U.S. vs. Charles Farinella

The defendant was convicted by
a jury of wire fraud, 18 U.S.C. § 1343, and of introducing
into interstate commerce a misbranded food with intent
to defraud or mislead. 21 U.S.C. §§ 331(a), 333(a)(2).
The judge sentenced him to five years’ probation (includ
ing six months of home confinement) and to pay a $75,000
fine and forfeit the net gain from the offense, which was
in excess of $400,000. The government’s cross-appeal
challenges the sentence as too lenient. The defendant’s
appeal primarily argues that there was insufficient admissible
evidence to convict him of misbranding. The
briefs contain no separate discussion of the wire-fraud
charge, and we construe the statement in the government’s
brief that the misbranding count was “the basis
of” the wire-fraud charge as a concession that if the
misbranding charge falls, the wire-fraud charge falls
with it.

The facts, stated as favorably to the government as the
record permits, but without extraneous detail, are as
follows. In May 2003 the defendant bought 1.6 million
bottles of “Henri’s Salad Dressing” from ACH Foods,
which in turn had bought it from Unilever, the manufacturer.
The label on each bottle said “best when purchased
by” followed by a date, which had been picked
by Unilever, ranging from January to June 2003. ACH
had purchased Henri’s Salad Dressing from Unilever
when the “best when purchased by” date was approaching.
The intention was to sell the salad dressing to consumers
through discount outlets. The defendant accordingly
resold the salad dressing he bought from ACH to
“dollar stores,” which are discount stores, but before
doing so he pasted, over the part of the label that contains
the “best when purchased by” date, on each bottle, a new
label changing the date to May or July 2004. The government
calls these the dates on which “the dressing would
expire.” That is itself false and misleading, and is part of a
pattern of improper argumentation in this litigation that
does no credit to the Justice Department. The usage
echoes the indictment and was employed repeatedly by
the prosecution at trial; in her opening argument the
principal prosecutor said that “it’s a case about taking
nearly two million bottles of old, expired salad dressing
and relabeling it with new expiration dates to pass it off as
new and fresh . . . . [N]obody wants to eat foul, rancid
food.” The term “expiration date” (or “sell by” date,
another date that the government’s brief confuses
with “best when purchased by” date) on a food product,
unlike a “best when purchased by” date, has a generally
understood meaning: it is the date after which
you shouldn’t eat the product. Salad dressing, however,
or at least the type of salad dressing represented by
Henri’s, is what is called “shelf stable”; it has no expiration
date.

ACH had faxed the defendant that it would guarantee
the freshness of the salad dressing for up to 180 days past
the “best when purchased by” date, but the dates that
he had affixed to them were more than 180 days after
the dates that Unilever had picked. ACH received some
complaints about the relabeling, though none about the
taste or other qualities of the salad dressing, and complained
in turn to the defendant, who stated that he
had checked with the Food and Drug Administration
and that the relabeling was okay. He had not checked
with the FDA. He made other false statements as well,
but they are not the basis of the misbranding charge,
because they are not statements that appeared on the
labels that he put on the bottles. That charge, upon which
as we said the government’s entire case is based, is
limited to the change of the “best when purchased by”
dates on the labels. It is conceivable that ACH or
Unilever might have a tort or contract claim against the
defendant for altering the “best when purchased by” date
and pretending to have been authorized by the FDA to
do so, but that has nothing to do with this criminal case.

It is important to understand what else this case does
not involve, and also what is not in the record—the
omissions are more interesting than the scanty contents
of the government’s threadbare case. There is no suggestion
that selling salad dressing after the “best when
purchased by” date endangers human health; so far as
appears, Henri’s Salad Dressing is edible a decade or
more after it is manufactured. There is no evidence that
the taste of any of the 1.6 million bottles of Henri’s Salad
Dressing sold by the defendant had deteriorated by the
time of trial—four years after the latest original “best
when purchased by” date—let alone by the latest relabeled
“best when purchased by” date, which was 18 months
after Unilever’s original “best when purchased by” date.
There is no evidence that any buyer of any of the
1.6 million bottles sold by the defendant has ever complained
about the taste.

