Amicus Curiae Brief — Weinberger v. Hynson, Westcott & Dunning, Inc.

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INDEX

Page

Isterest OF E. R. Squiss anv Sons, Inc. as Amicus

SEE covey coer 0 teewnsenentsbo0s0s seen dnuaocax 1

QuesTION PRESENTED ....................... Srererre 2

SratuToRY Provisions AND REGULATIONS INVOLVED .... 3

GPATEMENT 20... c cc ccc ccc cc ccc ccccccccccccrccecce 4

WOOT onc ccccccodicccocccvccvceccecccvcscosecs 8

I. Introduction ............. 0... cece eee cece ee 8

II. As Applied in This Case, Respondents’ ‘‘Sum-

mary Judgment’’ Regulation Violates Both Con-

stitutional and Statutory Requirements ....... 10

A. Burden of Proof .................0.00000. 12

(1) Commissioner’s Summary Judgment |

Procedure; Failure to Show Absence of

Genuine Issue of Fact ................ 17

(2) Commissioner’s Final Order; Failure to

Present Adequately Supported Findings 22

CONCLUSION 2.00. ccc cc cc cc cc cr cc cc ccccscccccces 24

CITATIONS

CASES:

Arndt v. United States, 222 F.2d 484, 488 (C.A.5,1955) 15

Adickes v. S. H. Kress and Co., 398 U.S. 144, 157 ..... 18

8. Buchsbaum & Co. v. F.T.C., 153 F.2d 85 (C.A. 7,

TY)

pbaudaeee sh yy snd oe4 we 4st au eens beeeness< 9, 22

Federal Power Commission v. Texaco, Inc., 377 U.S. 33 11

“=n .

li Index Continued

Gonzales v. United States, 348 U.S. 407, 413-414

Gonzalez, et al. v. Freeman, et al., 334 F.2d 570 (C.A.

DS AIOE), oss cs er osed ony esine deen sdckek yeuedns 15

Greene v. McElroy, 360 U.S. 474, 496-497 ............ 15

Lqbor Board v. Brown, 380 U.S. 278, 291 ............ 4

Magnolia Petroleum Co. v. National Labor Relations

Board, 112 F.2d 545, 548 (C.A. 5, 1940) ......... 14

Morgan v. United States, 304 U.S. 1, 15-19 .......... 10, 15

NLRB vy. Air Associates, 121 F.2d 586 (C.A. 2, 1941).. 16

NLRB v. Phelps, 136 F.2d 562, 563 (C.A. 5, 1943) .... 16

Ohto Bell Tel. Co. v. Public Utilities Commission, 301

UB. 292, S08 2. ccc cc cece cc cccccccccccscess 10, 14

Philadelphia Co. v. S.E.C., 175 F.2d 808 (C.A.D.C.,

1948), vacated as moot, 337 U.S. 901 ........... 12, 16

Saltzman v. Stromberg Carlson Telephone Manufac-

turing Co., 46 F.2d 612 (C.A.D.C., 1931) ........ 12, 16

E. R. Squibb and Sons, Inc. v. Secretary of Health,

Education, and Welfare, et al., No. 71-2138 |

(OBL 3) ocodincciceessvevnsdawcescpes<ieavevcs 29 F

United States v. Diebold, Inc., 396 U.S. 654, 655 ...... 22

United States v. Storer Broadcasting Co., 351 U.S. 192 ll

Universal Camera Corp. v. N.L.R.B., 340 U.S. 474 .... %

Upjohn Co. v. Finch, 422 F.2d 944 (C.A. 6, 1970) ..... 9

USV_ Pharmaceutical Corp. v. Secretary of Health,

Education, and Welfare, 466 F.2d 455 (C.A.D.C,,

EDIE) issn teeeueke cua peunes<ssansenees 9, 12, 20, 22

Willner v. Committee on Character, 373 U.S. 96,103... 15 }

STATUTES AND REGULATIONS:

Administrative Procedure Act:

5 U.S.C. 556(d) 2.0.2... eee ee ee eee 3, 12, 17, 20, 22, 4

Federal Food, Drug, and Cosmetic Act: |

21 U.S.C. 355(e) ..............00. 10, 19, 20, 21, 22, 24

21 U.S.C. 355(b) 0... cece cece eee eee 10, 17, 20

16 CPLR. 3.24 20... ccc ccc cece cece ccc eecceeees 19

21 O.F.R. 130.14 .... 2. cee d, 8, 9, 10, 11, 20, 21

4

Index Continued lil

Page

CoNGRESSIONAL AND MISCELLANEOUS:

Final Report of the Attorney General’s Committee on

Administrative Procedures, Sen. Doc. No. 8, 77th

Cong., Ist Sess., p. 62 (1941) ........00000..... 10, 16

Senate Document No. 245, 79th Cong., 2nd Sess., 208,

BNO ARG) oo oeee vas den tunynaa nese vec viiuvcs 12

33 F.R. 9908, July 10, 1968 ... 0... ee. 20

35 F.R. 7250; 7251, May 8, 1970 ..................... 8

35 F.R. 15253, September 30, 1970 .................. 22

35 F.R. 16332, October 17, 1970 .................... 20, 22

36 F.R. 20543, 20545, October 23, 1971 ............... 21

38 F:R. 3211, February 2, 1973 ...................... 21

Fed. R. Civ. P. 12 2... ccc ccc ccc cece ee ece 11

Fed. R. Civ. P. 56 .......... eeesehe wa eek eae ecea yous 9

38 U.S.L. Week 2658, June 9, 1970 ......000.0....... 18

E. Gelhorn and W. F. Robinson, Summary Judgment

in Administrative Adjudication, 84 Harv. L. Rev.

612, 616 (1971) ......... eee ee. 19

ee aa oe

IN THE

Supreme Court of the United States

OcToBER TERM, 1972

No. 72-394

CaspaR W. WEINBERGER, SECRETARY OF Heatru, Epvu-

CATION, AND WELFARE AND CHARLES C. EpwARps,

COMMISSIONER OF Foop anp Druas, Petitioners

Vv.

