Research Laboratories v. United States, 11624.

• Citation: 167 F.2d 410
• Decision Date: 02 April 1948
• Docket Number: No. 11624.,11624.
• Parties: RESEARCH LABORATORIES, Inc. v. UNITED STATES.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

167 F.2d 410 (1948)

RESEARCH LABORATORIES, Inc. v. UNITED STATES.

No. 11624.

Circuit Court of Appeals, Ninth Circuit.

April 2, 1948.

COPYRIGHT MATERIAL OMITTED

Justin N. Reinhardt, of Portland, Or., for appellant.

J. Charles Dennis, U. S. Atty., of Seattle, Wash., Harry Sager, Asst. U. S. Atty., of Tacoma, Wash., and Arthur A. Dickerman, of Washington, D. C., Atty., U. S. Food & Drug Administration, for appellee.

Before GARRECHT, MATHEWS and HEALY, Circuit Judges.

GARRECHT, Circuit Judge.

In four cases consolidated for trial, judgments and decrees were entered condemning and ordering destroyed quantities of a proprietary drug known as "Nue-Ovo" and certain written material alleged to constitute the labeling thereof. The action of the court below was taken pursuant to libels alleging misbranding, under 21 U.S.C.A. § 352(a). From the judgments and orders referred to, the present appeals have been taken by the intervenor below, as claimant of the property seized.

The appellant, an Oregon corporation, has engaged in the manufacture, sale, and distribution of proprietary drug products known as "Nue-Ovo", "Sal Trag", and "Burvidin" continuously since 1925. The formulas of the products have been changed from time to time, and the merchandise now under seizure differs from products of the same name involved in previous litigation.

Nue-Ovo is sold direct to consumers. In concentrated form, called "Sal Trag", it is sold to licensed physicians. The products are manufactured at Portland, Oregon, and shipped to purchasers and distributors in most of the states west of the Mississippi River. The appellant's direct sales program involves extensive use of advertisements in daily and weekly newspapers and similar publications. In general, these advertisements solicit mail inquiries regarding the effectiveness of Nue-Ovo in the treatment of arthritis, neuritis, rheumatism, sciatica, and lumbago, to which inquiries the appellant replies by mail. The advertisements referred to are not, of course, part of the labeling.

In November, 1944, a libel was filed in the United States District Court for the Western District of Missouri, Western Division, pursuant to which there were seized by the United States Marshal about 600 units of Nue-Ovo, each unit containing three bottles. Some of the unit cartons are labeled in part:

"Active Ingredients: An aqueous extraction of Plume Thistle, Burdock, Quassia, Sage, Cinnamon, Horehound, Dandelion, Kola Nut, Ginseng, Althea, Cascara and Licorice.

"This is the regular Nue-Ovo Formula to which have been added laxatives.

"Less than one-half of one per cent Sodium Benzoate added as a preservative."

Other unit cartons are labeled in part:

"This is the regular Nue-Ovo formula to which have been added Cascara, Licorice, and Sodium Salicylate. Less than one half of one per cent Sodium Benzoate added as a preservative. Vitamin B1 added."

The libel alleges that the 600 units were shipped by the appellant on or about June 27, 1944, and August 2, 1944, from Portland to Crown Drug Company, Kansas City, Missouri.

Pursuant to the same libel there were also seized at the same time stocks of circulars entitled "information on Nue-Ovo and its value in Arthritic and other Rheumatoid symptoms." The circulars were alleged to have been shipped in interstate commerce on or about April 7 and August 8, 1944, from Chicago, Illinois, by Nue-Ovo, Inc. — not the appellant herein — to the Crown Drug Company at Kansas City.

The libel alleges that:

"The article is misbranded within the meaning of 21 U.S.C. 352(a) 21 U.S.C.A. § 352(a) in that the statements in the attached Exhibits `A' and `B' which appear in the labeling of the article * * * are false and misleading in this, that such statements represent and suggest and create in the mind of the reader thereof the impression that the article of drug, Nue-Ovo, is effective in the treatment of arthritis, rheumatism, neuritis, sciatica, and lumbago, whereas, the article is not effective in the treatment of such conditions."

Other seizures were made later pursuant to libels following the same general pattern as the foregoing.

The proceedings were all removed to the court below, where they were consolidated for trial in accordance with the provisions of 21 U.S.C.A. § 334(b).

The court below entered a pre-trial order which specified as an agreed fact that "the labeling alleged in the several libels constituted the labeling of the product seized".

The agreed issues were stated in the pre-trial order as follows:

1. Whether or not the Nue-Ovo under seizure is ineffective in the treatment of arthritis, rheumatism, neuritis, sciatica, or lumbago.

