U.S. v. Jamieson-McKames Pharmaceuticals, Inc.
| Decision Date | 07 August 1981 |
| Docket Number | JAMIESON-M,79-1708,Nos. 79-1367,s. 79-1367 |
| Citation | 651 F.2d 532 |
| Parties | UNITED STATES of America, Appellee, v.cKAMES PHARMACEUTICALS, INC., Pharmacare Generic Drugs, Inc., Pharmacare, Inc., Payless Pharmacy, Inc., James C. Jamieson, Sr., and James C. Jamieson, Jr., Appellants. UNITED STATES of America, Appellee, v. ALL EQUIPMENT INCLUDING, BUT NOT LIMITED TO, AN ENCAPSULATING MACHINE NOT IDENTIFIED AS TO MANUFACTURER, STAINLESS STEEL COATING PANS, A COLTON SINGLE STAGE ROTARY TABLET PRESS, A FRATELLI ZANASI ENCAPSULATING MACHINE, TABLET PUNCHES AND DIES, WHICH EQUIPMENT IS IN THE POSSESSION OFcKAMES PHARMACEUTICALS, INC., 3227 MORGANFORD ROAD, ST. LOUIS, MISSOURI, Appellant. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Robert W. Saitz, St. Louis, Mo., Marc L. Sandberg, St. Louis, Mo., Irl B. Baris, St. Louis, Mo., for appellants.
Sanford M. Litvack, Asst. Atty. Gen., Washington, D. C., Barry Grossman, Susan J. Atkinson, Attys., Dept. of Justice, Washington, D. C., for appellee; J. Patrick Glynn, Atty., Dept. of Justice, Washington, D. C., of counsel.
Before LAY, Chief Judge, and STEPHENSON and ARNOLD, Circuit Judges.
James C. Jamieson, Sr., and James C. Jamieson, Jr., individuals, and Jamieson-McKames Pharmaceuticals, Inc., Pharmacare Generic Drugs, Inc., Pharmacare, Inc., and Payless Pharmacy, Inc., corporations, appeal a judgment finding them guilty of criminal violations of the Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq. They also appeal a civil order of condemnation and forfeiture of certain drug manufacturing equipment pursuant to 21 U.S.C. § 334(b). The criminal case, which resulted in convictions on one count of conspiracy to violate the Federal Food, Drug, and Cosmetic Act, and ten substantive counts of counterfeiting, misbranding, and adulterating of drugs, and the civil case were consolidated for trial before the district court 1 by consent of the parties.
The trial, which consumed more than twenty days, ended on January 17, 1978. The district court on March 29, 1979, filed its findings of fact in the criminal case. On July 23, 1979, an order, memorandum, and findings 2 were filed in the civil case. Each of the individual defendants was sentenced to imprisonment for terms of eight years and a fine of $5,000.00 on each of ten of the counts. The court suspended imposition of sentence as to count IV and placed the individuals on probation for a period of five years following the completion of the sentence of imprisonment under the other counts. Each of the four corporate defendants was fined the sum of $2,000.00 on each of the eleven counts, or $22,000.00 apiece, for a total of $88,000.00.
Asserted grounds for error are (1) that the searches and seizures conducted by the Food and Drug Administration (FDA) agents were in violation of the Fourth Amendment to the Constitution, (2) that certain statements made by the defendants to FDA agents were inadmissible because of violations of the Fifth Amendment, and (3) that the evidence was insufficient as to all criminal counts and the civil order of forfeiture and condemnation. In the main, we affirm.
Jamieson-McKames Pharmaceuticals, Inc. (Jamieson-McKames) is a Missouri corporation with its principal place of business in St. Louis, Missouri. The company manufactured, purchased, packaged, labeled, distributed, and sold drugs from before June 1972 until November 1975. Jamieson-McKames sold drugs directly to doctors, clinics, and pharmacies through defendants Pharmacare, Inc., and Payless Pharmacy, Inc. Jamieson-McKames's activities were carried out by defendant James C. Jamieson, Sr.; defendant James C. Jamieson, Jr.; James C. Jamieson, III, a part-time employee; and approximately five other employees.
Jamieson, Sr., was the president and treasurer of Jamieson-McKames and a member of its board of directors. He was also a member of the board of directors and vice-president and secretary of Pharmacare Generic Drugs and during 1975 a member of the board of directors of Pharmacare.
Jamieson, Jr., a board member, vice-president, and secretary of Jamieson-McKames, was also a member of the board of directors, president, and treasurer of each of the other corporate defendants.
