United States v. Argent Chemical Laboratories, Inc.
Docket: No. 95-35167
Court: Court of Appeals for the Ninth Circuit; August 16, 1996; Federal Appellate Court
The Food and Drug Administration (FDA) seized veterinary drugs from Argent Chemical Laboratories without a judicial warrant or a showing of probable cause, which was challenged under the Fourth Amendment. The case arose after multiple inspections revealed deficiencies at Argent. Following these inspections, the FDA obtained an in rem arrest warrant for the alleged violations directly from the District Court Clerk, leading to the seizure of over $100,000 worth of products. Argent contested the seizure's constitutionality, and the district court ruled in favor of Argent, stating the seizure was unconstitutional and quashed the warrant. The government appealed, resulting in a stay of the district court's order.
The statutory framework allowed the FDA to act without a judicial review or probable cause finding because the seizure was categorized as a forfeiture for federal statutory violations under the Food, Drug, and Cosmetic Act. As per the Supplemental Rules for Certain Admiralty and Maritime Claims, the government could obtain a warrant immediately upon filing a verified complaint, bypassing the usual requirement for judicial intervention.
Argent contends that the seizure of drugs, conducted under a warrant, violates the Fourth Amendment's prohibition on unreasonable searches and seizures and the requirement of probable cause. However, the court finds this argument unpersuasive due to the nature of Argent's business in the veterinary drug industry, which falls under the Colonnade-Biswell exception. This exception allows warrantless searches in closely regulated industries, as established in Colonnade Catering Corp. v. United States and United States v. Biswell. The Fourth Amendment's protections extend to commercial premises, but businesses in pervasively regulated industries have a reduced expectation of privacy, allowing Congress to set reasonable standards for searches and seizures.
Argent argues that its veterinary drug business does not qualify for this exception and that the exception does not apply to specific seizures of misbranded or adulterated goods. The court rejects these arguments, affirming that the veterinary drug industry is closely regulated, as demonstrated by the comprehensive regulations in the Food, Drug, and Cosmetic Act. The Supreme Court's standards from New York v. Burger are applied, confirming that a warrantless search is reasonable if there is a substantial government interest, the inspections are necessary to further the regulatory scheme, and the inspection program provides a constitutionally adequate substitute for a warrant. The court concludes that all these criteria are satisfied in this case, given the extensive regulations governing the veterinary drug industry.
Good manufacturing practices for human and animal drugs are detailed in 21 C.F.R. Pts. 210, 211. The veterinary drug industry is as extensively regulated as the vehicle dismantling industry, which the Supreme Court has classified as 'closely regulated.' The duration of regulatory schemes is relevant but not determinative; instead, the pervasiveness and regularity of federal regulation dictate warrant requirements. The FDA's regulation of the veterinary drug industry meets the criteria established in Burger v. New York.
Firstly, there is a substantial government interest in the regulatory framework governing inspections, ensuring the safety and effectiveness of animal drugs. Despite arguments that animal drug regulations are less stringent and economically motivated, the government maintains a significant interest in these regulations. Secondly, warrantless inspections are essential to advance the regulatory scheme, as unannounced inspections act as a deterrent against potential violations. Requiring warrants could compromise the regulatory intent by alerting owners to inspections. The necessity for swift action to address misbranded products further supports the need for warrantless searches, which are critical to maintaining the integrity of veterinary drugs.
The regulatory framework in question provides a constitutionally adequate substitute for a warrant, fulfilling the third requirement established in *Burger v. New York*. The regulatory statute serves two primary functions of a warrant: it notifies the commercial property owner that a search is conducted under the law with a defined scope, and it restricts the discretion of inspecting officers. The Act, regulations, and Supplemental Rules for Certain Admiralty and Maritime Claims collectively establish this constitutional adequacy. Inspections are conducted with prior notice, and their scope is statutorily limited. Seizures are restricted to adulterated or misbranded drugs, with articles needing to be described with reasonable particularity, and the government's complaint must be verified. Additionally, seizures generally require approval from multiple FDA offices and the Department of Justice.
The operation of Argent falls under the *Colonnade-Biswell* exception to the Fourth Amendment's warrant requirement. Argent argues that this exception applies only to inspections, which is a flawed interpretation. Although *Burger* primarily addresses inspections, it also acknowledges the admissibility of evidence obtained during such inspections. The *Colonnade* and *Biswell* cases affirm that seizures of contraband discovered during permissible inspections do not violate the Fourth Amendment.
Argent’s strongest argument, accepted by the district court, references *United States v. Device Labeled 'Theramatic'*, where the Ninth Circuit ruled that the FDA's seizure of a misbranded medical device from a physician’s office violated the Fourth Amendment. In that case, the court emphasized that the physician deserved Fourth Amendment protections in their office, akin to those in their home. While some administrative searches may occur under a warrant issued on less than probable cause, the government in *Theramatic* was not conducting random inspections but rather targeting a specific office to seize a known device.
The Colonnade-Biswell exception to the Fourth Amendment's warrant requirement was deemed inapplicable because the search in question was not part of a statutory program aimed at inspecting physicians’ offices. The ruling highlighted that the seizure in *Theramatic I* involved an impermissible invasion of a physician's privacy through a physical search by federal agents, distinguishing it from situations where property in open areas is seized without privacy intrusion. The court clarified that the *Colonnade-Biswell* exception is based on a diminished expectation of privacy within closely regulated industries, which did not apply to the physician in *Theramatic I*, as they were not closely regulated by the FDA.
The district court misinterpreted *Theramatic I*, suggesting it allowed inspections of closely regulated businesses without a warrant, but the key issue was the level of privacy invasion. In contrast, Argent was closely regulated by the FDA, granting it a reduced expectation of privacy that was not violated by the warrant execution. The court concluded that the FDA's return for a warrant execution did not infringe upon Argent's Fourth Amendment rights, as the seizure occurred within the regulatory framework authorized by Congress. Ultimately, the seizure of Argent’s drugs was upheld as constitutional under the *Colonnade-Biswell* exception, reversing the district court's decision. The regulations governing Argent's operations were extensive, covering various aspects of manufacturing and distribution, which contributed to the legitimacy of the FDA's actions.
