§348 Food, Drugs, Odometers
5th Circuit upholds upward variance for mislabeled drugs. (348) Defendants and their corporate entities were convicted of mislabeling drugs certain “spice” drugs as “not for human consumption,” when the drugs were actually intended for human consumption. The district court varied upward from the guidelines range and sentenced the individual defendants to 36 months. Defendants argued that the this was a departure, not a variance, and their sentences were substantively unreasonable. The Fifth Circuit found that the district court had properly varied upward based on its consideration of the 18 U.S.C. § 3553(a) factors. U.S. v. Gas Pipe, Inc., __ F.3d __ (5th Cir. May 6, 2021) No. 19-11145.
7th Circuit reverses risk of death or serious bodily injury increase for selling synthetic marijuana. (220) (348) Defendants were the owner and a cashier at a store that sold synthetic marijuana labeled as incense and potpourri. One teen who smoked substances purchased at the store crashed his car and died. Defendants pled guilty to conspiring to distribute misbranded drugs. The Seventh Circuit reversed an increase for engaging in conduct entailing “the conscious or reckless risk of death or serious bodily injury,” under § 2B1.1(b)(15)(A). In applying the enhancement to the first defendant, the district court relied on defendant’s personal experience in using and administering medications. However, this did not show that defendant knew synthetic marijuana posed a risk of death or serious bodily injury. As for the second defendant, the fact that he sometimes sold the products to teenagers without knowing what effect they might have, did not show that he was aware of, or had reason to suspect, that the products posed a risk of death or serious injury. U.S. v. Mohsin, __ F.3d __ (7th Cir. Sept. 25, 2018) No. 18-1275.
8th Circuit upholds three-month prison sentences for corporate officers convicted of misdemeanor. (348) (742) Defendants, corporate officers for an egg production company, pled guilty to the misdemeanor offense of introducing eggs adulterated with salmonella into interstate commerce. The Eighth Circuit held that their three-month prison sentences were procedurally and substantively reasonable. The court found that while defendants cleaned their barns and administered a second salmonella vaccine to their chickens in 2010, they did not test or divert eggs until July 2010, even though they had reason to suspect their contamination. The court did not clearly err in determining that defendants’ actions or inactions were insufficient and blameworthy under these circumstances. The court also did not clearly err in interpreting the evidence to show that defendants had failed to follow all of the expert recommendations they had previously used to eliminate salmonella in their other facility. The sentences were presumptively reasonable because they were within the stipulated guideline range of 0-6 months for each defendant. Defendants had “created a work environment where employees not only felt comfortable disregarding regulations and bribing USDA officials, but may have felt pressure to do so.” U.S. v. DeCoster, __ F.3d __ (8th Cir. July 6, 2016) No. 15-1890.
8th Circuit rejects challenges to prison sentences for corporate officers convicted of misdemeanor. (135) (140)(348) Defendants, corporate officers of an egg production company, pled guilty to the misdemeanor offense of introducing eggs adulterated with salmonella into interstate commerce. The Eighth Circuit rejected defendants’ claims that their three-month prison sentences for violating the Food Drug & Cosmetic Act (FDCA), 21 U.S.C. §333(a)(1), were unconstitutional under the due process clause and the Eighth Amendment. The prison sentences were relatively short. Defendants would not be branded as felons, and the record did not identify any additional civil sanctions they might be subject to beyond their sentences. The elimination of criminal intent under 21 U.S.C. §333(a) did not violate due process. The sentences also did not violate the Eighth Amendment – the sentences were not grossly disproportionate to the gravity of their misdemeanor offenses. The 2010 salmonella outbreak may have affected up to 56,000 victims, some of whom were hospitalized or suffered long term injuries. Judge Beam dissented. U.S. v. DeCoster, __ F.3d __ (8th Cir. July 6, 2016) No. 15-1890.
