Ajay Nutrition Foods, Inc. v. Food & Drug Administration

• Citation: 378 F. Supp. 210
• Decision Date: 05 April 1974
• Docket Number: Civ. A. No. 328-73.
• Parties: AJAY NUTRITION FOODS, INC., d/b/a Dave's Diet and Nutrition Foods, et al., Plaintiffs, v. FOOD AND DRUG ADMINISTRATION, Department of Health, Education and Welfare, et al., Defendants.
• Court: U.S. District Court — District of New Jersey

378 F. Supp. 210

AJAY NUTRITION FOODS, INC., d/b/a Dave's Diet and Nutrition Foods, et al., Plaintiffs, v. FOOD AND DRUG ADMINISTRATION, Department of Health, Education and Welfare, et al., Defendants.

Civ. A. No. 328-73.

United States District Court, D. New Jersey.

April 5, 1974.

Bass & Ullman, New York City, by David Ficksman (New York bar), Henry L. Gurshman, Metuchen, N. J., for plaintiffs.

Herbert J. Stern, U. S. Atty., Newark, N. J., by William J. Hunt, Asst. U. S. Atty., for defendants.

OPINION

COOLAHAN, District Judge.

This is an action against the Food and Drug Administration (FDA), its Commissioner,¹ and the Secretary of Health, Education and Welfare, brought as a class action² by the corporate plaintiffs, who are engaged in the sale and distribution of health food products and who are members of the National Nutritional Foods Association. Plaintiffs sue to enjoin defendants from issuing certain press releases and public announcements that are alleged to be damaging to their businesses, and ask the Court to award damages totaling $500 million. Defendants have brought the instant motion to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.

The action centers on events contemporaneous with publication by the FDA of regulations affecting the health food "industry." The procedural history of these regulations has a bearing on this action. As summarized by Judge Gurfein in National Nutritional Foods Ass'n v. Schmidt, 367 F.Supp. 889 (S.D.N.Y. 1973):

The regulatory scheme . . . finds its inception with a notice of proposed rule-making published in 27 Fed.Reg. 5815 (1962). Numerous comments were received in response to this notice. In June 1966, orders were subsequently promulgated establishing definitions and standards of identity for dietary supplements of vitamins and minerals and revising the regulations for labeling of food for special dietary uses. 31 Fed.Reg. 8521 et seq. (1966). Objections to these orders and requests for a public hearing were filed. After issuing a stay of the effective date of the June 1966 order (31 Fed.Reg. 15730 (1966)) public hearings commenced on June 20, 1968 and concluded nearly two years later on May 14, 1970. The transcript of the hearings comprises over 32,000 pages of testimony plus additional thousands of pages of documentary exhibits.

The hearing examiner who presided over the two years of hearings submitted his report to the Commissioner on January 25, 1971.

On January 19, 1973 the Commissioner . . . published proposed findings of fact, proposed conclusions of law and tentative orders. 38 Fed. Reg. 2143-2150 and 38 Fed.Reg. 2152-2162. These orders permitted those who appeared at the hearing to file written exceptions within 60 days which was subsequently extended to April 20, 1973. (38 Fed.Reg. 6396 (1973)). Exceptions to the orders and findings were filed by 35 persons who had appeared at the hearing, consisting of over 1,000 pages, and approximately 20,000 additional letters . . . .

. . . On August 2, 1973 the final findings of fact, conclusions of law and orders were published in the Federal Register, 38 Fed.Reg. XXXXX-XXXXX, 20730-20740 (1973). Included in the August 2 promulgation was the Commissioner's statement:

"Having considered the evidence received at the hearing, the hearing examiner's report, and all the exceptions and written arguments which were filed, the Commissioner, pursuant to the Federal Food, Drug, and Cosmetic Act (secs. 201(n), 401, 403(a) and (j), 701(a) and (e), 52 Stat. 1046, 1048, 1055, 1056, as amended by 70 Stat. 919; 21 U. S.C. 321(n), 341, 343(a) and (j), 371(a) and (e)) and under authority delegated to him (21 CFR 2.120), issues the following Findings of Fact, Conclusions, and Final Order . . . ." (38 Fed.Reg. 20712, 20734)

It is not contested by any of the parties that the regulations did not at the inception of this action, and do not as yet, have the force of law.³ Petitions to review the regulations were filed in United States Courts of Appeals for three Circuits⁴ and are now consolidated, under 28 U.S.C. § 2112(a), before the Second Circuit. See National Nutritional Foods Ass'n v. FDA, 491 F.2d 1141 (2d Cir. 1974).

