Alpharma, Inc. v. Pennfield Oil Co.

Decision Date17 June 2005
Docket NumberNo. 04-2958.,04-2958.
Citation411 F.3d 934
PartiesALPHARMA, INC., A Delaware Corporation, Plaintiff-Appellant, v. PENNFIELD OIL COMPANY, doing business as Pennfield Animal Health, A Nebraska Corporation, Defendant-Appellee.
CourtU.S. Court of Appeals — Eighth Circuit

Douglas J. Behr, argued, Washington, D.C. (John B. Dubeck and Eric H. Singer, Washington, D.C., on the brief), for appellant.

John H. Korns, argued, Washington D.C. (Edward J. Allera and Donald E. Segal, D.C., Bruce D. Vosburg, Omaha, NE, on the brief), for appellee.

Before MURPHY, HEANEY and SMITH, Circuit Judges.

MURPHY, Circuit Judge.

Alpharma Inc. filed this action against its competitor Pennfield Oil Co., alleging that Pennfield had violated the Lanham Act and state law by falsely advertising that one of its antibiotic animal feed additives was approved for certain uses by the Food and Drug Administration (FDA). The district court1 granted Pennfield's motion to dismiss, holding that Alpharma had failed to exhaust administrative remedies. Alpharma appeals, and we reverse.

Alpharma and Pennfield are the only manufacturers of bacitracin methylene disalicylate (BMD), an antibiotic animal feed additive requiring FDA approval under the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 301-399 (FDCA). Under that Act, the manufacturer of a new animal drug cannot market it for any use until the FDA has approved the company's product as safe and effective for that use. 21 U.S.C. §§ 331; 351(a)(5)-(6); 360b(a)(1)-(2). In 1976, the predecessors of both Alpharma and Pennfield received "interim" FDA approval to market BMD for multiple uses. Antibiotic, Nitrofuran, and Sulfonamide Drugs in the Feed of Animals, 41 Fed.Reg. 8282 (Feb. 25, 1976). This interim approval was codified in 21 C.F.R. § 558.15(g)(1). That regulation did not list the uses for which their BMD had been approved, however, but instead incorporated the statement of uses found in 21 C.F.R. § 558.76.

In the years following the promulgation of § 558.15(g)(1), Alpharma's predecessor sought authorization to market its BMD product for additional uses by submitting numerous supplemental new drug applications to the FDA, some of which were approved. See, e.g., New Animal Drugs for Use in Animal Feeds, 47 Fed.Reg. 18,591 (April 30, 1982) (approving the supplemental application of A.L. Laboratories, Alpharma's predecessor, to market BMD for use in controlling swine dysentery). After approving these applications, the FDA added the new uses to the list in § 558.76 and named Alpharma's predecessor as the only manufacturer who had submitted information in support of their approval. See 21 C.F.R. § 558.76(d)(1). The interim approval provision of § 558.15(g)(1), which had authorized the marketing of both parties' products, was however never amended to distinguish between the original uses listed in § 558.76 and those later added following the successful applications of Alpharma's predecessor. The result was an apparent expansion in the number of uses for which the product of Pennfield's predecessor had been approved for marketing. See 68 Fed.Reg. at 47,334.

Pennfield purchased the rights of its predecessor to manufacture and market BMD in 2002, allegedly relying on the interim approval provisions of §§ 558.15(g)(1) and 558.76, as well as confirmations of that approval by FDA officials. According to Alpharma's complaint, Pennfield began marketing the product nationally during the same year with advertisements indicating that its drug had been approved for a variety of uses extending beyond those originally listed in § 558.76. Alpharma further alleges that Pennfield began selling its BMD in 2003 under a label indicating that the product had received FDA approval for the same expanded set of uses.

On March 13, 2003, Alpharma brought an action against the FDA in the United States District Court for the District of Maryland, claiming that the agency had improperly approved Pennfield's sale of BMD for a number of uses or otherwise improperly enabled Pennfield to represent that it had approval for those uses. Alpharma sought a declaratory judgment and injunctive relief. While the Maryland suit was pending, the FDA published two August 8, 2003 notices relating to Pennfield: a notice of proposed rulemaking for the "interim marketing provisions" of § 558.15 to be eliminated, 68 Fed.Reg. 47,272, and a notice of opportunity for hearing addressing the extent of Pennfield's approval to market BMD, 68 Fed.Reg. 47,332. After these notices were published, the FDA and Alpharma filed a Stipulation and Order of Dismissal which acknowledged that the agency lacked any record of Pennfield's having applied for or received approval to market its BMD for seven of the seventeen uses the agency had listed as approved. The Maryland suit was then dismissed with prejudice.