HynsoN, WESTCOTT AND DuNNING, INCORPORATED

On Writ of Certiorari to the United States Court of Appeals

for the Fourth Circuit

BRIEF FOR E. R. SQUIBB AND SONS, INC. AS

AMICUS CURIAE, IN SUPPORT OF RESPONDENT

INTEREST OF E. R. SQUIBB AND SONS, INC.

AS AMICUS CURIAE

This brief amicus curiae in support of Hynson,

Westcott and Dunning, Inc. (HW&D), is submitted

by E. R. Squibb and Sons, Inc. (Squibb) pursuant to

Rule 42 of the Rules of the Supreme Court of the

United States.’

'The written consent of petitioners and respondent have been

lodged with the Clerk.

2

Squibb is a New Jersey corporation engaged in the

manufacture and sale of pharmaceutical products

Squibb is presently engaged in litigation with the |

petitioners in a review proceeding involving an essen.

tially identical legal issue to one which this Court may

decide in this case (EZ. R. Squibb and Sons, Ine. y,

Secretary of Health, Education, and Welfare et al,,

No. 71-2138, presently pending in the United States

Court of Appeals for the Third Circuit). The pro-

ceeding in which Squibb is a party was argued on

January 19, 1973, at which time the Court of Appeals

orally indicated an inclination to withhold its decision

until this case is decided by this Court. Since the

decision of this Court can be controlling on this issue

in its case, Squibb has an interest in these proceedings

and is submitting this brief amicus curiae.

This brief is limited to the issue of the validity of

the procedures followed by the Food and Drug Ad-

ministration in denying HW&D a hearing on the revo-

cation of its new drug application for Lutrexin. -We

take no position as to the merits of the data and in--

formation which were submitted by HW&D in support

of its request for hearing, or on the jurisdictional ques-

tions involved in whether HW&D is entitled to an

administrative hearing on the new drug status of its

product.

QUESTION PRESENTED

Whether, in an agency-instituted license revocation

proceeding required by statute to be ‘‘after due notice

and opportunity for hearing,’’ the administrative

agency may adopt a summary judgment procedure in

which the license may be revoked without a hearing,

without a finding or an evidentiary showing that there

is no substantial issue of fact, and without an eviden-

——

3

tiary showing by the Agency on the record that the

statutory grounds required for revocation exist. (J.A.

490-491)

STATUTORY PROVISIONS AND REGULATIONS

INVOLVED

In addition to the provisions cited in petitioners’

brief, the issue argued in this brief involves:

Section 7(c) of the Administrative Procedure Act

(APA) (5 U.S.C. §556(d)) which provides in per-

tinent part:

§ 556—Hearings ; presiding employees ; powers and

duties; burden of proof; evidence; record

as basis of decision.

* * *

(d) Except as otherwise provided by statute, the

proponent of a rule or order has the burden of

proof.... A sanction may not be imposed or rule

or order issued except on consideration of the

whole record or those parts thereof cited by a

party and supported by and in accordance with

the reliable, probative, and substantial evidence.

A party is entitled to present his case or defense

by oral or documentary evidence, to submit re-

buttal evidence, and to conduct such cross-exam-

ination as may be required for a full and true dis-

closure of the facts. In rule making or deter-

mining claims for money or benefits or applica-

tions for initial licenses an agency may, when a

party will not be prejudiced thereby, adopt pro-

cedures for the submission of all or part of the

evidence in written form. ...

The Fifth Amendment to the Constitution of the

United States, which provides in pertinent part as

follows:

‘‘No person shall be . . . deprived of life, liberty, or

property without due process of law... .’’

- —_—a

4

STATEMENT

On March 22, 1969 (prior to the promulgation of

the procedural regulations involved in this proceed.

ing) the Food and Drug Administration (FDA) pub-

lished a Notice of Opportunity for Hearing on the

proposed withdrawal of HW&D’s license (new drug

application) to market the drug Lutrexin in interstate

commerce. (J.A.12).? The notice alleged, as grounds

for the withdrawal, in essentially statutory language, |

‘‘that new information before the Commissioner with |

respect to such drugs evaluated together with the evi-

dence available to him when the applications were |

approved shows there is a lack of substantial evidence |

of effectiveness of the drugs in that there is a lack of |

substantial evidence that lututrin, a component of

[Lutrexin], has the effect or contributes to the effect

which [Lutrexin] purport[s] or [is] represented to

have under the conditions of use prescribed, recom-

mended or suggested in the labeling thereof.’’

By letter dated April 18, 1969, HW&D requested

that a hearing be held on the proposed withdrawal of

these licenses. (J.A. 14)

On May 8, 1970, the Food and Drug Administration

promulgated new procedural regulations purporting to

condition the right to a hearing in license revocation

proceedings of this type upon compliance with the re-

quirement that the licensee, as a part of its request

for a hearing, set forth a ‘‘well organized and full

factual analysis of the clinical and other investiga-

tional data he is prepared to prove in support of his

2J.A. refers to the Joint Appendix filed by the parties in this

ease and in Nos. 72-414, 72-528, 72-555, and 72-666, which have

been consolidated with this case.

5

opposition to the notice of opportunity for hearing.”’

According to the new regulations, the ‘‘request for

hearing may not rest upon mere allegations or denials

but must set forth specific facts showing that there

is a genuine and substantial issue of fact that requires

a hearing.’’ In the absence of such a showing the

regulations permit the Commissioner to enter an order

withdrawing the license without a hearing and without

the presentation of any evidence by the Agency, 21

C.F.R. 130.14. (J.A. 490-491)

By letter dated May 19, 1970, eleven days after the

promulgation of the new procedural regulations, the

Commissioner wrote to HW&D demanding that it

amend its request for hearing to comply with this new

requirement. (J.A. 20)

HW&D at first refused to amend its request on the

ground that the company was entitled to a hearing

under the regulations in effect at the time the notice

of opportunity for hearing was published. (J.A. 21)

Subsequently, on October 16, 1970, HW&D did sub-

mit (1) a 4-page listing of data and information which

it stated constitutes ‘‘substantial evidence,’’ as defined

in the May 8, 1970 regulations, thereby requiring that

a hearing be held, and (2) seven affidavits (citing 11

studies), and other documents and correspondence in

support of both its position that Lutrexin is not a ‘‘new

drug,’’ and the existence of ‘‘substantial evidence’’ re-

quiring a hearing. (J.A. 24-32)

The Food and Drug Administration did not place

into the record any evidence, data, information, affida-

vits, statements, or analysis of the material presented

by HW&D, nor did it attempt to introduce or present

any information to show the absence of any genuine

issue of fact in this proceeding. No such showing is

required by the 130.14 procedural regulations.