The term “misbranded food” is defined in some detail
in 21 U.S.C. § 343, but there is nothing there about dates
on labels, so that the defendant’s conduct if illegal is so
only if it can be said to be “false or misleading in any
particular.” § 343(a)(1). No regulation issued by the
Food and Drug Administration, or, so far as we are inNos.
formed, by the Federal Trade Commission or any other
body, official or unofficial, defines “best when purchased
by” or forbids a wholesaler (as here) or retailer to
change the date. There is evidence that Unilever picked
the “best when purchased by” dates on the basis of tests
that it conducted, but the tests were not described at the
trial and we do not know whether for example they
are taste tests.

There is also and critically nothing in the record concerning
consumers’ understanding of the significance of
“best when purchased by.” Without evidence of that
understanding, whether the defendant’s redating was
misleading cannot be determined. No consumer evidence
was presented, whether as direct testimony or in survey
form. The government’s able appellate lawyer surprised
us by arguing that if the manager of a grocery store,
after tasting Henri’s Salad Dressing, decided that there
was no diminution of flavor after two years and relabeled
the bottles accordingly, he would be guilty of the crime
of misbranding, just like the defendant. Conceivably
consumers understand the “best when purchased by” date
to refer to a date picked by the manufacturer, but there
is no evidence of that and it is not, as the government
believes, self-evident.

No evidence was presented that “best when purchased
by” has a uniform meaning in the food industry. The
government wants us to believe that it is a synonym
for “expires on” but presented no evidence for this interpretation,
and indeed argues the point by innuendo,
simply by substituting in its brief, as in the indictment
and in the prosecution’s statements at the trial in the
hearing of the jury, “expires on” for “best when purchased
by.”

The parties have found no previous case, either criminal
or civil, and no administrative proceeding, in which
alteration of the “best when purchased by” date was
challenged as unlawful. As far as the evidence shows,
any firm in the chain of production and distribution
that leads from the manufacturer to the ultimate consumer
can make its own judgment of when the taste of
the product is likely to deteriorate. For all we know, the
date is determined less by a judgment about taste
than about concern with turnover. The manufacturer
might want to affix an early “best when purchased by”
date so that his distributors would be more inclined
to repurchase the product within a reasonably short
time, so that he has more sales. Admittedly, this is speculation,
for while a date in the near future will increase
turnover it will do so at the cost of making each bottle
less likely to be sold at retail, and hence less valuable.
Grocery stores pay less for bottles that are less likely to
be sold. The cost of restocking shelves more frequently
also would drive down the price to the manufacturer.

Another possibility is that labeling a product with a
“best when purchased by” date is a method of price
discrimination. After that date, products are not
destroyed, for they are not only safe but also, as far as the
record shows, of undiminished quality for an indefinite
time. But well-off consumers prefer to buy before that
date, and after the date passes the product will be sold at
a discount in dollar stores or their equivalent, catering
to less well-off consumers. In economic lingo, the label
invites consumers to sort themselves into two groups,
one of less-elastic demanders willing to pay a higher
price for what may or may not be a higher-quality good
and the others preferring the discount.

So was the defendant ripping off the consumer by selling
salad dressing after its “best when purchased by” date
had passed, without disclosing the fact? Apparently not,
because it sold the salad dressing to dollar stores rather
than to stores that cater to consumers who would not
buy a product after its “best when purchased by” date.

Still another possibility is that “best when purchased by”
is just a guarantee by the seller, in this case by the defendant—
a time-limited warranty. If so, then a consumer
who had a bad experience with a bottle of salad dressing
used before the “best when purchased by date” affixed
by the defendant would be entitled to a refund because
the defendant, and the retailers to whom he sold the
salad dressing and who we assume (though again there
is no evidence) did not alter the date, had implicitly
guaranteed “bestness” up to that date.

