U.S. v. Rx Depot, Inc.
| Decision Date | 12 November 2003 |
| Docket Number | No. 03-CV-0616-EA(M).,03-CV-0616-EA(M). |
| Citation | 297 F.Supp.2d 1306 |
| Parties | UNITED STATES of America, Plaintiff, v. RX DEPOT, INC. and Rx of Canada, LLC, corporations, and Carl Moore and David Peoples, individuals Defendants. |
| Court | U.S. District Court — Northern District of Oklahoma |
Cathryn Dawn McClanahan, United States Attorney, Tulsa, OK, Alan Phelps, Washington, DC, for Plaintiff.
Gary L. Richardson, Fred Everett Stoops, Sr., Keith Allen Ward, Nancy C. Curtis, Richardson, Stoops, Richardson & Ward, Tulsa, OK, for Defendant.
On October 8-9, 2003, the Court held a hearing on plaintiff and defendants' motions for preliminary injunction (Dkt.## 2, 10). On November 6, 2003, the Court issued Findings of Fact and Conclusions of Law (Dkt.# 28) and an Order of Preliminary Injunction (Dkt.# 29). Now before this Court is Defendants' Emergency Motion to Stay Order of Preliminary Injunction Pending Appeal (Dkt.# 30). In their motion, defendants assert the Court erroneously found that: they altered the status quo; their actions constituted the requisite "causing" under 21 U.S.C. § 331 (); and the FDA's selective enforcement policy does not violate the equal protection clause. Defendants also allege that the Court abused its discretion in failing to invoke its equitable power to safeguard defendants' rights because there is a threat of irreparable harm to defendants if the stay is not granted, and the risk of harm to the public interest is substantial.
The plaintiff instituted this suit on September 11, 2003, by filing a complaint for injunction (Dkt.# 1) and a motion for a preliminary injunction (Dkt.# 2). Plaintiff's complaint alleged violations by defendants of the Federal Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. §§ 331(d) and (t). Defendants filed a response on October 6, 2003 (Dkt.# 10), wherein they moved for their own preliminary injunction against the plaintiff's attempt to enforce the FDCA. Defendants filed an answer and counterclaim on October 8, 2003 (Dkt.# 14). On October 8-9, 2003, the Court heard and received evidence relating to both preliminary injunction motions. Plaintiff and the defendants presented witnesses and exhibits, and thereafter filed proposed findings of fact and conclusions of law. On November 6, 2003, the Court issued Findings of Fact and Conclusions of Law (Dkt.# 28) and an Order of Preliminary Injunction (Dkt.# 29). The Court found: (1) Rx Depot assists individuals in procuring prescription medications from pharmacies in Canada; (2) defendants are essentially commissioned sales agents for Canadian pharmacies; (3) defendants are engaged in the business of causing the shipment of U.S. manufactured and unapproved prescriptions drugs from Canadian pharmacies to U.S. citizens; (4) unapproved prescription drugs and drugs imported from foreign countries by someone other than the U.S. manufacturer do not have the same assurance of safety and efficacy as drugs regulated by the Food and Drug Administration ("FDA"); and (5) defendants would continue their activities unless the Court enjoined them. Findings of Fact and Conclusions of Law, Dkt. # 28, at 3-5, 10-12.
When considering a stay pending appeal, the Court must address the following factors: (1) the likelihood of success on appeal; (2) the threat of irreparable harm if the stay is not granted; (3) the absence of harm to opposing parties if the stay is granted; and (4) any risk of harm to the public interest. FTC v. Mainstream Mktg. Servs., Inc., 345 F.3d 850, 852 (10th Cir.2003); Homans v. City of Albuquerque, 264 F.3d 1240, 1243 (10th Cir.2001). "With respect to the four stay factors, where the moving party has established that the three `harm' factors tip decidely in its favor, the `probability of success' requirement is somewhat relaxed." Mainstream Mktg. Servs., 345 F.3d at 852 (internal citation omitted). The Court finds that, in this case, the three harm factors do not support a relaxed review of the probability of success factor. With respect to the third and fourth factors-which are "necessarily conflated" because the FDA's asserted injury is exclusively one involving the public interest-the Court concludes that plaintiff, on behalf of the public, does have a strong interest in the safety and efficacy of prescription drugs that weighs in favor of denying this stay pending review of the merits. The harm factors do not weigh so heavily towards defendants as to justify a relaxed review of the first factor, likelihood of success on the merits. Thus, the Court will grant a stay only if defendants show a substantial likelihood of success on the merits of its appeal. See id. at 853.