On June 18, 1971, the Commissioner of Food and

Drugs published a final order withdrawing approval

of HW&D’s new drug application for Lutrexin. The

request for a hearing was denied ‘‘for failure to comply

with applicable regulations.’”” The 4-page listing of

data and information which HW&D submitted as sub-

stantial evidence of effectiveness was dismissed on the

grounds that:

‘*What the Commissioner is required to do is

determine from this material what HW&D may

or may not consider relevant and, therefore, relies

upon. In the case [of the] bibliographies, the }

Commissioner would be required to research each f

article and then determine if it is relevant, or f

whether HW&D might consider it relevant. Be- fF

cause such a procedure is not contemplated by the }

regulations, the request for a hearing is denied for

failure to comply with applicable regulations.”

\ (J.A. 77)

There was no finding by the Commissioner that all of

the data submitted or listed failed to show a ‘‘substan-

tial issue of a material fact,’’ nor could there have been

such a finding since there was no examination of all the

data listed.*

3 The statement from the Order quoted in petitioners’ brief, at

page 9, to the effect that in any event the material:

‘* ‘reveals a lack of adequate and well controlled investigations

showing that lututrin will have the effect HW&D claims for

| oe i

appears to have been taken out of its context in the Order. In the

Order, the quoted statement, by its own terms, specifically referred

only to that portion of the data which had previously been included

J

——

7

On petition for review, the Court of Appeals held

that HW&D is not entitled to a hearing on the issue

of whether Lutrexin is a ‘‘new drug.’’ This decision

was based upon the lack of jurisdiction in the FDA

administrative process to decide the issue. That por-

tion of the decision is before the Court in Case No.

72-414.

The Court of Appeals also upheld the validity of the

FDA’s procedural regulations, but reversed the Com-

missioner’s denial of a hearing on the ground that the

data and information presented by HW&D, together

with the Commissioner’s objections to these data as

they appeared in the Order, create ‘‘at most’’ a genuine

“in the Lutrexin new drug application ....’’ (J.A.78) The other

listed data cited in support of the existence of substantial evidence,

including the additional studies cited (see, J.A. 27-30), was not

analyzed or discussed.

The ‘‘detailed review of Hynson’s documentation’’ alleged by

petitioners’ brief at page 9, pertained only to that portion of the

data which was cited in the affidavits submitted in support of

HWé&D claims that its product was not a ‘‘new drug.’’ This-re-

view appears in the Commissioner’s Order under the heading:

‘pb. Lutrexin and Trexinest are new drugs within the meaning

of 21 U.S.C. 321 (p)(1).”’ (J.A. 74)

No ‘detailed review’’ was presented under the heading:

”?

‘‘e. The issue of substantial evidence of effectiveness, .

(J.A. 77)

with respect to the list of data submitted by HW&D on that issue

(J.A. 27-30). To the extent that the data cited in the affidavits

submitted to support ‘‘not new drug. status’’ was also cited by

HWé&D in support of the existence of ‘‘substantial evidence,’’ the

analysis under ‘‘b’’ could, of course, have been utilized by the

Commissioner under ‘‘c’’ for that portion of the ‘‘substantial

evidence data.’’ Even if that were done, however, there was still

a substantial listing of data not reviewed ‘‘because’’ according to

the Commissioner’s Order, ‘‘such a procedure is not contemplated

by the regulations.’’ (J.A. 77-78)

——_

oe

issue of fact to be resolved at a hearing upon proper

evidence. The petitioners in this case seek to have the

Commissioner’s Order reinstated. ;

8

The validity of the procedural regulations has been

raised by HW&D as an alternate ground for affirmance,

and argued by petitioners in their brief at pages 21-24,

ARGUMENT

I

INTRODUCTION

The Food and Drug Administration’s procedural

regulations involved in this proceeding (21 CFR |

130.14) are, according to that agency, ‘‘an adaptation

of the summary judgment procedures of the District

Courts,’’ 35 F.R. 7250, 7251 (May 8, 1970). Petition-

ers’ brief, page 23, contends that ‘‘several other agen-

cies currently have similar rules dispensing with a

hearing when there is no genuine issue of fact to be

determined.”’

However, all existing summary judgment procedures,

whether administrative or judicial, other than the

FDA’s, incorporate the requirement that the moving

party must show by documentary, admissible evidence

that there is no genuine issue as to any material fact.

Petitioners’ regulations require no such showing by the

FDA. Instead, they require the party defending

against the ‘‘motion’’ to come forward with an initial,

independent presentation of evidence establishing the

existence of a genuine issue of fact in order to obtain

a hearing. Under its regulations the FDA, by simply

alleging in general statutory terms that a license should

be revoked, thereby purports to shift the burden of

coming forward with proof both on the summary judg-

ment motion, and on the issue of whether the license

may be revoked, to the defending party.

Where, in a case such as this, the FDA decides that a

licensee has not even complied with the requirement

that evidence be presented,‘ the license may be revoked

without the presentation of any evidence by the Com-

missioner.

