Seaside Farm, Inc. v. US


PUBLISHED AUTHORED OPINION filed. Originating case number: 9:11-cv-01199-CWH. [999979604]. [15-2562]

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Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 Pg: 1 of 19 PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 15-2562 SEASIDE FARM, INC., Plaintiff - Appellant, v. UNITED STATES OF AMERICA, Defendant - Appellee. Appeal from the United States District Court for the District of South Carolina, at Beaufort. C. Weston Houck, Senior District Judge. (9:11-cv-01199-CWH) Argued: October 26, 2016 Decided: December 2, 2016 Before WILKINSON, NIEMEYER, and SHEDD, Circuit Judges. Affirmed by published opinion. Judge Wilkinson wrote opinion, in which Judge Niemeyer and Judge Shedd joined. the ARGUED: Daniel A. Speights, SPEIGHTS & RUNYAN, Hampton, South Carolina, for Appellant. Michael Shih, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: A. G. Solomons, III, SPEIGHTS & RUNYAN, Hampton, South Carolina, for Appellant. William B. Schultz, General Counsel, Daretia M. Hawkins, Senior Attorney, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, Washington, D.C.; Elizabeth H. Dickinson, Chief Counsel, Michael Shane, Associate Chief Counsel for Enforcement, UNITED STATES FOOD AND DRUG ADMINISTRATION, Washington, D.C.; Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Mark B. Stern, UNITED STATES DEPARTMENT OF JUSTICE, Washington, Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 Pg: 2 of 19 D.C.; William N. Nettles, United States Attorney, Barbara Bowens, Assistant United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Columbia, South Carolina, for Appellee. 2 Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 Pg: 3 of 19 WILKINSON, Circuit Judge: This case involves a Federal Tort Claims Act (“FTCA”), 28 U.S.C. §§ 1346(b), 2671-2680, suit by a tomato farmer against the United States. Seaside Farm, Inc., alleges that the Food and Drug Administration negligently issued a contamination warning in response to an outbreak of Salmonella Saintpaul that devalued Seaside’s crop by $15,036,293.95. The district court held that FDA was exercising a discretionary function in connection with the contamination warning and dismissed the case under 28 U.S.C. § 2680(a). That ruling was essential to protect FDA’s vital role in safeguarding the public food supply, and we affirm the judgment. I. Salmonella causes Saintpaul moderate-to-severe is a rare illness in strain of humans. bacteria Symptoms that include fever, diarrhea, nausea, and abdominal pain. Salmonella can also enter the bloodstream complications, salmonella a and including “serious cause death. health more FDA serious consequently concern.” 74 Fed. health considers Reg. 33,030, 33,031 (July 9, 2009). A. On May 22, 2008, the New Mexico Department of Health notified the Centers for Disease Control and Prevention that a number of local residents had been 3 infected with Salmonella Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 Pg: 4 of 19 Saintpaul. Similar reports soon arrived at CDC from Texas. After interviewing patients, association” between J.A. 713. This association” CDC the discovered infections observation between was a and “strong eating supported salmonella and statistical raw by tomatoes. a “historical tomatoes generally. J.A. 432. CDC subsequently notified FDA that tomatoes were the “leading hypothosis” for the source of the outbreak. J.A. 660. By June Salmonella 1, 2008, Saintpaul CDC was across investigating nine states. 87 incidents J.A. 147. of FDA, including its various component parts such as the Center for Food Safety and Applied Nutrition, decided to issue an initial contamination warning to consumers in New Mexico and Texas. The contamination warning informed consumers that the outbreak was likely associated with tomatoes, but acknowledged that the exact type and the origin of the contaminated tomatoes was unknown. By June 6, 2008, reports of Salmonella Saintpaul had risen to 145 incidents and 23 hospitalizations across sixteen states. J.A. 149. CDC notified FDA that the outbreak threatened the entire country. On warning June 7, titled, 2008, “FDA FDA Warns issued an Consumers updated contamination Nationwide Not to Eat Certain Types of Raw Red Tomatoes.” J.A. 149. The contamination warning explained the nature of Salmonella Saintpaul and specified certain types of tomato as the likely vehicles for the 4 Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 Pg: 5 of 19 bacteria. It also provided a list of countries and seven states, including South Carolina, whose tomatoes remained unassociated with the outbreak. The media, however, reported the contamination warning without mentioning that some tomatoes were not implicated. FDA officials also stressed the magnitude and national scope of the outbreak but likewise failed to mention any “safe” tomatoes. Over the next month, CDC accumulated enough data to trace Salmonella Saintpaul to jalapeño and serrano