Opinion ID: 768530
Heading Depth: 2
Heading Rank: 1

Heading: arbitrary and capricious standard of review

Text: 18 Snoring Relief argues that the district court applied the incorrect standard of review to the defenses that Snoring Relief raised to FDA's adulteration claim as part of the seizure action. Snoring Relief claims that SnorBan should not be an adulterated product because it was exempt from FDA regulation. Because this is a seizure action, Snoring Relief claims that the district court should not have applied the arbitrary and capricious standard. Rather, Snoring Relief contends that it has the burden of proving by a preponderance of the evidence that it was exempt from FDA regulation. 19 Snoring Relief's argument about the standard of review fails because: (1) Review of FDA regulation and adulteration decisions is governed by the Administrative Procedures Act (APA); (2) The seizure precedents cited by Snoring Relief are not on point; (3) Snoring Relief conceded in its counterclaims that the arbitrary and capricious standard applies; and (4) As a practical matter, Snoring Relief is suggesting that the courts review the agency's decision de novo.
20 FDA decisions about adulteration and regulation are reviewed under the APA, which states that an agency's decision should not be overturned unless it was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. S 706(2)(A). We have defined the arbitrary and capricious standard as follows: 21 A decision is arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explana tion for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or product of agency expertise. 22 O'Keefe's, Inc. v. U.S. Consumer Prod. Safety Comm'n, 92 F.3d 940, 942 (9th Cir. 1996) (quoting Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)). Most importantly, [r]eview under the arbitrary and capricious standard is narrow, and the reviewing court may not substitute its judgment for that of the agency.  Id. (citing Marsh v. Oregon Natural Resources Council, 490 U.S. 360, 376 (1989)); Presidio Golf Club v. National Park Service, 155 F.3d 1153, 1160 (9th Cir. 1998) (citations omitted). 23 In Bowen, we recently applied the arbitrary and capricious standard to a FDC Act case about whether a Class III medical device was adulterated. See Bowen, 172 F.3d at 687.  `Congress gave FDA sweeping discretion in determining the classification of devices and therefore in judging the safety and effectiveness of medical devices.'  Id. (quoting Ethicon, Inc. v. FDA, 762 F. Supp. 382, 386 (D.D.C. 1991)). In Bowen, the appellant challenged whether a machine that sterilizes dental handpieces was a device under the FDC Act's statutory definition, and whether FDA acted arbitrarily and capriciously by classifying the sterilizing machine as a Class III device subject to pre-market approval. See id. at 684. 24 In this case, Snoring Relief did not contest that SnorBan was a device pursuant to the language of the FDC Act, nor did it petition for reclassification. Snoring Relief argues that SnorBan should not be regarded as a Class III adulterated device; instead as with similar OTC [over-the-counter] antisnoring products, SnorBan should be exempt from FDA regulation. Snoring Relief claims to be exempt from FDA regulations (or be cleared for marketing) based on its pre-market notification to FDA that SnorBan is substantially equivalent to anti-snoring pillows, collars, and nasal strips. FDA repeatedly rejected these contentions. Initially, FDA compared SnorBan to other anti-snoring mouthpieces available by prescription only, concluding that a non-prescription anti-snoring mouthpiece presented new safety and effectiveness concerns about undiagnosed sleep apnea and TMJ. On two subsequentoccasions, FDA rejected Snoring Relief's comparisons of SnorBan to anti-snoring pillows, collars, and nasal strips. These agency decisions should be narrowly reviewed under the APA's arbitrary and capricious standard. Although Snoring Relief's exemption argument is slightly different than the one in Bowen, appellants in both cases are trying to avoid FDA decisions that the medical devices in question are Class III adulterated devices without pre-market approval. 25
26 Snoring Relief tries to avoid the narrow standard of review under the APA and to reopen the administrative record 2 by dwelling on the fact that this is a seizure action. Snoring Reliefs cites two seizure cases, United States v. 45/194 Kg. Drums of Pure Vegetable Oil, 961 F.2d 808, 812 (9th Cir. 1992), and United States v. Article of Device  Toftness, 731 F.2d 1253, 1258-62 (7th Cir. 1984). In these cases, the appellants argued that their products were exempt from FDC Act misbranding provisions. Neither of these cases, however, involved a district court's review of an agency decision. For example, in Pure Vegetable Oil, the company promised to stop exporting the oil to the United States. See Pure Vegetable Oil, 961 F.2d at 810. FDA never reviewed the product as part of an exemption petition. Thus, Snoring Relief's cases are distinguishable because they only involved FDA seizure actions; they did not involve review of prior FDA decisions.
27 Snoring Relief conceded before the district court that with regard to its counterclaims, the proper standard of review is arbitrary and capricious. Snoring Relief argued to the district court that FDA's refusal to exempt its product from premarket notification or to clear its pre-market notification petition was arbitrary, capricious, and contrary to law. Snoring Relief's standard of review argument regarding the seizure action is severely undercut by the arbitrary and capricious formula it employs with counterclaims that are identical to its defenses to the seizure action.
28 In arguing that the arbitrary and capricious standard of review does not apply, Snoring Relief implicitly suggests that the district court should have reviewed FDA's decision de novo. Snoring Relief contends that as a defense to the seizure action, it has the burden of proving by a preponderance of the evidence that it was exempt from FDA regulations. This argument, however, conflates the standard of review with the burden of proof. The arbitrary and capricious standard of review cannot be replaced by the preponderance of the evidence burden of proof. What Snoring Relief really wants is for the district court (and this court) to review FDA's decision de novo. But, as the government said, the issue is an agency decision not to exercise its enforcement discretion to waive the premarket notification requirement for SnorBan. FDA is entitled to decide how to exercise its discretion, and the Court only reviews that decision under the arbitrary and capricious standard. We agree. As a practical matter, Snoring Relief's argument is unpersuasive. Agency decisions, even if accompanied by a seizure action, should be reviewed under the arbitrary and capricious standard.