Notable Recent Third Circuit Decision in Appeal from FDC Act Conviction

August 20, 2008

On August 8, 2008, the U.S. Court of Appeals for the Third Circuit issued an opinion in an appeal from a conviction under, among other provisions, the criminal provisions of the Federal Food Drug and Cosmetic Act (“FDC Act”). 

A jury convicted Eric Goldberg of various crimes arising out of his sales of veterinary prescription drugs without a prescription.  Goldberg appealed his conviction, and the appellate court, despite affirming various other convictions (mail and wire fraud and possession with intent to distribute a controlled substance), reversed his FDC Act convictions.

Goldberg was convicted of felony violations of the FDC Act, which requires that the violations be done with the “intent to defraud or mislead.”  Criminal violations done without the intent to defraud and mislead are misdemeanors.  Based upon the evidence that Goldberg was open with both the FDA and his customers about his sale of prescription drugs without a prescription, the court reversed the felony convictions, and remanded the case to the district court for resentencing as misdemeanors.

In providing guidance to the district court, the appellate court sided with the government on an issue that FDA had recently argued for (unsuccessfully) before the United States Sentencing Commission.  We previously reported that FDA sought an amendment to the “loss” guideline so that adulterated and misbranded drugs were given no value.  In its comments, FDA recognized that approved drugs that were nevertheless adulterated or misbranded were treated differently under the guidelines than unapproved drugs. The Sentencing Commission did not adopt FDA’s proposal.  Thus, despite the distinction between misbranded and unapproved drugs, the court (seemingly incorrectly), applied the comment concerning unapproved drugs to the misbranded drugs at issue in Goldberg’s case.

Lastly, the court agreed with Goldberg that a two level enhancement for “violating a ‘prior specific judicial or administrative order, injunction, decree, or process not addressed elsewhere in the guidelines’– was unwarranted.”  In particular, the court stated that the enhancement was not warranted where the FDA had told Goldberg that he was “dispensing illegal drugs” but never told him to stop.

By J.P. Ellison

Categories: Enforcement