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United States v. N.Y. Fish, Inc.

United States District Court, E.D. New York

March 30, 2014

UNITED STATES OF AMERICA, Plaintiff,
v.
N.Y. FISH, INC., a corporation, NEW YORK CITY FISH, INC., a corporation, MAXIM KUTSYK, an individual, PAVEL ROYTKOV, an individual, LEONID STAROSELETSKY, an individual, and STEVEN KOYFMAN, an individual, Defendants

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[Copyrighted Material Omitted]

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For United States of America, Plaintiff: Adrienne E. Fowler, LEAD ATTORNEY, U.S. Department of Justice, Office of Consumer Litigation, Washington, DC; Elliot M. Schachner, LEAD ATTORNEY, United States Attorneys Office, Eastern District of New York, Brooklyn, NY.

For New York City Fish, Inc., a corporation, Maxim Kutsyk, an individual, Defendants: Stephen R. Foreht, LEAD ATTORNEY, Foreht Associates, LLP, New York, NY.

For Leonid Staroseletsky, an individual, Pavel Roytkov, Defendants: Robert Y. Lewis, Freeman Lewis LLP, New York, NY.

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MEMORANDUM AND ORDER ON BENCH TRIAL AND MOTION FOR INJUNCTIVE RELIEF

ROSLYNN R. MAUSKOPF, United States District Judge.

The United States seeks to enjoin two seafood production companies and their senior management from producing food products at a facility in Brooklyn alleged to be noncompliant with the federal Food, Drug, and Cosmetic Act (" FDCA" ), 21 U.S.C. § 301 et seq. The government filed its complaint on May 17, 2013, alleging that defendants had violated 21 U.S.C. § § 331(a) and (k) by introducing adulterated food into interstate commerce and by causing food to become adulterated while held for sale after the shipment of one or more components in interstate commerce. ( See Doc. No. 1.) At that time, the government requested a preliminary injunction prohibiting defendants from further violations of those provisions. ( See Doc. No. 2.)

On May 23, 2013, this Court ordered defendants to show cause why the government's application for preliminary injunctive relief should not be granted.[1] After

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briefing by the parties and with their consent, the Court consolidated the motion for a preliminary injunction with a bench trial on the merits. See Fed.R.Civ.P. 65(a)(2). Trial was held from July 9-10, 2013, during which the Court heard testimony from Peter M. Trunk, the FDA investigator who inspected the Chester Street facility in February 2013; Mary E. Losikoff, a Consumer Safety Officer in the Division of Seafood Safety at the FDA; Frank Costanzo, a seafood safety and regulatory compliance consultant retained by defendants; defendant Roytkov; and defendant Kutsyk. For the reasons that follow, the government's motion for injunctive relief is granted, with a directive to modify the proposed order of permanent injunction consistent with this opinion.[2]

BACKGROUND

As the findings of fact recounted below demonstrate, from about January 2006 through September 2012, defendant N.Y. Fish, Inc. (" N.Y. Fish" ), a New York corporation, had its principal place of business at 738 Chester Street in Brooklyn, New York (" the Chester Street facility" ). N.Y. Fish had a troubled history with the U.S. Food and Drug Administration (" FDA" ). Between 2006 and 2012, the FDA conducted six inspections of the Chester Street facility and discovered violations of the FDCA each time. ( See generally Decl. of Ronald M. Pace (" Pace Decl." ) (Doc. No. 13).)[3] Most significantly, during that period environmental samples collected from various locations within the facility and from finished fishery products tested positive for Listeria monocytogenes (" L. mono " ).[4] Several of the L. mono strains isolated at the Chester Street facility were found to persist from inspection to inspection.

N.Y. Fish ceased operations sometime in September 2012, leaving behind its processing

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logs, Hazard Analysis and Critical Control Point (" HACCP" )[5] and Sanitation Standard Operating Procedure (" SSOP" )[6] plans, records, fixtures, and equipment. Throughout October 2012, the Chester Street facility apparently sat vacant. During that month, however, defendant Kutsyk incorporated New York City Fish, Inc. (" N.Y.C. Fish" ), which then leased the Chester Street facility and began operations on or about November 1, 2012. Like N.Y. Fish before it, N.Y.C. Fish prepares, processes, packs, holds, and distributes ready-to-eat smoked and cured fishery products, including salmon, mackerel, and herring. To staff his new company, Kutsyk hired a number of former N.Y. Fish employees.

In February 2013, an FDA inspection again documented significant HACCP and Current Good Manufacturing Practices (" CGMP" )[7] violations. Kutsyk then retained Costanzo to provide advice concerning the procedures and systems necessary for the proper operation of a seafood factory. (Decl. of Frank Costanzo (" Costanzo Decl." ) (Doc. No. 15) ¶ 22.) Costanzo inspected the facility, observed the current practices at N.Y.C. Fish, and reviewed the documents from the February 2013 and August 2012 inspections. Kutsyk asserts that, in consultation with Costanzo, he made a number of beneficial changes at the Chester Street facility.[8] The government maintains that these changes -- if they were made at all -- are insufficient to allay the FDA's concerns.