peppers imported from Mexico. FDA withdrew the contamination warning as a result and announced that fresh tomatoes were no longer associated with the outbreak. At that point in time, Salmonella Saintpaul was linked to 1,220 infections across forty-two states and the District of Columbia. J.A. 150. B. Seaside while the harvested Salmonella a crop of Saintpaul tomatoes in contamination South Carolina warning was in effect. On May 18, 2011, Seaside brought suit against the United States under the FTCA alleging that FDA negligently issued the contamination warning and impaired the value of Seaside’s crop by $15,036,293.95. barred by the The FTCA government provision claimed protecting that the the suit was government’s exercise of discretionary functions, see 28 U.S.C. § 2680(a), and moved to dismiss the case. The district court denied the 5 Appeal: 15-2562 Doc: 74 motion as discovery, Filed: 12/02/2016 premature giving and Seaside Pg: 6 of 19 ordered the limited opportunity to jurisdictional establish some nondiscretionary duty that FDA may have breached. A three-year discovery fight ensued. The parties frequently disagreed over the scope of authorized inquiry, although the government ultimately produced over 12,000 pages of unredacted FDA guidance reports, and manuals, internal confidential deliberations, emails relevant to daily situation the Salmonella Saintpaul outbreak. Seaside also had the opportunity to take multiple depositions government provided of an CDC or FDA additional employees. 13,000 pages Finally, of the discovery material that was generated in a related case. On December 15, 2015, the district court dismissed the case for lack of subject matter jurisdiction. The district court reasoned that FDA had broad discretion to warn the public about a contaminated food supply, and that Seaside failed to allege any statute, regulation, or policy that required FDA to proceed in a particular manner. The district court also acknowledged that contamination considerations of warnings protecting implicate the public competing from serious policy health risks and minimizing any adverse economic impact on associated industries. Seaside appeals. 6 Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 Pg: 7 of 19 II. The FTCA provides a limited waiver of sovereign immunity for civil actions §§ 1346(b)(1), against 2674. This the United waiver States. extends U.S.C. certain to 28 claims resulting from “the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or function employment.” exception, Id. however, § 1346(b)(1). preserves The discretionary sovereign immunity and insulates the government from liability for “the exercise or performance [of] a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused.” Id. § 2680(a). FTCA plaintiffs have the burden of showing that the discretionary function exception does not foreclose their claim. Welch v. United States, 409 F.3d 646, 651 (4th Cir. 2005); Williams v. United States, 50 F.3d 299, 304 (4th Cir. 1995). The discretionary function exception represents “the boundary between Congress’ willingness to impose tort liability upon the United governmental States activities and from its desire exposure to to protect suit by certain private individuals.” United States v. S.A. Empresa de Viacao Aerea Rio Grandense (Varig Airlines), 467 U.S. 797, 808 (1984). It was meant to “protect the government from liability that would seriously handicap efficient government operations.” Id. at 814 7 Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 (quoting United States v. Pg: 8 of 19 Muniz, 374 U.S. 150, 163 (1963)). Congress also wanted to “prevent judicial ‘second-guessing’ of legislative and administrative decisions grounded in social, economic, and political policy through the medium of an action in tort.” Id. Consequently, federal courts lack jurisdiction over claims falling within the discretionary function exception. Holbrook v. United States, 673 F.3d 341, 345 (4th Cir. 2012); Williams, 50 F.3d at 304-05. III. Seaside that the contends the discretionary district function court improperly exception barred concluded its claim. Seaside also argues that it did not receive adequate discovery before the case was dismissed, and faults the district court for improperly limiting the scope of inquiry to jurisdictional issues. We shall discuss each contention in turn. A. Government conduct is protected by the discretionary function exception if it “involves an element of judgment or choice,” and implicates “considerations of public policy.” Berkovitz v. United States, 486 U.S. 531, 536-37 (1988); see United States Airlines, 467 v. U.S. Gaubert, 499 at U.S. 315, 813-14; Dalehite 322-25 v. (1991); Varig United States, 346 U.S. 15, 32-36 (1953). We begin by asking whether any “federal statute, regulation, or policy specifically prescribes a course 8 Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 Pg: 9 of 19 of action.” Berkovitz, 486 U.S. at 536. If not, we consider generally “the nature of