It is precisely the absence of those safeguards em-

bodied in both Rule 56 of the Federal Rules of Civil

Procedure and the administrative summary decision

rules and practices cited by the petitioner, but delib-

erately omitted from FDA’s procedural regulations

§ 130.14, which cause the latter regulations to be, in the

words of the Court of Appeals for the District of Co-

lumbia, ‘‘fundamentally defective,’’® and violative of

‘The FDA has applied these regulations to deny a hearing in

every new drug application license revocation since the promulga-

tion of these regulations. The factual settings of these denials

have varied from cases where no data was submitted in support of

the request for hearing or analyzed in the final order, e.g., USV

Pharmaceutical Corp. v. Secretary of Health, Education and Wel-

fare, 466 F.2d 455 (C.A.D.C., 1972), where the Commissioner’s

Order was reversed ; and Ciba Geigy Corp. v. Richardson, 446 F.2d

466 (C.A. 2, 1971), where the Commissioner’s Order was upheld ;

to cases where data was submitted and an analysis of that data was

contained in the final order, e.g., Upjohn Co. v. Finch, 422 F.2d

944 (C.A. 6, 1970), where the Commissioner’s Order was upheld;

and E, R. Squibb and Sons, Inc. v. Richardson, No. 71-2138 (C.A.

3), where affidavits were also submitted to establish that the data

submitted constitutes ‘‘substantial evidence,’’ this case is pending.

*USV Pharmaceutical Corp. v. Secretary of Health, Education

and Welfare, 466 F.2d 455 (C.A.D.C. 1972). Although decided on

August 14, 1972, before certiorari was allowed in these consoli-

dated cases, the government did not petition this Court for certi-

orari in that case.

~~

10

the requirements of the Federal Food, Drug, and Cos.

metic Act (the Act), the Administrative Procedure

Act (APA), and procedural due process.°

II

AS APPLIED IN THIS CASE, PETITIONERS’ “SUMMARY

JUDGMENT” REGULATION VIOLATES BOTH CON.

STITUTIONAL AND STATUTORY REQUIREMENTS

Congressional delegation of quasi-judicial functions

to administrative agencies has not relieved those agen-

cies of compliance with fundamental due process re-

quirements. Ohio Bell Tel. Co. v. Public Utilities

Commission, 301 U.S. 292, 304; Morgan v. United

States, 304 U.S. 1, 15-19. See also, Final Report of

the Attorney General’s Committee on Administrative

Procedures, Senate Document No. 8, 77th Cong., Ist

Sess., p. 62 (1941). In addition, Congress has itself

prescribed both general and specific procedural re-

quirements which these administrative agencies must

follow in carrying out their limited assigned functions,

The petitioners’ May 8th hearing regulations, 21 0.F.R.

130.14, on the basis of which HW&D was denied its

right to a hearing in this proceeding, as applied in this

proceeding, violate both these constitutional and statu-

tory limits.

This is not to say that a hearing would be required

on applications where the application or request for a

® Even if due process and the Administrative Procedure Act did

not require a full fair hearing including the proper allocation of

the burden of proof, the Federal Food, Drug, and Cosmetie Act

itself requires that an order withdrawing a New Drug Application

“‘shall state the findings on which it is based,’’ § 505(e), 21 U.S.C.

355(e), (J.A, 480) and that on appeal those findings of fact must

be ‘‘supported by substantial evidence,’’ section 505(h), 2f U.S.C.

355(h) (J.A. 480). The license cannot be withdrawn without any

evidentiary showing by the Commissioner.

od

11

hearing does not ‘‘state a valid basis for a hearing,”’

United States v. Storer Broadcasting Co., 351 U.S. 192;

Federal Power Commission v. Texaco, Inc., 377 U.S.

33, Administrative procedures may include the

equivalent of motions under Rule 12 of the Federal

Rules of Civil Procedure to dismiss for failure to state

legal grounds upon which relief can be granted, or for

judgment on the pleadings. This principle is not, how-

ever, pertinent to the present case since the Commis-

sioner has not alleged the legal inadequacy of the alle-

gations made by HW&D in its request for a hearing.

Rather, he has refused to hold a hearing on the ground

that HW&D allegedly failed to comply with the re-

quirements of 21 C.F.R. 130.14.by presenting what the

Commissioner will accept as a ‘‘well-organized’’

analysis of adequate supporting evidence showing the

existence of a material issue of fact.

Further, Squibb does not contend that the mere alle-

gation of adequate legal grounds must, in all cases,

entitle a party to an evidentiary administrative hearing,

any more than legally adequate pleadings necessarily

entitle a litigant in a District Court to a trial. Admin-

istrative agencies should not be expected to waste their

time on hearings where it can be shown that there

isno genuine or material issue of fact. Unless prohib-

ited by statute, rules for administrative summary judg-

ment, with proper observance of required statutory

and constitutional safeguards, may be adopted for this

purpose, These principles are not disputed by Squibb

in this case.

What is in dispute is whether the procedures followed

here have been adequate to meet basic statutory and

constitutional requirements.

12

A. Burden of Proof

Section 7(c) of the APA (5 U.S.C. § 556(d)), which

is applicable to these proceedings, provides that

‘‘[e]xcept as otherwise provided by statute, the pro-

ponent of a rule or order has the burden of proof.”

Both logic and the legislative history of the APA re.

quire that the ‘‘burden of proof’’ be construed to

include the ‘‘burden of coming forward with a prima

facie case.’’ Thus, in discussing the effect of proposed

section 7(c), the Senate Report states, ‘‘[t]hat the

proponent of a rule or order has the burden of proof

means... that the party initiating the proceeding has

the general burden of coming forward with a prima

facie case.””? Sen. Doc. No. 245, 79th Cong., 2d Sess.,

208, 270 (1946). In this case, the Commissioner is

the party who initiated the proceedings withdrawing

approval of HW&D’s new drug application and, ac-

cordingly, the burden of coming forward with a prima

facie case rests squarely rfpon his shoulders.

The allocation of the burden of proof upon the Com-

missioner is not only required by the clear and unam-

biguous language of the APA but is well supported by

ease law. The Courts of Appeals have insisted that

where an agency is the proponent of an Order in an

adjudicatory proceeding, it cannot require the party

who denies the validity or propriety of that Order to

show cause why the Order should not be effectuated.