2. Whether or not the labeling under seizure suggests to the user that the Nue-Ovo is effective in the treatment of arthritis, rheumatism, neuritis, sciatica, or lumbago.

3. Whether or not the product is misbranded by reason of the labeling.

The appellant admitted that the labeling represented the product to be effective. Thus the misbranding and the ineffectiveness of the product were the issues to be litigated.

Summarized, the appellant's attacks upon the judgment below are as follows:

1. The court below erred in submitting issues to the jury, since every statement in the labeling as to the effectiveness of the product is a statement of opinion, and at the conclusion of the case the record showed nothing more than a difference of opinion among qualified medical experts as to the effectiveness of the product.

2. The court erred in receiving testimony intended to show a misleading of the witnesses by material that was not part of the labeling seized.

3. The court erred in instructing the jury as to the elements to be taken into account in determining whether the labeling is misleading, under 21 U.S.C.A. § 321(n), infra.

4. If it should be held that the court did not err in giving an instruction based upon 21 U.S.C.A. § 321(n), infra, the court's denial of the appellant's motion for the release of the product under bond was an abuse of discretion.

5. As applied by the court the statute is unconstitutional.

If the first four objections urged by the appellant are found to be untenable, the fifth must fall of its own weight and need not be discussed.

1. The Rule in the McAnnulty Case

The appellant bases its first contention upon a line of decisions commencing with American School of Magnetic Healing v. McAnnulty, 187 U.S. 94, 105, 106, 23 S. Ct. 33, 37, 47 L.Ed. 90. There the court said:

"As the effectiveness of almost any particular method of treatment of disease is, to a more or less extent, a fruitful source of difference of opinion, even though the great majority may be of one way of thinking, the efficacy of any special method is certainly not a matter for the decision of the Postmaster General within these statutes relative to fraud. Unless the question may be reduced to one of fact, as distinguished from mere opinion, we think these statutes cannot be invoked for the purpose of stopping the delivery of mail matter."

Although the McAnnulty case was decided four years before the passage of the original Food and Drugs Act of June 30, 1906, c. 3915, 34 Stat. 768, 21 U.S.C.A. § 1 et seq., the doctrine there announced was applied to the misbranding of drugs in United States v. Johnson, 1911, 221 U.S. 488, 498, 499, 31 S.Ct. 627, 55 L.Ed. 823, and in Seven Cases of Eckman's Alternative v. United States, 1916, 239 U.S. 510, 517, 36 S.Ct. 190, 60 L.Ed. 441, L.R.A. 1916 D, 164.

2. Three Limitations to the McAnnulty Rule

It should be borne in mind, however, that the McAnnulty case, supra, was heard on a demurrer and involved the Postmaster General's power to decide what was in reality a medical question, as to which he would presumably have no professional training.

It cannot be assumed that the Supreme Court intended to reach out a dead hand over the power of Congress to pass legislation in the future setting up a well-equipped Federal agency capable of arriving at a professional conclusion as to the adulteration or misbranding of drugs "when introduced into or while in interstate commerce". 21 U.S.C.A. § 334(a). In the McAnnulty case the court not only pointed out that "as the case arises on demurrer, all material facts averred in the bill are, of course, admitted", but throughout the opinion doubt was expressed as to the qualifications of a postmaster general to pass on medical questions.

In the excerpt which we have already quoted, the Supreme Court expressed the view that "the efficacy of any special method of treatment of disease is certainly not a matter for the decision of the Postmaster General within these statutes relative to fraud". Again, on page 105, of 187 U.S. on page 37 of 23 S.Ct. of the opinion, referring to the place of electricity in therapeutics, the court pointedly asks: "Was this kind of question intended to be submitted for decision to a Postmaster General, * * *?"

On the following page, the court thus summarized its holding as to the Postmaster General's power under the mail fraud statutes:

"Other instances might be adduced to illustrate the proposition that these statutes were not intended to cover any case of what the Postmaster General might think to be false opinions, but only cases of actual fraud in fact, in regard to which opinion formed no basis."

Even in that case, however, the court conceded that the Postmaster General might make a showing that fraud was being committed:

"In overruling the demurrer, we do not mean to preclude the defendant from showing on the trial, if he can, that the business of complainants, as in fact conducted amounts to a violation of the statutes as herein construed."

Cf. Leach v. Carlile, 258 U.S. 138, 139, 140, 42 S.Ct. 227, 228, 66 L.Ed. 511.

And in Seven Cases of Eckman's Alterative v. United States, supra, 239 U.S. at page 518, 36 S.Ct. at page 193, Mr. Justice Hughes said:

"It cannot be said, for example, that one who should put inert...