U.S. v. An Article of Drug Consisting of 4,680 Pails, More or Less, Each Pail Containing 60 Packets, Etc., No. 82-1381

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtBefore BROWN and RANDALL; RANDALL
Citation725 F.2d 976
PartiesUNITED STATES of America, Plaintiff-Appellee, v. AN ARTICLE OF DRUG CONSISTING OF 4,680 PAILS, More or Less, EACH PAIL CONTAINING 60 PACKETS, etc., Defendant, Pfizer, Inc., Claimant-Appellant.
Decision Date27 February 1984
Docket NumberNo. 82-1381

Page 976

725 F.2d 976
UNITED STATES of America, Plaintiff-Appellee,
v.
AN ARTICLE OF DRUG CONSISTING OF 4,680 PAILS, More or Less,
EACH PAIL CONTAINING 60 PACKETS, etc., Defendant,
Pfizer, Inc., Claimant-Appellant.
No. 82-1381.
United States Court of Appeals,
Fifth Circuit.
Feb. 27, 1984.

Page 977

Michael Byrd, Dallas, Tex., Robert H. Becker, Glenn E. Davis, Nancy Singer, Washington, D.C., for claimant-appellant.

Page 978

Richard E. Geyer, Rockville, Md., John J. Powers, D. of J., Antitrust Div., William J. Roberts, Washington, D.C., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before BROWN and RANDALL, Circuit Judges, and HUNTER *, District Judge.

RANDALL, Circuit Judge:

Claimant-appellant, Pfizer, Inc., appeals the district court's grant of summary judgment in this seizure action instituted by the United States under section 304 of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Sec. 301 et seq. (1982). The district court held that Neo-Terramycin Soluble Powder Concentrate was adulterated within the meaning of 21 U.S.C. Sec. 351(a)(5) (1982). We affirm.

I.

It will first be useful briefly to outline the somewhat complicated statutory and regulatory scheme involved in this case. The Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Secs. 301-392 (1982) (the "Act"), provides a comprehensive scheme to protect the public from drugs that may be unsafe or ineffective for their intended uses. As part of this scheme, the Act regulates the marketing of drugs used in treating animals which are raised for human consumption. 21 U.S.C. Sec. 360b. The Act establishes a system of pre-marketing clearance for animal drugs by prohibiting the introduction into interstate commerce of any "new animal drug" unless a Food and Drug Administration ("FDA") approved New Animal Drug Application ("NADA") is in effect for that drug. 21 U.S.C. Sec. 360b(a)(1)(A). 1 The Act establishes procedures for the filing of an NADA, 21 U.S.C. Sec. 360b, and provides that the Secretary of Health and Human Services (the "Secretary") may reject an NADA if he or she finds that the drug is not proven safe, 21 U.S.C. Sec. 360b(d)(1)(A) & (B), 2 or that "there is a lack of substantial evidence that the drug will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the proposed labeling thereof." 21 U.S.C. Sec. 360b(d)(1)(E). 3 "Substantial evidence" is defined to mean:

[E]vidence consisting of adequate and well-controlled investigations, including field investigation, by experts qualified by scientific training and experience to evaluate the effectiveness of the drug involved, on the basis of which it could fairly and reasonably be concluded by such experts that the drug will have the effect it purports or is represented to have under the conditions of use prescribed,

Page 979

recommended, or suggested in the labeling or proposed labeling thereof.

21 U.S.C. Sec. 360b(d)(3). 4 The FDA has required, by regulation, that for a fixed combination

Page 980

new animal drug, substantial evidence must be provided both that the drug is effective for its intended use and that each ingredient designated as active contributes to the claimed effects. 21 C.F.R. Sec. 514.1(b)(8)(v) (1983). 5

A drug that is not a "new animal drug" can be marketed without FDA approval. 6 For a drug not to be considered a new animal drug, it must be "generally recognized" by qualified experts as safe and effective for each of its intended uses. 21 U.S.C. Sec. 321(w). 7

If a "new animal drug" is marketed without FDA approval, it is deemed to be "unsafe." 21 U.S.C. Sec. 360b(a)(1)(A). 8 An unsafe animal drug is deemed "adulterated." 21 U.S.C. Sec. 351(a)(5). 9 The Act prohibits the shipment of any adulterated animal drug in interstate commerce. 21 U.S.C. Sec. 331(a). 10 The Secretary may sue to enjoin violations, 21 U.S.C. Sec. 332, 11 prosecute the violator criminally, 21 U.S.C. Sec. 333, 12 or

