Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-04-02958/USCOURTS-ca8-04-02958-0/pdf.json

Parties Involved:
Alpharma
Appellant
Pennfield Oil Company
Appellee

Document Text:

-1-

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 04-2958

___________

Alpharma, Inc., A Delaware *

Corporation, *

*

Plaintiff - Appellant, *

* Appeal from the United States

v. * District Court for the 

* District of Nebraska.

Pennfield Oil Company, doing *

business as Pennfield Animal *

Health, A Nebraska Corporation, *

*

Defendant - Appellee. *

___________

Submitted: March 17, 2005

Filed: June 17, 2005 

___________

Before MURPHY, HEANEY and SMITH, Circuit Judges.

___________

MURPHY, Circuit Judge.

Alpharma Inc. filed this action against its competitor Pennfield Oil Co.,

alleging that Pennfield had violated the Lanham Act and state law by falsely

advertising that one of its antibiotic animal feed additives was approved for certain

Appellate Case: 04-2958 Page: 1 Date Filed: 06/17/2005 Entry ID: 1917026
1

The Honorable Joseph F. Bataillon, United States District Judge for the

District of Nebraska.

-2-

uses by the Food and Drug Administration (FDA). The district court1 granted

Pennfield's motion to dismiss, holding that Alpharma had failed to exhaust

administrative remedies. Alpharma appeals, and we reverse.

Alpharma and Pennfield are the only manufacturers of bacitracin methylene

disalicylate (BMD), an antibiotic animal feed additive requiring FDA approval under

the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 301-399 (FDCA). Under that

Act, the manufacturer of a new animal drug cannot market it for any use until the

FDA has approved the company's product as safe and effective for that use. 21

U.S.C. §§ 331; 351(a)(5)-(6); 360b(a)(1)-(2). In 1976, the predecessors of both

Alpharma and Pennfield received "interim" FDA approval to market BMD for

multiple uses. Antibiotic, Nitrofuran, and Sulfonamide Drugs in the Feed of Animals,

41 Fed. Reg. 8282 (Feb. 25, 1976). This interim approval was codified in 21 C.F.R.

§ 558.15(g)(1). That regulation did not list the uses for which their BMD had been

approved, however, but instead incorporated the statement of uses found in 21 C.F.R.

§ 558.76.

In the years following the promulgation of § 558.15(g)(1), Alpharma's

predecessor sought authorization to market its BMD product for additional uses by

submitting numerous supplemental new drug applications to the FDA, some of which

were approved. See, e.g., New Animal Drugs for Use in Animal Feeds, 47 Fed. Reg.

18,591 (April 30, 1982) (approving the supplemental application of A.L.

Laboratories, Alpharma's predecessor, to market BMD for use in controlling swine

dysentery). After approving these applications, the FDA added the new uses to the

list in § 558.76 and named Alpharma's predecessor as the only manufacturer who had

submitted information in support of their approval. See 21 C.F.R. § 558.76(d)(1).

The interim approval provision of § 558.15(g)(1), which had authorized the

marketing of both parties' products, was however never amended to distinguish

Appellate Case: 04-2958 Page: 2 Date Filed: 06/17/2005 Entry ID: 1917026
-3-

between the original uses listed in § 558.76 and those later added following the

successful applications of Alpharma's predecessor. The result was an apparent

expansion in the number of uses for which the product of Pennfield's predecessor had

been approved for marketing. See 68 Fed. Reg. at 47,334.

Pennfield purchased the rights of its predecessor to manufacture and market

BMD in 2002, allegedly relying on the interim approval provisions of §§ 558.15(g)(1)

and 558.76, as well as confirmations of that approval by FDA officials. According

to Alpharma’s complaint, Pennfield began marketing the product nationally during

the same year with advertisements indicating that its drug had been approved for a

variety of uses extending beyond those originally listed in § 558.76. Alpharma

further alleges that Pennfield began selling its BMD in 2003 under a label indicating

that the product had received FDA approval for the same expanded set of uses.

