Fool Me Once, Shame on You. Fool Me Twice and It’s a Federal Felony—Always?

September 29, 2023By JP Ellison & Anne K. Walsh

As readers of the FDA Law Blog know, the FDC Act is a strict liability criminal enforcement statute that can impose criminal misdemeanor penalties on a person without any showing of intent.  See some of our prior posts, here, here, and here.  If committed with an intent to defraud or mislead, an FDC Act violation can become a felony, which carries more significant jail time and financial penalties.  See some of those prior posts here and here.  What is less well-known is the provision in the FDC Act that purports to automatically convert a second FDC Act violation to a felony, even without any evidence of intent to defraud or mislead. See FDC Act § 303(a)(2), 21 U.S.C. § 333(a)(2): “[I]f any person commits such a violation after a conviction of him [of a prohibited act listed in section 331] has become final, . . .  such person shall be imprisoned for not more than three years or fined not more than $10,000, or both.”

The issue of whether this “second violation” felony requires evidence of intent was addressed in a recent Ninth Circuit decision, United States v. Marschall.  Richard Marschall, a “naturopathic doctor,” had been convicted in 2017 for a misdemeanor violation of the FDC Act for selling misbranded drugs.  In 2021, he was caught again, this time for selling a concoction of sugar and garlic that he claimed could prevent a whole slew of infections.  Marschall stipulated that he had had a prior FDC Act misdemeanor conviction, but at trial and on appeal, Marschall challenged the indictment as defective for charging him with a felony despite the lack of allegations regarding knowledge or intent.  His arguments were rejected by the district court, and the 9th Circuit affirmed the felony conviction.

The facts of Marschall’s case do not make a particularly compelling vehicle for the important legal question of whether a person can be convicted of a felony without any evidence of knowledge or intent.  While Marschall was convicted of a felony based on one earlier 2017 FDC Act conviction, in a footnote, the 9th Circuit notes that this was actually Marschall’s third FDC Act conviction.  Based on these facts, it hardly seemed a stretch for the 9th Circuit to be comfortable that the felony conviction did not raise statutory or constitutional concerns.

But the court’s opinion is not so limited.  At least in dictum, the court appears to suggest that any person (including a large corporation, or the responsible corporate officer of such a corporation) is put “amply on notice” by a prior FDC Act misdemeanor conviction, such that a subsequent felony could be warranted.  Given the broad range of products regulated by FDA, the laundry list of activities prohibited under the FDC Act, and the scope of strict liability misdemeanor exposure, we respectfully disagree.

Indeed, under an unlimited reading of the second violation provision, a global company engaged in a multitude of FDA-regulated activities should be alarmed.  If one business unit is convicted for a food-related violation, perhaps related to failing to maintain adequate HACCP controls, the corporation could be subject to potential felony charges years later for wholly unrelated conduct by a separate business unit for, hypothetically, off-label promotion of a medical device.  Under Marschall, this corporate entity was on notice.  And the risk is the same regardless if the “person” is a corporation or a natural person, a mid-level manager or a CEO.   Such an expansive application hardly seems consistent with the notions of federal criminal prosecution for felonies.

A practical rejoinder to this concern is that first and second misdemeanors are not brought by federal prosecutors without any exercise of prosecutorial discretion, and if such a second misdemeanor prosecution was brought, a court could address these concerns then. The problem with that argument is that the threat of strict liability criminal exposure often results in resolutions short of trial, and felony exposure tilts the scales of justice even more in favor of the prosecution.

Companies and individuals must be aware of the risk that they could be charged with a felony despite the lack of intent.  We will cover further use of the second misdemeanor charge in future posts.

Categories: Enforcement