Page 981

seek to have the district court seize and condemn the shipment of the adulterated animal drug, 21 U.S.C. Sec. 334. 13

Thus, drug manufacturers have two alternative routes in marketing their animal drugs. The first is to seek FDA approval of an NADA. The second is to market the drug without FDA approval on the assumption that the drug is not a "new animal drug," thus leaving the initiative to the Secretary. As such, the Act is somewhat incongruous; it provides a comprehensive scheme for both pre-marketing clearance and post-marketing regulation of new animal drugs, yet leaves it up to the manufacturer of the animal drug to decide whether its product is subject to the scheme in the first place. "The in terrorem effect of potential judicial enforcement actions, the possibility of penalties, and the extremely broad definition of a new drug as any one not generally recognized by experts as safe and effective are apparently designed to encourage voluntary compliance and to render the scheme self-policing." Cutler v. Kennedy, 475 F.Supp. 838, 842, 1979 Food Drug Cosm.Rep. (CCH) p 38,257, at 39,042 (D.C.D.C.1979).

II.

On May 15, 1979, the United States filed a complaint for forfeiture, under section 304 of the Act, praying for seizure and condemnation of a specified quantity of the animal drug Neo-Terramycin Soluble Powder Concentrate ("Neo-Terra Powder") that was shipped in interstate commerce by Pfizer, Inc. ("Pfizer"). The complaint alleged that the drug was a "new animal drug" within the meaning of section 321(w), for which an approved NADA was not in effect. After seizure pursuant to a warrant for arrest in rem, Pfizer intervened as claimant and filed an answer, alleging that Neo-Terra Powder is "generally recognized" as safe and effective, and is not, therefore, a "new animal drug" within the meaning of the Act.

Neo-Terra Powder is a water soluble combination drug, administered in drinking water, labeled for the treatment of various ailments common to chickens, turkeys, swine and calves. 14 The active ingredients in Neo-Terra Powder are neomycin and oxytetracycline. Although Pfizer has marketed Neo-Terra Powder since the mid-1960s, it has not obtained an approved NADA from the FDA.

A jury trial was held from October 14, 1980 to October 23, 1980, at the conclusion of which the jury found that Neo-Terra Powder is "generally recognized" as safe and effective. On November 4, 1980, the district court issued a final judgment based upon the jury's verdict and ordered that the United States Marshal return the seized Neo-Terra Powder to Pfizer.

The next day, November 5, 1980, the United States Marshal released the drug, in violation of the automatic ten-day stay provision of Fed.R.Civ.P. 62(a). 15 The marshal's

Page 982

return shows that the marshal's office called Pfizer on November 5 to notify Pfizer that the drug had been released, and then mailed Pfizer a copy of the written order. The United States was not notified of the release, although it learned informally of the release sometime during the ten-day automatic stay period. The United States did not request or obtain an order staying execution of the judgment releasing the Neo-Terra Powder to Pfizer, nor did it request or obtain an order requiring its return once improperly released.

On November 7, 1980, the United States filed a timely motion for a new trial, pursuant to Fed.R.Civ.P. 59(a). This motion was granted on May 8, 1981.

On June 8, 1981, Pfizer renewed a motion it had made at trial that the proceeding should be dismissed because the status of the drug is governed by the FDA's interim marketing rules developed for certain animal drugs, 21 C.F.R. Sec. 558.15 (1983). 16 On November 9, 1981, Pfizer moved to dismiss the complaint alleging that the court lacked in rem jurisdiction following the release and removal of the seized drug from the district. The district court denied both motions. 17

The United States, on December 17, 1981, moved for summary judgment, which the district court granted on May 6, 1982. United States v. An Article of Drug ... Neoterramycin Soluble Powder Concentrate, 529 F.Supp. 230 (N.D.Tex.1981). Pfizer filed a timely notice of appeal.

III.

The first issue we must address is whether the release by the United States Marshal of the 4,680 pails of Neo-Terra Powder destroyed the jurisdiction of the district court; Pfizer contends that it did. Pfizer's argument rests on the admiralty rule 18 that in rem actions generally require, as a prerequisite to a court's jurisdiction, the presence of the vessel or other res within the territorial confines of the court. United States v. Mack, 295 U.S. 480, 484, 55 S.Ct. 813, 815, 79 L.Ed. 1559 (1935). This rule is predicated upon admiralty's fiction of convenience that a ship is a person against whom suits can be filed and judgments entered, allowing actions to be brought against the vessel when her owner cannot be reached. Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 22-23, 80 S.Ct. 1470, 1472-1473, 4 L.Ed.2d 1540 (1960). However, in recent years this court has shied away from a strict construction of this in rem rule and has allowed, in certain circumstances, an in rem action to continue despite the absence of the res. Specifically, we have dispensed with strict application of this in rem rule when a legal fiction which exists solely to effectuate the adjudication of disputes is invoked for the opposite purpose, and we have found a substitute basis of in personam jurisdiction. See, e.g., Treasure Salvors, Inc. v. Unidentified Wrecked and Abandoned Sailing Vessel, 569 F.2d 330 (5th Cir.1978); Inland Credit Corp. v. M/T Bow Egret, 552 F.2d 1148 (5th Cir.1977).