All this is speculation, but it is less implausible speculation
than the government’s that consumers think “best
when purchased by” means “expires on,” so that if
they knew that the manufacturer’s “best when purchased
by” date had passed they would not dream of
buying the product no matter how steeply it was discounted.

In mid-trial the government was permitted to call as an
expert witness an employee of the Food and Drug Admin
istration. He testified that the FDA has a database of
inquiries regarding the relabeling of food products, that
he had looked in the database, and that he had found no
record of an inquiry from the defendant concerning the
relabeling of salad dressing. The implication was that
changing the “best when purchased by” date on a label
requires the FDA’s permission, and he added that the
FDA requires supporting data before approving a
request to change the date. This evidence, to which the
defendant vociferously objected, should not have been
admitted. If there is a requirement that the FDA’s
approval must be obtained before a “best when purchased
by” date may be changed, it would, to be a lawful
predicate of a criminal conviction, have to be found in
some statute or regulation, or at least in some written
interpretive guideline or opinion, and not just in the oral
testimony of an agency employee. It is a denial of due
process of law to convict a person of a crime because he
violated some bureaucrat’s secret understanding of the
law. “The idea of secret laws is repugnant. People
cannot comply with laws the existence of which is concealed.”
Torres v. INS, 144 F.3d 472, 474 (7th Cir. 1998); see
George Campbell Painting Corp. v. Chao, 463 F. Supp. 2d
184, 190-91 (D. Conn. 2006); Oppenheimer Mendez v.
Acevedo, 388 F. Supp. 326, 335 (D.C. Puerto Rico 1974).

Moreover, the law (unless foreign) that a jury applies
is the law given to it by the judge in his instructions, not
the legal opinion offered by a witness, including an
expert witness. United States v. Chube II, 538 F.3d 693,
701 (7th Cir. 2008); Nationwide Transport Finance v. Cass
Information Systems, Inc., 523 F.3d 1051, 1058 (9th Cir.
2008). District judges, rather than witnesses, must explain
to juries the meaning of statutes and regulations.
Bammerlin v. Navistar Int’l Transportation Corp., 30 F.3d
898, 901 (7th Cir. 1994).

The testimony of the FDA’s employee was not just
improper and inadmissible but incoherent. He testified
that he did not know what “the FDA say[s] about best
when purchased by dates.” When shown the “best when
purchased by” date on a bottle and asked what it meant
he said he did not know. He also said—contradicting his
own testimony that altering the date is misbranding— that
“the FDA doesn’t have the authority to regulate expiration
dates.” Then he said that it did. He never explained
the basis for either of his contradictory statements concerning
his agency’s authority.

The prosecutor told the judge that if there is a “best
when purchased by” date on the label of a food product
“and it’s changed[,] that is a violation of the Food, Drug
and Cosmetic Act.” That is false.

The government is left to argue that any change on the
label of a food product is misbranding, whatever consumers
understand. But it doesn’t believe that either,
because its lawyer told us at argument that a knowingly
false statement that Henri’s Salad Dressing is the most
delicious salad dressing in the world would be mere
“advertising” and thus (but why “thus”?—misbranding
includes false advertising on a food label) not actionable
as misbranding.

We do not suggest that a novel fraud can never be
punished as a crime. But to prove a person guilty of having
made a fraudulent representation, a jury must be given
evidence about the meaning (unless obvious) of the
representation claimed to be fraudulent, and that was not
done here. We remind that one possible meaning of “best
when purchased by” is that it is a guarantee by the
seller that if purchased by then (and, presumably, eaten
within a reasonable time afterward) it will taste as good
as when it was first sold; if this is the meaning that consumers
attach to the phrase, there was no misrepresentation.

Because the government presented insufficient evidence
that the defendant engaged in misbranding, he is
entitled to be acquitted. But since there was insufficient
evidence, why did the jury convict? Perhaps because of
a series of improper statements by prosecutor Juliet
Sorensen in her rebuttal closing argument, for which the
government in its brief (which she signed) belatedly
apologizes (belatedly because the government defended
the remarks emphatically in the district court). The brief
says that “the remarks which drew sustained objections
were improper, because they cast the defendant’s exercise
of his constitutional right to counsel in a negative
light.”