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After briefing had been submitted on the issues in this case, the parties consented to a consolidation of the motion for preliminary relief with a bench trial on the merits. See Fed.R.Civ.P. 65(a)(2). Following trial, the parties submitted proposed findings of fact and conclusions of law, along with post-trial memoranda on all relevant issues. With the benefit of the record established at trial and the parties' submissions, the Court issues the following Findings of Fact and Conclusions of Law based on a preponderance of the evidence. See Fed.R.Civ.P. 52(a)(1) (" In an action tried on the facts without a jury . . . the court must find the facts specially and state its conclusions of law separately. The findings and conclusions . . . may appear in an opinion or a memorandum of decision filed by the court." ).

FINDINGS OF FACT[9]

In a bench trial, the Court " acts both as a determiner of whether a case meets the legal requirements for decision by a fact-finder and as a fact-finder." Cabrera v. Jakabovitz, 24 F.3d 372, 380 (2d Cir. 1994). " As the fact[-]finder, the [C]ourt is under a duty to weigh the evidence, determine the credibility of witnesses and draw whatever reasonable inferences the established facts may warrant." United States v. Beigel, 254 F.Supp. 923, 932 (S.D.N.Y. 1966), aff'd, 370 F.2d 751 (2d Cir. 1967); see also Krist v. Kolombos Rest. Inc., 688 F.3d 89, 95 (2d Cir. 2012) (" It is within the province of the district court as the trier of fact to decide whose testimony should be credited." ). " The obligations of the [C]ourt as the trier of fact are to determine which of the witnesses it finds credible, which of the permissible competing inferences it will draw, and whether the party having the burden of proof has persuaded it as fact[-]finder that the requisite facts are proven." Cifra v. G.E. Co., 252 F.3d 205, 215 (2d Cir. 2001).

Upon due consideration and examination of the developed factual record, including the parties' declarations and affidavits, the testimony of witnesses at trial, and the exhibits introduced into evidence, the Court makes the following findings of fact:

1. Defendant N.Y. Fish is a New York corporation. From at least January 2006 to at least October 2012, N.Y. Fish's principal place of business was located at 738 Chester Street, Brooklyn, New York. During that time period, N.Y. Fish prepared, processed, packed, held, and distributed ready-to-eat smoked and cured fishery products, including salmon, mackerel, and herring, in the Chester Street facility.
2. Defendant N.Y.C. Fish is a New York corporation, with its principal place of business at the Chester Street facility. N.Y.C. Fish was incorporated in October 2012 and entered into a lease of the Chester Street facility in November 2012. N.Y.C. Fish prepares, processes, packs, holds, and distributes ready-to-eat smoked and cured fishery products, including salmon, mackerel, and herring, in the Chester Street facility.
3. N.Y.C. Fish began operating at the Chester Street facility on or about November 1, 2012. Prior to that date,

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the facility sat vacant following the cessation of business by N.Y. Fish.
4. N.Y.C. Fish hired and currently employs individuals who formerly worked at N.Y. Fish. Eight of N.Y.C. Fish's fourteen employees were formerly employed by N.Y. Fish.
5. Defendant Kutsyk, an individual, is the President of N.Y.C. Fish. He is responsible for all of N.Y.C. Fish's business operations and oversees all aspects of the firm, including purchasing raw materials and making final decisions regarding employees, equipment, and business matters. He performs his duties at the Chester Street facility.
6. Defendant Pavel Roytkov, an individual, is the Vice President of N.Y.C. Fish, and former Vice President of N.Y. Fish. In his capacity as Vice President of N.Y.C. Fish, Roytkov reports directly to Kutsyk, oversees the purchase of raw materials and other supplies needed for the manufacturing operations, and oversees certain aspects of the manufacturing operations. In his capacity as Vice President of N.Y. Fish, he reported directly to the president of N.Y. Fish, oversaw the purchase of raw materials and other supplies needed for the manufacturing operations, and oversaw certain aspects of the manufacturing operations. Additionally, Roytkov was responsible for conducting the official HACCP review of all critical control point and process schedule monitoring records to ensure that values were within critical limits. His duties at both N.Y. Fish and N.Y.C. Fish were and are performed at the Chester Street facility. Roytkov failed to inform his new employer of the longstanding problems the FDA found in N.Y. Fish's HACCP records, which N.Y.C. Fish continued to use.
7. Defendant Leonid Staroseletsky, an individual, is the Plant Manager of N.Y.C. Fish, and former Plant Manager of N.Y. Fish. In his capacity as Plant Manager of N.Y.C. Fish, he reports directly to Kutsyk, oversees all manufacturing operations including monitoring production of all batches from raw material to finished product, processing methods and cooking/smoking ovens, plant sanitation, and product labeling, oversees employee management, and manages all sanitation operations. Additionally, he prepares and initials the Brining and Temperature Logs for batches of finished product. In his capacity as Plant Manager of N.Y. Fish, he reported directly to Roytkov, oversaw all manufacturing operations, oversaw employee management, and managed all sanitation operations. Additionally, Staroseletsky prepared and initialed the Brining and Temperature Logs. Staroseletsky's duties at both N.Y. Fish and N.Y.C. Fish were and are performed at the Chester Street facility. Staroseletsky failed to inform his new employer of the longstanding problems the FDA found in N.Y. Fish's HACCP records, which N.Y.C. Fish continued to use.
8. Since November 2012, N.Y.C. Fish, Kutsyk, Staroseletsky, and Roytkov receive raw fish for their ready-to-eat fish products from outside of New York, including frozen mackerel from Rhode Island, and sell ready-to-eat fish products to stores in Maryland, Massachusetts, Pennsylvania, and New Jersey.
9. The ready-to-eat fish products produced by N.Y.C. Fish, Kutsyk, Staroseletsky, and Roytkov in the Chester Street facility since November 2012 are articles of food.