We first dispensed with strict construction of this in rem rule in Inland Credit Corp. v. M/T Bow Egret, supra. In that case, a ship mortgagee brought suit in rem against the vessel and in personam against the vessel's owner seeking to foreclose on its...

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  • U.S. v. LeBeau, No. 92-2724
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • January 28, 1993
    ...and (2) that the expert consensus is based on "substantial evidence." United States v. An Article Of Drug Consisting of 4,680 Pails, 725 F.2d 976, 985 (5th Cir.1984). The "substantial evidence" standard, which is not as stringent as the "preponderant evidence" standard, takes into account t......
  • United States v. $4,480,466.16 in Funds Seized from Bank of Am. Account Ending in 2653, No. 18-10801
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • November 5, 2019
    ...of 2000 ("CAFRA"), Pub. L. 106-185, 117 Stat. 202 (2000) ).9 See, e.g. , United States v. An Article of Drug Consisting of 4,680 Pails , 725 F.2d 976, 981 (5th Cir. 1984) (observing, "[a]fter seizure pursuant to a warrant for arrest in rem , Pfizer intervened as claimant and filed an answer......
  • Bynum v. FMC Corp., No. 84-4677
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • September 13, 1985
    ...The moving party carries the burden of showing the absence of a genuine issue of material fact. United States v. An Article of Drug, 725 F.2d 976, 984 (5th Cir.1984). Once this burden is discharged, the burden shifts to the opposing party to demonstrate through opposing affidavits or other ......
  • Isgett by and through Isgett v. Wal-Mart Stores, Civil Action No. 3:96-CV-325WS.
    • United States
    • United States District Courts. 5th Circuit. Southern District of Mississippi
    • June 30, 1997
    ...for summary judgment"); Galindo v. Precision American Corp., 754 F.2d 1212, 1216 (5th Cir.1985); United States v. An Article of Drug, 725 F.2d 976, 984-85 (5th Cir.1984); Grimes v. Texas Dept. of Mental Health, 102 F.3d 137, 140 (5th Cir.1996) (in response to a summary judgment motion, it i......
  • Request a trial to view additional results
69 cases
  • U.S. v. LeBeau, No. 92-2724
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • January 28, 1993
    ...and (2) that the expert consensus is based on "substantial evidence." United States v. An Article Of Drug Consisting of 4,680 Pails, 725 F.2d 976, 985 (5th Cir.1984). The "substantial evidence" standard, which is not as stringent as the "preponderant evidence" standard, takes into account t......
  • United States v. $4,480,466.16 in Funds Seized from Bank of Am. Account Ending in 2653, No. 18-10801
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • November 5, 2019
    ...of 2000 ("CAFRA"), Pub. L. 106-185, 117 Stat. 202 (2000) ).9 See, e.g. , United States v. An Article of Drug Consisting of 4,680 Pails , 725 F.2d 976, 981 (5th Cir. 1984) (observing, "[a]fter seizure pursuant to a warrant for arrest in rem , Pfizer intervened as claimant and filed an answer......
  • Bynum v. FMC Corp., No. 84-4677
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • September 13, 1985
    ...The moving party carries the burden of showing the absence of a genuine issue of material fact. United States v. An Article of Drug, 725 F.2d 976, 984 (5th Cir.1984). Once this burden is discharged, the burden shifts to the opposing party to demonstrate through opposing affidavits or other ......
  • Isgett by and through Isgett v. Wal-Mart Stores, Civil Action No. 3:96-CV-325WS.
    • United States
    • United States District Courts. 5th Circuit. Southern District of Mississippi
    • June 30, 1997
    ...for summary judgment"); Galindo v. Precision American Corp., 754 F.2d 1212, 1216 (5th Cir.1985); United States v. An Article of Drug, 725 F.2d 976, 984-85 (5th Cir.1984); Grimes v. Texas Dept. of Mental Health, 102 F.3d 137, 140 (5th Cir.1996) (in response to a summary judgment motion, it i......
  • Request a trial to view additional results

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