US v. UNDETERMINED QUANTITIES OF DRUGS, 87 C 4665.
| Decision Date | 21 December 1987 |
| Docket Number | No. 87 C 4665.,87 C 4665. |
| Court | U.S. District Court — Northern District of Illinois |
| Parties | UNITED STATES of America, Plaintiff, v. UNDETERMINED QUANTITIES OF DRUGS AS DESCRIBED IN ATTACHMENT A, Defendant. |
Frederick H. Branding, Asst. U.S. Atty., Chicago, Ill., for plaintiff.
George M. Burditt, Steven M. Kowal, Sheryl A. Marcouiller, Richard O. Wood, Burditt, Bowles & Radzius, Ltd., Chicago, Ill., for claimant.
This case involves the seizure and potential condemnation of approximately $680,000 worth of drugs used and manufactured by Travenol Laboratories ("Travenol") at its Regional Compounding Center ("TRC") in Morton Grove, Illinois. The United States government, the plaintiff in this action, seized the drugs on May 22, 1987, pursuant to a Complaint for Forfeiture granted by a district court that same day. Travenol has moved for the release from seizure of approximately $500,000 worth of these drugs pursuant to the Federal Food, Drug and Cosmetic Act ("the Act"), 21 U.S.C. § 301 et seq. and this court's equitable powers. This court has jurisdiction pursuant to 28 U.S.C. § 1345 and 21 U.S.C. § 334. For the reasons set forth below, the motion is granted.
For the purposes of this motion, the facts are not in dispute. The $500,000 of drugs at issue here are "sterile active ingredients"—principally freeze-dried powders or concentrated liquids — that have been subject to Food & Drug Administration ("FDA") review and approval and are therefore perfectly lawful; provided they are packaged and sold in accordance with applicable regulations. According to the government, however, since the mid-1980s, Travenol has been engaged in a program ("the TRC program") in which it alters these "sterile active ingredients" to produce different drugs — "finished product" — and the TRC program does violate the Act.
On May 22, 1987, the government sought and obtained an order for the seizure of approximately $680,000 worth of drugs from the TRC. Of these drugs, approximately $180,000 worth was "finished product"; the other approximately $500,000 worth were "sterile active ingredients." The government admits that the "sterile active ingredients" were not misbranded nor mislabeled and would thus be perfectly lawful drugs, were it not for their intended use in producing the allegedly unlawful "finished product."
On December 11, 1987, Travenol sought release of the "sterile active ingredients" on the condition that they would not be used in the TRC program but would instead be sold and/or distributed in a lawful manner.1 Travenol noted that the "sterile active ingredients" have a limited "shelflife" and argued that the continued forced storage of these products was resulting in undue waste of beneficial drugs as well as unnecessary storage costs.
The government responded that, even conceding everything Travenol said, this court lacks the power to order the release of the sterile active ingredients at this time. According to the government, these drugs were properly seized as the intended ingredients of unlawful drugs; accordingly, they may only be released in accordance with 21 U.S.C. § 334(d), which provides that a court may, in its discretion, order the release of products seized under the Act after a condemnation proceeding has been held and any issues regarding the lawfulness of the products resolved. Such condemnation proceedings have not yet been held.
On December 16, 1987, this court heard oral arguments on Travenol's motion.2 During the arguments, both sides agreed that there exists only one question for this court to resolve now: Does § 304 of the Act, 21 U.S.C. § 334, prohibit this court from ordering the pre-condemnation release of any products properly seized pursuant to the Act even where the government concedes that the goods, if released, would be in full conformity with the law?
21 U.S.C. § 334, sets out a coherent scheme for the seizure, condemnation and final disposition of products which allegedly violate the Act. When the FDA believes that a drug violates the Act, it may seek condemnation of the drugs "on libel of information." 21 U.S.C. § 334(a). The drug may be seized pre-trial "by process pursuant to the libel." 21 U.S.C. § 334(b). The procedures employed by the court in resolving the motion for libel and any other pre-trial matters "shall conform, as nearly as may be, to the procedures in admiralty." 21 U.S.C. § 334(b).