the actions taken and . . . whether they are susceptible to policy analysis.” Gaubert, 499 U.S. at 325. The relevant inquiry is whether the decision “in an objective, or general sense, . . . is one which we would expect inherently to be grounded in considerations of policy.” Baum v. United States, 986 F.2d 716, 721 (4th Cir. 1993). We do not examine, therefore, “whether policy considerations were actually contemplated in making [the] decision.” Smith v. Washington Metro. Area Transit Authority, 290 F.3d 201, 208 (4th Cir. 2002) (emphasis in original). In fact, if a statute or regulation permits discretion, “it must be presumed that [decisions] are grounded in policy when exercising that discretion.” Holbrook, 673 F.3d at 345 (quoting Gaubert, 499 U.S. at 324). The Federal Food, Drug and Cosmetic Act (“FDCA”), 21 U.S.C. § 301 et seq., provides that FDA may “cause to be disseminated information regarding food . . . in situations involving, in the opinion of the [Commissioner], imminent danger to health or gross deception of the consumer.” Id. § 375(b) (emphasis added). A notice in the Federal Register emphasizes that “FDA's implicit or explicit U.S.C. authority § 375(b)] is to not disseminate accompanied information by any under [21 procedural requirements.” 50 Fed. Reg. 43,060, 43,063 (Oct 23, 1985). The FDCA plainly delegates broad discretion, and we presume FDA is 9 Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 Pg: 10 of 19 firmly grounded in considerations of public policy when acting pursuant to that discretion. Seaside argues in response that various FDA guidance manuals eliminate this discretion and prescribe some mandatory course of action. Seaside points to provisions that establish standard operating procedures, contamination warning protocols, “essential steps,” and major considerations for emergency response activities. It would be the rare guidance manual that did not contain some arguably mandatory language. It is our duty, however, to construe the nature of the statutory and regulatory regime as a whole. Indeed, “[t]he price of circulating internal guidance should not be an exponential increase in exposure to a tort suit.” Holbrook, 673 F.3d at 347. It is questionable, moreover, whether something as informal as a guidance manual can overcome a statutory consignment of agency discretion. But even if we were to so assume, it would not aid appellant’s case. For after reviewing the FDA guidance manuals, we still find the agency possesses significant discretion. The FDA Emergency Response Plan, for example, begins with a qualification that “the nature and severity of an emergency . . . will determine . . . the specific actions . . . for each emergency.” J.A. 923. It continues to explain that “the exact activities performed . . . will 10 vary by the type and Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 Pg: 11 of 19 severity of the emergency,” J.A. 925, and that any given plan may “require[] significant adjustments during an incident,” J.A. 926 (emphasis added). There is even an express disclaimer: “[T]hese identified steps do not comprise the entire scope of the FDA emergency response. Emergencies are unpredictable and dynamic; therefore, the Agency’s strategy, while containing core activities, must each situation.” 1 J.A. 925-26. be unique to Remaining provisions then speak in broad terms of what FDA “may” or “should” do, subject to the overarching nature of the emergency. See Fortney v. United States, 714 F.Supp. 207, 208 (W.D.Va. 1989) discretion), (holding aff’d, 912 that F.2d “should” 722 (4th is Cir. indicative 1990). The of FDA Emergency Response Plan thus envisions a fluid combination of variable responses and “real-time determination of the necessary course of action.” J.A. 926. The warning policy are also considerations evident. The inherent FDCA 1 in expressly a contamination directs FDA to The core activities that comprise the FDA Emergency Response Plan, such as “Performing Initial and On-Going Planning,” are all described at a high level of generality. J.A. 926. But a general directive that does not “specifically prescribe[] a course of action” likewise does not operate to restrict the exercise of agency discretion. Berkovitz, 486 U.S. at 536. Furthermore, “[t]he existence of some mandatory language does not eliminate discretion when the broader goals sought to be achieved necessarily involve an element of discretion.” Holbrook, 673 F.3d at 348 (quoting Miller v. United States, 163 F.3d 591, 595 (9th Cir. 1998)). 