Specifically, plaintiffs state that certain "press releases, public announcements and other communications" issued by the FDA "have resulted in the deprivation of property without due process of law and the wrongful and unlawful interference with the rights of the plaintiffs and the other members of the class to carry on a business." Plaintiffs allege that the class has been referred to as "nutrition quacks," "food faddists," "health quacks," and that the products that are produced have been referred to as "shotgun mixtures." Further, plaintiffs claim that the FDA has sought to discredit certain fastly held tenets of health food enthusiasts.⁵ Lastly, plaintiffs allege that the FDA statements "are knowingly and maliciously false and untrue and not justified by any fair balance of competing social interests . . . they are not factual, but rather represent character attacks by the defendants."

I. JURISDICTION

A. The Administrative Procedure Act, 5 U.S.C. § 701 et seq.

Plaintiffs argue that Section 10(a) of the Administrative Procedure Act (APA), 5 U.S.C. § 702, confers jurisdiction in this matter. That section provides:

A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.

Defendants argue that the Administrative Procedure Act does not confer jurisdiction not otherwise existing and, in any event, this suit is in actuality one against the United States, which has not consented to be sued. Larson v. Domestic & Foreign Commerce Co., 337 U.S. 682, 688, 69 S.Ct. 1457, 93 L.Ed. 1628 (1949); Blackmar v. Guerre, 342 U.S. 512, 72 S.Ct. 410, 96 L.Ed. 534 (1952); Dalehite v. United States, 346 U.S. 15, 30, 73 S.Ct. 956, 97 L.Ed. 1427 (1953). Whether or not the APA is jurisdiction-conferring has been an issue presented to several of the federal Circuits, and is a source of controversy among commentators.⁶

The first question to be confronted is whether section 10 of the APA, 5 U.S.C. § 701(a) (2) precludes judicial review of possible abuses of agency discretion as long as the agency is given general discretion in an area. The section provides:

This chapter applies . . . except to the extent that— . . . (2) agency action is committed to agency discretion by law.

On its face the language strongly limits review. The contrary argument, that the purpose of the APA as a whole would be largely defeated unless courts may scrutinize agency actions for abuse of discretion, is also very strong.⁷

These contrasting views are discussed in Littell v. Morton, 445 F.2d 1207, 1210-1211 (4th Cir. 1971), where it is held, following the rationale of Wong Wing Hang v. Immigration and Naturalization Service, 360 F.2d 715, 719 (2d Cir. 1966), that

The APA provides limited judicial review to determine if there was an abuse of agency discretion . . . The Secretary's decision here would be an abuse of discretion "if it were made without a rational explanation, inexplicably departed from established policies, or rested . . . on other `considerations that Congress could not have intended to make relevant.'"

This Court holds, after review of Zimmerman v. United States Government, 422 F.2d 326 (3d Cir.), cert. denied, 399 U.S. 911, 90 S.Ct. 2200, 26 L.Ed.2d 565 (1970), that the law of this Circuit conforms to that of the Second and Fourth Circuits on this threshold issue. In that case, certain patentees, employees of the United States Government, asked a United States District Court to review a determination by the Commissioner of Patents that the Government was entitled to royalty-free licenses in patentee's inventions. In discussing the question whether any statute may "exclude all occasions of judicial intervention" in respect to actions of administrative officers, the court endorsed an observation of Professor Jaffee⁸— a leading proponent of the view that the APA does not, on its own terms, exclude judicial review of agency actions⁹ — to the effect that even a statute providing that an "administrative determination shall be `final'," "should not be interpreted to exclude judicial question of the agency's `jurisdiction'." 422 F.2d at 330. Though this language in Zimmerman is not specifically focused on the APA, 5 U.S.C. § 701(a)(2) certainly cannot be viewed as stronger than a statute providing that an administrative determination is "final." Thus, the clear implication of this language in Zimmerman is that the APA by itself does not preclude review of administrative determinations in areas under general agency discretion.¹⁰

The Zimmerman case makes it clear, however, that the APA is itself not jurisdiction-conferring. 422 F.2d at 330.¹¹Zimmerman also states that any argument for the exercise of jurisdiction pursuant to the APA gives way to a defense of sovereign immunity:

The present action is against the United States and is a suit to which the Government has not consented. Congress has provided an exclusive and adequate remedy in the Court of Claims.

422 F.2d at 331-332.

As the foregoing passage indicates, the court held in Zimmerman that the Court of Claims, under a statute specifically granting jurisdiction to it¹² — and not the District Court pursuant to the APA — was the proper forum to which the Zimmerman plaintiffs could turn. It is thus clear under the doctrine of sovereign immunity. Larson v. Domestic & Foreign Commerce Co., supra; Dalehite v. United States, supra; Blackmar v. Guerre, supra, and under Zimmerman, that this Court has no jurisdiction over the FDA or the Department of Health, Education and Welfare in this action.¹³ In a practical sense such lack of jurisdiction is fatal to the plaintiffs' claim for monetary relief since it cannot...