Opinion ID: 799257
Heading Depth: 3
Heading Rank: 1

Heading: Finished HGH versus API

Text: Mr. Bader's first argument pertains to two of his convictionsspecifically, his convictions for knowingly facilitating the sale of HGH imported into the United States contrary to law and conspiring to do so (Counts Seventeen and One of the Second Superseding Indictment, respectively). These convictions implicate 18 U.S.C. § 545, which prohibits the smuggling of illegal goods into the United States by providing, in relevant part, that [w]hoever fraudulently or knowingly imports or brings into the United States, any merchandise contrary to law, or receives ... buys, [or] sells such merchandise, knowing the same to have been imported or brought into the United States contrary to law shall be fined or imprisoned for a maximum of twenty years. 18 U.S.C. § 545. In the present case, Mr. Bader was charged in Count One with conspiring to knowingly facilitate the sale of HGH after importation knowing the same to have been imported into the United States contrary to several identified federal statutes: 21 U.S.C. § 331(a), which prohibits the introduction into interstate commerce of a misbranded drug; 21 U.S.C. § 352(f)(1), which relates to causing the introduction into interstate commerce of a misbranded drug that fails to bear adequate directions for use; 21 U.S.C. § 331(d), which prohibits the introduction into interstate commerce of an article that is in violation of section 355 of Title 21; and 21 U.S.C. § 355, which prohibits the introduction into interstate commerce of a new drug without prior application to or approval from the FDA. See Aplee. App., Vol. IV, at 1027-28 (Second Superseding Indictment, returned Sept. 9, 2008). At bottom, the charged conspiracy involved a scheme to import comparatively cheap HGH from China, to sell that cheap HGH in order to reap windfall proceeds, and to retain the proceeds. In Count Seventeen, Mr. Bader was charged with a specific instance of knowingly facilitat[ing] the sale of HGH, knowing the same to have been imported into the United States contrary to the federal laws cited above. See id. at 1039. According to FDA documents, finished drug products must be approved through an effective new drug application (NDA) before they can be legally imported. [2] Aplt.App., Vol. I, at 267 (Import Alert # 66-71, dated Jan. 23, 2007). Active pharmaceutical ingredients (API), in contrast, may be legally imported on a case-by-case basis if they are intended for use in pharmacy compounding. Id. at 270-71. The government concedes that the district court significantly limited the basis upon which the jury could convict Mr. Bader under § 545, focusing upon the government's primary theory that the HGH that Mr. Bader imported from China was a finished drug product subject to FDA oversight and, because Mr. Bader had failed to file an NDA, he had imported HGH contrary to 21 U.S.C. § 355's ban on the importation of new drugs that lack FDA approval. As the court later explained in its order partially granting Mr. Bader's motion for judgment of acquittal, its instruction on Count Oneoutlined in jury instruction number twenty (Jury Instruction No. 20)[d]istilled to its essence, ... directed the jury to resolve the `imported contrary to law' question by first determining whether the HGH being imported was a `finished drug' or an `ingredient.' Aplee. App., Vol. IV, at 1258 (Op. & Order Granting, in Part, Mot. for J. of Acquittal and Den. Remaining Mots., filed Apr. 29, 2010). The court further instructed that [t]here is no definition under the law for the term `finished drug' but that in determining whether the [HGH] was a finished drug, [the jury could] consider whether it was in a finished dosage form; for example, a tablet, capsule, or solution. Aplt. Trial Tr.App., Vol. VIII, at 2169 (Jury Instruction No. 20). In the event that the jury determined that the Chinese HGH was in finished form, they were instructed that a `finished drug' must have NDA approval in order to be legally imported, and because it was undisputed at trial that the HGH here did not have such approval, a finding that the HGH was a `finished drug' compelled the conclusion that it was `imported contrary to law.' Aplee. App., Vol. IV, at 1258-59; see Aplt.App., Vol. VIII, Tr. at 2715-16. However, significantly, the district court further instructed the jury, in the alternative, that if the jury f[ound] that the [HGH] was not a finished drug but instead an active pharmaceutical ingredient, then it still was authorized to find that the HGH was imported contrary to federal law if it was manufactured by a foreign entity that was not registered with the FDA.  