Miles Laboratories v. Federal Trade Commission

• Decision Date: 07 February 1944
• Docket Number: No. 8595.,8595.
• Citation: 140 F.2d 683,78 US App. DC 326
• Parties: MILES LABORATORIES, Inc., v. FEDERAL TRADE COMMISSION et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

78 US App. DC 326, 140 F.2d 683 (1944)

MILES LABORATORIES, Inc., v. FEDERAL TRADE COMMISSION et al.

No. 8595.

United States Court of Appeals District of Columbia.

Argued January 10, 1944.

Decided February 7, 1944.

Mr. James F. Hoge, of New York City, with whom Messrs. Preston B. Kavanagh and Preston C. King, Jr., both of Washington, D. C., were on the brief, for appellant.

Mr. Cyrus B. Austin, of Washington, D. C., member of the Bar of the Court of Appeals of the State of New York, pro hac vice, by special leave of Court, with whom Messrs. William T. Kelley, Chief Counsel, Federal Trade Commission, and Edward M. Curran, United States Attorney, both of Washington, D. C., were on the brief, for appellees.

Before GRONER, Chief Justice, and EDGERTON and ARNOLD, Associate Justices.

GRONER, C. J.

Appellant is an Indiana corporation and is engaged in the sale and distribution in interstate commerce of certain medical preparations described as "Dr. Miles' Nervine," "Dr. Miles' Nervine Tablets," and "Dr. Miles' Anti-Pain Pills." The sales of these products amount to around a million dollars annually.

Stated in general terms, the present controversy grows out of the fact that some two or three years ago the Federal Trade Commission, after an investigation, reached the tentative conclusion that appellant's advertising material failed fully to reveal that these preparations, if used by individuals in excess of the dosage recommended, might result in harm to the users. In consequence the Commission addressed a communication to appellant, notifying it of this finding, and suggesting the disposition of the matter by stipulation. This contemplated an agreement on the part of appellant to revise its advertising matter to include a warning to the public in line with the conclusions of the Commission; or, stated in the language of the Commission, so as to reveal to purchasers that its preparations, if used in excess of the dosage recommended on its labels, would be dangerous to health and cause mental derangement, skin eruptions or collapse or dependence upon the drug. The Commission offered as an alternative, that if the directions for the use of the preparations appearing on the labels were changed to contain warnings, in similar language to that just used, of dangers of excessive use, the advertisements need contain only the cautionary statement "Caution, Use Only As Directed."

Appellant declined the Commission's offer to stipulate and brought this suit in the District Court under the Federal Declaratory Judgment Act, 28 U.S.C.A. § 400, seeking a declaration as to the limits of the Commission's authority to dictate and control the contents of appellant's labeling and advertising. The suit was dismissed on the Commission's motion upon the ground that the court was without jurisdiction of the subject matter.¹ An appeal to this court followed.

The Federal Trade Commission Act, 15 U.S.C.A. § 41 et seq., defines unlawful advertising as that which is misleading in a material respect, or which induces the purchase of drugs injurious to health under the conditions prescribed in the advertisement or under such conditions as are customary or usual, and which fails to reveal material facts with respect to the consequences which may result from the use under the conditions advertised.² Appellant says that nothing appears in any of its advertising or labeling contrary to these provisions; that all of its labels, as well as its advertisements, contain accurate statements of the active ingredients in its medicines, the purposes for which they are to be used, as well as the safe and proper doses to be taken; and all of this is admitted on the motion to dismiss. Appellant, therefore, insists that the action of the Commission in demanding that it include in its advertisements, or at its option on its labels, a statement to the effect that the excessive use of any of the medicines may result in mental derangement or cause collapse or dependence upon the drug, is wholly beyond the power of the Commission. But appellant admits, as of course it must, that the Act does give the Commission power, after notice and hearing, to prohibit false advertising of drugs, as that term is defined in the Act; and that is the provision on which the Commission based its right to request a stipulation that appellant conform its advertising to the Commission's construction of the statute, as an alternative to a proceeding by the Commission to seek to accomplish the same end through the issuance of a "complaint." We see no objection to this procedure. Certainly, there can be no contention that the Commission is without statutory authority to issue a complaint when it "has reason to believe" that someone is using misleading matter in the advertising and sale of its medicinal products — for the Act specifically so provides.³ Whether, having issued a complaint and held a hearing, its decision on the facts or on the law is correct is a question which cannot be challenged in a District Court, either before or after the event, for in such case an appeal to an appropriate...