Easy Returns Worldwide, Inc v. U.S.

Decision Date19 May 2003
Docket NumberNo. 4:03 CV 555HEA.,4:03 CV 555HEA.
Citation266 F.Supp.2d 1014
CourtU.S. District Court — Eastern District of Missouri
PartiesEASY RETURNS WORLDWIDE, INC., Plaintiff, v. The UNITED STATES of America, as represented by John Ashcroft, in his official capacity as Attorney General, John B. Brown III as Deputy Administrator for the Drug Enforcement Administration, Defendants.

Eric D. Martin, Blackwell, Sanders, Peper, Martin, LLP, St. Louis, MO, Stephen L. Hill, Jr., Blackwell, Sanders, Peper, Martin, LLP, Kansas City, MO, for plaintiff.

Joseph B. Moore, Suzanne J. Gau, Office of U.S. Attorney, St. Louis, MO, Ori Lev, U.S. Department of Justice, Washington, DC, for defendants.


AUTREY, District Judge.

This matter is before the Court on the Plaintiffs Application for Preliminary Injunction. On May 14, 2003 and May 15, 2003, the Court held a hearing on this matter. Evidence was taken, and arguments were considered. Defendant has also filed a Motion to Dismiss. For the reasons set forth below, plaintiffs Motion for Preliminary Injunction, [# 1], is denied and the Motion to Dismiss, [# 27] is granted.

Statutory Requirements

Under the Controlled Substances Act, anyone who manufactures or distributes a controlled substance, must obtain a registration from the Attorney General on an annual basis. 21 U.S.C. § 822(a). The Attorney General "shall register an applicant to distribute a controlled substance ... unless he determines that the issuance of such registration is inconsistent with the public interest." 21 U.S.C. § 823(b), (e).

Once the registration is issued, the Attorney General has the authority to revoke such registration if, inter alia, the registrant has committed acts "as would render his registration ... inconsistent with the public interest as determined under [Section 823]." 21 U.S.C. § 824(a)(4). An order to show cause why the registration should not be revoked is required to be is served upon the registrant in the event that the Attorney General intends to revoke the registration. 21 U.S.C. § 824(c); 21 C.F.R. 1301.37(c). The revocation becomes effective after an administrative hearing, if one is requested, and upon final order of the Administrator. See 21 C.F.R. § 1301.46.

The Attorney General can, in his discretion, suspend any registration simultaneously with the institution of proceedings under Section 824 where he finds that there is an imminent danger to the public health or safety. 21 U.S.C. § 824(d). The Attorney General must serve an order of immediate suspension which contains a statement of his findings regarding the danger to the public health and safety. 21 C.F.R. § 1301.36(e). In the event of such an immediate suspension, the registrant is entitled to an expedited administrative hearing. 21 C.F.R. § 1301.36(h). This suspension remains in force until the conclusion of the administrative proceeding unless "sooner withdrawn" by the Attorney General or dissolved by "a court of competent jurisdiction." 21 U.S.C. § 824(d).

The DEA requires registrants to maintain specific security requirements with respect to the storage and handling of controlled substances. 21 C.F.R. § 1301.71(a). The regulations set forth a set of factors for the Administrator to consider in determining whether a particular registrant's overall security system meets the "need for strict compliance with security requirements." 21 C.F.R. § 1301.71(b).

The regulations set forth specific required physical security controls that govern how controlled substances must be stored. 21 C.F.R. § 1301.72. All Schedule I and II controlled substances must be stored in either a safe or steel cabinet or a vault meeting certain detailed specifications. 21 C.F.R. § 1301.72(a). Schedule III, IV and V controlled substances can be stored in a safe, steel cabinet or vault, or in any one of several other specifically prescribed and secured facilities such as a steel cage meeting certain specifications. 21 C.F.R. § 1301.72(b). DEA regulations also require registrants to notify it of any theft or significant loss of any controlled substances upon discovery of such theft or loss, using its forms, whether or not the substances are subsequently recovered. 21 C.F.R. § 1301.74(c).

The CSA and its regulations also establish several record keeping and reporting requirements. 21 U.S.C. §§ 827, 828, 842(a)(5). Section 1304.21 requires each registrant to maintain on a current basis a complete and accurate record of each such substance manufactured, imported, received, sold, delivered, exported, or otherwise disposed of by the registrant. These records must contain specific prescribed information regarding the name of the substance, its finished form and the number of units at issue. 21 G.F.R. § 1304.22; 21 C.F.R. § 1304.21(d). An inventory of all stocks of controlled substances on hand is required at least every two years. The inventory must contain a complete and accurate record of all controlled substances on hand on the date the inventory is taken and must be maintained in written, typewritten or printed form at the registered location. 21 C.F.R. § 1304.11(a).

Registrants are also required to report records of sales or acquisitions of controlled substances in Schedules I and II, of narcotic controlled substances listed in Schedules III, TV and V, and of psychotropic controlled substances listed in Schedules III and IV with the DEA's Automation of Reports and Consolidated Orders System (ARCOS). 21 C.F.R. § 1304.33(c); 21 U.S.C. 827(d). These reports must be filed every quarter not later than the 15th day of the month succeeding the quarter for which it is submitted. 21 C.F.R. § 1304.33(b).

Under Section 842 of Title 21, it is unlawful to refuse or negligently fail to make, keep or furnish any record, report, notification, declaration, order or order form, statement, invoice, or information required by the CSA. Under Section 843, it is unlawful to furnish false or fraudulent material information in, or omit any material information from, any application, report, record, or other document required to be made, kept or filed under the CSA.

