If You Read Only One Thing This Fortnight (US)

Make it Steve Brill’s 15-part report on Johnson & Johnson’s criminal and otherwise unlawful off-label sales of its drug Risperdal.  He has provided links to all the primary materials used to piece the story together. It raises many of the classic questions about how we ought to respond to corporate crime and investigates how it happens in the first place.  It demonstrates how difficult it can be to respond to and prosecute corporate crime, and how inadequate even very large criminal fines can be to deter these behaviours.

“The company will still have cleared $3 billion from its off-label sales—despite getting caught.  In other words, the worst possible outcome for J&J—getting caught red-handed and being buried in lawsuits that end up with terrible verdicts or settlements—will still have been highly profitable.”

Should regulators be assisting class action firms? (Aus)

Apparently there has been some such cooperation in the US, and former Federal Court Judge Ray Finkelstein considers the Australian levels of cooperation unsatisfactory.  The discussion of qui tam lawsuits in the US, in Steve Brill’s article on J&J, above, is interesting in this context.

Biosecurity Act 2015 (Aus)

The Biosecurity Bill 2015 passed both houses of parliament; the Biosecurity Act 2015 is expected to come into operation in 2017.  Interestingly, s279(b) sets the maximum penalty for a category 1 offence committed by a corporation at “$2,200,000 and, in the case of a continuing offence, a further penalty of $275,000 for each day the offence continues.”  The offences are all summary; s283 requires the charges be determined in either the local court (which is limited to a maximum sentence of $22,000), or the Supreme Court, in its summary jurisdiction.

Workplace Injuries the Result of “Egregious Failure” (Aus)

Dotmar Epp Pty Ltd, a company that engineers plastic products in Victoria, considered its $375,000 sentence for two offences of failing to provide an maintain a safe working environment for employees, was manifestly excessive.  The Victorian Court of Appeal disagreed, commenting, “[n]ot only did the offending behaviour embraced by the first charge take place over a ten month period, but it occurred against a background of several years’ egregious failure to adhere to proper safety procedures with respect to the [machine that created risks to health].” (Dotmar Epp Pty Ltd v The Queen [2015] VSCA 241)

Anti-Competitive Conduct Civil Pecuniary Penalty for VISA (Aus)

Visa were ordered to pay a civil pecuniary penalty of $18 million (and costs of $2 million to the ACCC) for anti-competitive conduct over a 5 month period.  The litigation took over 2 years to complete, and concerned conduct from 2010.  (ACCC v Visa Inc & ors [2015] FCA 1020)

“Free Range” Civil Pecuniary Penalty for Darling Downs (Aus)

The ACCC concluded its review of “free range” claims in the chicken, egg and pork industries.  The review culminated in three companies providing court-enforceable undertakings to modify their behaviour, and a civil pecuniary penalty of $250,000 against Darling Downs Fresh Eggs. The Darling Downs Fresh Eggs eggs, labeled “free range” had been laid by hens who had, at no point in the relevant 9 month period, had access to the outdoors. (ACCC v RL Adams Pty Ltd [2015] FCA 1016)  Darling Downs responded petulantly with “we are guilty of doing the right thing“; apparently they were so focussed on changing their chicken management from free-range to definitely-not-free-range-anymore for health reasons, that they forgot to change their packaging to note the fact they were changing their chicken management from free-range to definitely-not-free-range-anymore.   I doubt their (genuinely) free-range competitors agree, not to mention their consumers who paid the higher prices that come along with the free-range label.

Gambling Company’s Advertising “Misleading and Deceptive” (Aus)

The Federal Court also found that Bet365 engaged in (civil) misleading and deceptive conduct when it advertised its “$200 FREE BETS FOR NEW CUSTOMERS” offer.  Orders to follow. (ACCC v Hillside (Australian New Media) Pty Ltd trading as Bet365 [2015] FCA 1007)

ASIC Has a New Corporate Plan (Aus)

ASIC has published its corporate plan for 2015/16 to 2018/19.

