UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK
January 28, 1985
UNITED STATES OF AMERICA, against GEL SPICE CO., INC., BARRY ENGEL AND ANDRE S. ENGEL, Defendants
The opinion of the court was delivered by: MCLAUGHLIN
MEMORANDUM AND ORDER
JOSEPH M. MCLAUGHLIN, U.S.D.J.
The defendant corporation, its president, Barry Engel, and its vice-president, Andre Engel, are charged in a ten-count Information alleging, in substance, that the defendants permitted food to become adulterated within the meaning of §§ 342(a)(3) and 342(a)(4) of the Food, Drug and Cosmetic Act (the "Act"), 21 U.S.C. § 301 et seq. Defendants made several motions to suppress evidence and to dismiss certain counts of the Information. United States Magistrate A. Simon Chrein of this Court denied those motions, and defendants have appealed. 28 U.S.C. § 636(b). This Memorandum and Order embodies ruling made orally on October 21, 1983.Facts
Gel Spice, Inc., has been the subject of regular inspections by the Food and Drug Administration (FDA) since 1972. In July 1976, March-April 1977, and July 1977, FDA inspectors conducted three extensive inspections of the Gel Spice warehouse in Brooklyn, New York. On those occasions photographs were taken and certain lots of allegedly adulterated foods were seized.
Three hearings were subsequently held pursuant to § 305 of the Act, 21 U.S.C. § 335. Section 305 hearings afford a person against whom the FDA is contemplating a criminal prosecution "appropriate notice and an opportunity to present his views, either orally or in writing, with regard to such contemplated proceeding" before the matter is referred to the United States Attorney for prosecution. Id.
The first § 305 hearing was held on October 27, 1976 following the July 1976 inspection, and the second on December 20, 1977 following the March-April and July 1977 inspections. On September 18, 1978, the FDA Chief Counsel formally referred a request for prosecution of Gel Spice to the Office of the United States Attorney in the United States Department of Justice.
In January 1979, the FDA conducted another inspection, which disclosed an active rodent infestation on the Gel Spice premises. Another § 305 hearing was held on May 30, 1979; and this Information was filed in December 1980.Discussion
1. FDA's Good Faith
Defendants' first motion is to dismiss the Information or to suppress evidence on the ground that the government obtained the evidence in bad faith; that is, that the government conducted the searches, not in furtherance of administrative purposes, but rather to obtain evidence for a criminal prosecution that was already planned. Defendants contend that they are entitled to an evidentiary hearing at least on the issue of the government's good faith.
A regulatory agency may investigate possible violations of law through its administrative process, provided that its inquiries are for a proper purpose, the information sought is relevant to that purpose, and the statutory procedures are observed. United States v. Powell, 379 U.S. 48, 57-58, 13 L. Ed. 2d 112, 85 S. Ct. 248 (1964). Once the agency has established the existence of a valid civil purpose, the burden shifts to the defendants to come forward with evidence of bad faith. See United States v. O'Henry Film Works, 598 F.2d 313, 320 (2d Cir. 1979); United States v. Morgan Guaranty Trust Co., 572 F.2d 36, 42-43 n.9 (2d Cir.), cert. denied, 439 U.S. 822, 99 S. Ct. 89, 58 L. Ed. 2d 114 (1978). Magistrate Chrein held (Interim Report and Recommendation at 11-12), and I agree, that the burden is on the defendants in this case "to disprove the actual existence of a valid . . . purpose . . ." United States v. LeSalle National Bank, 437 U.S. 298, 316, 98 S. Ct. 2357, 57 L. Ed. 2d 221 (1978).
Before obtaining evidentiary hearing on the issue of the government's good faith, defendants must make a substantial preliminary showing of bad faith. United States v. O'Henry's Film Works, supra, 598 F.2d at 320; United States v. Morgan Guaranty Trust Co., supra, 572 F.2d at 42-43 n.9; United States v. Morgan Guaranty Trust Co., 524 F. Supp. 24, 27 (S.D.N.Y. 1981). To establish bad faith, defendants must show that the sole purpose of the investigation was investigatory, rather than regulatory. United States v. LaSalle National Bank, supra, 437 U.S. at 316-17; Securities and Exchange Commission v. Dresser Industries, Inc., 202 U.S. App. D.C. 345, 628 F.2d 1368, 1387 (D.C.Cir.)(en banc), cert. denied, 449 U.S. 993, 66 L. Ed. 2d 289, 101 S. Ct. 529 (1980); United States v. Schutterle, 586 F.2d 1201, 1203 (8th Cir. 1978).
