Last month, in what is known as the "Yates Memo," the United States Department of Justice (DOJ) set a new course on "Individual Accountability for Corporate Wrongdoing" identifying six "keys steps" in its prosecutions. When coupled with the Food and Drug Administration's (FDA) renewed interest in applying the "Park Doctrine" to implicate individuals for others' conduct, the compliance stakes have never been greater.

The Yates Memo outlines the following six actions that the DOJ will now take:

  • Demand all relevant facts. To qualify for any cooperation credit, corporations must provide the DOJ all relevant facts relating to the individuals responsible for the misconduct.
  • Focus on individuals. Criminal and civil corporate investigations should focus on individuals from the inception of the investigation.
  • Enhance communications between agencies. Criminal and civil attorneys handling corporate investigations should be in routine communication with one another.
  • Do not release individuals when a corporation settles. Absent extraordinary circumstances or approved departmental policy, the Department will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation.
  • Consider individuals when settling with corporation. DOJ attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases, and should memorialize any declinations as to individuals in such cases.
  • Do not evaluate civil focus on individuals based on their ability to pay. Civil attorneys should consistently concentrate on individuals as well as the company and decide whether to sue an individual based on considerations beyond that individual's monetary resources.

The FDA and the Park Doctrine

In a series of Warning Letters issued by the FDA, senior executives were threatened with criminal prosecutions for failing to establish and follow procedures "to ensure the quality of the [products]" citing the Park Doctrine as follows:

United States v. Dotterweich, 320 U.S. 277, 284 (1943) (explaining that an offense can be committed under the Act by anyone who has "a responsible share in the furtherance of the transaction which the statute outlaws"); United States v. Park, 421 U.S. 658, 672 (1975) (holding that criminal liability under the Act does not turn on awareness of wrongdoing, and that "agents vested with the responsibility, and power commensurate with that responsibility, to devise whatever measures are necessary to ensure compliance with the Act" can be held accountable for violations of the Act).

The Park Doctrine has been hotly debated and questioned since its inception in 1943 because it permits criminal prosecutions against individuals who may not have been involved in the events leading to the offense. The Park Doctrine has generally been applied and approved by the courts to convict upper level executives in situations involving repeated violations and small penalties. Nonetheless, the FDA has been clear in stating that "anyone who has 'a responsible share in the furtherance of the transaction'" is potentially criminally liable.

The full civil and criminal investigative and punitive powers of the government can intimidate corporations and cause even more consternation to individuals under investigation or charged in cases involving alleged corporate wrongdoing. Over the past decade, pharmaceutical and medical device companies facing prosecutions have paid more than $12 billion dollars in penalties to the government. The Yates Memo now amplifies the warnings the FDA evidenced in the Park Doctrine prosecutions and places executives and all employees in FDA-regulated industries squarely in the government's cross hairs.

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