Court Sides With Government in Case Alleging Adulteration, But Deems Injunction Request Overbroad

By Wes Siegner, John R. Fleder & Ricardo Carvajal –

In U.S. v. Scenic View Dairy, LLC, et. al., the government prevailed on summary judgment in an injunction action against dairy farms alleged to market cows bearing unlawful drug residues.  Although nominally a veterinary drug case, the court’s decision offers a number of gems of general interest.

Defendants operate three dairy farms from which they periodically cull cows for sale to slaughterhouses for human beef consumption.  On numerous occasions, USDA/FSIS detected new animal drug residues that were above tolerance levels in the edible tissues of Defendants’ cows.  The government alleged in part that Defendants violated § 301(a) of the FDC Act by delivering food for introduction into interstate commerce that was adulterated within the meaning of § 402(a)(2)(C)(ii) and § 402(a)(4), and also violated § 301(k) by adulterating drugs while held for sale and after shipment in interstate commerce.

FDC Act § 402(a)(2)(C)(ii) deems a food adulterated “if it is or if it bears or contains… a new animal drug (or conversion product thereof) that is unsafe” under § 360(b).  Based on relevant provisions of the FDC Act and its implementing regulations, the court held that a drug is unsafe if the drug’s use is extralabel (i.e., the drug is used in a manner that does not accord with the approved labeling), unless used “by order of a licensed veterinarian in the context of a valid veterinarian-client-patient relationship” (“VCPR”).  Even if there exists a VCPR, the drug is unsafe if its use results in illegal tissue residues.  In finding that the drugs at issue were unsafe, the court relied in part on sworn affidavits in which Defendants admitted to extralabel use, thereby rendering moot the possible existence of a VCPR.  FDA routinely requests inspected companies to sign “affidavits” on FDA forms that are filled in with information that is written by the FDA inspector.  As this case illustrates, such affidavits can be powerful evidence against a company in any civil or criminal case that FDA subsequently brings based on the inspection.  There is no requirement that companies sign such affidavits, and, except in very rare circumstances and after review by counsel, companies would be best served by not signing (or even reading or listening to the inspector read) such affidavits.

Section 402(a)(4) deems a food adulterated “if it has been prepared, packed, or held under insanitary conditions whereby it may have become contaminated with filth, or whereby it may have been rendered injurious to health.”  The government argued that Defendants’ failure to maintain adequate drug treatment records (i.e., records that document dosage, route of administration, and withdrawal period) constituted an insanitary condition whereby Defendants’ food may be rendered injurious to health.  The court agreed, relying in part on an FDA Compliance Policy Guide that articulated the same position – a timely reminder of the potential impact of guidance documents, notwithstanding the fact that they are not legally binding.  In passing, the court rejected Defendants’ argument that the Bioterrorism Act’s exemption of farms from recordkeeping requirements applied to drug treatment records.

With respect to the alleged violation of § 301(k), the court held that Defendants’ extralabel use of the drugs rendered those drugs unsafe, and therefore adulterated.  Further, the court agreed with the government that the criterion of “held for sale” in § 301(k) is “satisfied if the item is used for any purpose other than personal consumption.”

Notably, although the court found that an injunction was appropriate, it also found that the government had sought an injunction that was too broad.  The court disclaimed any intent to put Defendants out of business, and expressed concern about the terms and the length of the injunction.  The court noted that, “if the record-keeping is put into compliance as a system and by the individuals, then the problems will be largely solved.”  The court therefore concluded that a permanent injunction was not necessary.  Finally, the court noted that “without knowing the specific facts and background of injunctions entered by other district courts, this Court is not too impressed with the fact that such injunctions exist.”