I agree with the Magistrate Chrein that the FDA conducted its investigation pursuant to a valid administrative scheme and not for the purpose of gathering evidence (Final Report and Recommendation at 2-3). Magistrate Chrein further found that the government made its decision on September 18, 1978, to prosecute defendants for the violations discovered at the July 1976, March-April 1977, and July 1977 inspections. The decision to prosecute defendants for the January 1979 violations was made on November 21, 1979. Id. These findings, which I adopt, undermine defendants' contention that the FDA inspections were "for an investigatory rather than regulatory purpose." United States v. Shaefer, Michael and Clairton Slag, Inc., 637 F.2d 200, 204 (3d Cir. 1980).
An evidentiary hearing is not required without a meaningful factual showing of an improper purpose by the agency. Securities and Exchange Commission v. Howatt, 525 F.2d 226, 229 (1st Cir. 1975). I am satisfied that the defendants have made no such showing in this case. Accordingly, defendants' motion for dismissal, suppression or an evidentiary hearing regarding the good faith of the FDA is denied.
2. Discovery of FDA Records
Because I have found that defendants failed to make a substantial preliminary showing of bad faith, it follows that they are not entitled to discovery of internal FDA records related to the inspection of the Gel Spice premises beyond those already in their possession. I reject defendants' contention that they are entitled to discovery as a matter of law. In accordance with United States v. Berrios, 501 F.2d 1207 (2d Cir. 1974), Magistrate Chrein made an in camera inspection of the materials sought by defendants. He determined that the documents sought were not relevant to the defenses raised; that is, they would not tend to establish the elements of any defense (Interim Report and Recommendation at 16-17). Under Berrios, therefore, they need not be produced. I have conducted a de novo examination of the documents and conclude that they are not demonstrably relevant to the defenses raised.Furthermore, the documents in question closely parallel records that have already been provided to the defendants in discovery proceedings. Their right of confrontation has been rejected.
I am satisfied that Magistrate Chrein's ex parte examination of the documents was proper. Fed. R. Crim. P. 16(d)(1) permits a party to make an ex parte showing when seeking a protective order; the adversary's rights are protected by the fact that the text of the party's statement must be preserved in the event of an appeal. Id. Counsel for the government was present solely to identify documents and answer questions. The ex parte examination was well within the bounds of the Code of Professional Responsibility and the Code of Judicial Conduct. No prejudice has inured to defendants.
3. Statements Made During FDA Inspections
Defendants also move to suppress all statements made by Barry Engel and Andre Engel during the four inspections of the Gel Spice premises. The motions are based on alleged violations of defendants' rights under the Fourth and Fifth Amendments.
Defendants made the statements in question during inspections conducted pursuant to lawful authority and consistent with the requirements of the Act, 21 U.S.C. § 374. FDA personnel presented written notice of each inspection and produced the proper credentials. I agree with Magistrate Chrein that defendants consented to each of the inspections (Final Report and Recommendation at 11). Defendants have submitted no evidence to support their contention that statements were obtained from them involuntarily, either through coercion or duplicity. Because the defendants were not in custody, Miranda warnings were not required. See United States v. Jamieson-McKames Pharmaceuticals, Inc., 651 F.2d 532, 543 (8th Cir. 1981), cert. denied, 455 U.S. 1016, 72 L. Ed. 2d 133, 102 S. Ct. 1709 (1982); United States v. Dudgeon, 279 F. Supp. 300, 302 (D.Mass. 1967). The statements were made voluntarily during lawful inspections; I therefore deny the motion to suppress.
4. Statements Made at Section 305 Hearings
Defendants have also moved to suppress statements made at the § 305 hearings. These hearings were held following the FDA inspections to give defendants an opportunity to head off a criminal prosecution for violation of the Act. See 21 U.S.C. § 335; 21 C.F.R. § 7.84 (1982). Defendants' motion to suppress is based on the allegation that at the time of each hearing the FDA had already recommended prosecution for the alleged violations that gave rise to the hearing. They contend that if statements made at such a hearing are not given adequate consideration before a decision to prosecute is reached, the maker of the statement has been misled as to the purpose of the hearing.
As noted above, however, I have adopted Magistrate Chrein's findings that the decision to prosecute was made after those hearings (Final Report and Recommendation at 2-3). Thus defendants have not been misled. I adopt Magistrate Chrein's finding that defendants were well aware of the possible consequences of the hearings (Final Report and Recommendation at 13); the notice of hearing makes clear that "any civil action which may have taken against the goods involved, such as seizure, does not preclude prosecution of those responsible for the violation; the hearing concerns the possible criminal action only." Accordingly, defendants' motion to suppress statements made during the § 305 hearings is denied.
5. Suppression of Gel Spice Records
The individual defendants have also moved under 21 U.S.C. § 373 to suppress records regarding the shipment and importation of certain foods. Section 373 provides that carriers engaged in interstate commerce and persons receiving food in interstate commerce or holding such articles so received must furnish to the FDA records relating to the shipment of foods. Section 373 states, however, that evidence obtained in this fashion "shall not be used in a criminal prosecution of the person from whom obtained." Id.
