Metro Medical Supply, Inc. v. Shalala, 3:96-1075.

959 F.Supp. 799

METRO MEDICAL SUPPLY, INC., et al. v. Donna E. SHALALA, et al.

No. 3:96-1075.

United States District Court, M.D. Tennessee, Nashville Division.

December 12, 1996.

Hugh C. Howser, Jr., Nashville, TN, for Plaintiff.

Van S. Vincent, Nashville, TN, for Defendant.

ORDER

CAMPBELL, District Judge.

This is a civil action to enjoin a criminal investigation and prosecution.

Pending before the Court are the following Motions: Motion for Preliminary Injunction (Docket No. 2); Emergency Motion For Expedited Temporary Injunction Hearing (Docket No. 7); Motion To Quash Subpoena (Docket No. 15); and Defendant's Response To Plaintiffs' Motion For Preliminary Injunction And Request That Plaintiffs' Verified Complaint Be Dismissed For Failure To State A Claim Upon Which Relief May Be Granted (Docket No. 9).

The Court held a hearing on all pending motions on December 11, 1996. For the reasons described herein, the Court rules on the pending Motions as follows:

The Motion For Preliminary Injunction (Docket No. 2) is DENIED. The Emergency Motion For Expedited Temporary Injunction Hearing (Docket No. 7) is DENIED as to the relief requested, but GRANTED to the limited extent that the Court held a hearing on December 11, 1996. The Motion To Quash Subpoena (Docket No. 15) is DENIED as moot. The Court found the proffered testimony of Earl Davis and Larry Loftis unnecessary to a determination of the Motion For A Preliminary Injunction.¹ The request that Plaintiffs' Verified Complaint be dismissed for failure to state a claim upon which relief may be granted (Docket No. 9) is held under advisement until the Plaintiffs have an opportunity to file a written response in accordance with Local Rule 8(b)(3).

I. INTRODUCTION

Metro Medical Supply, Inc., Bart Ashley, and F.H. Thompkins, III have filed a Complaint asking for certain declaratory and injunctive relief. F.H. Thompkins subsequently filed a notice of voluntary dismissal and is no longer a party.

The Complaint asks this Court to "enter a preliminary injunction, after notice and hearing in which Defendants are enjoined from enforcement of the PDMA/PDA of 1992, 21 U.S.C. § 353(e)(1)(A), including any criminal investigation or criminal prosecution, as to these Plaintiffs only, until such time as the Court declares the rights of the parties" (Docket No. 1, p. 18) (emphasis added).

Exhibit 8 to the Complaint indicates that the United States Attorney is also investigating Metro Medical Supply, Inc. for certain other alleged offenses (e.g., wire fraud, money laundering, forfeiture).

Plaintiffs subsequently moved this Court for a preliminary injunction enjoining the Defendants from investigating and/or prosecuting them with respect to any alleged violations of the Prescription Drug Marketing Act of 1987 ("PDMA"), as amended by the Prescription Drug Amendments of 1992 ("PDA"), including but not limited to violations of 21 U.S.C. §§ 331(t) or 353(e). For grounds, the Plaintiffs state that:

(1) Unless restrained by this court, the defendants will continue their ongoing criminal investigation of the plaintiffs and it is reasonably believed will wrongfully attempt to criminally prosecute the plaintiffs for asserted violations of the PDMA as amended by the PDA, including but not limited to 21 U.S.C. §§ 331(t) and 353(e);

(2) Such actions by the defendants will result in irreparable injury, loss and damages to the plaintiffs, as more particularly appears in the Verified Complaint, filed simultaneously herewith;

(3) The issuance of a preliminary injunction as requested will not cause undue inconvenience or loss to the defendants but will prevent irreparable injury to the plaintiffs;

(4) The plaintiffs are likely to succeed on the merits in a trial on this declaratory judgment claim; and,

(5) The issuance of the requested preliminary injunction is likely to advance the public interest.

(Docket No. 2).

Defendants in this case are Donna E. Shalala, Secretary of the Department of Health and Human Services; Dr. David Kessler, Commissioner of the Food and Drug Administration; Janet Reno, Attorney General of the United States; and John M. Roberts, United States Attorney for the Middle District of Tennessee.

Plaintiffs then filed an Emergency Motion For An Expedited Hearing (Docket No. 7) ("Emergency Motion"). In the Emergency Motion, Plaintiffs essentially restate their Motion For A Preliminary Injunction and add an alternative request. Plaintiffs, alternatively, request that this Court quash the grand jury subpoena of F.H. Thompkins until such time as a hearing on Plaintiffs' "motion for a temporary injunction may be had" (Docket No. 7). Plaintiffs also request a continuation of the grand jury proceeding to evaluate a potential conflict of interest with counsel.

