Court Opinion

ID: 9492103
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:32:16.096145+00
Date Added: 2024-06-11T17:55:06.883712
License: Public Domain

LAY, Circuit Judge,
dissenting.
The majority opinion holds that the district court erred by substituting its opinion for that of the USDA when it reversed the USDA’s denial of Grand Labs’ request to reprocess serial 45-016. I respectfully submit that the majority opinion reflects a basic misunderstanding of the district court’s holding. The district court found that the USDA’s denial of reprocessing was arbitrary and capricious because the USDA failed to review a full and fair administrative record when it decided the serial could not be retested to determine whether it could be safely marketed to the public. In so holding, the district court was simply following the Supreme Court’s dictate in Florida Power & Light Co. v. Lorion, 470 U.S. 729, 744, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985):
If the record before the agency does not support the agency action, if the agency has not considered all relevant factors, or if the reviewing court simply cannot evaluate the challenged agency action on the basis of the record before it, the proper course, except in rare circumstances, is to remand to the agency for additional investigation or explanation.
*966Thus, it is a fundamental misconception to say that the district court substituted its own judgment for that of the USDA where the USDA’s judgment was not based on consideration of all the relevant factors.
The majority’s confusion probably arises from the rather unusual procedural history of this case. This action originally arose when the USDA brought a four-count civil suit against Dr. Pankratz and Grand Labs for violations of the Virus-Serum-Toxin Act (VSTA). The defendants filed a counterclaim under the Administrative Procedure Act (APA), 5 U.S.C. §§ 551 et seq., challenging the USDA’s decision to deny their requests for reprocessing of serial 45-016. The court initially granted the government’s motion for summary judgment on the defendants’ counterclaim and upheld the USDA’s decision to deny reprocessing. The court granted the USDA’s motion for summary judgment for three basic reasons. First, the USDA had explained that the contaminant discovered in the serial in the original test might have produced toxins or metabolites that could not be identified or removed. Second, the defendants had presented no evidence to indicate that the original test could be questioned. Third, the USDA showed that the product had gone unrefrigerated when Dr. Pankratz removed it, and that lack of refrigeration alone would justify the agency’s denial of the reprocessing request.
The district court then proceeded to trial on the other counts. After trial, the district court found liability on only one count of the complaint (shipment of a contaminated biological product).3 The district court then reversed its earlier grant of summary judgment for the government on the counterclaim and ordered that the USDA expand its administrative record to include all relevant factors relating to the grant or denial of reprocessing. The court found that evidence disclosed at trial showed that the USDA had not considered relevant evidence that serial 45-016 was not contaminated when it made its decision to deny reprocessing.4 On this basis, the court ordered that the case be remanded to the USDA in light of the overall record not previously considered by the USDA at the time of its original decision. The district court emphasized that the decision whether the serial would ultimately be placed on the market for sale would be made only by the USDA, but only after full and fair review testing. This appeal arises primarily from the district court’s decision on this counterclaim.
It is important to set forth this procedural history because it points out that the district court was not substituting its judgment for the USDA, but rather was simply requiring a full and fair review based upon the testimonial record developed in the district court. I mention this because it is not the prerogative of the district court in reviewing agency action under the APA to make a new record and overrule the agency’s decision based upon evidence that the agency has not reviewed. See Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973); Wilkins v. Secretary of Interior, 995 F.2d 850, 853 (8th Cir.1993). Contrary to the implicit holding of the majority opinion, the district court did *967not do this in the present case. The procedural history is also important to emphasize that the ultimate issue here is not the question of reprocessing, but whether the agency should be required to consider the entire record, including the results of current and concurrent testing, in making the ultimate decision whether the serial is safe for consumer use.
The majority opinion does not discuss the evidence the district court relied upon to conclude that its original grant of summary judgment should be vacated and that further tests should be done. I believe this evidence supported the district court’s decision. The USDA based its position that serial 45-016 is contaminated solely on the results of the first sterility test performed on September 25, 1990. As the district court found, however, the testimony developed at trial casts grave doubt upon the reliability of that original test showing contamination of serial 45-016.5 There was testimony that concurrent tests were performed at Grand Labs in September, October and November which showed no contamination, and that Dr. Pankratz’s employees did not report these satisfactory tests to the USDA.6 In fact, a second bulk sterility test was performed on the serial on September 26, 1990, the day after the initial test, and it showed no contamination. Yet the USDA was not informed of this satisfactory test. The district court also received testimony from Dr. Long, a former USDA official, that safety tests had been performed on serial 45-016 which found the serial to be free from any substance toxic enough to cause any reaction to an animal. Finally, the court found that the government failed to prove that serial 45-016 had gone unrefrigerated for any extended period of time as it had previously alleged.7 This evidence, however, was *968not in the administrative record before the USDA and was never considered by the USDA when it denied reprocessing. Therefore, the district court concluded that the USDA failed to consider important evidence to form a rational basis for its denial of Grand Labs’ requests for reprocessing serial 45-016.8 The USDA’s failure to consider this evidence justified the district court’s order remanding the case to the USDA for retesting and reconsideration of serial 45-016’s marketability based upon all of the relevant evidence.9
It may seem cavalier to say that in the interest of justice there is little to lose and everything to gain by affirming the district court. There is no question that Dr. Pan-kratz concealed the alleged contaminated product and substituted a bogus product in its place; his conduct clearly should not be condoned.10 However, affirming the district court’s order of reprocessing would not threaten the safety of animals. The district court specifically stated that it was not ordering the USDA to allow Grand Labs to market serial 45-016. Rather, it only ordered it to allow Grand Labs to spend $40,000 of its own money to retest the serial and then submit the evidence of this retest, along with the testimony developed at trial and the satisfactory test results withheld from the USDA, for reconsideration by the USDA in light of the overall record. The bottom line is that the USDA retains the ultimate decision whether serial 45-016 may be marketed, and its decision will remain undisturbed as long as it was made based upon full and fair consideration of the record. If the government is still convinced after reprocessing that the original finding of contamination is irrevocable, it can simply deny Grand Labs the right to market the serial, and we will be back at square one. By allowing reprocessing, however, Grand Labs will be assured that the government is giving it a full and fair opportunity to urge its position that serial 45-016 is marketable.
For these reasons, I would affirm the district court. I respectfully submit that it is unreasonable to find that a district court erred by requiring an administrative agency to fully and fairly review all the evidence in making its critical decisions.

