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Nor-Am Agricultural Products Inc. v. Hardin

July 15, 1970


Swygert, Chief Judge, and Cummings and Pell, Circuit Judges. Swygert, Chief Judge (concurring). Cummings, Circuit Judge (dissenting).

Author: Pell

PELL, Circuit Judge.

This is an appeal from an order of the District Court granting plaintiffs' motion for a preliminary injunction enjoining the appellants (the Secretary and other personnel of the United States Department of Agriculture) along with each person acting under the authority or direction of the appellants, and any employee or agent of the Department from taking action, the purpose of which would be in effect to interfere with the sale, distribution, or manufacture of certain agricultural seed treatment products containing mercury compounds and generically referred to as Panogen products. The plaintiffs, Nor-Am and Morton, are the seller and manufacturer respectively of the products involved.

If this were the ordinary situation involving an appeal from an interlocutory order granting a preliminary injunction, the sole issue before this court would be whether the District Court abused its discretion in allowing a preliminary injunction. Further, it is clear that reversal would not be authorized nor would the decree be subject to modification unless abuse of discretion was clearly shown. Mytinger & Casselberry, Inc. v. Numanna Laboratories Corp., 215 F.2d 382, 384 (7th Cir. 1954).

Professor Wright has stated the matter well as follows:

"The trial court has considerable discretion in determining whether the situation requires the preservation of existing conditions through a preliminary injunction and the more deliberate conclusion of the appellate court that the ultimate decision may be against the party that obtained preliminary injunction does not warrant reversal of the interlocutory order. Reversal on such an appeal can be only for abuse of discretion." 3 Barron & Holtzoff, Federal Practice and Procedure § 1440 at 510 (1958).

Indeed, there is some authority to the effect that the only requirement is that a prima facie case be made. See: 43 C.J.S. Injunction § 192 p. 898 (1945). We would have little difficulty in affirming the District Court's order on the basis of the pleadings and evidence before the court if this were the ordinary type of case, but it is not. We are confronted at the outset by the strongly urged contention of the Department that this is an attempt to secure a judicial review of administrative proceedings and that the District Court lacks jurisdiction so to do.

It is not contended by the Department that the administrative action taken by the Secretary pursuant to 7 U.S.C. § 135 et seq., is immune from judicial scrutiny. The Department concedes otherwise but contends that judicial intervention into the administrative process created by Congress in the particular statute is not appropriate at this time because a court should not grant injunctive relief unless and until the appropriate administrative procedure is exhausted.

Conversely, the plaintiffs contended in the District Court and now contend that the particular order of the Secretary was arbitrary and capricious and by its nature had achieved a finality permitting judicial review under 5 U.S.C. § 701 et seq. as well as pursuant to the inherent equity powers of the court.

To resolve the conflicting contentions, it is necessary to turn in some detail to the facts as adduced at the hearing before the District Judge.

It is to be noted that there was some complaint by the Department that it was hampered timewise in its preparation for the hearing below; however, the District Court did offer the Government a chance to bring in additional evidence and did grant additional time to permit the preparation of a motion to dismiss, which motion was denied at the time of the granting of the preliminary injunction. At the conclusion of the testimony, including that by the defendant Hays, the District Judge inquired of counsel for the Department as to whether the Department intended to present evidence, presumably referring to further testimony or other evidence. Counsel indicated he was going to confer with other counsel and the matter having been continued for several days no further testimony was offered. Since the Department contends that its personnel did not act arbitrarily or capriciously but on a basis of fact, presumably the matters on which the order in controversy was based were available for presentation. In any event, the Department on this appeal does not appear to be resting its claim for reversal on a claim of not having had a fair opportunity of presenting evidence available to it.

In considering the evidence before the District Court we are not, as we have heretofore indicated, considering this as the ordinary case in which the only inquiry is that of whether discretion was abused. Nevertheless, we are not unmindful that another "ordinary" rule of procedure is applicable. We are referring to the principle that on an appeal from the granting of an interlocutory order of preliminary injunction the evidence will be considered in the light most favorable to the appellee.

This court has so held in analogous situations without feeling the necessity for the citation of authority. Seifert v. Solem, 387 F.2d 925, 929 (7th Cir. 1967).

As a matter of fact, the proposition that the court on appeal will presume that the trier of facts resolved the conflict in favor of the party for whom its verdict was rendered, unless it is opposed to the physical facts or inherently incredible, will assume the truth of such party's evidence which will be viewed in the light most favorable to the verdict and will give the benefit of all inferences that may reasonably and legitimately be drawn therefrom is of such universality that 5 C.J.S. Appeal & Error § 1562(4) beginning at p. 1225 has some twenty full pages of citations supportive thereof.