Once a trial is held, and the drugs condemned, the district court may do any one of three things. It may order the drugs destroyed; it may order them sold; or it may order them "delivered to the owner thereof to be destroyed or brought into compliance with the provisions of this chapter under the supervision of an officer or employee duly designated by the Secretary." 21 U.S.C. § 334(d).
Thus, the statute does not directly address the question of whether drugs may be released prior to the completion of condemnation procedures. The defendant claims that, because it does not, this court may invoke its equitable powers to order the pre-condemnation release of the "sterile active ingredients."
In Porter v. Warner Holding Co., 328 U.S. 395, 66 S.Ct. 1086, 90 L.Ed. 1332 (1946), the Supreme Court stated that "unless a statute in so many words or by a necessary and inescapable inference, restricts the court's jurisdiction in equity, the full scope of that jurisdiction is to be recognized and applied." Id. at 398, 66 S.Ct. at 1089. In United States v. K-N Enterprises, Inc., 461 F.Supp. 988 (N.D.Ill.1978), the court relied on Porter in ordering the postcondemnation recall of drugs, despite the absence in the Act of a specific provision for recall, because "the statute by which we are given jurisdiction over the controversy does not preclude such relief." Id. at 990.
The government insists that this case differs from K-N Enterprises because the statute's comprehensive scheme for condemning allegedly unlawful drugs gives rise to the "unescapable and necessary inference" that pre-condemnation release is always improper. In so arguing, the government ignores entirely the Act's instruction that admiralty procedures should inform the disposition of seizures pursuant to the Act. Admiralty Rule E(9) specifically provides for situations in which perishable goods have been seized:
(b) Interlocutory Sales. If property that has been attached or arrested is perishable, or liable to deterioration, decay or injury by being detained in custody pending the action, or if the expense of keeping the property is excessive or disproportionate, or if there is unreasonable delay in securing the release of property, the court, on application of any party to the marshall, may order the property or any portion thereof to be sold; and the proceeds, or so much thereof as shall be adequate to satisfy any judgment, may be ordered brought into court to abide the event of the action; or the court may, on motion of the defendant or claimant, order delivery of the property to the defendant or claimant, upon the giving of security in accordance with these rules. (Emphasis supplied).
Thus, the Admiralty Rules specifically authorize the pre-condemnation release of certain seized goods. To be sure, the difference between the purposes of the Act and those of admiralty law may necessitate adjusting the Rules when applying them to seizures pursuant to the Act. Nevertheless, the Act's specific reference to the Rules strongly suggests that Congress did not intend to strictly limit the court's authority over seizure proceedings to those procedures specifically delineated on the face of the statute. The four cases cited by the government do not alter this conclusion.
In United States v. Alcon Labs, 636 F.2d 876 (1st Cir.1981), cert. denied, 451 U.S. 1017, 101 S.Ct. 3005, 69 L.Ed.2d 388 (1982), the court held, on the basis of its reading of § 334, that "articles seized in an FDA enforcement action may not be released by the court prior to a judicial determination of whether they violate the Act." Id. at 883, citing, In re United States, 140 F.2d 19 (5th Cir.1943); United States v. 893 One-Gallon Cans, More or Less, 45 F.Supp. 467 (D.Del.1942). The court agreed that "the Supplemental Rules for Certain Admiralty and Maritime Claims Admiralty Rules ... were intended to inform seizure procedure under the Act," United States v. Alcon Labs, 636 F.2d at 883, and that "Rule E(5) implies some general grant of authority to a court to order the release of seized property." Id. Nevertheless, it held that the district court erred when it released drugs which the FDA maintained were in violation of the Act's "new drug" provisions. Id.
Two aspects of that case render it inapposite the instant one. First, the drugs in that case were not perishable. Thus, the Court was forced to rely solely on Admiralty Rule E(5). That rule provides for the pre-trial release of property upon an order of the court after the giving of security; it does not, however, provide any guidance for determining when a court may properly grant such an order. Accordingly, the court saw "little in Rule E(5) by way of a general grant of authority permitting courts to countermand administratively instituted seizures without first adjudicating the merits of the agency's claim." Id. (emphasis added). This conclusion...
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