1. Enforcement Litigation and Compliance Washington, DC December 9-10, 2015 Food: Park Doctrine, Individual Liability, and the Yates Memo Timothy Moore, Senior Associate, Shook, Hardy & Bacon LLP Jeffrey Steger, Assistant Director, Consumer Protection Branch, Civil Division, Department of Justice Andrew Ittleman, Partner, Fuerst Ittleman David & Joseph, PL Moderated by James Cole, Partner, Sidley Austin LLP

2. Tim Moore Senior Associate Shook, Hardy & Bacon LLP tmoore@shb.com (305) 755-8924 http://www.shb.com/professionals/m/moore-timothy

3. Responsible Corporate Officer Doctrine Enables the government to criminally prosecute someone who had, “by reason of his [or her] position in the corporation, responsibility and authority either to prevent in the first instance, or promptly to correct, the violation complained of,” and did not. Park, 421 U.S. 674. Applies to violations of the Food, Drug & Cosmetic Act and other federal legislation. Enables prosecution of executives for misdemeanor violations without proof of knowledge of wrongful act.

4. Responsible Corporate Officer Doctrine (Cont’d) First announced in United States v. Dotterweich, 320 U.S. 277 (1943) and refined in United States v. Park, 421 U.S. 658 (1975). Recent Cases –United States v. Purdue Frederick Co. –United States v. Quality Egg, LLC –The Jensen Farms Case

5. Recent Examples of Corporate Prosecution Outside RCO Peanut Corporation of America November crackdown on dietary supplement makers Warner Chilcott

6. Jeffrey Steger Assistant Director Consumer Protection Branch U.S. Department of Justice Jeffrey.Steger@usdoj.gov The views expressed are the author’s and do not necessarily represent the views of the Department of Justice or any other agency.

7. Consumer Protection Branch  CPB enforces through civil litigation and criminal prosecutions a number of Federal statutes that protect the public health and safety and protect consumers from unfair trade practices.  Under 28 U.S.C. § 510, the Attorney General has delegated to the Civil Division’s AAG the responsibility to conduct, handle or supervise “all civil and criminal litigation and grand jury proceedings arising under the Food, Drug, and Cosmetic Act....”  CPB’s role within DOJ on FDCA matters.

8. CPB’s Enforcement Priorities  Identify and prosecute the most serious instances of food, drug, and medical device violations  Prevent future violations, especially those involving fraud or consumer safety  Protect consumers  Protect integrity of regulatory process

9. Individual Accountability for Corporate Wrongdoing  Consistently been a DOJ priority.  Effective way to combat corporate misconduct is by seeking accountability from the individuals responsible.  Deters future illegal activity, incentivizes change, holds proper parties responsible for their actions, promotes public’s confidence in justice system.  New Guidance from the Deputy AG recently re-emphasized this priority.

10. DAG Yates Memo: Key Steps for Federal Prosecutors  To be eligible for any cooperation credit company must provide all relevant facts relating to individuals  Focus on individuals from inception of investigation  Coordination between criminal and civil attorneys  No release for culpable individuals when resolving matter with corporation  No resolution without clear plan to resolve related individual cases  Civil attorneys should consider appropriateness of suit based on considerations beyond ability to pay

11. Cooperation Credit  Principles of Federal Prosecution of Business Organizations  Timely and voluntary disclosure of wrongdoing and willingness to cooperate is important consideration  What does it mean to be eligible for credit?  Identify all individuals involved in misconduct regardless of position, status, seniority, etc.  Provide all facts relating to that misconduct

12. Cooperation Credit  Extent of cooperation credit will depend on factors traditionally applied:  Timeliness  Diligence, thoroughness, and speed of internal investigation  Proactive nature of cooperation  Applies equally to civil matters  Within the bounds of legal privileges  Department attorneys will vigorously review information to insure completeness  Continued cooperation may be necessary post-resolution

13. Practical Responses to the Yates Memorandum Steps for a Company to Protect Itself and its Employees Andrew S. Ittleman Fuerst Ittleman David & Joseph, PL

14. Most Critical Safeguard Standard of Conduct (e.g., 8 Del. C. §145(a)) If the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. Independent Determination that the Employee met the Standard of Conduct (e.g., 8 Del. C. §145(d)) –Independent Directors (with outside counsel) –Independent Counsel legal opinion

15. Indemnification Legally Sufficient –Meets requirements of state law Functionally Sufficient –Meets needs of company and employee

16. Advancement Sufficient for protracted investigations and/or prosecutions Subject to reasonable conditions

17. Insurance Understand existing policies –D&O limitations and exclusions Appropriate for investigations and/or prosecutions

18. Questions? Andrew S. Ittleman, Esq. Fuerst Ittleman David & Joseph, PL 305-350-5694 aittleman@fuerstlaw.com www.fuerstlaw.com/Yates