FDA’s Permanent Injunction Authority: Is There a Crack in FDA’s Resolve to Shut Down a Facility’s Operations?

April 6, 2016

By Andrew J. Hull

FDA often seeks permanent injunctions against FDA-regulated companies that allegedly run seriously afoul of FDA’s cGMP requirements. FDA usually asks courts, in granting a permanent injunction (the agency’s most powerful civil enforcement tool against U.S. facilities), to order the complete shutdown of a facility’s operations. Indeed, in the proposed consent decrees that the agency usually offers to industry as an alternative to a court battle, FDA routinely requires a shutdown provision that only terminates when FDA reinspects a facility and issues what is commonly referred to (at least by FDA litigation wonks) as a “green light letter.”

A recent case in the Eastern District of Michigan, United States v. S. Serra Cheese Co. (No. 2:14-cv-13077), however, signals a hesitancy by courts to allow such a drastic provision in an injunction, as well as likely unwillingness by the government to press for a company’s shutdown when it receives pushback from either the company or the court.

After multiple inspections revealing cGMP violations and a Warning Letter issued in 2013, the government filed a complaint for a permanent injunction in August 2014 against S. Serra Cheese Company (“Serra”), a manufacturer of ready-to-eat cheeses, and its co-owners. The government alleged that the defendants: (1) introduced or delivered for introduction adulterated food, as defined by the FDCA, into interstate commerce; and (2) caused the adulteration of articles of food while such articles were held for sale after shipment of their component parts into interstate commerce. Complaint at 6. Specifically, the government alleged that the cheese products had been

prepared, packed or held under insanitary conditions whereby they may have become contaminated with filth or rendered injurious to health. The insanitary conditions include the presence of generic, nonpathogenic E. coli and L. innocua and Defendants’ failure to implement effective monitoring and sanitation controls in accordance with [cGMP] requirements for food.  

Id. at 4.

In the complaint, as well as in the government’s proposed permanent injunction, the government sought an order prohibiting Serra and its co-owners from “receiving, preparing, processing, packing, holding, and distributing all food at or from their facility . . . unless and until” they bring such operations into compliance with the FDCA and FDA’s regulations “to FDA’s satisfaction.” Id. at 8-9.

Ruling on a motion for summary judgment filed by the government, the Court held that the company had violated the FDCA by introducing adulterated food into interstate commerce and causing food to become adulterated while it was held for sale after shipment, and it granted the government’s motion for summary judgment. Order at 10. The Court held that the government was entitled to injunctive relief, but noted that it was “not disposed to immediately close the facility; the fact that it has continued to operate during the pendency of the case is of significance.” Id. at 14. The court then ordered the parties to reach a resolution on the language of the injunction.

It appears that the government acquiesced in the judge’s concern that Serra be permitted to continue operations, despite the government winning its motion for summary judgment. The only issue that the government and defendants were unable to resolve without the Court’s involvement was the extent of time for which the injunction would remain in effect. The government wanted it to remain for five years; the defendants wanted a sunset provision of one year.

In the injunction issued on April 4, 2016, the Court imposed various cGMP controls and reporting requirements upon the defendants, presumably as the parties had negotiated, but it sided with the government by imposing a five-year sunset provision. The Court, however, did not order a shutdown of Serra’s operations.

The most interesting fact in this case is that the Court did not want to allow a shutdown of Serra’s operations, and that the government apparently backed off from seeking this provision in the injunction.

Often, larger drug and device companies will feel the need to ensure peace between them and FDA, and they will not challenge a shutdown provision in a proposed FDA injunction for fear of further angering FDA. Food companies, on the other hand, are often smaller, and scrutiny from FDA is rarer than with drug and device companies. These food companies may feel less of a need to stay in FDA’s good graces, and might freely challenge proposed injunction provisions that they believe are too onerous. And, from other cases we have observed, these food companies appear to be having some success with pushing back against shutdown provisions and continuing operations throughout the entirety of the term of an injunction. See, e.g., Permanent Injunction, United States v. Am. Mercantile Corp., No. 2:11-cv-02371 (W.D. Tenn. Nov. 8, 2012) (a case in which this firm represented the defendants).

Of course, all cases are fact specific, and it is impossible to know how a particular court or the government will act in other civil injunction cases. It does appear, though, that, in civil injunction cases, if FDA-regulated companies push back against the government’s proposal for a shutdown of company operations, courts may reject the government’s demand for an injunction that completely shuts down a company’s operations and puts most or all of its employees out of work. And the government may be willing to acquiesce to this objection if properly pushed.