U.S. v. Universal Management Services, Inc., 5:95 CV 2768.

• Decision Date: 22 December 1997
• Docket Number: No. 5:95 CV 2768.,5:95 CV 2768.
• Citation: 999 F.Supp. 974
• Parties: UNITED STATES of America, Plaintiff, v. UNIVERSAL MANAGEMENT SERVICES, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

999 F.Supp. 974

UNITED STATES of America, Plaintiff, v. UNIVERSAL MANAGEMENT SERVICES, INC., et al., Defendants.

No. 5:95 CV 2768.

United States District Court, N.D. Ohio, Eastern Division.

December 22, 1997.

COPYRIGHT MATERIAL OMITTED

Alexander A. Rokakis, Office of U.S. Attorney, Cleveland, OH, Deborah M. Autor, Dept. of Justice Consumer Litigation, Washington, DC, for plaintiff.

Wesley Adelbert Dumas, Sr., Cleveland, OH, Edwin Davila, Canton, OH, Ralph E. Burns, Jr., Klein, Hammerle & Burns, Ft. Lauderdale, FL, for defendants.

MEMORANDUM AND ORDER

OLIVER, District Judge.

Plaintiff, the United States of America ("Plaintiff"), brings this action against Defendants, Universal Management Services, Inc., Natural Choice, Inc., Paul M. Monea, and Paul A. Monea ("Defendants"). Currently pending before the court are summary judgment motions from both parties, including argument regarding whether disgorgement should be among the remedies should summary judgment be granted in favor of Plaintiff and Defendants' Motion For Clarification of an aspect of an earlier issued preliminary injunction. The court makes the following rulings: 1) Plaintiff's Motion For Summary Judgment (docket no. 65) is granted; 2) Defendants' Motion For Summary Judgment (docket no. 66) is denied; and 3) Defendants' Motion For Clarification (docket no. 88) is denied.

I.

The following facts are not in dispute. Defendants Universal Management Services, Inc., and Natural Choice, Inc. are Ohio corporations which are managed by Defendant Paul M. Monea and his son, Paul A. Monea. As part of their business, Defendants sell and distribute a product known as the Stimulator, and also a product that connects to the Stimulator known as the Xtender. The Stimulator is essentially a piezo-electric gas grill igniter, marketed as a pain relieving device. To produce the Stimulator, defendants purchase gas grill igniters and outfit them with finger grips. A user then places the tip of the Stimulator on his body, presses with his thumb on a plunger, and an electric current passes into that part of the body. Defendants' advertising literature states that, when applied to certain acupressure points, the Stimulator can relieve numerous kinds of pain (e.g., migraine headaches, swollen joints, allergies). The Xtender is an accessory that allows an individual to use the Stimulator to reach areas of the body otherwise difficult to reach (e.g., the spine).

II.

Federal Rule of Civil Procedure 56(c) governs summary judgment motions and provides:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law ....

Rule 56(e) specifies the materials properly submitted in connection with a motion for summary judgment:

Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein .... The court may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, or further affidavits. When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denial of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party.

However, the movant is not required to file affidavits or other similar materials negating a claim on which its opponent bears the burden of proof, so long as the movant relies upon the absence of the essential element in the pleadings, depositions, answers to interrogatories, and admissions on file. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

In reviewing summary judgment motions, the court must view the evidence in a light most favorable to the non-moving party to determine whether a genuine issue of material fact exists. Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); White v. Turfway Park Racing Ass'n. Inc., 909 F.2d 941, 943-44 (6th Cir. 1990). A fact is "material" only if its resolution will affect the outcome of the lawsuit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Determination of whether a factual issue is "genuine" requires consideration of the applicable evidentiary standards. Thus, in most civil cases the court must decide "whether reasonable jurors could find by a preponderance of the evidence that the [non-moving party] is entitled to a verdict." Id. at 252.