Panogen products are mercury compounds which have been continuously marketed by plaintiffs and their predecessors for approximately twenty years. The product is used in the agricultural community as a fungicide seed treatment to protect young seedlings such as oats, tomatoes, wheat, barley and sorghum, from soil borne fungi disease and systemic or seed borne diseases that carry from one generation to the next. By estimate, United States farmers had been benefited from 1949 through 1968 in an increased yield of crops raised from treated seed in an aggregate value in excess of eight billion dollars. A small amount of the product apparently goes a long way and the cost to farmers has been an average of approximately seven cents per planted acre per season. Testimony indicated there was no available satisfactory substitute for liquid methylmercury seed treatment products (including Panogen) which is as economical and efficacious for the treatment of seeds.

Sale of Panogen products amounts to about $4000 per day. Panogen products are economic poisons within the meaning of 7 U.S.C. § 135, et seq., being the Federal Insecticide, Fungicide and Rodenticide Act, of which the Secretary is chargeable with the administration. The statute requires the registration of economic poisons and the Panogen products in question were duly and properly registered under the statute. Plaintiffs and their predecessors for some years prior to being required to do so by the United States Food and Drug Administration have included a distinctive red dye in their formulations to give warning and for the purpose of preventing either deliberate or accidental misuse of treated seed or by-products as human food or animal feed. All of the Panogen products were labeled, the labels showing in red letters "poison treated" and containing a skull and crossbones. In addition, the labels contained warnings that the seed treated with the Panogen products was not to be used for feed, oil or food purposes and might be fatal if swallowed and might produce delayed chemical burns. Warnings further admonished against breathing dust or getting near eyes or skin. Antidotes were specified on the warning labels. Labels were not only prepared for direct use on the product but for use on containers containing treated seed.

For the purpose of the hearing below only, the following facts were assumed to be true. On or about August 1969, a hog raiser in Alamogordo, New Mexico, obtained waste grain products which had been contaminated with a fungicide or fungicides containing mercury. The waste grain products were fed to approximately seventeen hogs as a supplement to their diet which also included cooked garbage. After approximately one month of feeding all of the hogs with the contaminated material, one hog (after it showed signs of illness) was butchered for family food and the meat was eaten by seven of the nine family members from September through December. In October 1969, fourteen of the remaining hogs owned by the family became ill, with blindness and a gait disturbance. Twelve of these hogs died and two became blind In December 1969, three of the family members who had eaten the hog became permanently injured from mercury poisoning.

On the evening of February 17, 1970 there was a national television broadcast on the Huntley-Brinkley newscast which discussed and portrayed the Alamogordo, New Mexico, incident. Doctor Hays, the Director of the Pesticides Regulation Division of the Department, to whom authority in the area involved had been delegated, did not see the program but was aware of it on February 18, 1970. On that date he sent Nor-Am a telegram which stated in part that in view of the recent accident [referring to the Alamogordo incident], Nor-Am was notified that registration of products containing the mercury compound for use as seed treatment was suspended. Such products were to be recalled from the market and further shipments were to be unlawful. A letter was to follow.

In the letter elaborating on the telegram, which letter also bore the date of February 18, 1970, in addition to reference to the Alamogordo incident, it was stated that other incidents had been reported which showed that mercury treated seed screenings and sweepings had been fed to livestock or disposed of in a manner that resulted in wildlife feeding on them.

At a later time and prior to hearing below, the order of recall was suspended in view of the practical difficulty of safely disposing of the compound other than through ordinary use channels. No further products, however, were to be distributed from the manufacturer.

The Director's action was taken pursuant to the 1964 amendment of the statute which generally permitted the Secretary of the Department of Agriculture to have the same type of power as the Secretary of Health, Education and Welfare has in food and drug cases. Specifically, the statute, 7 U.S.C. § 135b(c), provides:

"Notwithstanding any other provision of this section, the Secretary may, when he finds that such action is necessary to prevent an imminent hazard to the public, by order, suspend the registration of an economic poison immediately."

While the Department contends that the Alamogordo incident was not the sole actuating factor in the suspension of the registration order under the "imminent hazard to the public" power, it is certainly a fair inference, and one in which we are entitled to indulge at this juncture, that the New Mexico incident really triggered the order. Other persuasive support for the order is not found by us in the record before us.

After some colloquy on the form of the question, Doctor Hays, on cross examination, stated that so far as he was aware at the time the telegram was sent he knew of no permanent injury resulting from the use of Panogen per se. With regard to Alamogordo, Doctor Hays testified that he "visited the area and discussed the entire investigation going on during the latter part of December and early January." Hays admitted that as of February 18, the date of suspension, he assumed the product involved was Panogen and assumed that the case involved accidental misuse rather than intentional misuse. He was sure tests were available to identify Panogen but admitted that no such tests had been conducted. Hays had met with the representative of plaintiffs on February 25, 1970, and at that time discussed with him "alkyl mercury accidents" in other states. These incidents were reported in Oregon and California. On further testimony, however, he indicated that he did not know at the time of the Oregon incident what form of mercury it was, that when he had talked to the plaintiffs' representative he was talking about mercury in general. He reported that the Fish and Game Office in California had found pheasants with high levels of mercury in their tissues and also that mercury had been found in pheasants and quail in the area, "I believe," of Cincinnati. The witness believed that the mercury in large part was from the eating of seeds that had been sown in the field. About the greatest degree of specificity realized by Doctor Hays with regard to other bases for the order in his testimony was the statement that there was an inadequate degree of control over the use of the product by the fact that there had been numerous reports of treated seed getting into food and feed. His further testimony, however, indicated that he predicated this statement upon the number of seizure actions that had been taken in the past by the Food and Drug Administration when treated seed was found in grain.