Defendants first claim that they will likely succeed on appeal because the Court erroneously found that they altered the status quo when they began to build a nationwide business based on violating the law. Def. Motion to Stay, Dkt. # 30, at 4. The argument by defendants is simply a restatement of its prior argument that "the government is presently attempting to alter the status quo through its enforcement of the defendant's current operation of Rx Depot in twenty-five states." Id. Defendants base their assertion on SCFC ILC, Inc. v. Visa USA, Inc., 936 F.2d 1096, 1099-1100 (10th Cir.1991), and O Centro Espirita Beneficiente Uniao Do Vegetal v. Ashcroft, 342 F.3d 1170, 1178 (10th Cir. 2003). The Court previously distinguished both SCFC ILC and O Centro Espirita from the current set of circumstances. Findings of Fact and Conclusions or Law, Dkt. # 28, at 15. Defendants also allege that the Court's ruling conflicts with O Centro Espirita because the Court found that a violation of a statute (here the FDCA) "is presumed to cause public harm and that the government need only show that there exists `some cognizable danger of recurrent violation.'" Def. Motion to Stay, Dkt. # 30, at 5. As stated in the conclusions of law, this case is different from O Centro Espirita because this case does not implicate two conflicting federal statutes. Findings of Fact and Conclusions of Law, Dkt. # 28, at 15. The Court found that plaintiff has conclusively shown that the complex legislative scheme governing the regulation of prescription drugs explicitly prohibits the exact activities in which defendants are engaged. See id.
Contrary to defendants allegations, there is not a "complete lack of evidence regarding the safety concerns of the prescription drugs." Def. Motion to Stay, Dkt. # 30, at 5. The Court has already found that "unapproved prescription drugs and drugs imported from foreign countries by someone other than the U.S. manufacturer do not have the same safety and efficacy as drugs regulated" by the FDA. Findings of Fact and Conclusions of Law, Dkt. # 28, at 5. Defendants produce no additional evidence that the Court's prior finding of fact was in error. Therefore, the Court finds that defendants are not likely to succeed on appeal on their argument regarding status quo.
Although defendants also assert that they are likely to succeed on appeal because they are not violating the law, the Court has already found that defendants "openly and notoriously violate the law." Id. at 16. Defendants claim that the Court erred in its interpretation of "causing" with respect to the FDCA. Def. Motion to Stay, Dkt. # 30, at 6. Even if the Court were to utilize defendants' latest definition of "causing," as supplied by Black's Law Dictionary, the Court still finds defendants are agents that bring about the illegal importation of drugs. See Findings of Fact and Conclusions of Law, Dkt. # 28, at 4, 16. Therefore, with respect to violation of the law, the court finds that there is not a substantial likelihood defendants will succeed on appeal.
Next, defendants assert that the Court erred in not finding that the FDA's selective enforcement policy violates the equal protection clause. Def. Motion to Stay, Dkt. # 30, at 7. Defendants claim that because they did not make a claim of discrimination aimed at a "suspect class," they must show intentional or purposeful discrimination. Id. at 8, citing Cook v. Price, 566 F.2d 699, 701 (10th Cir.1977). Based on this standard, defendants allege that the Court erred "in not finding intentional or purposeful discrimination by the government." Although defendants cite to the portion of Cook which describes the requisite proof they must show, they fail to include the following sentence in Cook: "[m]ere failure to prosecute other offenders is no basis for a finding of denial of equal protection." Cook, 566 F.2d at 701. Because defendants' claim is based on an assertion that the plaintiff is intentionally and purposefully singling out them versus other entities, the Court finds defendants' argument is one which is not a basis for finding a denial of equal protection. Rather, the Court reiterates its finding that it is reasonable for the FDA "to marshal its limited resources against large-scale, commercial operations such as Rx Depot/Rx Canada rather than small-scale individual violators." Findings of Fact and Conclusions of Law, Dkt. # 28, at 19. Thus, the Court finds defendants are unlikely to prevail on appeal based on their argument concerning selective enforcement.
Although defendants also claim that the Court "abused its discretion in failing to invoke its equitable power to safeguard the rights of the defendants," the Court specifically addressed this issue in its conclusions of law. Def. Motion to Stay, Dkt. # 30, at 10; Findings of Fact and Conclusions of Law, Dkt. # 28, at 20-21. In their motion, defendants do not provide any legal authority that the Court erred in concluding that "it would be an abuse of the Court's equitable power to ignore statutory law, or to declare a statute invalid where there is no constitutional basis for doing so." Findings of Fact and Conclusions of Law, Dkt. # 28, at 20; United...
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