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August 15, 1963

DIAPULSE MANUFACTURING CORP. OF AMERICA, Abraham J. Ginsberg, Jesse Ross, William F. Kelly, Jr., Bernard O. Siler, Irving Grad and Joseph Ross, Plaintiff,

The opinion of the court was delivered by: DOOLING

In two libel actions (consolidated for trial) in which the alleged libel is that plaintiffs' 'Diapulse' physiotherapeutic device was valueless and the claims made for it unfounded in fact, defendants, by permission, move for leave to plead as complete defenses that the plaintiff New York manufacturer or wholesaler of the Diapulse physiotherapeutic device had not applied for and received a registration certificate as a manufacturer of 'devices' from the New York State Board of Pharmacy as required by New York Education Law, § 6805, subd. 5 which provides:

' § 6805. Registration and operation of establishments * * *

 '5. Manufacturer; wholesaler. No manufacturer, bottler, packer and/or wholesaler of drugs or devices shall operate as a manufacturer, bottler, packer and/or wholesaler of drugs or devices until the proprietor thereof has applied for and received a registration certificate from the board. Such proprietor of every manufacturing, bottling, packing and/or wholesaling establishment shall thereafter biennially in the month of September apply for registration, pay the required registration fee, and receive a certificate of registration which must be conspicuously displayed at all times in the place of business. The initial fee for a new certificate of registration required under this subdivision shall be one hundred dollars. The biennial registration fee shall thereafter be fifty dollars for each such place of business. In the event that the location of such place of business shall be changed, the proprietor thereof shall apply to the department for inspection of the new location and endorsement of registration certificate for such new location. The fee for such inspection and endorsement shall be fifty dollars, unless it shall appear to the satisfaction of the department that the change in location is of a temporary nature and due to fire, flood or other disaster.'

 Plaintiffs oppose the motion as prejudicially belated and, by cross motions, seek to strike the defense, if allowed to be interposed, as insufficient in law and unsupported on the facts agreed on by the parties (or put beyond dispute by their affidavits).

 The litigation commenced on February 15, 1961. Defendants' counsel did not learn of the possible applicability of Education Law, 6805, subd. 5 until after the answer was interposed in December 1961. By letter of February 7, 1962, he inquired of the Pharmacy Board as to whether plaintiff was registered and he was advised that it was not and, in the understanding of the clerk writing on behalf of the Board, was not required to be registered. When defense counsel was making ready for trial over a year later he reverted to the topic and was then told by the Secretary of the Board that if the diapulse device was as described the manufacturer and wholesalers would have to register just as did diathermy machine manufacturers. Shortly after this call defense counsel told plaintiff's counsel that he meant to rely on the lack of registration as a defense and, if it had to be pleaded to be available (which he contended it did not have to be), he would apply at pretrial for leave to amend (Rule 16(2)). In view of the importance of the possible defense and the lapse of time before its assertion, the matter was referred by the pretrial judge to motion term so that the questions of the right to amend and the validity of the defense could be fully briefed and argued.

 The motion for leave to amend is granted. The defense is one that, if valid, gives effect to a public policy. The delay in pleading it has not increased the plaintiffs' difficulty in meeting the defense nor altered, objectively, the plaintiffs' rights, although, if the defense is valid, plaintiffs will have lost the cost of preparing the case to date. Plaintiff may not complain for, under our system, it must be treated as prescient of this point of law and to have taken the risk of it. Apart from that, defendant's counsel go far to explain the delay in terms exculpatory certainly of their client and of counsel as well. See 3 Moore, Federal Practice (2d ed.) 829-830, 833, 835. To the extent that the matter is discretionary under Rule 15(a) the discretion is exercised in favor of allowing the amendment for the reasons and on the grounds stated without consideration of the merit of the defense tendered beyond observing that it is not on its face frivolous and that, in the circumstances of its presentation, it is not tendered in bad faith or for the purpose of delay or with a view to injecting legally insufficient but prejudicial matter into the trial.