The Director further stated that it was a matter of conjecture as to whether it really was possible to prevent treated seed from getting into "these channels, and on this basis it is my feeling that it is a undue risk for the public." The witness, however, was unable to supply the figures on the number of seizures supposedly made of grain in which treated seed was found in the year 1969.

A representative of the companies involved met with Doctor Hays in Washington shortly after the telegram was sent and interrogated the Director with regard to the alleged incidents of animal poisoning in Oregon, California and Texas. He stated that the companies had no information regarding these facts and asked what he could be told regarding them. Doctor Hays asked a member of his personnel to get the information and the assistant returned with a manila folder and said that Panogen was not involved in the Oregon incident. He further supplied the fact that the only information they had regarding the California incident was the newspaper clipping which mentioned mercury poisoning of birds, and there was no information on the Texas incident. This, according to the witness, is "all the information we have ever learned in regard to that allegation for being one of the reasons for suspending Panogen."

It is further to be noted that in the letter confirming the order of suspension, under the date of February 18, 1970, a statement is made that the "directions for use and warning and caution statements on labels of the products were inadequate to prevent the treated seed screenings and sweepings from being fed to the hogs." Reference presumably was to the Alamogordo incident although apparently no serious contention is being made by the Department that the warning labels do not clearly and explicitly state the danger involved in the misuse or even accidental use of the product. Rather the position of the Department seems to be that as long as the products are on the market no warning whatsoever can be conceived which would be adequate warning. This, of course, as a general proposition could be said to be true of any poisonous substance which has economic usefulness in the daily affairs of life.

Following briefing, the District Court entered its order of preliminary injunction which had the effect of staying the suspension of registration of the Panogen products. In addition, however, it was specifically stated in the order that it was being entered without prejudice to the Governmental defendants issuing a notice of cancellation with respect to the products in question in accordance with the law, but providing further that no cancellation should become effective prior to the completion of the administrative proceedings provided for by law including a public hearing. It is clear, therefore, that the Department was not in any way prevented from proceeding to hearings to determine whether the registration of the products in question should be continued. The only effect of the order was to prevent the Department from taking action against the manufacturing and distribution of the products pending the full administrative proceedings as provided for in 7 U.S.C. § 135b(c).

On motion of the defendants this court, on May 20, 1970, stayed the preliminary injunction but ordered that the appeal be expedited.

Apparently on the assumption that the Alamogordo incident was caused by Panogen (although this assumption is not necessarily supported by persuasive evidence) the Secretary's order of February 18 applied only to Panogen. Other alkyl mercury products used for seed treatment manufactured and sold by plaintiff's competitors were not suspended until more than a month later. There was no indication if in fact the distribution of Panogen constituted an imminent hazard to the public, that the other alkyl mercury products were less hazardous to the public.

In this legal and factual context, we turn to a determination of whether the judicial intervention was jurisdictionally timely.

The possibility of judicial intervention or review was recognized well before administrative agencies achieved the major status in governmental operations occupied today.

As long ago as 1910, the first Mr. Justice Harlan stated the following:

"Learned counsel for the defendant suggests some extreme cases, showing how reckless and arbitrary might be the action of Executive officers proceeding under an act of Congress, the enforcement of which affects the enjoyment or value of private property. It will be time enough to deal with such cases as and when they arise. Suffice it to say, that the courts have rarely, if ever, felt themselves so restrained by technical rules that they could not find some remedy, consistent with the law, for acts, whether done by government or by individual persons, that violated natural justice or were hostile to the fundamental principles devised for the protection of the essential rights of property."

Monongahela Bridge v. United States, 216 U.S. 177, 195, 30 S. Ct. 356, 361, 54 L. Ed. 435 (1910).

In the intervening years, as Congressional legislation creating administrative agencies has become more sophisticated and more prolific, ordinarily the enactment provides for judicial review, at least of some phases of the administrative action and ordinarily only after finality of administration action. The litigation that has developed has been concerned with efforts for judicial review at times or of areas not prescribed in the pertinent statutes. Many of the cases which have developed have involved what has sometimes been termed threshold intervention or review. Such intervention has been viewed with judicial alarm and has been typified as opening Pandora's box. See the dissenting opinion of Mr. Justice Fortas in Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967), and Gardner v. Toilet Goods Ass'n, 387 U.S. 167, 87 S. Ct. 1526, 18 L. Ed. 2d 704 (1967), in which he states after the reference to Pandora's box (at p. 176, 87 S. ...

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