United States v. Confidence, U.S.A., Inc.

• Decision Date: 28 January 2021
• Docket Number: 19-CV-3073 (ERK) (SIL)
• Parties: UNITED STATES OF AMERICA Plaintiff, v. CONFIDENCE, U.S.A., INC., HELEN CHIAN, AND JIM CHAO Defendants.
• Court: U.S. District Court — Eastern District of New York

UNITED STATES OF AMERICA Plaintiff, v. CONFIDENCE, U.S.A., INC.,HELEN CHIAN, AND JIM CHAO Defendants.

19-CV-3073 (ERK) (SIL)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

January 28, 2021

NOT FOR PUBLICATION

MEMORANDUM & ORDER

KORMAN, J.:

Plaintiff United States of America ("plaintiff") moves for summary judgment on its complaint seeking a permanent injunction against defendants Confidence, U.S.A., Inc. ("Confidence"), Helen Chian, and Jim Chao for continuing violations under the Food Drug and Cosmetic Act ("FDCA"). Specifically, plaintiff argues that defendants violate the FDCA by distributing adulterated dietary supplements in interstate commerce and by causing their dietary supplements to become adulterated while holding them for sale after shipment of one or more of their components in interstate commerce. See 21 U.SC. §§ 331(a), (k).

Plaintiff argues that defendants' products are adulterated as a matter of law because defendants violate current good manufacturing practice ("cGMP") regulations that govern the production and distribution of dietary supplements. In particular, plaintiff claims that numerous FDA inspections over the past decade have revealed that defendants fail to properly establish criteria for determining the identity and purity of the ingredients in their products. Plaintiff also claims that the testing methods that defendants use are inadequate to verify that the ingredients in defendants' supplements are what they purport to be. Given the long history of defendants' compliance failures, plaintiff seeks a permanent injunction barring defendants from manufacturing and distributing dietary supplements in interstate commerce until they can demonstrate that their practices are in compliance with the law. I have carefully reviewed the language of the proposed injunction that plaintiff requests and, subject to the caveat discussed in the conclusion of this order, I grant plaintiff's motion.

BACKGROUND

Confidence is a New York corporation, founded and operated by Chian and Chao, which manufactures and distributes dietary supplements out of Port Washington. ECF No. 25 ¶¶ A1-2, 7. Chao also owns the Herbal Store, which is a Flushing-based retail vitamin and dietary supplement store that sells products manufactured by Confidence. Id. ¶¶ A17, B6. Defendants distribute Confidence's products throughout the United States and internationally, primarily to Chinese-speaking communities. Id. ¶ A24, B7.

For the past decade, the Food and Drug Administration ("FDA") has issued multiple warnings to defendants that their manufacturing and distribution practices violate the FDCA. Plaintiff argues that "despite multiple inspections, an agency Warning Letter, and a civil in rem seizure," defendants have failed to make the necessary corrections and that this history of failed compliance requires a permanent injunction to ensure that violations of the FDCA do not continue. ECF No. 21 at 7. Defendants respond that the FDA's last inspection of Confidence's facilities was over two years ago and that Confidence has since implemented voluntary measures to verify that it is in compliance with FDA regulations. ECF No. 24 at 5-6. They argue that because plaintiff is "relying on stale and erroneous FDA inspectional observations, ignoring significant improvements implemented by Confidence which show that any alleged violations will not recur, summary judgment must be denied and a permanent injunction is inappropriate." Id. at 7. Before describing defendants' alleged history of noncompliance and the purported remedial measures they have taken, an explanation of the regulatory background in which they operate is necessary.

A. Statutory and Regulatory Background

The manufacture and distribution of dietary supplements in interstate commerce is regulated by the FDCA, 21 U.S.C. § 301 et seq. The FDCA defines a dietary supplement as "a product . . . intended to supplement the diet" that contains,inter alia, "a vitamin; a mineral; an herb or other botanical; an amino acid; [or] a dietary substance for use by man to supplement the diet by increasing the total dietary intake." Id. § 321(ff). A dietary supplement is also "not represented for use as a conventional food or as a sole item of a meal or the diet" and is "labeled as a dietary supplement." Id. With exceptions not applicable here, "a dietary supplement shall be deemed a food within the meaning of" the FDCA. Id.