On March 13, 2003, Alpharma brought an action against the FDA in the United

States District Court for the District of Maryland, claiming that the agency had

improperly approved Pennfield's sale of BMD for a number of uses or otherwise

improperly enabled Pennfield to represent that it had approval for those uses.

Alpharma sought a declaratory judgment and injunctive relief. While the Maryland

suit was pending, the FDA published two August 8, 2003 notices relating to

Pennfield: a notice of proposed rulemaking for the "interim marketing provisions" of

§ 558.15 to be eliminated, 68 Fed. Reg. 47,272, and a notice of opportunity for

hearing addressing the extent of Pennfield's approval to market BMD, 68 Fed. Reg.

47,332. After these notices were published, the FDA and Alpharma filed a

Stipulation and Order of Dismissal which acknowledged that the agency lacked any

record of Pennfield's having applied for or received approval to market its BMD for

seven of the seventeen uses the agency had listed as approved. The Maryland suit

was then dismissed with prejudice.

Appellate Case: 04-2958 Page: 3 Date Filed: 06/17/2005 Entry ID: 1917026
-4-

On September 30, 2003, Alpharma filed the present action against Pennfield

in the United States District Court for the District of Nebraska. Alpharma alleged that

the advertisements and labels for Pennfield's BMD falsely advertised that it had been

approved by the FDA for a number of uses for which it had not, in violation of the

Lanham Act § 43(a), 15 U.S.C. § 1125(a), and the Nebraska Uniform Deceptive

Trade Practices Act, Neb. Rev. Stat. §§ 87-301–87-306. The company also

contended that Pennfield’s practices constituted unfair competition and unjust

enrichment under Nebraska common law. Alpharma sought injunctive relief,

compensatory, treble and punitive damages, fees and costs. 

 Pennfield moved to dismiss Alpharma’s claims under Federal Rule of Civil

Procedure 12(b)(6), arguing that §§ 558.15(g)(1) and 558.76 showed that its product

had been approved for the contested uses, that Alpharma’s action was an

impermissible private attempt to enforce FDCA and FDA regulations, that the

Lanham Act was not intended as a means of indirectly enforcing the FDCA and FDA

regulations, and that Alpharma’s action intruded upon the FDA’s discretion and

expertise in the area of drug approval and marketing. 

The district court granted Pennfield’s motion to dismiss, referencing the

doctrine of primary jurisdiction but ultimately concluding that the "plaintiff's failure

to exhaust" required dismissal. Alpharma, Inc. v. Pennfield Oil. Co., 2004 WL

1562870, *1 (D.Neb. 2004). The court cited a number of factors in concluding that

dismissal was proper: the absence of a decision by the FDA clarifying the meaning

of “completely confusing historical records” regarding Pennfield’s approval to market

BMD; the pending FDA actions on issues relating to the case; the FDA’s expertise

on questions involved; the FDA’s responsibility to interpret its own regulations first;

and the absence of any indication that exhaustion would be ineffective or futile. Id.

Alpharma appeals the district court's dismissal of its action, arguing that

exhaustion and other related doctrines do not apply in this case. We review the

Appellate Case: 04-2958 Page: 4 Date Filed: 06/17/2005 Entry ID: 1917026
-5-

district court’s Rule 12(b)(6) dismissal de novo, taking all facts alleged in the

complaint as true. Carter v. Arkansas, 392 F.3d 965, 968 (8th Cir. 2004). "A motion

to dismiss should be granted only if it appears beyond doubt that the plaintiff can

prove no set of facts which would entitle him to relief.” Knapp v. Hanson, 183 F.3d

786, 788 (8th Cir. 1999).

