United States v. Argent Chemical Laboratories, Inc.
96 Cal. Daily Op. Serv. 6117, 93 F.3d 572, 96 Daily Journal DAR 10005 (1996)
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Rule of Law:
Warrantless seizures of allegedly adulterated products from a business operating in a closely regulated industry, performed under a specific statutory and regulatory scheme that provides a constitutionally adequate substitute for a warrant, do not violate the Fourth Amendment's prohibition against unreasonable searches and seizures.
Facts:
- Argent Chemical Laboratories manufactures and repackages veterinary drugs.
- Between the summer of 1993 and May 1994, FDA agents inspected Argent's premises multiple times to ensure compliance with the Food, Drug, and Cosmetic Act.
- The FDA cited Argent for various deficiencies discovered during these inspections.
- Several months after the last inspection, FDA agents and United States Marshals physically seized over $100,000 worth of veterinary drugs from Argent’s premises, alleging the drugs violated the Food, Drug, and Cosmetic Act as adulterated products.
Procedural Posture:
- The United States initiated a condemnation action in district court against the seized veterinary drugs.
- Argent Chemical Laboratories appeared in the district court action as the claimant of the seized property and challenged the constitutionality of the seizure, arguing it violated the Fourth Amendment.
- The district court ruled that the seizure violated the Fourth Amendment, granted Argent’s motion to quash the in rem arrest warrant, and ordered the government to return the property.
- The United States, as appellant, appealed the district court's judgment to the Ninth Circuit Court of Appeals.
- The district court stayed its order to return the property pending the government's appeal.
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Issue:
Does the warrantless seizure of allegedly adulterated products from a closely regulated veterinary drug manufacturer, without a judicial warrant based on probable cause, violate the Fourth Amendment?
Opinions:
Majority - Canby, Circuit Judge
No, the warrantless seizure of allegedly adulterated products from a closely regulated veterinary drug manufacturer, without a judicial warrant based on probable cause, does not violate the Fourth Amendment. The court found that Argent's veterinary drug manufacturing business falls under the 'Colonnade-Biswell' exception to the Fourth Amendment's warrant requirement, which applies to closely regulated industries. Persons engaged in pervasively regulated industries have a diminished expectation of privacy. The court applied the three-pronged test from New York v. Burger: (1) there is a substantial government interest in ensuring the safety and effectiveness of animal drugs, whether for human or economic health; (2) warrantless inspections and seizures are necessary to further this regulatory scheme by deterring violations and allowing swift removal of misbranded products; and (3) the statutory and regulatory framework (including the Food, Drug, and Cosmetic Act and the Supplemental Rules for Certain Admiralty and Maritime Claims) provides a constitutionally adequate substitute for a warrant by advising owners of the legal basis and scope, and by limiting official discretion. The court distinguished United States v. Device Labeled 'Theramatic' (Theramatic I), emphasizing that in that case, the physician's office was not considered a closely regulated industry by the FDA, and the central issue was an impermissible invasion of privacy, not the particularity of the seizure itself. Because Argent operates in a closely regulated industry, its diminished expectation of privacy means the seizure, conducted under congressional authority within the regulatory scheme, was constitutional.
Analysis:
This case reinforces the scope and application of the 'closely regulated industry' exception to the Fourth Amendment's warrant requirement, as articulated in Colonnade, Biswell, and Burger. It clarifies that this exception extends to seizures, not just inspections, and provides a framework for assessing what constitutes a 'closely regulated' industry. The decision empowers government agencies like the FDA to take swift action against non-compliant products in critical sectors such as drug manufacturing, balancing individual privacy interests against compelling public health and safety concerns. Future cases will likely refer to this ruling when determining the permissible extent of warrantless administrative actions in other pervasively regulated fields.
