United States v. AN ART. OF DRUG... NEOTERRAMYCIN, ETC.

• Citation: 529 F. Supp. 230
• Decision Date: 14 December 1981
• Docket Number: Civ. A. No. CA-3-79-0615-D.
• Parties: UNITED STATES of America, Plaintiff, v. AN ARTICLE OF DRUG ... NEOTERRAMYCIN SOLUBLE POWDER CONCENTRATE, et al., Defendants.
• Court: U.S. District Court — Northern District of Texas

529 F. Supp. 230

UNITED STATES of America, Plaintiff, v. AN ARTICLE OF DRUG ... NEOTERRAMYCIN SOLUBLE POWDER CONCENTRATE, et al., Defendants.

Civ. A. No. CA-3-79-0615-D.

United States District Court, N. D. Texas, Dallas Division.

December 14, 1981.

Paula Mastropiere-Billingsley, Asst. U. S. Atty., Dallas, Tex., for plaintiff.

Lee Simpson (Pfizer, Inc.), Akin, Gump, Strauss, Hauer & Feld, Dallas, Tex., for defendants.

ORDER

ROBERT M. HILL, District Judge.

Came on for consideration before the Court, Honorable Robert M. Hill, presiding, the motion to dismiss filed by Pfizer, Inc. (Pfizer), claimant. Having considered the motion, briefs of the parties, and oral argument the Court is of the opinion that the motion should be denied.

The plaintiff, the United States, initiated this in rem action by filing a complaint for forfeiture seeking seizure and condemnation of a specified quantity of the animal drug Neo-Terramycin Soluable Powder Concentrate (Neo-Terramycin) which had been shipped in interstate commerce by Pfizer. Pursuant to an order of the Court, the U.S. Marshal seized the specified drug. Pfizer filed a claim and answer. Following a trial from October 14, 1980, to October 23, 1980, a jury found that the product "is generally recognized" as safe and effective, contrary to the allegations of the United States.

On November 4, 1980, a Final Judgment was entered, which included an order that the seized drug be returned to the possession of Pfizer. The next day, November 5, 1980, the U.S. Marshal released the drug, in violation of the automatic 10-day stay provision of Fed.R.Civ.P. 62(a). The marshal's return shows that the marshal's office called Pfizer on November 5 to notify Pfizer that the drug had been released, and then mailed Pfizer a copy of the written order. The United States, however, was not notified of the release.

The United States filed a motion for a new trial on November 7, 1980. The government did not ever request or obtain an order from the Court to stay the execution of the Judgment releasing the res to Pfizer.¹ On May 8, 1981, the Court granted the government's motion for a new trial. A month later, on June 8, 1981, Pfizer renewed its motion to return the action to the Food and Drug Administration (FDA) on the ground that the drug is covered by the interim marketing provision of 21 C.F.R. § 558.15 (1981). The Court has not as yet ruled on this motion and has set forth a schedule that provides for simultaneous resolution of the motion to remand and a motion for summary judgment to be filed by the government.

On or about October 1, 1981, Pfizer removed the Neo-Terramycin from the district. Pfizer returned the drugs to the manufacturing plant beyond the territorial jurisdiction of this Court because the potency expiration date was to have been reached within four months. Pfizer's practice is to remove merchandise from its distribution warehouses approximately four months before the potency expiration date. The res, therefore, is no longer before the Court.

This action was instituted under the Federal Food, Drug and Cosmetic Act (the Act), 21 U.S.C. § 334, against a specifically identified lot of Neo-Terramycin. Section 334(b) provides, in part, that "the procedure in cases under this section shall conform as nearly as may be, to the procedure in admiralty." The general rule in admiralty is that in an in rem proceeding the res must be within the territorial jurisdiction of the court. E.g. Treasure Salvors, Inc. v. Unidentified Wrecked and Abandoned Sailing Vessel, 640 F.2d 560, 566 (5th Cir. 1981) (Treasure Salvors III); Platoro Ltd. v. Unidentified Remains of a Vessel, 508 F.2d 1113, 1115 (5th Cir. 1975); American Bank of Wage Claims v. Registry of District Court of Guam, 431 F.2d 1215, 1218 (9th Cir. 1970). It is well established that the sale of the res does not destroy jurisdiction, so long as the court continues to exercise control over the proceeds of the sale. Inland Credit Corp. v. M/T Bow Egret, 552 F.2d 1148, 1151 (5th Cir. 1977); American Bank, supra, 431 F.2d at 1218. However, removal of the res from the court's jurisdiction, or distribution of a substitute res deposited in the registry of the court, has generally been held to destroy in rem jurisdiction. Bank of New Orleans & Trust Co. v. Marine Credit Corp., 583 F.2d 1063, 1068 (8th Cir. 1978); Inland Credit, supra, 552 F.2d at 1151-52; The Manuel Arnus, 141 F.2d 585, 586 (5th Cir.), cert. denied, 323 U.S. 728, 65 S.Ct. 63, 89 L.Ed. 584 (1944); The Kotkas, 135 F.2d 917 (5th Cir. 1943); Canal Steel Works, Inc. v. One Drag Line Dredge, 48 F.2d 212, 213 (5th Cir.), cert. denied, 284 U.S. 647, 52 S.Ct. 29, 76 L.Ed. 550 (1931). Where the res is accidentally, fraudulently, or improperly removed from the district, the court's in rem jurisdiction is not affected. The Rio Grande, 90 U.S. (23 Wall) 458, 465, 23 L.Ed. 158 (1875); Platoro, supra, 508 F.2d at 1116.

