MGT 5030 - Legal Environment of Business Paper 3 | Alexis Lake May 13, 2017 In reviewing the facts and conducting further research on the United States vs. Gel Spice, Co. case, I agree with the court’s decision that Barry Engel was guilty of allowing food, or in this case spices, to become adulterated or contaminated during the processing, packaging, and storage of those spices. As the corporate office of Gel Spice Co., he is responsible for ensuring the spices are unadulterated and safe for consumers. In looking to the specifics of the case, Barry Engel, the company’s president was held criminally responsible for violating the Food, Drug, and Cosmetic Act, 21 U.S.C. Under this Act, companies are required to ensure food does not become adulterated when it is packed, prepared or stored in “insanitary conditions whereby it may have become contaminated with filth, or whereby it may have been rendered injurious to health,” (United States v. Gel Spice Co., Inc., 1984). The company would be held criminally liable for this contamination under the theory of corporate liability, and specifically the responsible corporate officer. In this theory, the corporate officer, Barry Engel, “‘bore a responsible action’ to a violation of statue dealing with ‘products which may affect the health of consumers,’” (Bagely, 2010, pgs. 449-450). This essentially means that in this case, Engel had the opportunity to prevent the rodent infestation and subsequent adulteration of the spices, but failed to do so. When applying this theory or doctrine, the principles around vicarious liability, or the employer being liable for the actions of his or her employees, come into play. This could mean that Engel failed to supervise the employees around managing the rat issue, or failed to provide the
employee the resources needed to combat the problem. However the employees were or were not supervised in the situation, Engel was responsible for their actions. In conducting further research around this case, the Gel Spice company has been in existence since 1855, and according to court documents, had sanitation standards. Even today, the company website outlines their quality and safety standards. Before the legal charges, the company used the insect repellent and chemical compound DDT on their doorways, loading docks, floors and even some storage containers (United States of America, Appellee, v. Gel Spice Company, Inc. and Barry Engel, Defendants-appellants, 1985). This seemed to be effective at keeping the rodents away, but DDT became a banned for agricultural and commercial use in 1972. This was due to adverse impacts on the environment and health risks to humans. At this time, Gel Spices worked with exterminators to use alternative methods to trap or poison the rats. However, in 1972 is when the company failed an FDA inspection. This leads to the second principle around the responsible corporate office doctrine, the mental state or mens rea of the corporate officer. This is focused around whether the officer knew about the situation, or how much knowledge the officer had of the situation. In the case of Engel, he did know there was a rat problem based on the 1972 findings of the rodent infestation. He also clearly knew how to handle such a problem because Gel Spice Co. did pass inspection in 1973 and at that time, avoided criminal prosecution. Additionally, Engel knew that the rodent problem was an ongoing issue given the nature of their business. The company imported and received spices from all over the world, but mostly South America, Europe, and the Middle East (United States v. Gel Spice Co., Inc., 1984). When the company received the spices at the pier,
the spices were inspected for any contamination or infestation from the shipping process, as rats are a very common problem in naval shipping. However, only a random sampling of bag exteriors were inspected, and there could always be a risk that rodents breached the bags or containers. Additionally, once the spices were processed, packaged, and stored at the company’s facility in Brooklyn, the company would be responsible for preventing rats, trapping and disposing of the rats, while also checking for any rat urine or excrement in the storage areas and containers. The spice bags and containers could be scanned with a black light to check for any urine contamination. All of these inspection and prevention efforts demonstrate that the rodents were a known issue and something Engel was actively aware of and combating. This leads to the company’s impossibility defense. In the impossibility defense, the corporate officer may not be liable for the violation if they did everything possible to ensure compliance or used extraordinary care to prevent in-compliance, but was still unable to meet the standards (Bagley, 2010, pg. 452). In the case of Engel, this could be that the company did everything it could, but despite their best efforts, the infestation continued and the spices become adulterated. Inspection reports from the Food and Drug Administration (FDA) investigators found that the Gel Spice storage bags were contaminated with rodent urine and rats who may have been poised, were left dead and rotting on the floor. There were even photographs that captured of the scenes of rat nesting materials, excessive amounts of excrement, and dead rodents in spice containers, storage areas, and other locations throughout the facility. All of these signs point to an infestation that may have been very challenging to contain.
While this appears to be a rampant issue, it is one that the company clearly knew how to handle given that it passed the 1973 inspection, and also passed five other inspections between 1973 and July 1976. This underscores that Gel Spices knew how to take extraordinary care to help solve this issue. The company started having issues and failing inspections again in 1977. Whether this was from a change in the employee base or internal reporting structures, Engel was still at the helm of the company and aware of the ongoing rodent issue. This means that under the impossibility defense, Engel could not qualify to fight the 1979 criminal charges because after having passed and then failed the violations again, he did not take the extraordinary care, steps, or measures to prevent the infestation. From court documents, it appears that Engel was found guilty and later tried to appeal the verdict. He claimed that the FDA did not have the right to search the facility without a warrant, that the investigations were conducted in bad faith, and that Engel did have not sufficient documentation or time to respond to the FDA investigations. While the court documents around this these appeals are lengthy and bit convoluted, it appears that this case was dismissed. Engel was given a chance to respond to the initial charges, and the FDA investigators were permitted to search and inspect the Gel Spices facility for administrative purposes without a warrant. This is because such inspections are suspicion-less searches protected by law to ensure compliance with government regulations and safety standards. In conclusion, as the president of Gel Spices, Barry Engel held the responsibility and liability to ensure the company’s goods were packaged, stored, and prepared in a clean environment in order to avoid contamination. The ongoing rodent problem caused
the contamination, which was then controlled and then uncontrolled, resulting in both passing and failing inspections from the FDA. Given that the company knew the actions needed to pass inspections, and failed to do so, the leadership was criminally liable. Today, Barry’s brother, Andre is listed as the CEO of the company, which is no longer operated in Brooklyn. The company is currently located in Bayonne, New Jersey, where there are hopefully fewer rats.
References: Bagley, C.E. (2010). Managers and the Legal Environment Strategies for the 21st Century, South Western Cengage Learning, OH. 6e Bloomberg (n.d.) Company Overview: Gel Spices Co., LLC. Retrieved May 13, 2017, from https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapid=4274443 Gel Spice, Co. LLC (2015). About Us. Retrieved May 13, 2017, from http://www.gelspice.com/about.htm
United States v. Gel Spice Co., Inc., 601 F. Supp. 1205 (E.D.N.Y. 1984). (1984, December 21). Retrieved May 13, 2017, from http://law.justia.com/cases/federal/districtcourts/FSupp/601/1205/1734855/
UNITED STATES v. GEL SPICE CO. (1985, January 28). Retrieved May 13, 2017, from http://ny.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19850128_0000016.ENY.htm/qx
United States of America, Appellee, v. Gel Spice Company, Inc. and Barry Engel, Defendants-appellants, 773 F.2d 427 (2d Cir. 1985). (1985, September 13). Retrieved May 13, 2017, from http://law.justia.com/cases/federal/appellate-courts/F2/773/427/107898/