The Yates Memo: US to Increase Efforts to Prosecute White-Collar Criminals (USA)

The US Dept of Justice, via Sally Quillian Yates, Deputy Attorney General, has issued a memo (“the Yates Memo“) outlining the DOJ’s recalibrated approach to corporate and white collar crime, moving the cross-hairs of investigative enquiry squarely over individual targets.  “The working group examined how the Department approaches corporate investigations, and identified areas in which it can amend its policies and practices in order to most effectively pursue the individuals responsible for corporate wrongs. This memo is a product of the working group’s discussions… Fundamentally, this memo is designed to ensure that all attorneys across the Department are consistent in our best efforts to hold to account the individuals responsible for illegal corporate conduct.” (emphasis added)  In a speech at New York University School on the new memo, Yates affirmed former Attorney General, Eric Holder’s view that “as a matter of basic fairness, we cannot allow the flesh-and-blood people responsible for misconduct to walk away, while leaving only the company’s employees and shareholders to pay the price.  And, as he pointed out, nothing discourages corporate criminal activity like the prospect of people going to prison.”

What Role Should Judges Play in the Drafting of Deferred Prosecution Agreements? (USA)

The US Court of Appeals for the District of Columbia Circuit is considering what role judges have to play in the agreement of deferred prosecution agreements between the US DOJ and corporate suspects.  The case in question concerns the alleged illegal supply by Fokker Services B.V. to Iran, Sudan and Myanmar, of aircraft parts – and the lawfulness of a judge’s rejection of the deferred prosecution agreement settled with the US DOJ.

“Off-Label” Sales of Medical Device – Sanofi Genzyme Enters Deferred Prosecution Agreement (USA)

And here’s an example of a US deferred prosecution agreement, formalised this month:  Sanofi’s Genzyme Corporation admitted its staff had been coaching doctors to use its medical product “Seprafilm” in a non-approved way so as to increase sales; the US DOJ filed two criminal charges against the company, but they are stayed for the duration of the deferred prosecution agreement.  If it is complied with, the charges will ultimately be withdrawn.

EPA proposes new environmental protection laws (USA)

United States EPA proposes new environmental laws, including a ban on healthcare facilities disposing pharmaceutal products into waterways.

Out-of-court Settlement for Arctic Tundra Toxic Spill (USA)

“Preventative measures to protect sensitive ecosystems like the arctic tundra are very important to keep pollutants out of the environment and away from people” says a representative of the U.S. EPA. “Holding companies accountable when they pollute the environment ensures that everyone is treated fairly, and promotes the use of precautionary spill prevention procedures.”  For Repsol E&P USA Inc, that “accountability” came in the form of a  $30,500 out-of-court settlement following its alleged leak of 500 gallons of “well testing fluids” onto “an acre of frozen, snow-covered tundra” in Alaska, allegedly contravening the US Clean Water Act.  Mmmm… smell the accountability – I’m sure the Alaskan wildlife can.

Oyster Effluent Guilty Plea (USA)

Meanwhile, an oyster processing company based in Washington, required by the terms of its licence to perform monthly sampling of the effluent it discharged into Willapa Bay, spent over two years knowingly failing to perform that monthly sampling.  After pleading guilty to offences under the Clean Water Act it “agreed to pay a $100,000 fine, make a $75,000 community service payment, implement an EPA approved environmental management system to insure future compliance, and publish a public apology in the Pacific Coast Shellfish Growers Association’s quarterly newsletter.”

Bayer CropScience Explosion Kills 2 People, Releases “Extremely Hazardous Substances To The Atmosphere” – Litigation Settled (USA)

The US had initiated civil litigation against Bayer CropScience LP, seeking civil penalties for alleged violations of the Clean Air Act, which, it said, “caused or contributed to conditions that, on August 28, 2008, led to an explosion that killed two of Defendant’s employees and released extremely hazardous substances to the atmosphere.”  The civil litigation has now been settled out-of-court, on the condition that Bayer CropScience admits nothing.