Summary judgment is appropriate whenever the non-moving party fails to make a showing sufficient to establish the existence of an element essential to that party's case and on which that party will bear the burden of proof at trial. Celotex, 477 U.S. at 322. Moreover, "the trial court no longer has a duty to search the entire record to establish that it is bereft of a genuine issue of material fact." Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479-80 (6th Cir.1989) (citing Frito-Lay, Inc. v. Willoughby, 863 F.2d 1029, 1034 (D.C.Cir.1988)). The non-moving party is under an affirmative duty to point out specific facts in the record as it has been established which create a genuine issue of material fact. Fulson v. City of Columbus, 801 F.Supp. 1, 4 (S.D.Ohio 1992). The non-movant must show more than a scintilla of evidence to overcome summary judgment; it is not enough for the non-moving party to show that there is some metaphysical doubt as to material facts. Id.

III.

As a preliminary note, given the overlap of issues in these motions and the preliminary injunction motion, the court, in ruling on these motions, will use some of the same factual analysis and legal discussion as in the preliminary injunction order. However, clearly a different evidentiary standard applies in the summary judgment context. In granting Plaintiff's motion for a preliminary injunction, the court concluded that

Because defendants obtained from the FDA neither a PMA nor a finding of substantial equivalence, the Stimulator and Xtender are "adulterated" devices under the FDCA. This finding alone entitles the government to the injunctive relief it seeks. When the government seeks an injunction to protect the public health pursuant to statute, as here, it is not required to show irreparable harm, or inadequacy of a remedy at law. United States v. W.T. Grant Co., 345 U.S. 629, 633, 73 S.Ct. 894, 97 L.Ed. 1303 (1953); United States v. City of Painesville, Ohio, 644 F.2d 1186, 1193 (6th Cir.1981), cert. denied, 454 U.S. 894, 102 S.Ct. 392, 70 L.Ed.2d 209 (1981). Further, Congress has found that a violation of the FDCA, by itself, results in harm to the public, so there is no need to balance the equities. Hecht Co. v. Bowles, 321 U.S. 321, 64 S.Ct. 587, 88 L.Ed. 754 (1944); United States v. Diapulse Corp. of America, 457 F.2d 25, 28 (2nd Cir.1972).

In reaching that conclusion, the court was acting as both the finder of facts and law in determining whether Defendants should be enjoined from certain activity pending a determination on the merits of the lawsuit. In the context of ruling on a summary judgment motion, however, the court plays a different role. Here, the court must determine "whether reasonable jurors could find by a preponderance of the evidence that the [non-moving party] is entitled to a verdict." In making this determination, the court must view the evidence in a light most favorable to the non-moving party to determine whether a genuine issue of material fact exists.

A.

Plaintiff claims that Defendants' sales of the Stimulator and Xtender are violations of the Federal Food, Drug & Cosmetic Act, 21 U.S.C. § 301 et seq. ("FDCA"). Specifically, the government claims that defendants have violated 21 U.S.C. § 331(a) and § 331(k), which prohibit misbranding or adulterating medical devices and introducing such devices into interstate commerce. Both Plaintiff and Defendants have now moved for summary judgment on these claims.

To show that Defendants have violated §§ 331(a) & (k), Plaintiff must prove: (1) the Defendants' products are "devices" within the meaning of the FDCA; (2) the devices are adulterated or misbranded; and (3) the devices move in interstate commerce. It is undisputed that Defendants' products move in interstate commerce. Consequently, Plaintiff must prove only that the products are adulterated or misbranded devices.

A device is "adulterated" under the FDCA if it is required to receive premarket approval ("PMA") from the Food & Drug Administration ("FDA"), but did not receive this PMA. 21 U.S.C. § 351(f)(1)(B); United States v. An Article of Device Consisting of 1,217 Cardboard Boxes, 607 F.Supp. 990, 998 (W.D.Mich.1985). Whether a device is required to receive a PMA from the FDA depends on a scheme set out in 21 U.S.C. § 360c. Under this scheme, all medical devices are categorized as Class I, Class II, or Class III devices. Class III devices are subject to stringent regulatory requirements, Class II devices are subjected to intermediate regulatory requirements, and Class I devices are subjected to minimal regulation. Further, under this scheme, medical devices are either "old devices," meaning they were on the market before 1976, or "new devices," meaning they were not on the market before 1976. All new devices are automatically Class III devices. 21 U.S.C. § 360c(f).

Class III devices cannot be marketed unless either: (1) the manufacturer has submitted to the FDA an application for PMA, and the application...