Injunctive Relief

I respectfully submit that the district court’s decision denying all injunctive relief also should be upheld. The question whether a plaintiff is entitled to injunctive relief in a given case “addresses itself to the judicial discretion of the trial court,” Columbia Transit Corp. v. Jones, 572 F.2d 168, 173 (8th Cir.1978), and should be given due deference by this court. One of the requirements necessary for injunctive relief to be granted, is that the plaintiff has *969no adequate remedy at law. See, e.g., id. It is clear in this case that the USDA has an adequate remedy at law in the event of any future shipment of serial 45-016 or other VSTA violation by Dr. Pankratz.
Under 21 U.S.C. § 157, an adequate legal remedy exists for the USDA to enter any establishment where any virus, serum, toxin or other product used in the treatment of domestic animal is prepared, at any hour of the day or night to inspect and enforce compliance. I fail to see how an injunction in any way would create a greater deterrence from VSTA violation than does the statute itself. Furthermore, Dr. Pankratz’s conduct appears to be an isolated act, and the record reveals no basis for concluding that any likelihood exists that he will ship serial 45-016 again.
For the foregoing reasons, I dissent.

. The defendants were found not responsible for falsely labeling a biological product; for not having suitable tags or labels on a biological product; and for shipping a worthless product.

. The district court stated;
The USDA, as shown in the letters above, had taken a position that the first test, Exhibit A-l, of serial 45-016 showed contamination. Thereafter, they consistently held the position that no retesting could be done until such time as Grand could identify what the contaminant had been and successfully demonstrate that whatever the contaminant was, it was all now removed from serial 45-016. This is an impossible position because it assumes there was contamination. Grand made tests (Exs.I-1, O-1, L-l, H-2, V-2, E-3, G-3, A-4, B-4), all of which were negative for contamination (Trial Tr. 344). None of these were part of the administrative record and therefore were never considered by the USDA.
United States v. Grand Labs., Inc., No. C91-4113-DEO, at 37 (N.D.Iowa Sept. 22, 1997) (order).