Alpharma first argues that the district court erred in dismissing its Lanham Act

claim on exhaustion grounds. Under the doctrine of exhaustion, "no one is entitled

to judicial relief for a supposed or threatened injury until the prescribed

administrative remedy has been exhausted." Myers v. Bethlehem Shipbuilding Corp.,

303 U.S. 41, 50-51 (1938); see also Cornish v. Blakey, 336 F.3d 749, 753 (8th Cir.

2003) (requiring exhaustion of "statutory administrative remedies"). The doctrine

applies when the plaintiff's claim is "'cognizable in the first instance by an

administrative agency alone,'" and does not apply when the relevant agency is unable

to grant relief. Harris v. P.A.M. Transport, Inc., 339 F.3d 635, 638 (8th Cir. 2003)

(quoting United States v. W. Pac. R.R. Co., 352 U.S. 59, 63 (1956)); Jackson v. Swift

Eckrich, Inc., 53 F.3d 1452, 1456 (8th Cir. 1995) (exhaustion "ordinarily requires a

plaintiff to pursue relief, when available, from an administrative agency before

proceeding to the courts"). Alpharma argues that the Lanham Act does not require

that any administrative procedures be exhausted before filing suit, but rather places

exclusive jurisdiction to resolve false advertising claims in the district courts. The

company also contends that its false advertising claim is not cognizable by the FDA

since the agency cannot award the requested damages. Alpharma finally notes that,

unlike the plaintiffs in Bradley v. Weinberger, 483 F.2d 410 (1st Cir. 1973), and other

cases cited by the district court, it is not seeking review of agency action under the

Administrative Procedure Act or any other statute requiring exhaustion.

Alpharma is incorrect in its assertion that district court jurisdiction over

Lanham Act claims is exclusive. 15 U.S.C. § 1121(a); Aquatherm Industries, Inc. v.

Florida Power & Light Co., 84 F.3d 1388, 1394 (11th Cir. 1996) ("Federal courts do

Appellate Case: 04-2958 Page: 5 Date Filed: 06/17/2005 Entry ID: 1917026
-6-

not have exclusive jurisdiction over an action brought under the Lanham Act.").

Nonetheless, the statute does not create administrative procedures for the resolution

of false advertising claims brought by Alpharma. See Sandoz Pharmaceuticals Corp.

v. Richardson-Vicks, Inc., 902 F.2d 222, 226-29 (contrasting the administrative

apparatus of the Federal Trade Commission Act with the civil remedy created by §

43(a) of the Lanham Act). Moreover, the FDA does not have the authority to award

the compensatory and punitive damages sought by Alpharma in the present lawsuit.

The company's claim was therefore not cognizable by the agency, and it was not

required to refrain from litigation until some "administrative process ha[d] run its

course." Western Pac. R.R., 352 U.S. at 63.

In dismissing Alpharma's claims the district court also referred to primary

jurisdiction. The doctrine of primary jurisdiction "'applies where a claim is originally

cognizable in the courts, and comes into play whenever enforcement of the claim

requires the resolution of issues which, under a regulatory scheme, have been placed

within the special competence of an administrative body.'" Atlantis Exp., Inc. v.

Standard Transp. Services, Inc., 955 F.2d 529, 532 (8th Cir. 1992) (quoting Western

Pac. R.R., 352 U.S. at 64)). The contours of primary jurisdiction are not fixed by a

precise formula. Rather, the applicability of the doctrine in any given case depends

on "whether the reasons for the existence of the doctrine are present and whether the

purposes it serves will be aided by its application." Western Pac. R.R., 352 U.S. at

64. Among the reasons and purposes served are the promotion of consistency and

uniformity within the areas of regulation and the use of agency expertise "'in cases

raising issues of fact not within the conventional experience of judges or cases

requiring the exercise of administrative discretion." Access Telecomm. v.

Southwestern Bell Tel. Co., 137 F.3d 605, 608 (8th Cir. 1998) (quoting Far East

Conference v. United States, 342 U.S. 570, 574 (1952)). 

When it is determined that primary jurisdiction to resolve an issue lies with an

agency, a court otherwise having jurisdiction over the case may stay or dismiss the

Appellate Case: 04-2958 Page: 6 Date Filed: 06/17/2005 Entry ID: 1917026
-7-

action pending the agency's resolution of the question. Jackson v. Swift Eckrich,

Inc., 53 F.3d 1452, 1456 (8th Cir. 1995). The doctrine is to be "invoked sparingly,

as it often results in added expense and delay." Red Lake Band of Chippewa Indians

v. Barlow, 846 F.2d 474, 477 (8th Cir. 1988) (internal quotations omitted). 