1st Circuit holds that hospital patients who received diluted pain medications from RN were particularly vulnerable. (348) Defendant, a registered nurse who worked at a hospital, took for her own use pain medications meant for patients who were in pain and were recovering from surgery. The First Circuit upheld a § 3A1.1 (b)(1) vulnerable victim increase. These patients, unlike the general public, had no way to help themselves or, because of their pain and their medical conditions, to detect or prevent against the drug dilution, and so were vulnerable within the meaning of § 3A1.1(b). The special victim vulnerability was not incorporated into the higher base offense level applicable to the offense of product tampering, U.S.S.G. § 2N1.1. The focus of § 2N1.1 is the harm or risk of harm to the victim, while the focus of § 3A1.1(b) is the vulnerability of the victim and the defendant’s awareness of that vulnerability. U.S. v. Stella, 591 F.3d 23 (1st Cir. 2009).
5th Circuit relies on auto dealer’s guide to determine value of cars sold. (348) Defendant was convicted of odometer tampering. Section 2N3.1(b)(1) refers sentencing courts to the fraud guideline when the offense involves more than one car. Note 7 to section 2F1.1 provides that in cases involving misrepresentation of the quality of a consumer product, loss is the difference between the amount paid by the victim for the product and the amount for which the victim could resell the product received. The National Automobile Dealers Association (NADA) guide stated that the reduction of value for high mileage should not exceed 40 percent of a car’s value. The 5th Circuit affirmed the district court’s use of the 40 percent loss of value figure from the NADA guide to determine loss. The court determined that the average purchase price of a car sold by defendant was $10,000, and arrived at a loss of $4,000 per car. U.S. v. Whitlow, 979 F.2d 1008 (5th Cir. 1992).
5th Circuit upholds application of fraud guideline to illegal steroid offense. (348) Defendant pled guilty to conspiring to sell and selling steroids. Defendant’s violation was addressed by guideline section 2N2.1, (food and drug violations). Nevertheless, the district court found that the Sentencing Commission had not considered a conviction for trafficking in steroids with the intent to defraud or mislead, and accordingly departed from section 2N2.1 and applied the fraud guideline, section 2F1.1. The 5th Circuit affirmed, although it found that it was unnecessary for the district court to depart. Application note 2 section 2N2.1 provides that if the offense involved theft, fraud, bribery, revealing trade secrets or destruction of property, the court is to apply the guideline applicable to the underlying offense. The district court specifically found that fraud was involved in defendant’s offense. U.S. v. Arlen, 947 F.2d 139 (5th Cir. 1991).
6th Circuit remands for findings on profit or loss caused by adulteration scheme. (348) Defendant fraudulently caused adulterated orange juice to be introduced into interstate commerce. The district court refused to enhance defendant’s sentence under § 2F1.1 for perpetrating a fraud in excess of $5 million. The judge was satisfied that no one was “hurt” by the scheme. The 6th Circuit remanded for further findings on whether defendant profited from the venture, and the monetary loss caused by his fraud and deceit. U.S. v. Kohlbach, 38 F.3d 832 (6th Cir. 1994).
6th Circuit approves “ingredient-substitution” method to calculate loss from adulteration scheme. (348) Defendant fraudulently caused adulterated orange juice to be introduced into interstate commerce. The 6th Circuit upheld the calculation of loss using an ingredient-substitution method. Under this method, the loss equaled the difference between the wholesale price per pound of bulk refined beet sugar (the improperly added ingredient) and orange juice soluble solids, multiplied by the minimum pounds of sugar that were contained in the adulterated mixture. The government presented documented wholesale prices and detailed statistics. Furthermore, the government’s numbers did not consider the additional losses caused by defendants’ use of the same illegal process to adulterate other fruit drinks they produced. The court was not required to reduce the loss by cost of other additives that went into the adulterated product. Defendant infused these additives primarily to conceal from consumers and the government the fact that pure orange content had been reduced in the finished product. U.S. v. Kohlbach, 38 F.3d 832 (6th Cir. 1994).