11 Appeal: 15-2562 Doc: 74 “protect the wholesome, Filed: 12/02/2016 public [and] health Pg: 12 of 19 by sanitary.” ensuring 21 that U.S.C. foods are § 393(b)(2)(A); safe, see Gaubert, 499 U.S. at 324 (“It will most often be true that the general aims and policies of the controlling statute will be evident from its text.”). As the district court rightly noted, decisions regarding contamination warnings are “grounded in the policy of protecting the public from a health risk, and reducing adverse economic impact.” J.A. 1077. Discretion is necessary to evaluate available information, assess the sufficiency and reliability of evidence, resolve conflicting data, determine the overall nature of a health threat, and ultimately settle on a course of action. Both the timing and content of a contamination warning reflect this analysis. See Fisher Bros. Sales, Inc. v. United States, 46 F.3d 279 (3d Cir. 1995) (en banc). Acting too soon or waiting too late each entail profound potential consequences. Seaside insists that there remains a genuine dispute as to whether the government ultimately executed its decision in a reasonable manner. Seaside complains that the contamination warning was overly broad, based on insufficient evidence, and wholly inadequate to notify consumers that South Carolina tomatoes remained safe for consumption. Seaside then emphasizes that no tomato in the United States ever tested positive for Salmonella Saintpaul, and that FDA actually neglected to test 12 Appeal: 15-2562 Doc: 74 sample Filed: 12/02/2016 tomatoes Finally, Seaside before issuing asserts that, Pg: 13 of 19 the contamination warning. considerable evidence despite linking the outbreak to Mexico when the contamination warning was issued, FDA omitted that information without a defensible justification. impermissible Seaside suggests “political” this reasons decision beyond the was made scope of for FDA’s discretion. Reply Br. of Appellant at 20. Unfortunately, discretionary Seaside function misunderstands inquiry. The the nature of to issue decision the a contamination warning, especially in the middle of an escalating salmonella outbreak, clearly implicates the policy considerations which FDA was established to weigh. The FDCA even contemplates considerations regarding our commercial relationship with foreign countries. See 21 U.S.C. § 393(b)(3). Seaside fails to identify any mandatory requirements governing FDA’s decision, including any directive to test sample tomatoes before issuing the contamination warning. Not only is the FDA Emergency Response Plan phrased in permissive terms, but it envisions “[i]nvestigative, laboratory, and technical/scientific staff” pursuing J.A. 929. gathering These field multiple would avenues encompass, reports from of inter state obtaining alia, information. such agencies, things as healthcare providers, and affected patients, to employing FDA’s bank of pre-existing scientific knowledge about the association between 13 Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 certain foods pursued its and food-borne investigation, Pg: 14 of 19 illnesses. interpreted Whether relevant the agency evidence, or balanced policy considerations in what Seaside believes to be an optimal manner does not affect the discretionary function analysis. Seaside essentially invites us to engage in the very judicial second guessing that the discretionary function exception forbids. We therefore contamination choice,” that conclude warning that “involves implicates the an decision element “considerations of to of issue judgment public a or policy.” Berkovitz, 486 U.S. at 536-37. The government rightly observes that contamination warnings -– in both timing and content -- are a prototypical discretionary function. 2 B. Seaside discovery. next District contends courts it was exercise not allowed broad sufficient discretion over discovery issues. Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 402-03 (4th Cir. 2003). A party is not entitled to discovery that would be futile or otherwise inadequate to establish a sufficient basis for jurisdiction. See Rich v. United States, 811 F.3d 140, 146 (4th Cir. 2015). 2 In view of our ruling on the discretionary function exception, we have no need to address the government’s contention that the contract rights exception to the FTCA likewise forecloses Seaside’s claim. See 28 U.S.C. § 2680(h). 14 Appeal: 15-2562 Doc: 74 The Filed: 12/02/2016 district court was Pg: 15 of 19 correct to recognize that the discretionary function exception is a jurisdictional threshold that must be considered before moving to the merits of an FTCA claim. Williams, 50 F.3d at 308; Smith, 290 F.3d at 211. The district court discovery to was well within its dispositive this thus discretion issue. Rich, 811 to F.3d limit at 146. Indeed, unlike in Rich, policy would be inevitably implicated in the issuance of the contamination warning and in drafting its contents. See id. at 147. Other circuits considering the discretionary function exception agree –– if they even allow discovery at all. See, e.g., Gonzalez v. United States, 814 F.3d 1022, 1031-32 available (9th agency Cir. 2016) guidelines (refusing established discovery discretion); because Baer v. United States, 722 F.3d 168, 176-77 (3d Cir. 2013) (refusing discovery because available agency guidelines did not foreclose discretion); Davila v. United States, 713 F.3d 248, 263-64 (5th Cir. 2013) (refusing discovery because the plaintiff failed to allege any government's “well-pleaded facts or evidence to refute assertion . . . that no [nondiscretionary] the policy exists”); Ignatiev v. United States, 238 F.3d 464, 467 (D.C. Cir. 2001) (remanding for limited jurisdictional discovery); In re Orthopedic Bone Screw Prod. Liability Litig., 264 F.3d 344, 365 (3d Cir. 2001), as amended limited jurisdictional discovery). 