United States v. Willard Tablet Co., 8398.

• Decision Date: 07 March 1944
• Docket Number: No. 8398.,8398.
• Citation: 141 F.2d 141
• Parties: UNITED STATES v. WILLARD TABLET CO.
• Court: U.S. Court of Appeals — Seventh Circuit

141 F.2d 141 (1944)

UNITED STATES v. WILLARD TABLET CO.

No. 8398.

Circuit Court of Appeals, Seventh Circuit.

March 7, 1944.

B. Howard Caughran, U. S. Atty., of Indianapolis, Ind., Tom C. Clark, Asst. Atty. Gen., and Paul A. Pfister, Asst. U. S. Atty., of Indianapolis, Ind. (James B. Goding, of Boston, Mass., of counsel), for appellant.

John A. Nash, Arthur H. Schwab and Albert I. Kegan, all of Chicago, Ill., for appellee.

Before SPARKS and MAJOR, Circuit Judges, and LINDLEY, District Judge.

MAJOR, Circuit Judge.

The United States (libelant) instituted this proceeding for condemnation of a quantity of Willard's Tablets shipped in interstate commerce on the ground that the labeling thereof was false, in violation of the Food, Drug, and Cosmetic Act, 21 U.S.C.A. §§ 352(a), 352(f), and the articles were therefore subject to seizure and confiscation (21 U.S.C.A. § 334). The claimant filed an answer to the government's amended libel, setting up three affirmative defenses. The lower court sustained the claimant's defense of res judicata, based upon a prior proceeding before the Federal Trade Commission, and dismissed the action. From the order of dismissal, the government has appealed.

The only question for decision is whether the proceedings before the Federal Trade Commission are res judicata, and, therefore, binding upon the District Court and determinative of the issues involved herein.

The government urges as a basis for overruling the lower court's holding that: (1) the issues herein involved were not determined by the Federal Trade Commission; (2) unaffirmed decisions of the Federal Trade Commission do not have the finality necessary to constitute res judicata; (3) there is no mutuality of estoppel; (4) the lower court's holding would impair the enforcement of the Food, Drug, and Cosmetic Act; and (5) the District Court improperly dismissed the amended libel as to that part alleging that the directions for use on the labeling were inadequate.

The facts as stipulated and adopted by the lower court effectively dispose of the government's first contention. The stipulation discloses: (1) that the statements relied upon by the government to uphold the charge of misbranding are identical with those approved by the Federal Trade Commission; (2) that the fundamental issue of fact as to whether the Willard Tablets would give the relief claimed was considered by the Federal Trade Commission. We, therefore, have the incongruous situation of one branch of the government approving the method now pursued by the claimant and another branch seeking to condemn. This is, to say the least, placing claimant in an embarrassing situation and should be avoided if possible.

In George H. Lee Co. v. Federal Trade Commission, 113 F.2d 583, the Circuit Court of Appeals for the Eighth Circuit upheld, and we think properly so, the defense of res judicata. Therein, the condemnation proceedings were instituted prior to the action before the Federal Trade Commission. The court on page 585 said:

"Although the remedies sought by the government in the two proceedings were different — condemnation in the first, and a cease and desist order in the second, — it is obvious that the alleged falsity of the representations of the petitioner with respect to the therapeutic value and effectiveness of its product constituted the main basis for each of the proceedings * * *."

And further, on page 586:

"If the question of the falsity of the representations of the petitioner contained on its labels and circulars had been determined adversely to the petitioner in the libel proceeding, it could not have been heard to say in the proceedings instituted by the Commission that such representations were true. By the same token, the United States and its instrumentality, the Commission, were not, after the decree in the libel proceeding, entitled to say that the representations made by the petitioner which had been finally adjudged not to be false, were in fact false. The government had had its full day in court on that issue, had lost its case, and could not collaterally attack, either directly or indirectly, the decree entered against it."

And on page 585, the court stated:

"Where the underlying issue in two suits is the same, the adjudication of the issue in the first suit is determinative of the same issue in the second suit."

As was stated by the Supreme Court in Sunshine Coal Co. v. Adkins, 310 U.S. 381, 402, 60 S.Ct. 907, 917, 84 L.Ed. 1263:

"A judgment is res judicata in a second action upon the same claim between the...