 The first issue arising on the motions to strike the defense is the meaning of the statute. Section 6805 is part of Article 137 -- 'Pharmacy' -- of the Education Law but it now embraces much of the subject matter and uses much of the language and definitions found in the Federal Food, Drug & Cosmetic Act (21 U.S.C.A. § 301 et seq. except §§ 341-348, relating to food). However, there is not in the Federal Act any section comparable to Section 6805, which provides for registration of pharmacies, drug stores, registered stores, manufacturers, wholesalers, and auctioneers.

 Section 6801, subd. 26 defines a 'device' as including an apparatus intended for use in the cure, mitigation or treatment of disease or to affect the structure or any function of the body (See 21 U.S.C.A. § 321(h)). Plaintiff's device is a 'physiotherapeutic modality or device' of the class of 'electronic devices designed to treat human ills by application to areas of the human body'. Plaintiff's Diapulse machine is, in consequence, a 'device' within the meaning of that term as it is used in Article 137.

 Section 6805, subd. 5, quoted above, requires all manufacturers and wholesalers of 'devices' to register with the State Board of Pharmacy and that would inescapably apply to plaintiff unless excepted under Section 6816, subd. 2 e which provides that Article 137 shall not apply -- except as to adulterating, misbranding and substituting --

 'e. To surgical or dental instruments and accessories (except thermometers and hypodermic syringes), gases, oxygen tents, gas pressure reducing regulators, X-ray apparatus, therapeutic lamps, splints and stethoscopes, their components, parts and accessories, or to equipment, instruments, apparatus and contrivances used to render such articles effective in medical, surgical or dental treatment; or to articles or substances intended for generally recognized mechanical or industrial consumption or use.'

 The rationale of the exclusion is puzzling: counsel advise that the bill jacket discloses that it was pointed out before the bill was signed that the exception did not embrace 'a lot of other hospital equipment such as basal metabolism machines, electrocardiographs, physiotherapy equipment, etc.' The bill jacket also included a summary of the bill submitted to Governor's Counsel which said of the registration provision (then numbered § 1354)

 'Section 1354 includes a provision useful in the enforcement of the law. It requires every manufacturer, bottler, packer, and wholesaler of drugs or devices in this State to register with the Board at a nominal fee. The purpose is not to receive a fee beyond enough to cover expenses. The purpose is to have a list of all places in the State at which drugs and devices are manufactured, which will greatly facilitate the enforcement of the law.'

 It will be evident that there is no clue to the principle of the exception and so it is all but impossible to treat it as capable of exempting a type of device not in use at the time of the enactment but within some discernible principle of exception.

 However, administrative history, again uncertain in principle although clear enough in its practice, all but turned the exception inside out: only manufacturers of clinical thermometers, hypodermic syringes -- and contraceptive devices -- were thought of as being required to register. It is not known exactly who was permitted to register, even if not required to under the administrative practice. Counsel for both parties, together and separately, interviewed staff of the Board of Pharmacy: as noted above, defense counsel, originally advised that a manufacturer of such devices did not have to register, was also later advised that it would have to register inasmuch as diathermy manufacturers were required to register; in a joint interview of counsel with the Executive Secretary, a staff attorney and an employee of the Board, it was stated that the Board required registration only of makers and wholesalers of clinical thermometers, syringes and contraceptives and did not require the makers of diathermy machines and similar devices to register; this action was ascribed to the effect of Section 6816, subd. 2 e, which was said possibly to exclude such devices as being 'therapeutic lamps' although concededly neither diathermy or diapulse machines are considered, mechanically, to be 'lamps'; the intimation of the Board's Counsel that the plainly unexcepted devices (clinical thermometers and hypodermic syringes) are usually sold in pharmacies and that the elusive 'principle' of the exception is that it embraces articles generally sold outside the pharmacy directly to hospitals and physicians through surgical supply houses is attractive if it is thought that Section 6816, subd. 2 e must have a principle and cannot be read as an arbitrary collection of randomly excepted devices that have nothing in common and do not in any case exhaust the class of devices that have the same public health, welfare and safety characteristics as the one named. In any case, after the joint interview of counsel, and on May 20, 1963 Counsel ...

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