U.S. v. L-Tyrosine, No. CIV.98-2400 (JRT/FLN).

CourtUnited States District Courts. 8th Circuit. United States District Court of Minnesota
Writing for the CourtTunheim
Citation242 F.Supp.2d 617
PartiesUNITED STATES of America. Plaintiff, v. ALL ARTICLES OF DRUG CONSISTING OF FINISHED AND IN-PROCESS PRODUCTS (Including Active Pharmaceutical Ingredients), WHICH ARE LABELED AS CONTAINING TYROSINE and bear one or more of the following statements: "actifer," "with 1-tyrosine complex," "booster," "accelerator," "accelerates ...," and all articles of drug that bear "spf' anywhere on the label, in any size or type container, labeled or unlabeled, which were manufactured by and located at Creative Labs, Inc., 1325 Eagandale Court and/or 2755 Highway 55, Eagan, Minnesota, Defendants.
Docket NumberNo. CIV.98-2400 (JRT/FLN).
Decision Date31 March 2002
242 F.Supp.2d 617
UNITED STATES of America. Plaintiff,
v.
ALL ARTICLES OF DRUG CONSISTING OF FINISHED AND IN-PROCESS PRODUCTS (Including Active Pharmaceutical Ingredients), WHICH ARE LABELED AS CONTAINING TYROSINE and bear one or more of the following statements: "actifer,"

Page 618

"with 1-tyrosine complex," "booster," "accelerator," "accelerates ...," and all articles of drug that bear "spf' anywhere on the label, in any size or type container, labeled or unlabeled, which were manufactured by and located at Creative Labs, Inc., 1325 Eagandale Court and/or 2755 Highway 55, Eagan, Minnesota, Defendants.
No. CIV.98-2400 (JRT/FLN).
United States District Court, D. Minnesota.
March 31, 2002.

Gerald C. Kell, Senior Trial Counsel, Office of Consumer Litigation, United States Department of Justice, Washington, DC, and Mary Jo Madigan, Assistant United States Attorney, Office of the United States Attorney, Minneapolis, MN, for plaintiff.

Frederick H. Branding and James M. Ellis, Bell Boyd & Lloyd LLC, Chicago, IL, and Richard J. Wegener and Kari L. Wraspir, Oppenheimer Wolff & Donelly LLP, Minneapolis, MN, for claimant.

Page 619

MEMORANDUM OPINION AND ORDER ADOPTING REPORT AND RECOMMENDATION

TUNHEIM, District Judge.


This action is an in rem proceeding brought by plaintiff the United States of America ("the government") pursuant to 21 U.S.C. § 334. The products at issue in this action include tanning accelerators, sunscreen products, and the raw materials for making such products. Claimant Creative Labs ("Creative") seeks leave to withdraw its claims to the articles of drugs that are currently held under seizure by the government. This matter is now before the Court on the government's objections to the Report and Recommendation of United States Magistrate Judge Franklin L. Noel dated November 28, 2001. The Court has conducted a de novo review of the government's objections pursuant to 28 U.S.C. § 636(b)(1)(C) and D. Minn. LR 72.1(c)(2). For the reasons set forth below, the Court adopts the Report and Recommendation of the Magistrate Judge, and grants Creative's motion.

BACKGROUND

On January 11, 1993, the Food and Drug Administration ("FDA") informed Creative that its tanning accelerator products were considered drugs within the meaning of 21 U.S.C. § 321(g). Creative initially stopped producing these products, but resumed production after observing that its competitors were marketing very similar products without interference by the FDA. On November 6, 1998, the government filed a Complaint for Forfeiture against the subject articles, and the United States Marshal seized the articles and placed them under the jurisdiction of this Court. On December 3, 1998, Creative filed a Claim to the seized articles.

On February 12, 1999, the government filed an Amended Complaint, alleging that certain products containing the drug L-Tyrosine were non-approved "new drugs," the compositions of which were not generally recognized as safe and effective for use under the conditions suggested by the labeling. The Amended Complaint also alleged that the L-Tyrosine-containing products had not been approved as required by 21 U.S.C. § 355(b), and that the products were misbranded under 21 U.S.C. § 352(f)(1) because their labels did not contain adequate directions for use. Finally, the Amended Complaint alleged that the products were "adulterated" under 21 U.S.C. § 351(a)(2)(B), because they were not manufactured in conformity with good manufacturing practices.