Defendants Pharmacare, Inc. (Pharmacare), Payless Pharmacy, Inc. (Payless) and Pharmacare Generic Drugs, Inc. (Pharmacare Generic) were also Missouri corporations engaged in the business of manufacturing, purchasing, packaging, labeling, distributing, and selling drugs. In addition, Pharmacare and Payless operated five and two retail pharmacies respectively. The operations of Pharmacare, Pharmacare Generic, and Payless were closely interrelated with each other and with those of Jamieson-McKames. For example, the two Pharmacare pharmacies doing business in doctors' offices were opened only after an agreement was reached between Jamieson-McKames and the doctors in whose offices the pharmacies operated. Jamieson-McKames stocked the pharmacies, hired their employees, paid their bills, and shared the profits with the doctors. Drugs were frequently labeled with Pharmacare Payless Pharmacy labels whether the drug was for a Payless or a Pharmacare pharmacy, or for a pharmacy unconnected with any of the defendants.
Bills owed by the pharmacies operated by Payless and Pharmacare were forwarded to their common principal place of business, which was at the same location as Jamieson-McKames's principal place of business at 3227-29 Morganford Road in St. Louis. All of Pharmacare Generic's activities were carried out by Jamieson-McKames employees. Pharmacare Generic had no employees of its own, other than corporate officers.
On October 29, 30, and 31, and November 3, 1975, federal and state agents entered and searched the premises of Jamieson-McKames Pharmaceuticals, Inc., and Pharmacare, Inc., at 3227 Morganford Road, St. Louis, Missouri. Samples of drugs were taken, documents were taken, quantities of drugs were embargoed, the premises and contents photographed, and machinery seized. On October 29 and 30, 1975, defendant's premises at 714 West Pierce Road, Wentzville, Missouri, were also searched, and similar items were seized.
A civil complaint for forfeiture of certain items of equipment in the defendant's possession was filed by the government in the district court on December 19, 1975, alleging that the equipment was used or designed for use in making counterfeit drugs. Jamieson-McKames Pharmaceuticals, Inc., denied the allegations in its answer filed February 19, 1976.
Thereafter, on May 12, 1977, defendants were charged in an 11-count indictment with counterfeiting, adulterating, and misbranding drugs and conspiracy to counterfeit, adulterate, and misbrand drugs. The indictment also charged that the defendants committed all of these acts with the intent to defraud and mislead, rendering such felonies punishable under 21 U.S.C. § 333(b).
The appellants contend that their Fourth Amendment rights were violated by the failure of the court to suppress evidence seized by government agents from the defendants' business premises at Wentzville, Missouri, and at the Morganford Road site in St. Louis, and from a building in St. Louis operated by the Chambers Medical Group.
The seizures at the Wentzville pharmacy were conducted on the authority of a notice to inspect authorized by 21 U.S.C. § 374(a). 3 The employee in charge was given a copy of the notice to inspect, but no warrant to inspect was obtained.
The Supreme Court has held that warrantless searches are generally unreasonable, and that commercial premises as well as homes are within the Fourth Amendment's protection. Marshall v. Barlow's, Inc., 436 U.S. 307, 312, 98 S.Ct. 1816, 1820, 56 L.Ed.2d 305 (1978). An exception from the search-warrant requirement has, however, been delineated for industries "long subject to close supervision and inspection," Colonnade Catering Corp. v. United States, 397 U.S. 72, 77, 90 S.Ct. 774, 777, 25 L.Ed.2d 60 (1970), and "pervasively regulated business(es)," United States v. Biswell, 406 U.S. 311, 316, 92 S.Ct. 1593, 1596, 32 L.Ed.2d 87 (1972). Colonnade involved the liquor industry, and Biswell the interstate sale of firearms. The threshold question therefore is whether the drug-manufacturing industry should be included within this class of closely regulated businesses.
The appellants argue that the drug-manufacturing industry is no more closely regulated than any number of industries involved in interstate commerce, and that therefore the rule of Marshall v. Barlow's, Inc., supra, requiring a warrant in the absence of consent before an administrative search can take place, should apply. In Barlow's, the Supreme Court held that warrantless searches authorized by § 8(a) of the Occupational Safety and Health Act, 29 U.S.C. § 657(a), violated the Fourth Amendment. There, however, the government sought to inspect work areas not open to the public on the premises of an electrical and plumbing contractor. In Barlow's the argument that all businesses involved in interstate commerce had "long been subject to close supervision" of working conditions was urged by the Secretary of Labor but explicitly rejected by the Court. In rejecting this argument and others the Court specifically preserved the Colonnade-Biswell exception to the warrant requirement. The Court indicated that there were other industries, covered by regulatory schemes applicable only to them, where regulation might be so pervasive that a Colonnade-Biswell exception to the warrant requirement could apply. 436 U.S. at 313, 321, 98 S.Ct. at 1820, 1824.
Such warrantless searches are upheld because "when an entrepreneur embarks on such a business, he has chosen to subject himself to a full arsenal of governmental regulation," id. at 313, ...
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