U.S. v. Green Drugs, No. 89-1850

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Writing for the CourtBefore MANSMANN, SCIRICA and SEITZ; MANSMANN
Citation905 F.2d 694
PartiesUNITED STATES of America v. GREEN DRUGS and Raymond S. Kauffman, Appellants. . Submitted Under Third Circuit Rule 12(6)
Decision Date02 April 1990
Docket NumberNo. 89-1850

Page 694

905 F.2d 694
UNITED STATES of America
v.
GREEN DRUGS and Raymond S. Kauffman, Appellants.
No. 89-1850.
United States Court of Appeals,
Third Circuit.
Submitted Under Third Circuit Rule 12(6)
April 2, 1990.
Decided June 15, 1990.
Rehearing and Rehearing In Banc Denied July 26, 1990.

Earl G. Kauffman, Philadelphia, Pa., for appellants.

Michael M. Baylson, U.S. Atty., James G. Sheehan, Asst. U.S. Atty., Chief, Civ. Div., David F. McComb, Asst. U.S. Atty., Philadelphia, Pa., for appellee.

Before MANSMANN, SCIRICA and SEITZ, Circuit Judges.

OPINION OF THE COURT

MANSMANN, Circuit Judge.

In this appeal from a judgment assessing fines against a retail pharmacy and its owner, we are faced with the question of whether strict liability may be imposed for civil violations of the recordkeeping provisions of the Comprehensive Drug Abuse Prevention and Control Act, 21 U.S.C. Secs. 801-971. The defendants argued, and the district court found, that the audit shortages--though substantial--resulted through inadvertence and human error. We conclude that the district court correctly ruled that the Act provides for liability without fault and will thus affirm.

I.

In October of 1986 the Drug Enforcement Administration, acting pursuant to an administrative inspection warrant, conducted an investigative audit of Green Drugs, a Philadelphia retail pharmacy, and its owner and manager, Raymond Kauffman, a registered pharmacist. 1 DEA investigators reviewed

Page 695

Green Drugs' records and stock, and noted that the pharmacy's receipt records accounted for more quantities of drugs than its dispensing records and inventory showed. Specifically, the investigators found shortages of 4,798 Percodan tablets, 1,902 Percocet tablets, and 2,753 Preludin tablets.

The government commenced this civil action with a three-count complaint, alleging that the defendants' failure to keep complete and accurate records of each drug violated the recordkeeping provisions of the Comprehensive Drug Abuse Prevention and Control Act, popularly known as the Controlled Substances Act, 21 U.S.C. Secs. 827(a), (b) & 842(a)(5). The government sought a $25,000 civil penalty for each count.

At trial, the government presented corrected shortage figures: 1,698 Percodan tablets, 1,697 Percocet tablets, and 2,752 Preludin tablets. The defendants challenged the government's computation of the shortages, contending that the deficiencies were minor considering the large quantities of drugs processed by the pharmacy, and were due to human error and "inadvertent mistake." The defendants further argued that, as a matter of law, they could not be held liable because the recordkeeping provisions do not provide for strict liability.

The district court entered judgment in favor of the government. Accepting Kauffman's testimony, the court found that the shortages in the pharmacy's inventory were "inadvertent and innocent" and that the defendants acted in good faith. The court stated, however, that Congress had "imposed strict liability on retail pharmacists to account for Schedule Two substances," and "decreed that good faith is not a defense to inaccurate record keeping." The district court took into account the defendants' innocent motives and corrective measures before assessing a $6,000 fine, $2,000 for each count. The pharmacy and its owner appeal.

We have jurisdiction to review the final order of the district court under 28 U.S.C. Sec. 1291. The question presented on appeal is whether a civil violation of the recordkeeping provisions of the Act may be found and punished by a fine where the shortages are due to human error and no intent to violate the statute has been shown. The defendants would add, "and where no illegal gains have been realized." Although the issue has received some mention in cases decided under the statute, United States v. Williams, 416 F.Supp. 611, 614 (D.D.C.1976); United States v. Barbacoff, 416 F.Supp. 606, 610 (D.D.C.1976), it is apparently one of first impression before the Courts of Appeals. Because the matter involves application and interpretation of legal precepts, our standard of review is plenary. United States v. Engler, 806 F.2d 425, 431 (3d Cir.1986), cert. denied, 481 U.S. 1019, 107 S.Ct. 1900, 95 L.Ed.2d 506 (1987); Dent v. Cunningham, 786 F.2d 173, 175 (3d Cir.1986).

II.

Every registrant under the Controlled Substances Act engaging in the "manufacture, distribution, or dispensing of controlled substances" is required to "make a complete and accurate record of all stocks thereof on hand." 2 21 U.S.C. Sec. 827(a)(1). Section 827(a)(3) likewise requires the registrant to maintain "a complete and accurate record of each ... substance manufactured, received, sold, delivered, or otherwise disposed." Id. Sec. 827(a)(3). Such records must be maintained in strict accordance with regulations promulgated by the Attorney General and be available for inspection and copying by authorized officials for at least two years. Id. Sec. 827(b). Failure to maintain the requisite records constitutes a violation of 21 U.S.C. Sec. 842(a)(5), 3 and subjects the offender to

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civil or penal penalties, depending on whether the act was committed knowingly. Id. Sec. 842(c). "Inadvertent" mistakes due to sloppy recordkeeping subject pharmacies and owners to fines; a "knowing" violation subjects them to criminal sanctions of imprisonment, fines, or both.