On July 24, 2001, Creative filed the present Motion to Withdraw its Claim and Answer, and seeking entry of a Default Decree of Condemnation and Destruction, by which the products at issue would be destroyed. On August 31, 2001, the government gave notice of its intent to file a motion for summary judgment. The deadline for dispositive motions in this case was September 1, 2001.

ANALYSIS

The government now objects to the Magistrate Judge's determination that "for all practical purposes, this case is now finished, and the preparation and entry of a decree of condemnation would seem appropriate." The Magistrate Judge found that both parties agree to the condemnation and destruction of the drugs, and that Creative's proposed Decree provides the government with all of the relief requested in its complaint. Specifically, the government makes these objections: (1) the Magistrate Judge was wrong in failing to rule on whether the government is entitled to a judgment with res judicata effect; and (2) permitting Creative to withdraw its Claim and Answer will be unfair to the government.

Page 620

I. Entitlement to Res Judicata Judgment

The government's first objection is that permitting Creative to withdraw will deny the government a judgment that has a res judicata effect against Creative. In recommending that Creative's motion be granted, the Magistrate Judge stated that he declined to express "an opinion on the merits of the Government's assertion that entry of the proposed Default Decree deprives the government of a judgment with a res judicata effect against Creative."

The government cites several cases that discuss the res judicata effect of judgments, but it points to no authority holding that the government is entitled to a judgment with such an effect. First, the government cites United States v. Various Articles of Device, 814 F.Supp. 31 (E.D.Tenn.1992) and the unpublished, oral opinion in United States v. An Article of Food... "Schmidt's Blue Ribbon...", Civ. No. 72-703-HM (D.Md. Jan. 25, 1974) (reported in Kleinfeld, Kaplan, & Weitzman, Federal Food, Drug & Cosmetic Act 1969-197^ 166 (1976)). In Schmidt's Blue Ribbon, the court simply noted that a judgment in that case would have a res judicata effect, but did not hold that the government was entitled to such a judgment. Schmidt's Blue Ribbon at 168. That case was decided primarily on an incorrect application of Federal Rule of Civil Procedure 41(a). Id. at 167-68. The rule governs dismissal of claims by a plaintiff; the Court has been able to locate no other cases in which Rule 41(a) was held to govern withdrawal of claims by intervening parties in civil forfeiture cases. Therefore, the Court agrees with Creative that the court in Schmidt's Blue Ribbon incorrectly applied Rule 41(a), and that the case is not controlling here.

In Various Articles of Device, the Court did appear to hold that permitting the claimant to withdraw would deprive the government of a res judicata judgment. Various Articles of Device, 814 F.Supp. at 32. That case is distinguishable, however, because it had progressed farther than the present case. There, the government's motion for summary judgment had already been argued, and was before the Court for decision. Id. at 31. In the present case, the government moved for summary judgment nearly two months after Creative filed its motion to withdraw, and only one week before the hearing on Creative's motion before the Magistrate Judge. The parties have not argued or briefed the issue of summary judgment, as they apparently did in Various Articles of Device. Therefore, because this case has not progressed to the same extent, the Court is not persuaded by Various Articles of Device that the government has any right to a judgment with res judicata effects.

The government also cites the United States Supreme Court's decision in Hipolite Egg Co. v. United States, 220 U.S. 45, 31 S.Ct. 364, 55 L.Ed. 364 (1911), and its progeny, apparently arguing that a party who voluntarily intervenes in a forfeiture proceeding must subject itself to a res judicata judgment. These cases do not support the government's argument. The government is correct that where "a party is before the court in an in rem proceeding, the court has the power to render an in personam judgment against him." United States v. 18k Barrels Dried Whole Eggs, 53 F.Supp. 652, 654 (E.D.Wis.1943). This statement, however, merely re-states the holding of Hipolite Egg...

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