The general rule that removal or destruction of the res destroys the in rem jurisdiction of the court has also been applied in seizure actions under the Act. See United States v. 3 ... Bags ... Dried Mushrooms, 157 F.2d 722 (7th Cir. 1946); United States v. Washington Dehydrated Food Co., 151 F.2d 61 (9th Cir. 1945); United States v. An Article of Device ... "Porta Sauna", No. 19,389 (6th Cir. 1969), Kleinfeld, Kaplan and Weitzman, Federal Food, Drug, and Cosmetic Act Judicial and Administrative Record 1969-1974 at 46 (Kleinfeld); United States v. 260 ... Nutri-Bio... Dietary Food Supplement, No. 6919 (N.D.Ga.1962) 1963-1967 Transfer Binder Food Drug Cos.L.Rep. (CCH) ¶ 40,023; United States v. 261 Bags ... Potatoes, No. 16,385 (N.D.Ga. 1950), Kleinfeld, 1949-1950 at 166.

Pfizer argues that the general rule is applicable in this action. The Neo-Terramycin, the res involved, is no longer within the jurisdiction of this Court, and Pfizer contends that the case has become moot, resulting in the Court's losing in rem jurisdiction. It is further asserted that the rule requiring dismissal of cases that have become moot is more than a mere rule of decision; it is constitutionally mandated because there is no extant case or controversy. See, e.g., Heitmuller v. Stokes, 256 U.S. 359, 362, 41 S.Ct. 522, 523, 65 L.Ed. 990 (1921); Dried Mushrooms, supra, 157 F.2d at 723.

Despite the general rule that the presence of the res within the judicial district is a prerequisite to a court's jurisdiction, the Court is of the opinion that it has jurisdiction in this action. It now appears that the presence of the res within the judicial district is not an absolute prerequisite to a court's jurisdiction. See Treasure Salvors, Inc. v. Unidentified Wrecked and Abandoned Sailing Vessel, 569 F.2d 330, 334 (5th Cir. 1978) (Treasure Salvors I). Support for the proposition that the absence of the res is not a fundamental jurisdictional defect can be found in the numerous legal fictions that have been utilized to allow a court to decide an in rem case even though the res is not physically under the court's control. Jurisdiction has been sustained where the res is actually or constructively within the reach of the court. United States v. Mack, 295 U.S. 480, 55 S.Ct. 813, 79 L.Ed. 1559 (1935). Where the res has been taken from the jurisdiction of the court through accident, fraud, or improper removal, the court retains jurisdiction even though the res is no longer in the physical control of the court. The Rio Grande, supra, 90 U.S. 458, 23 L.Ed. 158. Similarly, it has long been the rule that proceeds from the sale of a vessel serve as an appropriate substitute for the res. American Bank, supra, 431 F.2d at 1218.

Ultimately, it must be recognized that the rule of admiralty requiring the presence of the res within the territorial confines of the court is predicated on the fiction of convenience that a ship is a person against whom suits can be filed and judgment entered. Treasure Salvors I, 569 F.2d at 333-34. Personification of the ship allows actions to be brought against the vessel when the court lacks in personam jurisdiction. Id. at 334. The Fifth Circuit, however, has declined to myopically employ a legal fiction which exists solely to effectuate the adjudication of disputes when it is invoked for the opposite purpose. Id. This Court similarly declines to blindly follow a rule of law that has little relationship to the modern view of in personam jurisdiction.

The Court is of the view that where in personam jurisdiction has been established over the claimants in a drug seizure action, at least where the res was initially within the jurisdiction of the court when in personam jurisdiction was asserted, the subsequent release of the res does not affect the court's jurisdiction to resolve the action.

As the courts have recognized, actions such as this, commenced by seizures under the Act, are not true in rem actions. United States v. An Article ... Sudden Change, 288 F.Supp. 29, 31 (E.D.N.Y.1968), rev'd on other grounds, 409 F.2d 734 (2d Cir. 1969). The applicability of § 334(b) requiring the procedure in seizure cases to conform to the procedure in admiralty has been held applicable only to the initial seizure; once the seizure was complete the action is characterized as one at law. Id. See also Four Hundred and Forty-Three Cans of Frozen Egg Product v. United States, 226 U.S. 172, 183, 33 S.Ct. 50, 52, 57 L.Ed. 174 (1912). In 1966, Rule 1 of the Federal Rules of Civil Procedure was amended to "abolish the distinction between civil actions and suits in Admiralty." Advisory Committee on Admiralty Rules of the Committee on Rules of Practice and Procedure of the Judicial Conference of the United States.

In Inland Credit, supra, the plaintiff, Inland, had filed a suit both in rem against a ship and in personam against the ship owner. After a court ordered sale of the res, both the proceeds of that sale and certain other funds recovered from the owner of the vessel were distributed pursuant to cour...