In tone and tenor, the Act's recordkeeping provisions mirror other food and drug legislation that Congress has enacted. The Supreme Court has upheld strict liability prosecutions under such statutes, where legislative history has provided for strict regulation.

Illustrative is United States v. Balint, 258 U.S. 250, 42 S.Ct. 301, 66 L.Ed. 604 (1922), where the defendants were indicted for violating the Narcotic Act of 1914, which made it unlawful "for any person to sell, barter, exchange, or give away" certain drugs. Act of Dec. 17, 1914, ch. 1, Sec. 2, 38 Stat. 785, 786 (repealed 1939). The district court dismissed the indictment because it did not charge that the defendants knew the drugs to be illegal, even though the law did not specifically make such knowledge an element of the offense. The Supreme Court reversed.

"[I]n the prohibition or punishment of particular acts," the Court reasoned, the legislature may "in the maintenance of a public policy provide 'that he who shall do them shall do them at his peril and will not be heard to plead in defense good faith or ignorance.' " Id. at 252, 42 S.Ct. at 302 (quoting Shevlin-Carpenter Co. v. Minnesota, 218 U.S. 57, 70, 30 S.Ct. 663, 666-67, 54 L.Ed. 930 (1910)). The Court noted examples found in regulatory measures in the exercise of the government's police power where the underlying purpose of the statute is centered on the advancement of some social purpose rather than the punishment of the crime.

In Balint, the Court determined that the congressional purpose of the Narcotic Act was "to require every person dealing in drugs to ascertain at his peril whether that which he sells comes within the inhibition of the statute, and if he sells the inhibited drug in...

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12 practice notes
  • U.S. v. Mobley, No. 90-3832
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • February 14, 1992
    ...Cir.1984), cert. denied, Angel v. United States, 469 U.S. 1208, 105 S.Ct. 1171, 84 L.Ed.2d 321 (1985); see United States v. Green Drugs, 905 F.2d 694, 696 (3d Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 518, 112 L.Ed.2d 530 (1990) (noting the distinction between the "advancement of s......
  • Pichler v. Unite, No. 06-4522.
    • United States
    • U.S. Court of Appeals — Third Circuit
    • September 9, 2008
    ...acts or omissions, but does not premise civil liability on knowing violations. In fact, as we recognized in United States v. Green Drugs, 905 F.2d 694 (3d Cir.1990), the strict liability standard is applicable for civil violations of section 842(a).22 Analyzing the statute, we noted this di......
  • U.S. v. Akhtar, No. Civ.A. H-98-3882.
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • December 16, 1999
    ...to all persons who have the authority to dispense drugs and imposes strict liability on all violators. See United States v. Green Drugs, 905 F.2d 694, 695, 698-99 (3d Cir.), cert. denied, 498 U.S. 985, 111 S.Ct. 518, 112 L.Ed.2d 530 (1990); United States v. Little, 59 F.Supp.2d 177, 183 (D.......
  • Advance Pharmaceutical, Inc. v. U.S., No. 02-6233.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • December 3, 2004
    ...within the maximum is committed to the informed discretion of the district judge[.]"); see also United States v. Green Drugs, 905 F.2d 694, 698 (3d Cir.1990) (recognizing district court's discretion in assessing civil penalties under 21 U.S.C. § 842(c)). We will find such abuse only if......
  • Request a trial to view additional results
9 cases
  • U.S. v. Mobley, No. 90-3832
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • February 14, 1992
    ...Cir.1984), cert. denied, Angel v. United States, 469 U.S. 1208, 105 S.Ct. 1171, 84 L.Ed.2d 321 (1985); see United States v. Green Drugs, 905 F.2d 694, 696 (3d Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 518, 112 L.Ed.2d 530 (1990) (noting the distinction between the "advancement of some s......
  • Pichler v. Unite, No. 06-4522.
    • United States
    • U.S. Court of Appeals — Third Circuit
    • September 9, 2008
    ...acts or omissions, but does not premise civil liability on knowing violations. In fact, as we recognized in United States v. Green Drugs, 905 F.2d 694 (3d Cir.1990), the strict liability standard is applicable for civil violations of section 842(a).22 Analyzing the statute, we noted this di......
  • U.S. v. Akhtar, No. Civ.A. H-98-3882.
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • December 16, 1999
    ...to all persons who have the authority to dispense drugs and imposes strict liability on all violators. See United States v. Green Drugs, 905 F.2d 694, 695, 698-99 (3d Cir.), cert. denied, 498 U.S. 985, 111 S.Ct. 518, 112 L.Ed.2d 530 (1990); United States v. Little, 59 F.Supp.2d 177, 183 (D.......
  • Advance Pharmaceutical, Inc. v. U.S., No. 02-6233.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • December 3, 2004
    ...of penalties within the maximum is committed to the informed discretion of the district judge[.]"); see also United States v. Green Drugs, 905 F.2d 694, 698 (3d Cir.1990) (recognizing district court's discretion in assessing civil penalties under 21 U.S.C. § 842(c)). We will find such abuse......
  • Request a trial to view additional results

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