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10. Prior to November 2012 and in their capacity as managers of N.Y. Fish, Staroseletesky and Roytkov received raw fish for their ready-to-eat fish products from outside of New York, including frozen mackerel from Rhode Island, and sold their food to stores in Maryland, Massachusetts, Pennsylvania, New Jersey, and Illinois.
11. The ready-to-eat fish products produced by Kutsyk and Roytkov in the Chester Street facility prior to November 2012 are articles of food.
12. The FDA has conducted seven inspections of the Chester Street facility between 2006 and 2013. The FDA inspections were conducted between February 12 and 15, 2013 (" February 2013 Inspection" ); August 13 and 24, 2012 (" August 2012 Inspection" ); October 28 and November 10, 2010 (" October--November 2010 Inspection" ); October 10 and November 3, 2009 (" October--November 2009 Inspection" ); May 27 and June 3, 2009 (" May--June 2009 Inspection" ); September 10 and 26, 2008 (" September 2008 Inspection" ); and January 11 and 23, 2006 (" January 2006 Inspection" ).
13. During the January 2006 Inspection, FDA investigators observed the following, which, as set forth below in the Court's Conclusions of Law, constitute violations of the FDCA for which Roytkov and Staroseletsky are responsible:
a. Food residue on the cutting board surface of the vacuum packaging machine in the packing room, on the slicing machine used to cut ready-to-eat cold smoked salmon, and on the production knives and utensils used to process raw fish;
b. Dirty lab coats stored next to and directly touching clean lab coats;
c. Raw, thawed herring piled on top of a stainless steel production table and against a tiled wall directly touching chipped, exposed wall tile;
d. Food residue on the stainless steel door and handle of the smoker oven and dried liquid on several plastic bags that are used to package ready-to-eat smoked fish;
e. Chipped and broken wall tiles above and directly next to a stainless steel production table where ready-to-eat cold smoked salmon are staged;
f. An open bin filled with rinsed product stored next to and under chipped wall tiles;
g. Peeling and flaking paint on metal frames around eighteen ceiling lights;
h. A rusted ceiling frame;
i. Fish residue on the tiled walls, at the bottom of a metal door frame, and on a plastic stand used to hold clean buckets to package product;
j. Standing water behind the smoker oven;
k. The absence of calibration records indicating that the freezer thermometer had been calibrated as written in N.Y. Fish's HACCP plan; and
l. N.Y. Fish's HACCP plan failed to identify histamine as a food safety hazard.
14. In addition, during the January 2006 inspection FDA investigators collected environmental samples from various locations within the Chester Street facility. FDA analysis revealed the presence of L. mono in samples collected from floor drains in

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the primary and secondary processing rooms.
15. During the September 2008 Inspection, FDA investigators observed the following, which, as set forth below in the Court's Conclusions of Law, constitute violations of the FDCA for which Roytkov and Staroseletsky are responsible:
a. Food residue on the slicer and fish skinner, unsanitized floors, and smoked salmon on and around all processing equipment;
b. Standing water in the finished product refrigerator and in front of an oven where carts are transported;
c. An absence of records establishing that the fish received for processing was within the critical limits identified in the N.Y. Fish's HACCP plan; and
d. Critical control point monitoring lacking a HACCP-trained reviewer's signature and/or date.
16. During the September 2008 inspection, FDA investigators also collected environmental samples from various locations within the Chester Street facility. FDA analysis of these samples revealed the presence of L. mono in ten locations of the facility, including samples collected from floor drains, the slicer blade, the salmon skinner, the skinner table wheels in the packing room; the floor drain in the brining refrigerator; the floor drain in the cutting room; ...

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