Alpharma contends that this is not a case in which the primary jurisdiction

doctrine should be applied. According to Alpharma, the question of whether

Pennfield's product has received FDA approval for certain uses does not require the

agency's expertise since its resolution requires only a review of agency materials the

district court is fully capable of interpreting. Alpharma notes that the FDA has

already provided substantial guidance on the issue by its stipulation in the Maryland

case and in its August 8, 2003 notices of opportunity for hearing and proposed

rulemaking. Alpharma also argues that there is no issue of consistent or uniform

regulation since the question of approval only concerns Pennfield and that substantial

delay would resulting from staying or dismissing the case, particularly since the FDA

has taken no action since publishing the notices nearly two years ago.

We agree with Alpharma that this is not the rare case requiring "expert

consideration and uniformity of resolution." See United States v. McDonnell

Douglas Corp., 751 F.2d 220, 224 (8th Cir. 1984) (primary jurisdiction "should

seldom be invoked unless a factual question requires both expert consideration and

uniformity of resolution"). A determination of whether Pennfield's product has

received FDA approval for certain uses turns on the meaning of agency publications

in the Federal Register and Code of Federal Regulations. Interpretation of such

materials is well within the "conventional experience of judges." See Access

Telecomm., 137 F.3d at 608. 

The question of whether Pennfield's BMD has been approved as safe and

effective is much different from the question of whether Pennfield's BMD should be

approved as safe and effective, and it is only the latter that requires the FDA's

Appellate Case: 04-2958 Page: 7 Date Filed: 06/17/2005 Entry ID: 1917026
2

Pennfield also cites a number of district court opinions for the same

proposition. See Ethex Corp. v. First Horizon Pharmaceutical Corp., 228 F.Supp.2d

1048, 1051-55 (E.D. Mo. 2002); Healthpoint, Ltd. v. Ethex Corp., 273 F.Supp.2d

817, 838-39 (W.D. Tex. 2001); Eli Lilly and Co. v. Roussel Corp., 23 F.Supp.2d 460,

475-80 (D.N.J. 1998); Summit Tech., Inc. v. High-Line Medical Instruments, Co.,

933 F.Supp. 918 (C.D. Cal. 1996).

-8-

scientific expertise. Consistency and uniformity of regulation would also not be

jeopardized by judicial resolution of this case since Alpharma has raised only the

issue of Pennfield's approval to market a single drug. Finally, an order staying or

dismissing this action would almost certainly result in substantial added expense and

delay. Nearly two years have passed since the FDA published its August 8, 2003,

notices relating to Pennfield's approval, and there is no indication that the agency will

soon finalize those actions. We conclude that Alpharma's claims should not have

been dismissed on the basis of primary jurisdiction.

Pennfield focuses its argument for affirmance on a related doctrine it extracts

from a number of cases brought under the Lanham Act and dealing with FDA issues.

It argues that these cases require dismissal of Alpharma's claims. According to

Pennfield, the courts in PDK Labs, Inc. v. Friedlander, 103 F.3d 1105 (2d Cir. 1997),

Mylan Laboratories, Inc. v. Matkari, 7 F.3d 1130 (4th Cir. 1993), and Sandoz

Pharmaceuticals Corp., established that plaintiffs may not bring Lanham Act false

advertising claims involving FDCA or FDA regulations because there is no private

right of action to enforce these provisions, Congress did not intend for the Lanham

Act to be a vehicle for enforcing the provisions indirectly, and the area is within the

expertise of the FDA.2

 After examining these cases, we conclude that they do not

support Pennfield's arguments here.

In PDK Labs, a plaintiff who had developed but not yet marketed a weight loss

product filed a Lanham Act claim, alleging that PDK had falsely advertised that its

own weight loss products had been approved by the FDA. 103 F.3d at 1107.