Immunity under § 373 arises when (1) the FDA has requested the records, (2) the custodian has refused to provide them, and (3) the FDA investigator again requests the records specifically under the authority of 21 U.S.C. § 373 and presents a written statement to that effect. United States v. Lyon Drug Co., 122 F. Supp 597, 601 (E.D.Wisc. 1954); United States v. Scientific Aids Co., 117 F. Supp. 588, 589 (D.N.J. 1954). Magistrate Chrein found that the FDA investigators did not invoke the authority of § 373 to obtain the records, and, accordingly that the immunity provisions of the statute did not apply (Final Report and Recommendation at 3). Magistrate Chrein further found that defendants showed the records to the FDA investigators voluntarily, which also precludes invocation of § 373 immunity (Final Report and Recommendation at 4). See United States v. Herold, 136 F. Supp. 15, 16 (E.D.N.Y. 1955); United States v. Lyon Drug Co., 122 F. Supp. at 599-601. I adopt Magistrate Chrein's findings on these issues and therefore, deny defendants' motion to suppress.
6. Subpoena of Gel Spice Records
Defendants have also moved to quash the trial subpoena of the same Gel Spice corporate records discussed in part 5, supra. Fed. R. Crim. P., 17(c) provides for the subpoena of corporate records, and, as a corporate defendant, Gel Spice is not entitled to claim Fifth Amendment protection against self-incrimination. Wilson v. United States, 221 U.S. 361, 382-384, 55 L. Ed. 771, 31 S. Ct. 538 (1911); Wright, Federal Practice and Procedure § 274 (2d ed. 1982). Similarly, corporate officers enjoy no personal Fifth Amendment privilege with regard to corporate records even when those records might incriminate them personally. Bellis v. United States, 417 U.S. 85, 88-90, 40 L. Ed. 2d 678, 94 S. Ct. 2179 (1974). For these and the other reasons set forth in Magistrate Chrein's Final Report and Recommendation (at 4-11), the motion to quash the trial subpoena of Gel Spice records is denied.
7. Photographs of Premises
Defendants next contend that photographs of Gel Spice premises taken during the FDA inspections must be suppressed. They argue that the photographs were unlawfully obtained and are unfairly prejudicial.
The photographs were taken during lawful inspections conducted pursuant to 21 U.S.C. § 374 (1976). FDA personnel followed all applicable procedural requirements. There is no evidence of unlawfulness.
I also find no merit in defendants' contentions that the photographs are unfairly prejudicial. The standard for admissibility is whether the photos fairly and accurately depict the scene. Magistrate Chrein found that there is no evidence that the photographs contain distortions (Interim Report and Recommendation at 5). In addition, before the photographs can be admitted at trial, a proper foundation for their admission must be laid. Defendants will be amply protected by their opportunity to cross-examine the FDA investigator through whom the photographs are offered.
Rule 403 of the Federal Rule of Evidence allows suppression if the probative value of the evidence is outweighed by the danger of unfair prejudice. Of course, relevant evidence is by its very nature prejudicial. The test is whether it is unfairly prejudicial. No basis exists for such a finding at the time. Accordingly, the motion to suppress the photographs is denied.
8. Number of Courts in the Information
Defendants' final objection is that because the charges in the Information are based on four investigations of the Gel Spice premises, the Information should contain no more than four counts. In their view only one crime may arise from one investigation. The government contends that there are as many crimes as there are different kinds of adulterated foods.
Neither the Supreme Court nor the Second Circuit has spoken directly on this issue. A district court in this Circuit, however, has held that one unsanitary condition maysupport multiple convictions based on different foods. United States v. J. Treffiletti & Sons, 496 F. Supp. 53, 56 (N.D.N.Y. 1980); see United States v. M.B. Gregory Co., 502 F.2d 700 (7th Cir. 1974), cert. denied, 422, U.S. 1007, (1975); Akin Distributors v. United States, 399 F.2d 306, 307 (5th Cir. 1968), cert. denied, 349 U.S. 905, 89 S. Ct. 1013, 22 L. Ed. 2d 216 (1969).
The applicable test for whether two violations constitute different offenses is whether each violation requires proof of an additional fact that the other does not. Blockburger v. United States, 284 U.S. 299, 304, 76 L. Ed. 306, 52 S. Ct. 180 (1932). The ten counts in this Information involve different foods, manufactured in different countries, labeled differently, and shipped to defendants on different dates.
I agree with the Magistrate Chrein that each count will require proof of additional facts (Interim Report and Recommendation at 7). Accordingly, defendants' motion to dismiss some of the counts in the Information is denied.
I have reviewed the record in this case and the Interim and Final Reports of Magistrate Chrein, and hereby adopt in full the findings contained therein.
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