Opinion ID: 1443088
Heading Depth: 2
Heading Rank: 3

Heading: The Felony Misbranding Convictions

Text: Counts 37-40 deal with Goldberg's misbranding activities, and specifically Equihealth's filling of two orders submitted by F.B.I. Agent Tremaglio. While Goldberg admits selling these drugs to Tremaglio, he argues that he cannot be convicted of misbranding because the drugs were not misbranded, and in any event not misbranded before they were sold. Further, he argues that even if what he did was misbranding, it was misdemeanor misbranding because there was no evidence that he acted with any intent to defraud or mislead. Accordingly, his appeal raises two issues: (1) was there sufficient evidence for a reasonable juror to conclude that Goldberg misbranded these drugs and/or held them for sale while they were misbranded; and if so, (2) was there sufficient evidence for a reasonable juror to conclude that he acted with an intent to defraud or mislead (so as to make the convictions felonies)? We consider each issue in turn.
Misbranding is governed by 21 U.S.C. § 331(k), which in pertinent part prohibits the doing of any ... act with respect to... a food, drug, device, or cosmetic, if such act is done while such article is held for sale (whether or not the first sale) after shipment in interstate commerce and results in such article being adulterated or misbranded. Although Goldberg admits selling these drugs without a valid prescription, he argues that he did not misbrand them, since (as a technical matter) he never misbranded or adulterated the drugs in question. Goldberg Op. Br. 21. In other words, Goldberg argues that misbranding prohibits alter[ing] the product in some way  not merely dispensing to an end-user without a prescription. Id. at 45 (emphasis deleted). However, Goldberg is a bit loose in his argument, because two paragraphs later he admits that dispensing a drug without a prescription is `misbranding.' Id. at 46. And his second instinct is the correct one: misbranding does encompass dispensing these drugs without a prescription. 21 U.S.C. § 353(b)(1); see, e.g., United States v. Arlen, 947 F.2d 139, 141 n. 2 (5th Cir.1991) (Any prescription drug that is dispensed without a prescription is deemed `misbranded' as a matter of law.); United States v. Bradshaw, 840 F.2d 871, 872 n. 2 (11th Cir.1988). [5] However, Goldberg stands by his argument that there is a temporal problem because a drug cannot be dispensed `while' it is held for sale, because it cannot be `delivered' and `held for sale' at the same time.' Goldberg Op. Br. 46. This argument gets him nowhere because the statute clearly states that [t]he act of dispensing a drug contrary to the provisions [requiring a prescription] shall be deemed to be an act which results in the drug being misbranded while held for sale. 21 U.S.C. § 353(f)(1)(C). As a result, whatever temporal confusion comes with the misbranding provision, it is resolved by the relatively straightforward declaration that dispensing drugs without a prescription means that those drugs were misbranded while they were held for sale. Id. We also reject Goldberg's argument that he cannot be properly convicted under § 331(k) because this provision was enacted to regulate the drug distribution chain, not dispensing to the end user. Goldberg Op. Br. 47. To the contrary, the Supreme Court's ruling in United States v. Sullivan notes that the purpose of § 331(k)'s misbranding prohibition was to extend the Act's coverage to every article that had gone through interstate commerce until it finally reached the ultimate consumer. 332 U.S. 689, 696-97, 68 S.Ct. 331, 92 L.Ed. 297 (1948) (discussing H.Rep. 2139, 75th Cong., 3d Sess., 3.). Accordingly, there is no reason grounded in legislative intent not to apply § 331(k) to Goldberg's sales to end users. Based on the analysis above, we affirm Goldberg's misbranding convictions.
Because we conclude that Goldberg was properly convicted of misbranding, we turn to whether the evidence shows that he acted with an intent to defraud or mislead as he conducted these misbranding activities. The presence or absence of intent is important since willful misbranding is only a misdemeanor unless there is the intent to defraud or mislead. 21 U.S.C. § 333(a). Then it is a felony. Although the jury found such an intent, Goldberg claims that this finding has to be wrong. There was, he contends, undisputed evidence showing that [f]ull disclosure was given to Equihealth's customers about the drugs sold, the nature of the transaction, and Equihealth's status as a nonprescribing party, and he was open and transparent with the FDA and the various state agencies that inquired about Equihealth. Goldberg Op. Br. 42-43. The Government offers three reasons to affirm on this issue. First, it claims that the Product and Use Disclaimer, which customers signed and supplied to Goldberg, was misleading as to, among other things, the rights of the customer to treat his or her own animal under the various state law provisions governing the practice of veterinary medicine. In making this argument, the Government overlooks that the Disclaimer is not an affirmative representation by Goldberg, but rather by the customer, meaning that any misrepresentation occasioned by the statements was caused by the customer lying about the applicable law in his or her home state, not the misbrander (Goldberg) that merely received the statement. As a result, it cannot be said that Goldberg misled anyone via the statements his customers made. Next, the Government points to [s]ales literature assert[ing] that the company veterinarian actually would prescribe the drugs. Government Br. 55. This is easily dealt with, as the literature in question has no tie to the four counts of misbranding that Goldberg was charged with. Agent Tremaglio was repeatedly told that the drugs he was ordering would not be provided pursuant to a prescription, were not prescribed by a veterinarian, and that he would not be able to consult directly with one either before or after he placed his order. As a result, the only way that we could deem Goldberg's conduct misleading would be to hold that when a vendor permits outdated sales literature to continue to exist in some form, even though it told customers not to rely on the representations therein, the vendor has misrepresented its activities. We are not prepared to do this, and therefore we deem that this argument does not justify Goldberg's felony convictions. Finally, the Government argues that by having [his suppliers] believe that they were sending him drugs pursuant to valid prescriptions, and that he would not resell the drugs, Goldberg acted with deception or an intent to mislead in his misbranding activities. Id. at 52. Whatever the merits of this argument, there is no factual basis for it. Nothing in the record shows that Goldberg made those statements (or implied them) in relation to the drugs he sold to Tremaglio. As a result, this argument, unsupported by any evidence we found, cannot justify Goldberg's felony misbranding convictions. This leaves the Government without any persuasive argument in favor of sustaining Goldberg's felony conviction for misbranding. Beyond that, our own independent review of the record has not yielded any trace of an intent on Goldberg's part to avoid detection or misrepresent what he was up to. Instead, the evidence demonstrates that Goldberg conducted his admittedly illegal ventures in the open, and (at least as far as the drugs that led to the misbranding counts with which he was charged) in accordance with all the agreements he made. As a result, we vacate his felony misbranding convictions, making these convictions instead misdemeanors.