The FDCA prohibits the distribution in interstate commerce of articles of food—including dietary supplements—that are adulterated, as well as the commission of any act that results in articles of food becoming adulterated while being held for sale after shipment of their components in interstate commerce. Id. §§ 331(a), (k). A dietary supplement is deemed to be adulterated if it has been "prepared, packed, or held under conditions that do not meet current good manufacturing practice regulations." Id. § 342(g)(1). Congress has delegated the authority to promulgate cGMP regulations to the Secretary of Health and Human Services, who oversees the FDA. Id. § 342(g)(2); Nutritional Health All. v. FDA, 318 F.3d 92, 99 n.8 (2d Cir. 2003). The cGMP regulations for dietary supplements are set forth in 21 C.F.R. Part 111. These regulations "aim to ensure that a dietary supplement is what it says it is—that it has the identity, purity, strength, and composition it is represented to have." United States v. Cole, 84 F. Supp. 3d 1159, 1167 (D. Or. 2015).

To guarantee that a dietary supplement is what it says it is, manufacturers must establish identity, strength, purity, and composition specifications for each component used in the dietary supplement and ensure that every shipment of the component meets the specifications before using it in the manufacturing process. 21 C.F.R. §§ 111.70(b); 111.75(a). The manufacturer of a supplement must verify the identity of dietary ingredients (such as a vitamin or mineral) by appropriate testing before using the ingredient unless it receives an exemption from the FDA. Id. § 111.75(a)(1). The manufacturer can verify the identity of non-dietary ingredients (e.g., flavoring and coloring), as well as specifications of dietary ingredients other than identity, by appropriate testing or by relying on a certificate of analysis of a properly qualified supplier. 21 § C.F.R. 111.75(a)(2); see also Final Rule, Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements, 72 Fed. Reg. 34,752, 34,835 (June 25, 2007).

In addition to establishing and verifying identity, purity, strength, and composition specifications with respect to the components of a dietary supplement, a manufacturer must establish and verify such specifications in finished products as well. 21 C.F.R. §§ 111.70(e), 111.75(c). If there is no scientifically valid method for verifying a certain specification in a finished product, the manufacturer may exempt the specification from being tested. 21 C.F.R. § 111.75(d)(1). For a finished product to qualify for this verification exemption, a company's quality controlpersonnel must adequately document that there is no scientifically valid method for verifying the exempted specification in the finished product. Id. They must also document how the manufacturer will ensure that the product specification is met absent testing in the finished product. Id.

When a manufacturer's product fails to meet a specification, quality control personnel must conduct a review of the finished product and decide whether the product can be remedied or must be rejected. 21 C.F.R. § 111.113. Quality control personnel must establish and follow written procedures for their product review and disposition decisions, and they must document their work to ensure effective review. Id. §§ 111.103, 111.105.

B. Confidence's History of cGMP Violations

Since 2010, the FDA has inspected Confidence six times, with the most recent inspection concluding on August 10, 2018. ECF No. 23-4; ECF No. 25 at ¶ A45. At the close of each inspection, the FDA observed violations of the cGMP regulations and notified defendants about Confidence's compliance shortfalls. ECF Nos. 23-13; 23-27; 23-34; 23-43; 23-46; 23-50. The FDA has repeatedly warned defendants of the consequences of failing to comply with the cGMP regulations. On July 7, 2011, the FDA sent a Warning Letter to Confidence, stating that failure to promptly correct violations could result in enforcement action, including product seizure or an injunction. ECF No. 23-48. In 2012, the FDA instituted a civilforfeiture action against Confidence based on its failure to remediate previously observed violations, specifically the failure to:

• ensure that its finished batches met product specifications (21 C.F.R. § 111.75(c));

• conduct appropriate tests to verify the identity of any product ingredient (Id. § 111.75(a)(1)(i));

• establish component specifications for the capsules used with the dietary supplements (Id. § 111.70(b));

• establish specifications for product labels or packaging (Id.§ 111.70(d)); and

• maintain documentation for how suppliers of component ingredients are qualified and establish that the suppliers' certificates of analysis were reliable. (Id.§ 111.75(a)(2))

ECF No. 23-41 ¶¶ 17-18. Pursuant to the forfeiture action, the U.S. Marshals Service seized products with an estimated value of $60,000 from Confidence. ECF No. 25 ¶ A80. After Confidence defaulted, Judge Spatt ordered the forfeiture of five dietary supplements that were the subject of the FDA's complaint on the ground that those supplements were adulterated within the meaning of the FDCA. ECF No. 23-35.

Even after the forfeiture action concluded, the FDA continued to find cGMP violations at Confidence's facilities. Specifically, the FDA conducted an inspection from December 2016 to January 2017 (the "2017 Inspection") and a follow-up inspection in August 2018 (the "2018 Inspection"). At the conclusion...