. The district court set out the reasons why the first test showing contamination was questionable:
"While the government would urge the Court to accept the contamination of serial 45-016 as set out in Exhibit A-l, it should be noted that Robin Moffle and Wayne Behan rushed to tell the government about that test and the moving of that serial, and acted as though they were carrying out their duty as in-house USDA representatives at Grand. (Tr. 634.) At least part of the eagerness for this conduct is that Ms. Moffle admitted that she hated Dr. Pan-kratz. (Tr. 357.) Thomas Miller, Grand Central Services Manager, admitted that he and Moffle agreed to lie to Dr. Pankratz about the destruction of serial 45-016. (Tr. 423.) Behan and Moffle did not report other things to the government that would have shown that there were two sides to the contamination question. They did not tell USDA officials that Dr. Pankratz had told Behan he wanted to save serial 45-016 so that it could be reprocessed. They did not reveal that Exhibit 28 showed the product 45-016 in bulk was not contaminated. The plaintiff tries to minimize this omission by saying Dr. Pankratz also did not tell the USDA about Exhibit 28. However, USDA did not ask him for test information. They were then listening to a 'bad' report by Moffle which left out anything favorable. (Tr. 1433.) Ms. Moffle, when asked about this, said that she forgot to tell the USDA that. Moffle and Behan further did not report that they started another sterility test in secret on October 19, 1990 on the same samples as used in the first test, and on November 2, 1990, the results showed that the product was sterile. (Ex. I — 1.) After this test was completed, Ms. Moffle did not have it written up as shown in Exhibit 1-1 until almost a year later, when Dr. Pankratz heard about it and insisted that it be properly written up. (Tr. 610.) The defendants contend with some credence that the reason for these omissions was that they discredited and/or certainly questioned the reliability of the first test, Ex. A-l, which, of course, is the bottom line for all of this litigation.”
United States v. Grand Labs., Inc., No. C91-4113-DEO, at 30 (N.D.Iowa Sept. 22, 1997) (order) (quoting its earlier order of Aug. 14, 1996, at 55 n. 13).

. The district court found that the employees failed to report these satisfactory test results to the USDA because they disliked Dr. Pan-kratz.

. In any event, the experts acknowledged that lack of refrigeration is relevant to the question of potency, and that upon retesting it could be determined whether lack of refrigeration had any effect on the potency of serial 45-016. Ultimately, potency may very well affect the decision whether the serial can be marketed. However, this can only be discovered upon retesting of the serial.

. The district court stated:
The court finds that the agency did not fully consider several things it should have. These include but are not limited to fair consideration of the request to reprocess, that the agency ignored the regulations concerning the right of the defendants in matters involving quarantine and no-test, and acted arbitrarily and capriciously toward the legitimate requests of the defendants in that the administrative record was inadequate and there was no rational relationship between the evidence and their decision not to allow any reprocessing, and, as found here and in this court’s order of August 14, 1996, serial 45-016 has not been fully and carefully tested.
United States v. Grand Labs., Inc., No. C91-4113-DEO, at 51 (N.D.Iowa Sept. 22, 1997) (order).

. I find it is highly significant that the district court evaluated the new evidence from 4,000 pages of testimony and considered the evidence to be such that the USDA should consider it in determining whether serial 45-016 is marketable.

. Although they do not excuse Dr. Pankratz’s conduct, several facts help to explain it. It is clear from the record that Dr. Pankratz's sole motive in concealing serial 45-016 and substituting it with a bogus serial was to preserve the serial for retesting. Grand Labs had invested $300,000 in the serial and it was the company’s most important product. He had falsely been told by his employees that the USDA intended to destroy the allegedly contaminated product, and his employees had concealed from the USDA tests that showed no contamination.