District Court Rules on Jurisdiction and Non-Final Agency Action

August 26, 2008

In Novelty Distributors, Inc. v. Leonhart, the U.S. District Court for the District of Columbia recently confronted the issue of whether district courts have jurisdiction over a challenge to an agency action that is admittedly not final.   

Novelty Distributors, Inc. (“Novelty”), a distributor of controlled substances, must obtain a registration every year to distribute the List I chemicals ephedrine and pseudoephedrine.  Based on findings from an administrative inspection, the Drug Enforcement Administration (“DEA”) concluded that Novelty’s continued registration posed an imminent danger to the public health and safety and immediately suspended Novelty’s registration pursuant to 21 U.S.C. § 824(d). Following an expedited administrative hearing, and before DEA had issued its final decision, Novelty filed suit in federal district court seeking injunctive and declaratory relief.

DEA challenged Novelty’s choice of forum citing 21 U.S.C. 877 and the D.C. Circuit’s 2007 decision in John Doe, Inc. v. DEA.  In John Doe, which concerned DEA’s denial of a permit to import for bioequivalency testing a generic version of an FDA-approved drug, the Court affirmed a district court decision concluding that exclusive jurisdiction over Doe’s claims lies in the courts of appeals pursuant to 21 U.S.C. § 877.  The court found, however, that “[r]ather than supporting DEA’s argument, John Doe demonstrates that only the district court can have jurisdiction at any time prior to a final DEA decision.”  As noted by the court:

Novelty’s motion for a preliminary injunction is not a disguised attempt at forum shopping or gun-jumping by going directly to the district court before exhausting its administrative remedies, but is rather a request for temporary injunctive relief from its pre-hearing suspension, which the court of appeals lacks jurisdiction to consider, until such time as DEA issues a final agency determination regarding the suspension or revocation of its registration, which the court of appeals can hear on appeal. . . . Accordingly, this Court has jurisdiction to consider Novelty’s motion for a preliminary injunction against DEA’s suspension of Novelty’s registration pending a final agency determination on the matter.

In considering whether to issue a preliminary injunction, however, the court found that: (1) DEA did not act arbitrarily and capriciously in suspending Novelty’s registration for posing an imminent danger to the public health or safety; and (2) that Novelty had not met the burden necessary of showing a “substantial likelihood of success on the merits.”  The court ultimately denied Novelty’s motion for preliminary injunction.

By John A. Gilbert & Serafina E. Lobsenz