Aplt. Trial Tr.App., Vol. VIII, at 2170 (emphases added). Importantly, the district court incorporated the legal standards concerning the contrary-to-law component of § 545, articulated in Count One's Jury Instruction 20, into the instructions that would control the jury's finding as to Count Seventeen. Specifically, the court stated: For purposes of determining whether the human growth hormone was imported into the United States in a manner contrary to federal law, you should use the same standards and instructions I gave you with regard to that issue in Count 1. Id. at 2176. Therefore, to the extent that a ground for reversal could be demonstrated regarding Count One relating to a defect in Jury Instruction 20's contrary-to-law standard, that ground for reversal would also fatally undermine Mr. Bader's conviction as to Count Seventeen because it employed the same standard. Mr. Bader contends that there is such a ground for reversal, focusing on the final sentence of Jury Instruction 20, relating to API importation. However, Mr. Bader did not specifically object to this portion of Jury Instruction No. 20 at trialdespite the fact that the court afforded him ample opportunity to do so, see id. at 2145 (Jury Trial Tr., dated Jan. 28, 2010) (Counsel, this is your second opportunity to lodge any objections to the concluding jury instructions reflected in the packet or to the verdict form.). At most, Mr. Bader's counsel made a general object[ion] to the [c]ourt's instructionwith no reference to which of the enumerated instructions was put at issue in his objectionand reurge[d] the court to adopt the defense's compounding instruction. Id. at 2148. This falls far short of Mr. Bader's obligation to lodge a timely and specific objection. See, e.g., Abuan v. Level 3 Commc'ns, Inc., 353 F.3d 1158, 1172 (10th Cir.2003) (No party may assign as error... the failure to give an instruction unless that party objects thereto before the jury retires to consider its verdict, stating distinctly the matter objected to and the grounds of the objection. (quoting Fed. R.Civ.P. 51) (internal quotation marks omitted)); Medlock v. Ortho Biotech, Inc., 164 F.3d 545, 553 (10th Cir.1999) (Because the purpose of [an] objection is to give the court an opportunity to correct any mistake before the jury enters deliberations, an excessively vague or general objection to the propriety of a given instruction is insufficient to preserve the issue for appeal. (citation omitted)). We therefore review Mr. Bader's objection to Jury Instruction No. 20 for plain error. See, e.g., United States v. Willis, 476 F.3d 1121, 1127 (10th Cir.2007); see also Aplee. App., Vol. IV, at 1261 (In the absence of a specific objection, the [c]ourt need only review the instruction for plain error....) Plain error occurs when there is (i) error, (ii) that is plain, which (iii) affects the defendant's substantial rights, and which (iv) seriously affects the fairness, integrity, or public reputation of judicial proceedings. United States v. Lopez-Medina, 596 F.3d 716, 738 (10th Cir.2010) (quoting United States v. Ruiz-Terrazas, 477 F.3d 1196, 1199 (10th Cir. 2007)) (internal quotation marks omitted). In undertaking the threshold error inquiry, we must determine whether, as a whole, the instructions correctly state the governing law and provide the jury with an ample understanding of the issues and the applicable standards. United States v. Visinaiz, 428 F.3d 1300, 1308 (10th Cir. 2005) (quoting United States v. Smith, 413 F.3d 1253, 1273 (10th Cir.2005)) (internal quotation marks omitted). Regarding the second prong, we have recognized that error is plain if it is clear or obvious under current law. United States v. Cooper, 654 F.3d 1104, 1117 (10th Cir.2011) (quoting United States v. Goode, 483 F.3d 676, 681 (10th Cir.2007)) (internal quotation marks omitted). As for the third prong of the test, [i]n the ordinary case, to have the requisite affect on substantial rights, an error must be prejudicial, which means that there must be a reasonable probability that the error affected the outcome of the trial. United States v. Marcus, ___ U.S. ___, 130 S.Ct. 2159, 2164, 176 L.Ed.2d 1012 (2010) (internal quotation marks omitted); accord United States v. Thornburgh, 645 F.3d 1197, 1212 (10th Cir.2011); United States v. Fishman, 645 F.3d 1175, 1196 (10th Cir.2011). Lastly, as to the fourth prong, it is notable that there is a relationship between that prong and the third: [I]n most circumstances, an error that does not affect the jury's verdict [i.e., the third prong] does not significantly impugn the `fairness,' `integrity,' or `public reputation' of the judicial process [i.e., the fourth prong]. Marcus, 130 S.Ct. at 2166 (quoting Johnson v. United States, 520 U.S. 461, 467, 117 S.Ct. 1544, 137 L.Ed.2d 718 (1997)). We are constrained to conclude that, in propounding Instruction No. 20 to the jury, the district court committed clear or obvious error; that there is a reasonable probability that the error affected the outcome of the trial; and that, under the circumstances presented here, this error significantly impugned the fairness, integrity, and public reputation of the trial. In denying Mr. Bader's post-trial motion for a judgment of acquittal, the district court concluded that the final sentence of Instruction No. 20 was unnecessary, but that any potential error was harmless. [3] Aplee. App., Vol. IV, at 1260-61. We conclude, however, that the final paragraph of the instruction was more than unnecessary; it effectively allowed the jury to convict Mr. Bader under a theory upon which he was never charged viz., illegal importation of an API, as opposed to illegal importation