United States v. Articles of Drug

• Decision Date: 14 March 1986
• Docket Number: No. 84 C 7677.,84 C 7677.
• Citation: 634 F. Supp. 435
• Parties: UNITED STATES of America, Plaintiff, v. ARTICLES OF DRUG, Consisting of: 203 paper bags, more or less, et al., Defendant.
• Court: U.S. District Court — Northern District of Illinois

634 F. Supp. 435

UNITED STATES of America, Plaintiff, v. ARTICLES OF DRUG, Consisting of: 203 paper bags, more or less, et al., Defendant.

No. 84 C 7677.

United States District Court, N.D. Illinois, E.D.

May 30, 1985.

On Motion for Re-Exportation February 28, 1986.

On Motion for Stay of Execution March 14, 1986.

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Michael S. O'Connell, Asst. U.S. Atty., U.S. Atty's. Office, Chicago, Ill., Richard E. Geyer (GCF-1), Office of the Gen. Counsel, Food and Drug Admin., Rockville, Md., for plaintiff.

Sheryl A. Marcouiller, Alan I. Becker, George M. Burditt, Burditt, Bowles & Radzius, Ltd., Chicago, Ill., for Claimant Amexchem Intern., Inc.

MEMORANDUM OPINION AND ORDER

NORDBERG, District Judge.

This action is before the court on motion of Amexchem International, Inc. ("Amexchem"), the claimant of the articles seized in this case, for exportation in lieu of destruction. For the reasons set forth below, this court must defer ruling pending further hearings.

Twelve shipments of animal drugs imported by Amexchem were seized by the Food and Drug Administration ("FDA"). The drugs have been condemned by consent decree as being adulterated under section 501(a)(5) of the Food, Drug and Cosmetic Act ("FDCA"), 21 U.S.C. ? 351(a)(5), because they are unapproved new animal drugs. Most of the lots have also been condemned as misbranded under either section 502(c) or 502(f)(1) of the FDCA, 21 U.S.C. ?? 352(c) or 352(f)(1), or both. The sole issue before the court is whether Amexchem may reexport these condemned drugs under ? 304(d)(1), 21 U.S.C. ? 334(d)(1), or whether they may be destroyed by the FDA.

Section 304(d)(1) provides for the disposition of any "food, drug, device or cosmetic" condemned under the section. It specifically provides for the reexportation of imported articles as follows:

If the article was imported into the United States and the person seeking its release establishes (A) that the adulteration, misbranding, or violation did not occur after the article was imported, and (B) that he had no cause for believing that it was adulterated, misbranded, or in violation before it was released from customs custody, the court may permit the article to be delivered to the owner for exportation in lieu of destruction upon a showing by the owner that all of the conditions of section 381(d) of this title can and will be met: Provided, however, That the provisions of this sentence shall not apply where condemnation is based upon violation of section 342(a)(1), (2), or (6), section 351(a)(3), section 352(j), or section 361(a) or (d) of this title: And provided further, That where such exportation is made to the original foreign supplier, then clauses (1) and (2) of section 381(3) of this title and the foregoing proviso shall not be applicable; and in all cases of exportation the bond shall be conditioned that the article shall not be sold or disposed of until the applicable conditions of section 381(d) of this title have been met. Any article condemned by reason of its being an article which may not, under section 344 or 355 of this title, be introduced into interstate commerce, shall be disposed of by destruction.

Thus, Amexchem must establish that (1) the adulteration, misbranding or violation occurred before the article was imported; (2) that Amexchem had no cause to believe the article was adulterated, misbranded or in violation before it was released from customs, and (3) that it can comply with the conditions section 801(d)(1) of the Act, 21 U.S.C. ? 381(d)(1), unless the articles will be returned to the original suppliers, in which case it need not comply with section 801(d)(1) and (2), 21 U.S.C. ? 381(d)(1)(A) and (B).¹

Amexchem asserts that it can establish all three of these requirements, and requests the court to exercise its discretion under section 304(d) to permit reexportation. The FDA raises a number of arguments against reexportation, and instead requests the court to authorize destruction of the seized drugs. First, the FDA argues that unapproved new animal drugs that have been imported, seized and condemned cannot be reexported under section 304(d) as a matter of law. FDA relies on the sentence in section 801(d)(1), which states, "This paragraph does not authorize the exportation of any new animal drug, or an animal feed bearing or containing a new animal drug, which is unsafe within the meaning of section 360b of this title."² The FDA asserts that, since section 304(d)(1) requires compliance with section 801(d)(1), this sentence in section 801(d)(1) prohibits reexportation of the seized new animal drugs of Amexchem under section 304(d)(1).