7th Circuit approves 77-month sentence where five teens died after overdosing on medicine sold by defendant’s company. (348) Over a four-month period, defendant’s company made hundreds of sales of dextromethorphan hydrobromide (DXM), a cough suppressant found in over-the-counter medicines, but also consumed recreationally as an intoxicant. In high doses, it can be fatal. It is not a controlled substance under Title 21 of the Criminal Code, but it is regulated by the Food and Drug Administration, which requires that it be accurately labeled according to its intended use. Five of defendant’s customers, all teenage boys, died from consuming the DXM. Defendant pled guilty to three counts of introducing a misbranded drug into interstate commerce, in violation of 21 U.S.C. § 331(a). The judge sentenced defendant to consecutive prison terms totaling 77 months, which was 61 months above the top of the applicable guideline range, although below the statutory maximum of 108 months. The judge considered the lethal consequences of defendant’s acts, plus the recklessness demonstrated by the fact that he continued to sell the misbranded product after learning that two of his customers had overdosed and died. The Seventh Circuit held that the sentence was not unreasonable. Defendant arguments in favor of a lighter sentence “mock[ed] the gravity of his conduct,” and some were “in poor taste.” U.S. v. Johnson, 471 F.3d 764 (7th Cir. 2006).
7th Circuit applies fraud guideline to mislabeling and/or adulteration of pharmaceuticals. (348) Defendants were convicted of offenses related to the manufacture and distribution of mislabeled and/or adulterated pharmaceutical products. They argued that they should have been sentenced under § 2N2.1(a) rather than § 2F1.1, the fraud guideline. Section 2N2.1(a) covers violations of statutes and regulations dealing with, among other things, drug products, and assigns a base offense level of six to such violations. However, subsection (b)(1) directs a court to apply § 2F1.1 if the offense involved fraud. The Seventh Circuit found no error, since there was substantial evidence of fraud here. Defendant’s wrongs were not merely “technical” violations of the Federal Food, Drug and Cosmetic Act. U.S. v. Bhutani, 266 F.3d 661 (7th Cir. 2001).
7th Circuit says § 2F1.1 applies to fraud against FDA for selling unregistered drugs. (348) Defendants operated a veterinary clinic and ran a “side” business in veterinary drugs. The drugs were sold in homemade packaging to defendants’ customers and were also used in their veterinary practice. Defendants pled guilty to manufacturing drugs and failing to register with the FDA in violation of the Food, Drug and Cosmetic Act, 21 U.S.C. § 331(p) and § 333 (a)(2). They argued that the district court erred in sentencing them under § 2F1.1 (Fraud) instead of § 2N2.1 (Food and Drug Act violations). The Seventh Circuit approved the use of the fraud guideline, holding that fraud against a regulatory agency is sufficient to invoke § 2F1.1. Section 2N2.1 directs a court to apply § 2F1.1 if the offense involved fraud. Although defendants may not have defrauded their customers, they defrauded the FDA by mislabeling drugs and altering invoices, rerouting shipments to avoid detection and misrepresenting current and intended future actions. The FDA represents the public, and a deliberate attempt to mislead the FDA is a fraud as clearly as an attempt to mislead customers or other individuals. U.S. v. Andersen, 45 F.3d 217 (7th Cir. 1995).
8th Circuit approves departure for pharmacist who diluted chemotherapy drugs to cancer patients. (348) Defendant, a pharmacist, diluted several chemotherapy drugs before distributing them for administration to cancer patients. The district court made a three-level upward departure on four grounds: (1) the grouping rules disregarded defendant’s significant number of additional offenses; (2) defendant significantly endangered public health; (3) defendant’s conduct caused extreme psychological injury to his victims; and (4) the guidelines did not take into account defendant’s uncharged criminal conduct. The Eighth Circuit affirmed, finding that at least two of the cited reasons solidly supported the departure. The background commentary to § 3D1.4 authorizes an upward departure when the flat five-level increase for more than five “units” disregards a significant number of units. Defendant’s offenses of convictions, combined with his other admitted relevant conduct (diluting 50 additional doses to eight patients named in the indictment, and 102 doses of drugs to 26 other patients) easily resulted in significantly more than five units. Moreover, Note 1 to § 2N1.1 authorizes an upward departure where the offense caused “extreme psychological injury.” The PSR was replete with victim impact statements illustrating the extreme psychological harm suffered by defendant’s patients. U.S. v. Flores, 362 F.3d 1030 (8th Cir. 2004).