See, e.g., Saltzman v. Stromberg Carlson Telephone

Manufacturing Co., 46 F.2d 612 (C.A.D.C., 1931);

Philadelphia Co. v. Securities and Exchange Commis-

sion, 175 F.2d 808 (C.A.D.C., 1948), vacated as moot,

337 U.S. 901.

Despite petitioners’ claim that ‘‘.. . every Court that

has ruled on the question . . . has upheld the lawfulness

PE OTe a ae On

13

of the Commissioner’s regulations... ,’’ the fact is that

the only Court of Appeals which has discussed or

analyzed the issues involved in the allocation of the

burden of proof under these regulations, has held ‘‘the

procedures followed by the Commissioner were funda-

mentally defective.”” USV Pharmaceutical Corp. v.

Secretary of Health, Education, and Welfare, 466 F.2d

455 (C.A.D.C., 1972). That case,in a proceeding essen-

tially identical to this, held that it is incumbent upon

the Commissioner, ‘‘before calling upon the [licensee]

for additional evidence establishing a right to a hear-

ing, to state facts and reasons showing at least prima

facie that the evidence before him raised no material

issue of fact which would justify a hearing.... Before

calling upon the [licensee] to answer, the Commis-

sioner, as the moving party, had an obligation to pre-

sent at least a prima facie case for denial of a hearing.”’

(USV Pharmaceutical Corp v. Secretary of Health,

Education, and Welfare, supra, at p. 461) The court

in that case reversed the Commissioner’s Order with-

drawing USV’s license without a hearing.”

It is the Commissioner who is the proponent of the

“Order’’ withdrawing approval of the new drug appli-

cation, and it is HW&D who opposes the Order. It is

the Commissioner who, by issuing the ‘‘Order’’ of revo-

cation, has assumed the burden of establishing the

propriety of the Order. It is up to him to prove the

existence of the statutory criteria for withdrawal of

new drug applications. He ‘‘may not by accusing put

"The cases cited by petitioners (Brief p. 24) do, of course, up-

hold the suspension of licenses pursuant to these regulations. All,

however, preceded the USV decision, and none discussed the bur-

den of proof issue which was held to be controlling in that case.

14

the accused upon proof.’’ Magnolia Petroleum Co. y,

National Labor Relations Board, 112 F.2d 545, 54g

(C.A. 5, 1940).

It has long been firmly established that administra-

tive hearings, especially in adjudicatory settings, are

required to conform to all ‘‘the rudiments of fair

play ... assured to every litigant by [due process] as

a minimal requirement,....’’ As stated by Justice

Cardozo in Ohio Bell Tel. Co. v. Public Utilities Com-

mission, 301 U.S. 292 at 304:

‘‘Regulatory commissions have been invested

with broad powers within the sphere of duty as-

signed to them by law. Even in quasi-judicial

proceedings their informed and expert judgment

exacts and receives a proper deference from courts

when it has been reached with due submission to

constitutional restraints. West Ohio Gas Co. vy.

Public Utilities Comm’n (No. 1), supra, p. 170;

West Ohio Gas Co. v. Public Utilities Comm’n

(No. 2), 294 U.S. 79; Los Angeles Gas & Electric

Corp. v. Railroad Commission, 289 U.S. 287, 304.

Indeed, much that they do within the realm of

administrative discretion is exempt from supervi-

sion if those restraints have been obeyed. All the

more insistent is the need, when power has been

bestowed so freely, that the ‘inexorable safeguard’

(St. Joseph Stock Yards Co. v. United States, 298

U.S. 38, 72) of a fair and open hearing be main-

tained in its integrity. Morgan v. United States,

298 U.S. 468, 480, 481; Interstate Commerce

Comm’n v. Louisville & N.R. Co., supra. The

right to such a hearing is one of ‘the rudiments of

fair play’ (Chicago, M. & St. P. Ry. Co. v. Polt,

232 U.S. 165, 168) assured to every litigant by the

Fourteenth Amendment as a minimal requirement.

West Ohio Gas Co. v. Public Utilities Comm’n

(No. 1), (No. 2), supra; Brinkerhoff-Faris Co. v.

Hull, 281 U.S. 673, 682. Cf. Norwegian Nitrogen

_

Pa Seed RS ESE RS Oe ee ee I RR IS PPD FN RTF ATR Da TQ BF" * DOEEN Neer ERS

ee a

15

Co. v. Umted States, supra. There can be no com-

promise on the footing of convenience or expedi-

ency, or because of a natural desire to be rid of

harassing delay, when that minimal requirement

has been neglected or ignored.”’ ®

This principle has been followed and applied in a

long line of cases to assure that litigants in administra-

tive adjudications have adequate notice of the action to

be taken and of issues to be tried, Morgan v. United

States, 304 U.S. 1, 15-19; to require confrontation and

cross-examination, Greene v. McElroy, 360 U.S. 474,

496-497, Willner v. Committee on Character, 373 U.S.

96, 103; to require that litigants be supplied with inves-

tigative reports supplied to the agency involved, Gon-

zales V. United States, 348 U.S. 407, 413-414, Arndt v.

United States, 222 F.2d 484, 488 (C.A. 5, 1955) ; to re-

quire administrative regulations establishing standards

for debarment (from participation in Commodity Cred-

it Corporation contracts), and procedures which will in-

clude notice of specific charges, opportunity to present

evidence and to cross-examine adverse witnesses, all

SIt is significant, in view of the petitioners’ references to the

burden of holding ‘‘hundreds or thousands’’ of pointless hearings

(Brief p. 30, fn. 20, to note that the FDA does not now have any

hearing examiners on its staff. The last resigned approximately

two years ago. Despite its dire predictions of ‘‘hundreds or thou-

sands’? of hearings based upon the number of products reviewed

by the NAS/NRC over the past five or six years, (Brief p. 19, and

p. 22 of petitioners’ brief in 72/555) petitioners have failed to sug-

gest the one figure in its files which is pertinent to this problem—

the number of hearings actually requested during that time.