However, the FDA's interpretation ignores the specific language of these provisions and the legislative intent of Congress. The last sentence of section 801(d) states that "this paragraph" (emphasis added) does not authorize the export of new animal drugs. It does not prohibit export authorized by other paragraphs, such as section 304(d)(1). In addition, section 304(d)(1) permits export of articles that are "adulterated, misbranded, or in violation" (emphasis added). If a drug is not adulterated or misbranded, the only way it can violate the FDCA is by being new and unapproved. Thus, by including "violative" drugs, Congress seems to have contemplated the export of new unapproved drugs.

Moreover, if Congress intended to impose any additional requirements on export or bar the export of any particular products, it could have done so expressly when amending section 304(d)(1). Congress did in fact specify in the amendment to section 304(d)(1) products which it would not permit to be exported under section 304(d)(1). A proviso to the export provision of section 304(d)(1) expressly states that, if goods are condemned under any of the sections of the Act specifically listed, they cannot be exported under section 304(d)(1). Each of the sections listed concerns substances dangerous to health. Congress therefore expressly specified the types of goods which could not be exported because of their dangerous nature. If Congress intended to prohibit the export of new animal drugs under section 304(d)(1), it could have included section 501(a)(5), 21 U.S.C. ? 351(a)(5), the section governing new drugs, in that proviso. By not including section 501(a)(5), under the well-established principle of expressio unius est exclusio alterius, Congress evidenced an intent that new drugs not be subject to any special prohibition from the export privilege created by the amendment to section 304(d)(1).

This interpretation is consistent with the legislative history of section 304(d)(1) and reflects Congress' intent in amending this provision. Since the original enactment of the FDCA in 1938, section 801(a) has given importers the unqualified right to reexport imported drugs if a failure to comply with U.S. requirements is discovered at the point of entry before the drugs are released by customs. 21 U.S.C. ? 381(a). However, the 1938 Act had no equivalent provision permitting reexport of violative drugs which were for some reason released into commerce before the violation was discovered. If the articles were seized after they were released, section 304 required their destruction unless the drugs could be brought into compliance with the Act. This resulted in unequal treatment of importers, with the right to reexport dependent upon whether the violation of U.S. drug law was discovered before or after the drugs were released from customs. The ability to reexport therefore often depended upon the imperfect and highly variable screening process at the point of entry.

In apparent response to this perceived inequity, Congress amended the FDCA in 1957 to permit the reexport of imported drugs which violate the FDCA if the conditions specified above could be met. Testimony at legislative hearings in the amendment indicates that the purpose of the bill was to apply the same reexport procedure whether the merchandise is seized at the point of entry or at some later time. Amendments to Federal Food, Drug, and Cosmetic Act. Hearings on H.R. 10519 Before the Subcommittee on Health and Science of the House Committee on Interstate and Foreign Commerce ("Hearings"), 84th Cong., 2d Sess. 27-33, 39-43 (1956) (statement of Harry S. Radcliffe). The Deputy Commissioner of the Food and Drug Administration interpreted the amendment to section 304 as follows:

This bill seeks to amend section 304(d) of the Federal Food, Drug, and Cosmetic Act in a manner to allow a United States judge to authorize exportation of seized drugs or cosmetics, where those goods had originally been imported and their faulty condition was not detected at the port of entry, and they subsequently entered the channels of domestic commerce and later were discovered to have been in violation of the act, and they are seized under domestic sections of the law. It is the settled judicial interpretation now that where such seizures are made, the provision to simply reexport them will not lie.

* * * * * *

This bill seeks to authorize the exportation of such seized goods (1) if the importer or owner proposes simply to send them back to the person he got them from by a simple court order authorizing him to do so under appropriate bond which is exonerated when it is found he has done so.

Id. at 39.

From these hearings, it seems that Congress intended the amendments to section 304 to allow the export of goods seized after admission to same extent as section 801(a) allowed the export of goods rejected before admission, except for the additional requirements Congress chose to specifically impose. Thus, Congress presumably chose to permit the virtually unrestricted export allowed under section 801(a), except to the extent it specifically limited that export in section 304(d). The only products not exportable under section 304(d) are those condemned under the provisions...