Indeed they were and they did. The reference to these
“sustained objections” by the defendant’s lawyer is to
objections to two statements made by the prosecutor to
the jury. After the court sustained the defendant’s objection
to the first statement—“Ladies and gentlemen,
don’t let the defendant and his high-paid lawyer buy
his way out of this”—she said to the jury: “Black and white
in our system of justice, ladies and gentlemen. You have
to earn justice. You can’t buy it.” The judge sustained an
objection to this statement too. That was too weak a
response. He should have made clear to the prosecutor
after sustaining the first objection that one more false
step and he would declare a mistrial. The prosecutor’s
second statement was worse than the first, because it
could be understood as a warning that the defendant
might try to obtain an acquittal by bribery.

There were additional improprieties, not acknowledged
and for the most part not even discussed by the
government in its brief. The prosecutor told the jury
that the “best when purchased by” date “allows a manufacturer
to trace the product if there is a consumer complaint,
if there is illness, if there is a need to recall the
product.” The implication is that by altering the “best
when purchased by” date the defendant had prevented
the manufacturer from tracing the product in order to
prevent it from causing illness. If that were true, the
FDA presumably would require that the date not be
altered, and it does not require that; in any event there
was no evidence that a bottle of Henri’s Salad Dressing
consumed before or for that matter after the altered
“best when purchased by” date could make anybody ill.

In like vein the prosecutor told the jury that if what the
defendant “did was business as usual in the food industry,
I suggest we stop going to the store right now and start
growing our own food.” That was a veiled reference
to the nonexistent issue of safety, which she pressed
further when she said that “in spite of all this talk about
the quality of the dressing, I don’t see them opening any
of these bottles and taking a whiff.” The implication,
which has no basis in the evidence, was that the dressing
in some of the bottles was rotten. She told the jury that
the defendant was indifferent to “safety” and that “the
harm caused by the fraud was to public confidence in
the safety of the food supply.” (The government repeats
this in its brief; there is no basis in the evidence for
the remark.) She also called the bottles of salad dressing
“truckfulls of nasty, expired salad dressing,” which was
another groundless comment about quality and safety.
She said that after the “expiration date” the salad dressing
was no longer “fresh” and that the defendant had
“had to convert the expired dressing into new, fresh
product,” a proposition that is not completely intelligible,
but sounds ominous.

The government could have performed tests on the
salad dressing to determine its freshness—perhaps the
same tests that Unilever had performed. It did not do so,
or, if it did, it did not present the results at trial. In her
closing argument the prosecutor 14 times substituted
“expiration date” or “expires” for “best when purchased
by”—14 further improprieties, which grew to 20 in
the government’s main appeal brief by virtue of its
using “sell-by date” as a synonym for “expiration date.”

We asked the government’s lawyer at argument what
an appropriate sanction for the prosecutor’s misconduct
might be. We are not permitted to reverse a judgment on
the basis of a lawyer’s misconduct that would not have
caused a reasonable jury to acquit, United States v. Hasting,
461 U.S. 499, 505-06 (1983); United States. v. Boyd, 55
F.3d 239, 241-42 (7th Cir. 1995), but in this case, had the
government presented enough evidence to sustain a
conviction, we would have reversed the judgment and
ordered a new trial on the basis of the prosecutor’s misconduct.
That sanction is not available only because the
government presented so little evidence that the
defendant is entitled to an acquittal. That does not detract
from the gravity of the prosecutor’s misconduct and
the need for an appropriate sanction. The government’s
appellate lawyer told us that the prosecutor’s superior
would give her a talking-to. We are not impressed by
the suggestion.

Since we are directing an acquittal on all counts, the
sentencing issues are academic and we do not address
them, beyond expressing our surprise that the government
would complain about the leniency of the sentence
for a crime it had failed to prove.

Chicago Criminal Lawyer - Robert J Callahan