of a finished drug product. See id. at 1024-50. Under Instruction No. 20, the jury was allowed to convict Mr. Bader of illegally importing HGH if either: (1) the imported HGH was a finished drug that did not receive new drug approval from the FDA; or (2) the imported product was an API that was manufactured by a foreign entity that was not registered with the FDA. Aplt. Trial Tr.App., Vol. VIII, at 2170. This effectively rendered the finished drug versus API distinctionupon which the government's entire case was baseda nullity, allowing the jury to convict Mr. Bader regardless of the imported HGH's form. In particular, the instruction permitted the jury to convict Mr. Bader of a charge for which he was never indicted. [4] Therefore, in propounding Instruction No. 20 to the jury, the district court committed clear or obvious error. We also are convinced that there is a reasonable probability that this error affected the outcomei.e., that there is a reasonable probability that the jury would not have convicted Mr. Bader of the § 545-related counts but for this error. See United States v. Marcus, 628 F.3d 36, 42 (2d Cir.2010) ([T]he overall effect of the due process [instruction-related] error must have been sufficiently great such that there is a reasonable probability that the jury would not have convicted him absent the error.). The probable prejudicial impact of Instruction No. 20 is evident when we examine it within the context of the entire trial. See Visinaiz, 428 F.3d at 1308. In his closing argument, the prosecutor invited the jury to consider several email exchanges between Mr. Bader, Mr. Henry, and Genescience representatives that reflect[ed] a concern about whether [the Genescience facilities] [were] even registered facilities. Aplt.App., Vol. IX, Tr. at 2760. In one of those email chains, Mr. Henry asked a Genescience representative whether Genescience was FDA registered yet, to which the representative responded that Genescience ha[d]n't got registered in FDA yet. Id. at 2767 (Gov't Ex. 34). In another, Mr. Henry informed Mr. Bader that a representative from Mediscaapparently an API supply companywould be sending a letter with information on the FDA[-]registered facility that their HGH comes from, explaining that the representative was totally convinced that Medisca is the only place in the country that is bringing in [HGH] legally. Id. at 2771 (Gov't Ex. 44). In conclusion, Mr. Henry noted, College Pharmacy need[ed] to ... find out if anybody [was] telling the truth or if they[ were] all doing it `illegally.' Id. Dr. Jason Woo, Associate Director for Medical and Scientific Affairs with the Center for Drug Evaluation Research, testified at trial. When questioned about the FDA approval of foreign-produced HGH, Dr. Woo explained that [t]here are no approved Chinese facilitiesmore specifically, there are not any facilities in China that are approved to make any components of the approved human growth hormone products. Aplee. App., Vol. I, Tr. at 18 (emphasis added). As Dr. Woo explained, those componentsalso known as APIare basically the precursor to an approved drug. [They are] part of the mix that goes into making the drug. Id. A reasonable jury presented with this evidencethe emails exchanged by Mr. Bader, Mr. Henry, and the Genescience representative; and the testimony of Dr. Woocould have easily concluded that, even if the imported HGH was not a finished drug subject to NDA oversight, it was still an API that had been imported contrary to federal law by virtue of its having been manufactured at a foreign facility that lacked FDA approval. [5] In particular, there is a reasonable probability that such a juryconsidering this evidence, in conjunction with the district court's erroneous jury instructionconvicted Mr. Bader when it would not otherwise have done so, on a theory upon which he was never indicted. Consequently, we conclude that the third prong of the plain-error test is satisfied. And we discern nothing in the circumstances of this case that would indicate that such a prejudicial effect would not significantly impugn the fairness, integrity, and public reputation of Mr. Bader's trial. Thus, we conclude that the fourth prong of the plain-error test also is satisfied. See Marcus, 628 F.3d at 44 (concluding that there was a reasonable probability that the erroneous jury charge affected the outcome of the trial and affected the fairness, integrity or public reputation of the proceedings). This plain-error analysis indicates that because of Jury Instruction No. 20's inclusion of an erroneous theory of liability viz., a theory that permitted Mr. Bader's conviction for having imported an API, as opposed to a finished drug, so long as that API was manufactured by a foreign entity that was not registered with the FDA, Aplt. Trial Tr.App., Vol. VIII, at 2170 (Jury Instruction No. 20)we must reverse and remand. Specifically, we reverse Mr. Bader's conviction on Count Seventeen, for knowingly facilitating the sale of HGH imported into the United States contrary to law, and on Count One, for conspiracy to do so. Both counts rely on the erroneous liability theory set forth in Jury Instruction 20. [6]