We do not believe that the Federal Government cannot provide

fair constitutional procedures without chaos. Certainly, the Agency

should at least first attempt to handle the ‘‘problem’’ by the

adoption of summary judgment procedures which conform to

our traditional judicial and administrative concepts of ‘fair play.”’

3

culminating in administrative findings an@ conclusions —

based upon the record so made, Gonzalez, et al. v. Free.

man, et al., 334 F.2d 570 (C.A.D.C., 1964); to assure

litigants of an unbiased and nonpartisan trier of f

NLRB vy. Phelps, 136 F.2d 562, 563 (C.A. 5, 1943) ; to

safeguard ‘‘the minimal Constitutional requirement”

that an agency must ‘‘receive and consider competent

and material evidence offered by a party in a proceed-

ing before it,’” NLRB v. Air Associates, 121 F.2d 58%

(C.A. 2, 1941) ; and, to require that an agency which

proposes to take action must assume the burden of

proof in respect to the propriety of its proposed action, |

Philadelphia Co. v. S.E.C., 175 F.2d 808 (C.A.D.C, |

1948), vacated as moot, 337 U.S. 901; Saltzman y.

Stromberg Carlson Telephone Manufacturing Co., 46

F.2d 612 (C.A.D.C., 1931).

‘‘There are certain criteria of fairness in the hear-

ing process which, in the absence of clear evidence

of inapplicability in particular circumstances, |

should regularly be observed. Before adverse ac.

tion is to be taken by an agency . . . the individual

immediately concerned should be apprised not only

of the contemplated action with sufficient precision

to permit preparation to resist, but before final ac-~

tion, he should be apprised of the evidence and con-

tentions brought forward against him so that.he

may meet them... These may properly be termed

the fundamentals ordinarily requisite to a fair

hearing leading to adverse action against an indi-

vidual.’’ (Emphasis added). Final Report of the

Attorney General’s Committee on Administrative

Procedure, Senate Document No. 8, 77th Cong,., Ist

Sess., 62 (1941).

Conceptually, the Food and Drug Administration

procedures violate these ‘‘rudiments of fair play” and

OS a ee

17

the statutory requirements of the APA, in two distinct

ways: the administrative summary decision procedure

does not require the FDA to show ‘‘the absence of a

material issue of fact’’ in order to revoke the license

without a hearing; and this and other cases have shown

that as a result of the Commissioner’s failure to present

any evidence of his own, the orders issued in these cases

violate the requirement that the Order be ‘‘on consid-

eration of the whole record”’ and ‘‘supported by and in

accordance with the reliable probative, and substantial

evidence,”’ section 7(¢), Administrative Procedure Act,

5 U.S.C. 556(d), see also section 505(h), 21 U.S.C.

355(h). (J.A. 480)

(1) Commissioner’s summary judgment procedure: failure to

show absence of genuine issue of fact

The procedure followed by the Commissioner under

his regulations appears to adopt the astonishing pre-

sumption that there is ‘no genuine and substantial issue

of fact which precludes . . . the withdrawal of approval

of the applications.”’ For, if the request for a hearing

by the holder of the license is deemed insufficient to

establish such an issue, no hearing will be held. No

showing need ever be made by the Commissioner to

support his Order denying the hearing. In the present

case, the state of the record is such that the Commis-

sioner’s denial of a hearing is based upon the allega-

tin that HW&D “‘has not attempted compliance

with [the procedural regulations],’’ (J.A. 77-78) and

therefore has not carried his burden of establishing the

existence of a factual issue. The Commissioner has

not provided or attempted to provide evidence to

affirmatively show the absence of a material issue of

fact.

_

18

This distinction is, of course, basic to any fair adop-

tion of a summary judgment procedure. A plaintiff

is not entitled to summary judgment on the basis of a

finding that the defendant has not shown the existence

of a substantial issue of fact.

A fundamental principle on motion for summary

judgment is that ‘‘the moving party ... has the burden

of showing the absence of a genuine issue as to any

material fact’’ and that he is entitled to judgment as a

matter of law, even though his opponent may have the

burden of proving the facts at trial, Adickes vy. §. H.

Kress and Co., 398 U.S. 144, 157.

Thus, it is Squibb’s position that the Commissioner

may not enter summary judgment in his own favor un-

less he first identifies and presents probative evidence

of record sufficient to establish the absence of any such

factual issues. He cannot merely rely upon a finding

that the respondent has not affirmatively shown the

existence of such an issue.

The Administrative Conference of the United States

has, as indicated in petitioners’ brief (P. Br. 23), sug-

gested the adoption of a ‘‘Summary Decision Rule,”

by administrative agencies.° This proposed rule, how-

ever, provides for motions which may be granted if,

but only if, the motion is supported by ‘‘pleadings,

affidavits, material obtained by discovery or otherwise,

or matters officially noticed’’ which show that there is

no genuine issue as to any material fact. The burden

is on the moving party to show the absence of any

factual issues. If, but only if, such a motion ‘‘is made

38 U.S.L. Week, 2658, June 9, 1970.

— -

19

and supported as provided in this rule,’’” the party

opposing the motion is required to respond to establish

a genuine issue of fact. By way of answer to the objec-

tion that summary judgment rules are not applicable

to administrative hearings because ‘‘[t]he right to be

heard means, at the least, the right of a party to pre-

sent evidence and to test that offered by his adversary,”’

the draftsmen of this model rule state :”

‘The short yet complete answer to these protests

is that summary judgment is granted only when

the papers filed with the motion clearly reveal that

an evidentiary hearing would serve no useful pur-

pose. Summary judgment honors the right to be

heard by allowing the party opposing the motion

to show the necessity for a trial and by placing the

burden on the party seeking summary disposi-

tion.’” (Emphasis supplied).