On September 30, 2003, Alpharma filed the present action against Pennfield in the United States District Court for the District of Nebraska. Alpharma alleged that the advertisements and labels for Pennfield's BMD falsely advertised that it had been approved by the FDA for a number of uses for which it had not, in violation of the Lanham Act § 43(a), 15 U.S.C. § 1125(a), and the Nebraska Uniform Deceptive Trade Practices Act, Neb.Rev.Stat. §§ 87-301-87-306. The company also contended that Pennfield's practices constituted unfair competition and unjust enrichment under Nebraska common law. Alpharma sought injunctive relief, compensatory, treble and punitive damages, fees and costs.

Pennfield moved to dismiss Alpharma's claims under Federal Rule of Civil Procedure 12(b)(6), arguing that §§ 558.15(g)(1) and 558.76 showed that its product had been approved for the contested uses, that Alpharma's action was an impermissible private attempt to enforce FDCA and FDA regulations, that the Lanham Act was not intended as a means of indirectly enforcing the FDCA and FDA regulations, and that Alpharma's action intruded upon the FDA's discretion and expertise in the area of drug approval and marketing.

The district court granted Pennfield's motion to dismiss, referencing the doctrine of primary jurisdiction but ultimately concluding that the "plaintiff's failure to exhaust" required dismissal. Alpharma, Inc. v. Pennfield Oil. Co., 2004 WL 1562870, *1 (D.Neb.2004). The court cited a number of factors in concluding that dismissal was proper: the absence of a decision by the FDA clarifying the meaning of "completely confusing historical records" regarding Pennfield's approval to market BMD; the pending FDA actions on issues relating to the case; the FDA's expertise on questions involved; the FDA's responsibility to interpret its own regulations first; and the absence of any indication that exhaustion would be ineffective or futile. Id.

Alpharma appeals the district court's dismissal of its action, arguing that exhaustion and other related doctrines do not apply in this case. We review the district court's Rule 12(b)(6) dismissal de novo, taking all facts alleged in the complaint as true. Carter v. Arkansas, 392 F.3d 965, 968 (8th Cir.2004). "A motion to dismiss should be granted only if it appears beyond doubt that the plaintiff can prove no set of facts which would entitle him to relief." Knapp v. Hanson, 183 F.3d 786, 788 (8th Cir.1999).

Alpharma first argues that the district court erred in dismissing its Lanham Act claim on exhaustion grounds. Under the doctrine of exhaustion, "no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted." Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51, 58 S.Ct. 459, 82 L.Ed. 638 (1938); see also Cornish v. Blakey, 336 F.3d 749, 753 (8th Cir.2003) (requiring exhaustion of "statutory administrative remedies"). The doctrine applies when the plaintiff's claim is "`cognizable in the first instance by an administrative agency alone,'" and does not apply when the relevant agency is unable to grant relief. Harris v. P.A.M. Transport, Inc., 339 F.3d 635, 638 (8th Cir.2003) (quoting United States v. W. Pac. R.R. Co., 352 U.S. 59, 63, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956)); Jackson v. Swift Eckrich, Inc., 53 F.3d 1452, 1456 (8th Cir.1995) (exhaustion "ordinarily requires a plaintiff to pursue relief, when available, from an administrative agency before proceeding to the courts"). Alpharma argues that the Lanham Act does not require that any administrative procedures be exhausted before filing suit, but rather places exclusive jurisdiction to resolve false advertising claims in the district courts. The company also contends that its false advertising claim is not cognizable by the FDA since the agency cannot award the requested damages. Alpharma finally notes that, unlike the plaintiffs in Bradley v. Weinberger, 483 F.2d 410 (1st Cir.1973), and other cases cited by the district court, it is not seeking review of agency action under the Administrative Procedure Act or any other statute requiring exhaustion.

Alpharma is incorrect in its assertion that district court jurisdiction over Lanham Act claims is exclusive. 15 U.S.C. § 1121(a); Aquatherm Industries, Inc. v. Florida Power & Light Co., 84 F.3d 1388, 1394 (11th Cir.1996) ("Federal courts do not have exclusive jurisdiction over an action brought under the Lanham Act."). Nonetheless, the statute does not create administrative procedures for the resolution of false advertising claims brought by Alpharma. See Sandoz Pharmaceuticals Corp. v. Richardson-Vicks, Inc., 902 F.2d 222, 226-29 (contrasting the administrative apparatus of the Federal Trade Commission Act with the civil remedy created by § 43(a) of the Lanham Act). Moreover, the FDA does not have the authority to award the compensatory and punitive damages sought by Alpharma in the present lawsuit. The company's claim was therefore not cognizable by the agency, and it was not required to refrain from litigation...

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