At the time the Plaintiffs' Motions were filed, F.H. Thompkins was scheduled to give his grand jury testimony on December 11, 1996 at 1:00 p.m. The Government's Response indicates that the testimony has now been continued thirty days. Moreover, as discussed above, F.H. Thompkins is no longer a party.

The PDMA and PDA contain certain provisions that require a paper trail for the sales history of certain prescription drugs. This is commonly referred to as a "pedigree." Plaintiffs claim that the pedigree provisions of the PDMA and PDA are unconstitutional on two grounds. First, Plaintiffs assert that the pedigree provisions are unconstitutionally void for vagueness under the Fifth Amendment of the Constitution. Second, Plaintiffs aver that the pedigree provisions constitute an unconstitutional delegation of legislative authority, under Article I, Section 1, of the Constitution, to the FDA and, in turn, to private drug manufacturers.

Plaintiffs allege that they are suffering irreparable injury from the ongoing grand jury investigation and threat of prosecution because they are losing business, suffering damage to their reputations, and that there is a negative impact on a possible sale of Metro Medical Supply, Inc. stock.

Plaintiffs have asked the Court to declare the relevant pedigree provisions of the PDMA and PDA unconstitutional and to enjoin the Defendants from any further criminal investigation or prosecution of them until such time as the Court declares the rights of the parties.

II. MOTION TO ENJOIN CRIMINAL INVESTIGATION AND PROSECUTION

Obtaining an injunction against a criminal investigation or prosecution is very difficult. Courts are extremely reluctant to enjoin criminal investigations and prosecutions. This Court has found no published decision in which a court enjoined an ongoing federal criminal investigation under similar circumstances. Dicta exist, however, suggesting that a prosecutor could be enjoined for repeatedly engaging in illegal or unconstitutional actions. Paul S. Diamond, Federal Grand Jury Practice and Procedure § 401[E] (3rd ed.1995). The reluctance of federal courts to enjoin criminal investigations and prosecutions is well founded.

In the event the Court issued the requested injunction against the United States Attorney, the pending grand jury investigation generally would be effectively enjoined given the role of the United States Attorney in such matters.² Therefore, the law applicable to grand juries provides helpful context and guidance.

In United States v. R. Enterprises, Inc., 498 U.S. 292, 111 S.Ct. 722, 112 L.Ed.2d 795 (1991), the Supreme Court summarized the role of a federal grand jury in criminal investigations:

The grand jury occupies a unique role in our criminal justice system. It is an investigatory body charged with the responsibility of determining whether or not a crime has been committed. Unlike this Court, whose jurisdiction is predicated on a specific case or controversy, the grand jury, `can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not.'... The function of the grand jury is to inquire into all information that might possibly bear on its investigation until it has identified an offense or has satisfied itself that none has occurred. As a necessary consequence of its investigatory function, the grand jury paints with a broad brush. `A grand jury investigation is not fully carried out until every available clue has been run down and all witnesses examined in every proper way to find if a crime has been committed.'

....

The investigatory powers of the grand jury are nevertheless not unlimited.... Grand juries are not licensed to engage in arbitrary fishing expeditions, nor may they select targets of investigation out of malice or an intent to harass.

....

We begin by reiterating that the law presumes, absent a strong showing to the contrary, that a grand jury acts within the legitimate scope of its authority.... Consequently, a grand jury subpoena issued through normal channels is presumed to be reasonable and the burden of showing unreasonableness must be on the recipient who seeks to avoid compliance.

498 U.S. at 301, 111 S.Ct. at 725-727.

In addition to the above considerations, to obtain an injunction against a criminal investigation or prosecution, the moving party is required to prove the customary prerequisites to the granting of injunctive relief under Rule 65. This, of course, assumes that the Court finds it necessary to determine the merits of the substantive claims.

The test for whether a court should issue preliminary injunctive relief is as follows:

(1) whether the plaintiff has shown a strong or substantial likelihood of success on the merits; (2) whether irreparable harm will result without an injunction; (3) whether issuance of a preliminary injunction will result in substantial harm to others and (4) whether the public interest is advanced by the injunction.

Thomas By and Through Thomas v. Davidson Academy, 846 F.Supp. 611, 616 (M.D.Tenn.1994).

Plaintiffs have cited the case of Boggs v. Bowron, 842 F.Supp. 542 (D.D.C.1993) as their sole authority for ...