In 2009, one of the largest food recalls in American history was announced. According to Wired, by the end of the peanut-linked salmonella outbreak, there were 714 people known to have been made sick (though likely more), hundreds were hospitalized, and nine died.
Thousands of peanut products made by Peanut Corporation of America from 2007 to the time of the company's closing in 2009 were recalled, including every product made at the company's plants in Blakely, Georgia and Plainview, Texas from January 1, 2007 to the time of the company's closure.
Worse than the massive extent of the recall was the callous behavior that preceded it. Food Safety News has a detailed timeline of the alleged acts of the corporate principals, including falsifying certificates of analysis, shipping products before positive salmonella tests could be returned to the company, and lying to consumers by stating that no salmonella had ever been detected at the plant.
Though most recalls end in a few sick people, a lot of hysteria, and possibly a few fines, the principals in the PCA conspiracy are facing federal felony charges in Georgia and could end up in prison for a long time.
No one ever expects their company to become the center of recalls, embezzlement, or mass indictments. When it does, however, here are a few things for in-house counsel to consider:
Who is the Client?
In most cases, the client is the company - not the executives or employees. Though your corporate bosses may come to you for help, remember that your duty is likely to the company. Advise them to seek outside counsel for themselves if appropriate, but otherwise, your duty should be to protect the company and minimize the damage - not to keep the CEO out of prison.
Evaluating Exposure from Illegal Activity - Retrospective, not Prospective
This should go without saying, but an attorney's job is to address illegal acts that have already occurred, not to plan future potential indiscretions. Over the course of PCA's peanut production history, there are numerous documented decisions made by Stewart Parnell, the owner and President. His conduct escalates quickly into riskier and riskier behavior, until nine people were dead and thousands sick.
When the decision-makers come to you about past poor decisions, your job is to evaluate and minimize the legal exposure. However, if they come to you for help in future planning you consider risky, the obvious thing to do is to advise otherwise.
This is what got Parnell and PCA caught - the paper trail. The record is full of faxes, emails, and other written records that cover Parnell's decisions to ship tainted or untested goods and his prioritizing of profits over food safety. If you are looking to evaluate exposure, this is a good place to start. Just remember, don't be like the Enron execs and run for the shredders -- obstruction of justice charges could follow.
- Indictment - USA v. Parnell et al (Scribd)
- FBI Battling 'Sexting' on Company Phones, Other Misconduct (FindLaw's In House Blog)
- What President Obama's Cybersecurity Executive Order Means to You (FindLaw's In House Blog)