The petitioners’ ‘‘summary judgment procedure”’ as

applied in this case places no burden on the agency

Tt is not Squibb’s contention that a prima facie case must in-

clude a showing by the Commissioner that the challenged drugs

are ineffective or unsafe. Rather, it is Squibb’s position that ac-

cording to the explicit terms of § 505(e) of the Act the Commis-

sioner must establish that the statutory criteria justifying revoca-

tion have been satisfied; i.e., he must come forward, identify and

present probative evidence, including ‘‘new information’’ which

“with the information available to him when the application was

approved’’ establishes that there is a lack of substantial evidence

that the drug will have the effect it purports or is represented to

have....’’ (J.A. 479).

"1 E. Gellhorn and W. F. Robinson, Summary Judgment in Ad-

ministrative Adjudication, 84 Harv. L. Rev. 612, 616 (1971).

The proposed ‘‘Rule,’’ set out in full in the cited article at page

628, is essentially identical to that which has been adopted by the

F.T.C., 16 C.F.R. 3.24, (also cited by petitioners at p. 23 of their

brief. ) >

20

when seeking summary disposition, but instead shifts

the burden of coming forward with proof to the party

opposing the motion, and provides for the granting of

such an order against that party solely because he hag

failed to establish the existence of a factual issue. Such

an Order, in a license revocation proceeding, clearly

violates the APA, section 7(c), 5 U.S.C. § 556(d), due

process requirements, and the requirements of the Fed-

eral Food, Drug, and Cosmetic Act that the license

revocation must be based upon findings of fact and

supported by substantial evidence. (§505(e) and (h),

21 U.S.C. 355(e) and (h)).

Petitioners appear to speak to this point in footnote

22, on page 32 of their brief, where in discussing SV

v. Secretary of Health, Education, and Welfare, 466

F.2d 455 (C.A.D.C., 1972) it is contended that the

Commissioner may, ‘‘by adopting the findings of the

NAS/NRC panels rightly place upon the holder of

NDA’s issued prior to October 10, 1962 (when it was

not necessary to submit any proof of effectiveness to

receive approval of an NDA) the burden of coming

forward with substantial evidence of effectiveness, to

avoid withdraw of the approval of that NDA.’’ The

short answer to this post hoc argument by counsel in

this Court is that the Notice of Opportunity for a Hear-

ing in this case (J.A. 12) did not purport to adopt the

NAS/NRC findings nor were they even referred to in

the ‘‘Findings’’ made in support of the Order.” (J.A.

72-78). They did not because the 130.14 regulations un-

der which the Order was issued are not designed for,

or limited to, pre-1962 drugs or to situations where

12 Nor, despite the quoted footnote, did the Commissioner “adopt”

or even refer to the NAS/NRC review in the Notice, 33 F.R. 9908

(July 10, 1968), or in the Order, 35 F.R. 16332 (October 17, 1970),

involved in the USV case.

21

NAS/NRC panels have spoken. The regulations pro-

vide for the same shift of the burden of coming forward

with proof regardless of the vintage of the drug or the

grounds alleged for withdrawal.” The NAS/NRC

Panel review did not constitute any part of the Com-

missioner’s ‘‘summary judgment’’ procedure under 21

C.F.R. 130.14, in this or any other proceeding.”

Petitioners’ argument is therefore both post hoc and

purely hypothetical, i.e., had the Commissioner adopted

the findings of the NAS/NRC Panels, then he could

have shifted the burden of coming forward with proof.

Clearly the Order in this case was not based upon the

panel reports because the Commissioner intended to

13Tn addition to the grounds alleged in this proceeding, i.e.,—

‘‘new information . . . that there is a lack of substantial evidence

_..? of effectiveness, 21 U.S.C. 355(e) provides that a new drug

application may be withdrawn if, e.g.,—

(1) the drug is ‘‘unsafe’’ :

(2) new evidence shows that such drug is not shown to be safe

(3) the application contains any untrue statement of material

fact

(4) the applicant fails to maintain certain records or make re-

quired reports

(5) on the basis of new information the labeling is false or

misleading in any particular. (J.A. 479-480)

4 The claim that the Notice had ‘‘adopted’’ the NAS/NRC find-

ings was not briefed by either party in the Court of Appeals.

FDA has, in fact, applied these regulations in Notices of Oppor-

tunity for Hearing on Proposed Withdrawals of New Drug Appli-

cations involving only issues of ‘‘safety,’’ and where there was no

NAS/NRC, or any other committee opinion available to rely upon,

see e.g., Notice of Opportunity for Hearing; Dienestrol Diacetate,

38 F.R. 3211 (February 2, 1973).

In other proceedings, the FDA has applied these regulations

where the Order itself admits that the NAS/NRC conclusions were

“unclear.’’ Notice Withdrawing Approval of New Drug Applica-

tions, 36 F.R. 20543, 20545 (October 23, 1971).

a

.

22

base this Order (like the other Orders where there was

no NAS/NRC review available) upon the far broader

base of the procedural regulations which purport to

automatically shift the burden of coming forward, with

no showing of any kind.”

(2) Commissioner's final order; failure to present adequately

supported findings

The Commissioner’s final order in this proceeding

must ‘‘state the findings on which it is based,”’ 21 U.8.0.

305(e), and be ‘‘supported by and be in accordance

with the reliable, probative and substantial evidence,”

5 U.S.C. 556(d). The ‘‘burden of proof” of present-

ing sufficient probative evidence to support an order

must be carried by the Commissioner and the findings

must be based upon such evidence. However, under the

procedures established by 130.14, no such showing or

findings are required, nor were they made in this case."

1 Tf the Court were to consider the argument that the Commis.

sioner. had inferentially attempted to adopt the NAS/NRC review

as a basis for ‘‘shifting the burden of coming forward’’ we would

be faced with the issues of (1) whether HW&D had proper notice

of what arguments it was expected to meet on such a ““summary

judgment’’ motion, and (2) whether the unsworn, brief summary

of views of a committee, which had, according to the summary it-

self, considered only two published papers (J.A. 7-10), would be

sufficient to support a summary judgment decision. (‘On summary

judgment the inferences to be drawn from the underlying facts

contained in such material must be viewed in the light most favor-

able to the party opposing the motion.’’ United States v. Diebold,

Inc., 396 U.S. 654, 655.) However, since the Order does not pur-

port to rely upon the Panel reports (nor did the petitioners’ brief

make this argument in the court below), this issue is not before this

Court.

