instance where FSIS is proposing to use a civil injunction to enforce against an establishment for a series of alleged violations of the acts. At this point, we do not have enough data points to determine whether this is an outlier or the beginning of a shift in FSIS’ approach to elevating enforcement beyond administrative remedies. In the event that civil injunctions become more commonplace, however, it may be helpful to become more familiar with the process and understand your company’s rights should it be targeted for a civil injunction.
What is an injunction?
An injunction is an order from a court to prevent or restrain specific conduct. Injunctions typically take the form of an order from a court to an establishment to not violate the law. The Federal Meat Inspection Act (FMIA), Poultry Products Inspection Act (PPIA) and Egg Products Inspection Act (EPIA) all contain provisions that allow federal district courts to issue injunctions against establishments to restrain violations of the respective acts.
An injunction on its own may not seem like much of a penalty. After all, you’re not supposed to need a court to tell you to follow the law. But injunctions are usually accompanied by other provisions. Here are a few key items that often accompany a civil injunction:
• Complaint: A civil enforcement action is initiated by filing a complaint in the federal court with jurisdiction over the establishment. The complaint spells out the violations the government is alleging the establishment committed. This will be filed by the U.S. Attorney’s Office for the jurisdiction that the establishment is located in. In practice, the government typically reaches out to the establishment to determine whether the matter can be resolved, usually through a consent decision, before filing the complaint. If the matter is resolved via consent decision before the complaint is filed, the complaint will be filed with the court concurrently with the consent decision.
• Consent decision: A consent decision is, effectively, a civil settlement agreement between a private entity and the government. Consent decisions may contain a statement of the facts or a summary of the allegations of a case; an injunctive order, which may state that the establishment is enjoined from further violations of the applicable act, or is enjoined from specific actions, such as misbranding; and penalties and remedial provisions. The penalties may include a one-time civil monetary penalty, a provision requiring the establishment to reimburse the government’s investigative costs and a liquidated damages provision (more on that below).
• “Sign or sue” letter: Prior to filing a complaint, the government will provide the establishment a “sign or sue” letter. Here, the government shares a proposed consent decision and demands that the establishment agree to the terms of its proposed consent decision or the government will file its complaint and commence litigation.
• Liquidated damages: Liquidated damages are sums of money agreed to between parties beforehand. Some consent decisions contain provisions that obligate an establishment to pay a set dollar amount or a set penalty/pound of product that is in violation of the applicable act. We typically advise clients to steer away from liquidated damages clauses because the costs associated with a violation could quickly skyrocket. We also believe it is a backhanded way to give civil penalties, a remedy that is not available to FSIS under the inspection acts.
Handling a civil complaint or a “sign or sue” letter
We strongly recommend our clients consult legal counsel if they are either the subject of a civil complaint or receive a “sign or sue” letter. While it may make sense to resolve a matter out of court to minimize negative attention and attorney’s fees, it’s important to have a full understanding of your rights before agreeing to any injunction or consent decision. Legal counsel can also advise whether it makes sense to challenge a complaint in court. It’s also important to remember the consent decision proposed in a “sign or sue” letter is the government’s first offer. The provisions of the consent decision and the complaint are amenable to negotiation.
We believe it’s important to not only reduce the near-term penalties, but ensure that our clients do not agree to unreasonable future penalties in the event of further violations. NP