Appellate Case: 04-2958 Page: 8 Date Filed: 06/17/2005 Entry ID: 1917026
-9-

Referencing its earlier holding that a Lanham Act plaintiff must "demonstrate a

reasonable interest to be protected against the advertiser's false or misleading claims,"

the Second Circuit held that the developer lacked standing to bring the action since

his product was not yet in competition with the defendant's. Id. at 1111-12 (internal

quotations omitted). In so holding, the court remarked that the plaintiff's "dogged

insistence that PDK's products are sold without proper FDA approval

suggest[ed]...that [his] true goal [was] to privately enforce alleged violations of the

FDCA," for which there was no private right of action. Id. at 1113. Pennfield argues

that this means that all Lanham Act claims involving FDA approval are impermissible

attempts at private enforcement of the FDCA. The case was decided on standing

grounds, however, and the court indicated a willingness to consider such a claim if

brought by a party in actual competition with a manufacturer who had falsely

advertised having FDA approval.

In Mylan Laboratories, a manufacturer of prescription and generic drugs filed

a Lanham Act claim against four competitors, alleging that their advertisements had

falsely represented both that their products had received FDA approval and that their

drugs were "bioequivalent" to the plaintiff's. 7 F.3d at 1137-38. While allowing the

bioequivalence claims to go forward, the Fourth Circuit dismissed the claims alleging

false representations of approval since plaintiff's complaint had not referenced any

"statement or representation in the defendants' advertising which declared 'proper

FDA approval.'" Id. at 1138-39. Were manufacturers permitted to file Lanham Act

suits in the absence of "some claim or representation that is reasonably clear from the

face of the defendants' advertising," the court concluded, the statute would be

inappropriately converted into a vehicle for privately enforcing the FDCA. Id.

(emphasis in original). Contrary to Pennfield's reading of the case, the Fourth Circuit

did not bar all Lanham Act claims involving false representations of FDA approval,

but only those where there had not been any claim of approval. Because Alpharma

has alleged reasonably clear claims of FDA approval by Pennfield, Mylan

Laboratories is inapposite.

Appellate Case: 04-2958 Page: 9 Date Filed: 06/17/2005 Entry ID: 1917026
-10-

Finally, in Sandoz Pharmaceuticals, a cough syrup manufacturer sued a

competitor, alleging that the label of the competitor's product falsely listed an

ingredient as "inactive" when FDA standards suggested that the ingredient was in fact

active. 902 F.2d at 230. The Third Circuit assumed without deciding that false

labeling was actionable under the Lanham Act, and concluded that the plaintiff had

not shown the defendant's label was false. Id. The FDA had not yet determined

whether the ingredient at issue was properly characterized as active or inactive, and

the court declined to answer the question first due to the agency's expertise in the

area. Id. 230-31. The court did not reject all Lanham Act suits involving drug

labeling, and it actually considered the false advertising claim on the merits, refusing

only to "determine preemptively how a federal administrative agency will interpret

and enforce its own regulations." Id. at 231. Alpharma's claim does not require such

a preemptive determination, and Pennfield's attempt to place this case within the

reasoning of Sandoz is mistaken. 

Our own opinion in Rhone-Poulenc Rorer Pharmaceuticals, Inc. v. Marion

Merrell Dow, Inc., 93 F.3d 511 (8th Cir. 1996), contradicts the principle Pennfield

tries to extract from the preceding cases. In Rhone-Poulenc, the manufacturer of a

drug approved only to treat hypertension, circulated advertisements with statements

implying that its product could be freely substituted for a competitor's medication that

had been approved for the treatment of both hypertension and angina. Id. at 513, 516.

The district court held that the manufacturer's advertisements violated § 43(a) of the

Lanham Act by falsely representing that the medication was approved to treat angina.

Id. at 514. We affirmed and thus confirmed the viability of Lanham Act claims

concerning representations of FDA approval. 

For these reasons we reverse the order of dismissal and remand the case to the

district court for further proceedings consistent with this opinion.

______________________________

Appellate Case: 04-2958 Page: 10 Date Filed: 06/17/2005 Entry ID: 1917026