15 (Oct. 10, 2001) (upholding Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 Pg: 16 of 19 In any event, Seaside had three years of discovery. The government produced over 25,000 pages of material relevant to FDA practices and the Salmonella Saintpaul outbreak. Seaside also had the opportunity to take multiple depositions of CDC or FDA employees. This was more than adequate to determine whether FDA had some nondiscretionary duty or otherwise exercised discretion that was not susceptible to policy analysis. While Seaside expresses additional frustration information at relevant to its inability whether the to obtain contamination warning was justified, that issue is separate and distinct from the question of jurisdiction and the discretionary function exception. Relying on Kerns v. United States, 585 F.3d 187 (4th Cir. 2009), Seaside insists that the facts necessary to determine jurisdiction are “inextricably intertwined” with the merits of the case and thus additional discovery was still necessary. See id. at 195. We disagree. Kerns, in fact, acknowledged that the discretionary function exception is a threshold issue that can be “wholly unrelated to the basis for liability under the FTCA.” Id. at 196. So it is here. Whether FDA was negligent is an entirely different discretion whether to draft question exercising and from issue that a whether FDA contamination discretion was given the warning, and implicates policy considerations. While we do not suggest the agency’s attempt to 16 Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 Pg: 17 of 19 warn the public of a major unfolding health crisis represented an abuse of the discretion entrusted to it, the discretionary function exception applies “whether or not the discretion involved be abused.” 28 U.S.C. § 2680(a); see Gaubert, 499 U.S. at 322-25; Holbrook, 673 F.3d at 349-50. The value jurisdictional of any bar, kind of declines immunity, as applied litigation here as proceeds. a See Mitchell v. Forsyth, 472 U.S. 511, 525-27 (1985) (explaining that qualified immunity in 42 U.S.C. § 1983 litigation “is in part an entitlement consequences matters as ‘[i]nquiries of official discovery of not this are kind to be forced conduct” to be can and “even avoided be to litigate such if peculiarly the pretrial possible, as disruptive of effective government’” (quoting Harlow v. Fitzgerald, 457 U.S. 800, 817 (1982)). Exposing FDA to extensive rounds of discovery on the merits would undermine the discretionary function exception and introduce the very litigation pressures Congress clearly meant to avoid. See Wu Tien Li-Shou v. United States, 777 F.3d 175, 186 (4th Cir. 2015); Holbrook, 673 F.3d at 349-50; cf. Harlow, 457 U.S. at 818 (“Until this threshold [42 U.S.C. § 1983] immunity question is resolved, discovery should not be allowed.”). The district court was thus well within discretion to order discovery in the manner that it did. 17 its Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 Pg: 18 of 19 IV. We refuse to place FDA between a rock and a hard place. On the one hand, if FDA issued a contamination warning that was even arguably overbroad, premature, or of anything less than perfect accuracy, injured companies would plague the agency with lawsuits. On the other hand, delay in issuing a contamination warning would lead to massive tort liability with respect to consumers who suffer serious or even fatal consequences that a timely warning might have averted. All this would loom if contamination warnings were not protected by the discretionary function exception. Every public health emergency is different. There is no boilerplate warning that can account for the unknown variables of a pathogenic outbreak. There is little room for leisured hindsight when the decision is one that must be made under the pressure of events and, in many cases, on the basis of imperfect information. After three years of discovery, Seaside failed to identify any mandatory duty that FDA may have breached, or any discretionary decision that was not firmly rooted in the very policy considerations that FDA was intended to exercise. While we acknowledge and regret any financial loss Seaside may have incurred as a result of the Salmonella Saintpaul contamination warning, allowing Seaside’s claim to proceed would allow the law 18 Appeal: 15-2562 Doc: 74 Filed: 12/02/2016 Pg: 19 of 19 of tort to distort one of the most critical of governmental functions, that of safeguarding the public health and welfare. The judgment is accordingly affirmed. AFFIRMED 19

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