16 This case was not unique in omitting findings of fact adequate

to support either a summary administrative decision or the final

order. Among the reported cases, no such findings were made in

the orders rendered in Ciba-Geigy Corp v. Richardson, 446 F.2d

466 (C.A. 2, 1971), 35 F.R. 15253 (Sept. 30, 1970) or USV Phar-

maceutical Corp. v. Secretary of Health, Education, and Welfare,

466 F.2d 455 (C.A.D.C., 1972), 35 F.R. 16332 (Oct. 17, 1970).

23

That part of the order which dealt with the alleged

existence of ‘‘substantial evidence”’ was not and did not

purport to be based upon an examination of all the data

presented. Rather, the Order specifically recites the

Commissioner’s refusal to do so because according to

the Commissioner, the ‘‘materials [relied upon by

HW&D] are described for the most part in general

terms (e.g., data presented in connection with the New

Drug Application for Lutrexin tablets * * * Lutrexin

bibliography * * * Trexinest bibliography * * * reprints

and abstracts * * *).’’? The Commissioner specifically

refused to ‘‘research each article and then determine if

itis relevant... [b]ecause such a procedure is not con-

templated by the regulations... ..”’ (J.A. 77-78).

Eleven studies were analyzed for the purpose of show-

ing that ‘‘Lutrexin [is a] new drug within the meaning

of 21 US.C. 321(p)(1),”’ (J.A. 74-77) and conclusion-

ary general comments concerning what the Commis-

sioner characterized only as ‘‘the most basic material

in the Lutrexin new-drug application’’ were presented.

(J.A. 78). It is, however, clear, and the Order does

not allege otherwise, that these two categories do not

exhaust the listing of information and data presented

by HW&D in support of its position regarding the

existence of ‘‘substantial evidence.’’

Since this brief is limited to legal procedural issues, we have

not attempted to argue whether the findings which were actually

made concerning the eleven studies are in fact supported by the

record. However, it is apparent that at least certain of the Com-

missioner’s alleged reasons for dismissing these eleven studies were

based upon evidence and information which is not in, or supported

by, the record. For instance, the Commissioner’s criticism (J.A.

75) of the statistical treatment of the Magewski study, ‘‘Statistical

Evaluation of the Reduction of the Incidence of Prematurity

(1968)’’ criticizes the manner in which the author presented his

data concerning ‘‘24 [women] with one previous pregnanecy’’ and

suggests an alternative presentation. The author’s presentation

£

€

24

The absence of adequate findings of fact ‘‘on consid.

eration of the whole record’’ and ‘‘supported by and

in accordance with reliable, probative, and substantia]

evidence,’’ to support the Commissioner’s conclusions,

in statutory language ‘“‘that on the basis of new infor.

mation before him with respect to [Lutrexin] evaly.

ated together with the evidence available to him when

[such] application was approved, there is a lack of

substantial evidence that [it] will have the effects it is

purported to have . . .’’ violates section 7(c) of the

Administrative Procedure Act, 5 U.S.C. 556(d), and

the Federal Food, Drug, and Cosmetic Act, 21 U.8.¢.

355(e) and (h), see Universal Camera Corp. v. NIBB,

340 U.S. 474, Labor Board v. Brown, 380 U.S. 278, 291,

CONCLUSION

The Court of Appeals in this case upheld the validity

of the Commissioner’s regulations but reversed the

order withdrawing the new drug application without a

hearing on the ground that ‘‘the showing of [HW&D]

was such that under a reasonable construction of the

Commissioner’s own regulations, as well as under

(J.A. 110) appears to be for the purpose of evaluating the effee-

tiveness of Lutrexin for increasing the likelihood of ‘‘live births”

by these 24 women, as compared with their own prior experiences

during their own prior pregnancies. The Commissioner’s suggested

alternative ‘‘paring’’ would result in a comparison of the “live

birth’’ percentage in these 24 women during their second preg-

nancies, against the ‘‘live birth’’ percentage in 15 other women

during their first and second pregnancies. Which of these com-

parisons is more meaningful is, at the very least, a question of fact

requiring evidentiary support. Similarly, although the author

analyzed the data in the same Table I by the ‘‘chi-square method,”

the Commissioner states that it ‘‘does not admit to a statistical eval-

uation by the chi-square method since the test is based on the

assumption that each number of the columns in Table I is the

sum of independent yes or no responses....’’ (J.A. 75) Such

a finding also requires, at the very least, a factual basis in expert

testimony, subject to cross-examination and rebuttal by HW&D.

Se

25

familiar principles of due process and the requirements

of the Administrative Procedure Act, it was entitled to

an impartial hearing before its NDA was withdrawn.”

(J.A. 179)

' The petitioners have, in this case, sought review of

that finding. Squibb recognizes that this Court may

afirm the decision of the Court below for the reasons

stated by the Court of Appeals—i.e., Hynson, Westcott

and Dunning’s showing was adequate to require a

hearing even under the Commissioner’s regulations—

without the need to reach the question of whether the

regulations are themselves valid. Indeed, -this course

may be preferable since the adequacy of that showing

was the ground relied upon in the Court of Appeals.

If this is done, however, the fact that the validity of

the regulations has not been decided by this Court

should be clearly stated so that the important questions

of administrative law presented by these regulations,

and potentially affecting administrative practices by .

all agencies, will not be foreclosed without adequate

consideration by this Court.

On the other hand, if the Court should find that

HW&D’s showing was not adequate under the Commis-

sioner’s regulations, it must of necessity reach the issue

of the validity of these regulations. On this issue, we

submit that these regulations are invalid, and that the

judgment of the Court of Appeals should be affirmed

on that ground.

Respectfully submitted,

VINCENT KLEINFELD

ALAN H. Kapitan

Rosert H. BecKER

‘Kleinfeld, Kaplan and Becker

1200 Seventeenth Street, N.W.

Washington, D.C. 20036