8th Circuit says doctor’s theft of narcotics from patients fell within heartland of tampering cases. (348) Defendant, a physician, stole morphine from the intravenous units of four patients under her care in the intensive care unit of a hospital. On each occasion, defendant inserted a hypodermic needle and syringe into the patient’s morphine delivery device, removed some of the morphine, and replaced the stolen morphine with saline solution. A jury convicted defendant with four counts of tampering with a consumer product, 18 U.S.C. § 1365(a)(4). The Eighth Circuit upheld the denial of a downward departure, agreeing with the trial court that defendant’s conduct fell within the heartland of the tampering statute. Note 1 to § 2N1.1 provides, “[i]n the unusual case in which the offense did not cause a risk of death or serious bodily injury, a downward departure may be warranted.” Defendant’s actions exposed her patients to risks of death or serious bodily injury, and thus her case was typical of the heartland of cases covered by the guidelines. U.S. v. Moyer, 182 F.3d 1018 (8th Cir. 1999).
8th Circuit upholds finding of number of cars in odometer tampering scheme. (348) Defendant and others purchased high mileage, late model cars, altered their odometers, forged the title and registration documents to show the altered mileage, and resold the cars through a co‑conspirator’s car dealership. The Eighth Circuit upheld the district court’s finding that there were 90 cars involved in the scheme, even though the government was only able to specifically identify 67 vehicles. The PSR stated that the scam involved 80 to 100 cars, but used 80 vehicles for its calculation. Defendant did not object to the PSR. The government claimed that 100 vehicles were involved, relying on a statement made by a co‑conspirator, but could only collect evidence on 67 of them. The sentencing judge split the difference and used a 90-vehicle figure. Because the scheme involved deceit and secrecy, it was likely that there were more autos involved in the scheme than the government could track. Thus, it was not clearly erroneous to use a 90‑vehicle figure for determining loss. U.S. v. Berndt, 86 F.3d 803 (8th Cir. 1996).
8th Circuit applies fraud guideline to defendant who mislabeled meat. (348) Defendant was the president of a meat wholesaler and a beef packing plant. He mislabeled meat sold by these companies to retail and wholesale customers. The 8th Circuit held that defendant was properly sentenced under the fraud guideline, § 2F1.1, rather than the food and drug guideline, § 2N2.1. Application note 2 to § 2N2.1 (1988) states that if the offense involved a fraud, a court must apply the guideline applicable to the underlying conduct. Defendant was convicted of fraud for his role in the mislabeling scheme. U.S. v. Strassburger, 26 F.3d 860 (8th Cir. 1994).
9th Circuit applies first degree murder guideline in Sudafed poisoning case. (348) In an effort to divert attention from his failed attempt to poison his wife with cyanide-laced Sudafed, defendant put cyanide in five packages of Sudafed, resulting in the deaths of two people. He was convicted of product tampering under 18 U.S.C. § 1365. The Ninth Circuit held that it was proper to apply the cross-reference in guideline section 2N1.1(c)(1) for product tampering that results in death. The court held that defendant acted “knowingly,” and upheld his life sentence. U.S. v. Meling, 47 F.3d 1546 (9th Cir. 1995).
9th Circuit finds court properly considered steroids in dismissed counts. (348) Defendant was convicted of introducing steroids in interstate commerce without a prescription. He argued the court should not have relied on conduct contained in dismissed counts in departing from the range established by U.S.S.G. 2N2.1. The 9th Circuit agreed that since the 2N2.1 offense level is not determined by the aggregate amount of harm (i.e., it is “non-groupable”), it was improper to consider the conduct in the dismissed counts in departing upward. However, the district court alternatively premised its decision on section 2F1.1 and did not err by considering the quantities of steroids involved in the dismissed counts as “relevant conduct.” In U.S. v. Fine, 975 F.2d 596 (9th Cir. 1992) (en banc) the court held that dismissed counts may be considered as relevant conduct in establishing a defendant’s offense level under section 2F1.1. Because the district court properly applied section 2F1.1, the 9th Circuit did not consider whether it should have applied the 1991 amended version of section 2D1.1 to calculate the sentence. U.S. v. Von Mitchell, 984 F.2d 338 (9th Cir. 1993).
