U.S. v. Undetermined Quantities of Art. of Drug, Civ. A. AW-00-1687.

Citation145 F.Supp.2d 692
Decision Date12 June 2001
Docket NumberNo. Civ. A. AW-00-1687.,Civ. A. AW-00-1687.
PartiesUNITED STATES of America, Plaintiff, v. UNDETERMINED QUANTITIES OF ARTICLES OF DRUG, Street Drug Alternatives .... et al., Defendants.
CourtUnited States District Courts. 4th Circuit. United States District Court (Maryland)

Lynne A. Battaglia, Nadira Clarke, Office of the U.S. Attorney, Baltimore, MD, Richard N. Goldberg, U.S. Department of Justice, Washington, DC, for Plaintiff.

Charles H. Nalls, Armstrong, Westerman, Hattori, et al., Washington, DC, for Defendants.

MEMORANDUM OPINION

WILLIAMS, District Judge.

Currently pending before the Court are Plaintiff's Motion for Summary Judgment [19-1] and Defendant Perry Hitt's Motion for Partial Summary Judgment [22-1]. The motions have been fully briefed by all parties. No hearing is deemed necessary. See Local Rule 105.6. Upon consideration of the arguments made in support of, and opposition to, the respective motions, the Court makes the following determinations.

I. FACTUAL BACKGROUND

Hit Products, Inc., Riverdale Organics, and Dreamworlds (collectively "Defendants") manufacture, market, and distribute certain products that serve the basis for this controversy. Specifically, the products at issue are named as follows: "Herba Ghani," "Inda-Kind," "Hydro," "Sweet Green," "Chronix," "Rave X," "Rave Energy," "Utopia," "Shroomz," "Liquid X," "Liquid X Export," "Hashanna Oil," "Northern Heights," "Herbal Hash— Mean Green," "Herbal Hash — Honey-Blonde," and "Herbal Opium." The products are made from a mixture of herbs. Defendants specifically market the products via publications and the internet to Generation Xers — the demographic of young adults aged 20 to 30 years-old. The products promise users effects comparable to illegal street drugs that plague America's youth. The United States Food and Drug Administration ("FDA") categorizes such substances as "street drug alternatives" that qualify as misbranded and unapproved new drugs in violation of the Federal Food, Drug, & Cosmetic Act ("FDCA"). Under its statutory authority, the FDA seized Defendants' products. Thereafter, the United States brought the instant action seeking an order of condemnation and permanent injunctive relief against the companies and their President, Perry Hitt.

II. DISCUSSION
A. FDA's Guidance on Street Drugs Alternatives

The United States' arguments in this case essentially track the opinion delineated by the FDA in a policy statement issued in April of 2000. In the statement, the FDA defined street drug alternatives as herbal products that claim to mimic the euphoric effects of illegal street drugs. See Guidance for Industry on Street Drug Alternatives, 65 Fed.Reg. 17,512 (Apr. 3, 2000). In the notice, the FDA announced its position that street drug alternatives constitute unapproved new drugs and misbranded drugs in violation of §§ 502 and 505 of the FDCA. 65 Fed.Reg. at 17,512. The FDA also asserted that street drug alternatives did not fall within the definition of "dietary supplements" because such products are not "intended to supplement the diet," but rather to modify the psychological states of the user. Id. Defendants' products fall within the scope of the FDA's definition of street drug alternatives.

Defendants maintain that the Guidance is not binding on the parties or the Court. The Court agrees. "A policy statement ... is not a substantive rule but rather an interpretative statement of position ... [that] is not subject to rulemaking requirements." Pelissero v. Thompson, 170 F.3d 442, 447 (4th Cir.1999). "An interpretation ... not one arrived at after ... a formal adjudication or notice-and-comment rulemaking[,] ... like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law — do not warrant Chevron-style deference." Christensen v. Harris County, 529 U.S. 576, 587, 120 S.Ct. 1655, 1663, 146 L.Ed.2d 621 (2000).1 "While ... a policy statement does not carry as much weight as a rule, it is nonetheless entitled to `some deference.'" Pelissero, 170 F.3d at 447. Such "interpretations ... are `entitled to respect' under [the Supreme Court's] decision in Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944), but only to the extent that those interpretations have the `power to persuade[.]'" Christensen, 529 U.S. at 587, 120 S.Ct. at 1663. For the reasons discussed below, the Court finds that FDA's position on street drug alternatives to be highly persuasive in light of the text and purposes of the FDCA.

The Court believes Defendants' characterization of the seized products as "dietary supplements" constitutes a veiled attempt to circumvent federal anti-drug laws and the FDCA. This Court declines to carve out a statutory loophole for drug manufacturers attempting to profit from the illegal drug epidemic by masquerading potentially dangerous substances as legitimate dietary supplements. Such mischaracterizations are not only contrary to the language of the Dietary Supplement Health and Education Act of 1994 ("DSHEA"), but also undermines the manifest purposes of the FDCA.