Facts and Background1

Plaintiff, Easy Returns Worldwide, Inc., (ERW), brought this action seeking a Preliminary Injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure and the Administrative Procedures Act, APA, 5 U.S.C. § 702. Plaintiff seeks to enjoin defendant, United States of America, acting through the Drug Enforcement Administration, (DEA), from immediately suspending plaintiffs Registration to possess and distribute controlled substances. Defendant moves to dismiss the action. The Court entered a temporary restraining order on April 30, 2003, which dissolved the immediate suspension of plaintiff's DEA Registration, until the conclusion of the hearing on plaintiffs Application.

Plaintiff is a "reverse distributor" of pharmaceutical products including Schedule II through V controlled substances. Plaintiffs primary business activity is retrieval of outdated or short-dated stocks of pharmaceutical products for the purposes of collecting rebates or destroying the products for its clients. As such, ERW is required to register with the DEA.

ERW has two types of clients: off-site and on-site, in the latter instance, an employee or agent of ERW is on the customer's business site to assist with the collection and transfer of the pharmaceutical products, whereas in the former, the customer performs these functions and sends the products to ERW.

On April 24, 2003, the DEA issued its Show Cause Order and Immediate Suspension of ERWs Registration. This Order and Immediate Suspension was served on April 25, 2003 without prior notice or hearing. Plaintiff filed this action to enjoin the DEA from suspending its registration in this way.


Preliminary injunctive relief functions to "preserve the status quo until, upon final hearing, a court may grant full, effective relief." Kansas City Southern Trans. Co., Inc. v. Teamsters Local Union #41, 126 F.3d 1059 (8th Cir.1997) (citations omitted). Whether the equitable remedy of a preliminary injunction should issue depends upon four factors:

(1) the probability that the movant will succeed on the merits; (2) the threat of irreparable harm to the movant should a preliminary injunction be denied; (3) the balance between this harm and the harm that granting the injunction will cause to the other parties litigant; and (4) the public interest.

Taylor Corp. v. Four Seasons Greetings, LLC 315 F.3d 1039, 1041 (8th Cir.2003)(citing Dataphase Sys., Inc. v. C.L. Sys., Inc., 640 F.2d 109, 112-14 (8th Cir.1981))(en banc). See also, Safety-Kleen Systems, Inc. v. Hennkens 301 F.3d 931, 935 (8th Cir.2002). The Court considers all of the factors and decides whether "on balance, they weigh in towards granting the injunction." Dataphase, 640 F.2d at 113. The burden of establishing that preliminary relief is warranted is on the party seeking the injunction. Id.

A. Irreparable Harm

At the hearing,2 plaintiff introduced the testimony of Jeffrey Jappa, plaintiffs CEO, to demonstrate the irreparable harm ERW would suffer if its registration was suspended pending the administrative hearing to review the DEA's Order to Show Cause and Immediate Suspension. Mr. Jappa testified that he assumed the position of CEO on November 1, 2003. ERW has approximately 100 employees throughout the country. About 50 percent of ERW's business is "off-site" and approximately 87 percent of its business packages received contain both controlled and noncontrolled substances. He further stated that the company receives "blind" packages, i.e., packages which do not indicate the contents contained therein. With respect to these packages, ERW would no longer be able to accept them without the registration because they may contain controlled substances and that without the registration, the company would be in violation of the law. Mr. Jappa testified that he contacted three of...

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4 cases
  • Holiday CVS, L.L.C. v. Holder, Civil Action No. 12–191 (RBW).
    • United States
    • U.S. District Court — District of Columbia
    • March 16, 2012
    ...pharmacists from October 2011 in support of her finding of imminent danger on February 2, 2012. See Easy Returns Worldwide, Inc. v. United States, 266 F.Supp.2d 1014, 1021 (E.D.Mo.2003) (“Plaintiff argues that DEA's actions are unjustified because of its reliance on past events.... [However......
  • Cardinal Health, Inc. v. Holder
    • United States
    • U.S. District Court — District of Columbia
    • March 7, 2012
    ...regarding the DEA's reliance on prior violations in issuing immediate suspension orders. See Easy Returns Worldwide, Inc. v. United States, 266 F.Supp.2d 1014, 1021 (E.D.Mo.2003) (“Plaintiff argues that DEA's actions are unjustified because of its reliance on past events.... [However], the ......
  • Oak Hill Hometown Pharmacy v. Dhillon, CIVIL ACTION NO. 2:19-cv-00716
    • United States
    • U.S. District Court — Southern District of West Virginia
    • October 30, 2019
    ...(D.C. Cir. 2012) ; Novelty Distributors, Inc. v. Leonhart , 562 F. Supp. 2d 20, 29 (D.D.C. 2008) ; Easy Returns Worldwide, Inc. v. United States , 266 F. Supp. 2d 1014, 1021 (E.D. Mo. 2003).2 Mr. McGonigal: "When I make this point, I always get stuck because I circle back around to saying t......
  • Aarric, Inc. v. Dhillon
    • United States
    • U.S. District Court — Middle District of Florida
    • May 4, 2020
    ...affect this Order. 2. See also Novelty Distribs., Inc. v. Leonhart, 562 F. Supp. 2d 20 (D.D.C. 2008); Easy Returns Worldwide, Inc. v. United States, 266 F. Supp. 2d 1014 (E.D. Mo. 2003); Keysource Med., Inc. v. Holder, No. 1:11-cv-393, 2011 WL 3608097 (S.D. Ohio Aug. 16, 2011); Holiday CVS,......

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