9th Circuit upholds departure in steroids case based on quantity and scope but reverses for improper reliance on role. (348) The steroid guideline, § 2N2.1, contained no distinctions based on quantity. Accordingly the 9th Circuit held that it was proper for the district court to consider the large quantity of steroids distributed in departing upward. Similarly it was proper for the court to depart on the basis of the “scope” of the offense, since the distribution schemes spanned at least 14 months. However, the sentence was reversed because the judge also relied on the defendant’s “role” in the offense. Since role in the offense is governed by § 3B1.1, the case was remanded for resentencing. Judge Rymer dissented, arguing that the departure was based the scope of the operation, not on role in the offense. U.S. v. Shields, 939 F.2d 780 (9th Cir. 1991).
9th Circuit upholds use of fraud guideline for selling misbranded steroids. (348) Defendant was convicted of selling counterfeit steroids, misbranded human growth hormone, and anabolic steroids in violation of 21 U.S.C. sections 331 and 333. The statutory index to the guidelines, Appendix A, states that guideline § 2N2.1 applies to violations of 21 U.S.C. sections 331 and 333. Nevertheless, the 9th Circuit upheld the district court’s sentence under the fraud and deceit guideline, § 2F1.1. Defendant “sold products counterfeited to represent different products made by reputable manufacturers.” Thus, the district court was justified in concluding that the offense involved fraud and deceit. U.S. v. Cambra, 933 F.2d 752 (9th Cir. 1991).
11th Circuit applies fraud guideline for distributing prescription drug without prescription. (348) Defendant was convicted of distributing and conspiring to distribute in interstate commerce a prescription drug without a prescription with the intent to defraud or mislead. The guidelines identify two different sections that apply to violations of 21 U.S.C. § 333(a)(2): § 2F1.1 and § 2N2.1. If the offense involves fraud, the court is directed to apply § 2F1.1. The Eleventh Circuit held that defendant was properly sentenced under § 2F1.1, the fraud guideline, rather than § 2N2.1, the guideline applicable to violations of statutes dealing with food and drugs. An essential element of defendant’s conviction was that the offense involved fraud. It is proper to apply § 2F1.1 to defendants who commit fraud against a government agency. U.S. v. Kimball, 291 F.3d 726 (11th Cir. 2002).
Commission amends guidelines for veterans’ memorials, plants, diamonds, injury to an unborn child and misdemeanors. (348) First, in response to a new offense at 18 U.S.C. § 1369 prohibiting destruction of veterans’ memorials, the Commission referred the offense to both §§ 2B1.1 and 2B1.5 and broadened the two-level increase under both §§ 2B1.1(b)(6) and 2B1.5(b)(2) to include veterans’ memorials. Second, in response to the new offense under 7 U.S.C. § 7734 for knowingly importing or exporting plants, plant products, biological control organisms, and like products for distribution or sale, the Commission modified Application Note 3 of § 2N2.1 to allow an upward departure for convictions under 7 U.S.C. § 7734. Third, to address the Clean Diamond Trade Act and Executive Order 13312, the Commission referred the new offense at 19 U.S.C. § 3907 to § 2T3.1, and added language referencing “contraband diamonds” to the introductory commentary. Fourth, to respond to the new offense at 18 U.S.C. § 1841 for causing death or serious bodily injury to a child in utero while engaging in conduct that violates any of over 60 offenses, the Commission referred the new offense to the homicide guidelines, §§ 2A1.1, 2A1.2, 2A1.3, and 2A1.4. Fifth, the amendment created a new guideline at § 2X5.2 to cover all Class A misdemeanors not otherwise referenced to a more specific Chapter Two guideline. The base offense level is 6. Amendment 685, effective November 1, 2006.