B. Dietary Supplements

The United States asserts that Defendants' products are marketed as alternatives to illicit street drugs, such as marijuana, Ecstasy, hashish, and opium. Defendants counter that the products are dietary supplements and, therefore, are exempt from the definition of "drug" under the Dietary Supplement Health and Education Act of 1994 ("DSHEA").

Section 3 of DSHEA defines a dietary supplement as:

a product (other than tobacco) intended to supplement the diet that bears or contains one or more of the following dietary ingredients: (A) a vitamin; (B) a mineral; (C) an herb or other botanical; (D) an amino acid; (E) a dietary substance for use by man to supplement the diet by increasing the total dietary intake; or (F) a concentrate, metabolite, constituent, extract, or combination of any ingredient described in clause (A), (B), (C), (D) or (E).

Few courts have interpreted this amendment to the FDCA by the DSHEA. See Pharmanex v. Shalala, 221 F.3d 1151 (10th Cir.2000). Nonetheless, as a prerequisite to application of the DSHEA, the product must be labeled as a "dietary supplement." See 21 U.S.C. § 321(ff)(2)(C); S.Rep. No. 103-410 (1994), 1994 WL 562259. The vast majority of Defendants' products are not labeled in compliance with the Act and, therefore, cannot be classified as "dietary supplements" within the meaning of 21 U.S.C. 321(ff).

Only the product, "Utopia," is labeled as a "dietary supplement." However, this alone does not preclude FDA regulation as a "drug." The Second Circuit has ruled that a product may qualify as a "dietary supplement" under § 321(ff) for certain purposes under the FDCA and may also qualify as a "drug" under § 321(g)(1)(C). See United States v. Ten Cartons, More or Less, of an Article, 72 F.3d 285, 287 (2d Cir.1995) (per curiam). "[A] dietary supplement `is not a drug under clause (C) solely because the label or labeling contains' certain `truthful and not misleading statement[s]' regarding the supplement's benefits related to classical nutrient deficiency diseases." Id. at 287 (emphasis in original). In other cases, "a dietary supplement's status as a ... drug should be determined by the application of § 321(g)(1)(C) without reference to the terms and provisions of § 321(ff)." Id.

Here, the FDA is not seeking to regulate "Utopia" based solely upon truthful and not misleading claims concerning its nutritive benefits. "Utopia's" labeling does not make such claims. Thus, even assuming that "Utopia" qualifies as a "dietary supplement" under § 321(ff), this status does not preclude the product from being classified as a "drug" under § 321(g)(1)(C) if it meets the statutory definition. Thus, the next issue is whether the products may be properly classified as drugs under the FDCA.

C. Drugs

The United States asserts that the Defendants' products are drugs because they are intended to affect the structure and function of the human body by altering the psychological states of users. Defendants counter that the products' appeal to "alternative" lifestyles does not elevate them to "drug" status. The FDCA defines "drug" as "articles (other than food) intended to affect the structure or any function of the body of man or other animals." 21 U.S.C. § 321(g)(1)(C). Thus, "the definition of drug ... require[s] not only that the article `affect the structure or any function of the body,' but also that these effects be intended." Brown & Williamson Tobacco Corp. v. Food & Drug Admin., 153 F.3d 155, 163 (4th Cir.1998), aff'd, 529 U.S. 120, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000). Of primary significance in determining whether a product may be deemed a "drug" is its intended use or effect as gathered from the objective evidence disseminated by the vendor. See United States v. Undetermined Quantities of Bottles of an Article of Veterinary Drug, 22 F.3d 235, 239 (10th Cir.1994) ("[T]he labeling and marketing claims made by [the defendant] make the substance a drug under § 321(g)(1)(B)."); United States v. Storage Spaces Designated Nos. 8 & 49, 777 F.2d 1363, 1366 (9th Cir.1985). "[A product] will be deemed a drug if the labeling, including separate promotional claims, attributes characteristics to the product that would bring it within the Act's definition." United States v. Article Consisting of 36 Boxes, etc., 415 F.2d 369, 370 (3d Cir.1969).

An examination of the labeling and promotional claims made by Defendants reflect an intent for the products to affect the function of the mind. The labeling for "Rave X" employs the phrases "ELECTRIFY YOUR SENSES," "BE HAPPY," and "RAGING POTENCY." (Pl.'s Mot. Summ. J. Ex. D at 1.) The product promises "effects in 15-45 min[utes]" of use. (See Ex. D at 1.) "Rave Energy" is labeled as "the Strong Legal X alternative" and being ...

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