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United States of America v. All Articles of

March 25, 2013

UNITED STATES OF AMERICA,
PLAINTIFF,
v.
ALL ARTICLES OF OTHER-SONIC GNERIC ULTRASOUND TRANSMISSION GEL, WHETHER LABELED OR UNLABELED, IN ANY SIZE OR TYPE OF CONTAINER, THAT ARE IDENTIFIED BY LOT NUMBER, OR BY OTHER MEANS, AS HAVING BEEN MANUFACTURED BY PHARMACEUTICAL INNOVATIONS, INC., NEWARK, NEW JERSEY, BETWEEN JUNE 2011 AND DECEMBER 2011, AND ARE LOCATED ANYWHERE ON THE PREMISES OF PHARMACEUTICAL INNOVATIONS, INC., FRELINGHUYSEN AVENUE, NEWARK, NEW JERSEY 07114-2122,
DEFENDANT.



The opinion of the court was delivered by: Honorable Steven C. Mannion United States Magistrate Judge

[D.E. 21]

OPINION AND ORDER ON MOTION TO STAY DISCOVERY

I.INTRODUCTION

This matter comes before the Court on the motion of the United States to stay discovery for 180 days [D.E. 21]. Claimant Pharmaceutical Innovations, Inc., opposes the motion. For the reasons set forth below, the Court will grant the United States' motion.

II.BACKGROUND

This case arises from a February 2012 report from the U.S. Food and Drug Administration ("FDA") alleging that patients in a Michigan hospital were infected by a bacterial pathogen from an ultrasound gel manufactured by Claimant Pharmaceutical Innovations ("Claimant"). (See D.E. 22, Claimant's Brief in Opposition, at *7). Upon learning of the Michigan hospital incident, Claimant allegedly requested information from the FDA relating to the allegation that it had distributed contaminated ultrasound gel. Id. at *8. The FDA allegedly denied most of Claimant's requests for information, but did supply Claimant with a limited number of documents, including a Health Risk Assessment indicating that the FDA believed that there had been a similar incident in 2006 involving ultrasound gel that had also originated from Claimant Pharmaceutical Innovations. Id.

On April 16, 2012, the United States filed a Verified Complaint for Forfeiture In Rem under the Federal Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. §§ 301-399d, alleging that devices manufactured by Pharmaceutical Innovations identified as Other-Sonic Generic Ultrasound Transmission Gel ("Other-Sonic Gel" or "Claimant's in rem") were contaminated with bacterial pathogens and thus subject to seizure, forfeiture, and condemnation. (See D.E. 21-1, Plaintiff's Brief in Support of Motion, at *5) (citing D.E. 1, Compl. ¶¶ 7-8). Pursuant to a Warrant for Arrest In Rem, the United States Marshalls for the District of New Jersey seized Claimant's in rem on April 17, 2012. Id.

Claimant filed a claim to its in rem on May 17, 2012 [D.E. 6], and an Answer on June 7, 2012 [D.E. 11]. Claimant then served the government with requests for the production of thirteen categories of documents, including: 1) documents relating to the allegation that the seized products are contaminated with bacterial pathogens; 2) documents relating to FDA administrative inspections in 2012 in which the FDA gathered evidence underlying this seizure case; 3) documents relating to the Michigan hospital incident that led to this seizure case; 4) documents relating to Pharmaceutical Innovations' withdrawal of products from the market following the report by the FDA of the Michigan hospital incident; 5) documents relating to the Health Risk Assessment provided by the FDA to Pharmaceutical Innovations as support for its concerns about the Michigan hospital incident; 6) documents relating to the New Jersey state embargo that was the prelude to the seizure action; and other documents relating to this seizure case and Pharmaceutical Innovations. (See D.E. 22, Claimant's Brief in Opposition, at *9). Before its responses were due, the United States filed the instant motion to stay this case for 180 days in light of a pending related criminal investigation. (See D.E. 21-1, Plaintiff's Brief in Support). Specifically, the United States Attorney's Office and the FDA Office of Criminal Investigations have allegedly been investigating whether Pharmaceutical Innovations and its officers and employees committed crimes in selling devices, such as Other-Sonic Gel, contaminated with bacterial pathogens. (See D.E. 21-1, Plaintiff's Brief in Support of Motion, at *7). The ongoing criminal investigation allegedly seeks to determine the extent to which the devices are contaminated, and the knowledge of Claimant and its officers and employees regarding the contamination. Id.

III. DISCUSSION

The United States Supreme Court acknowledged a district court's inherent power to stay a proceeding in Landis v. North American Co., 299 U.S. 248, 254-55 (1936). "[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the cases on its docket with economy of time and effort for itself, for counsel, and for litigants. How this can best be done calls for the exercise of judgment, which must weigh competing interests and maintain an even balance." Id. While courts are not required to stay civil proceedings where there is a pending, related criminal action, a stay may be warranted in some circumstances. Walsh Securities, Inc. v. Cristo Property Management, Ltd., 7 F.Supp.2d 523, 526 (D.N.J. 1998). The scope of a stay may encompass all of the proceedings in a civil action, or may be limited to particular parts of them, based on the sound discretion of the court.

See United States v. Mellon Bank, 545 F.2d 869, 872-73 (3d Cir. 1976) (finding that it was within the power of the district court to stay civil actions completely pending the resolution of related criminal proceedings).

A stay of a civil case is an "extraordinary remedy." Weil v. Markowitz, 829 F.2d 166, 174 n. 17 (D.C. Cir. 1987). In determining whether to grant a stay, courts consider the following factors: (1) the extent to which the issues in the criminal and civil cases overlap; (2) the status of the case, including whether the defendants have been indicted; (3) the plaintiff's interest in proceeding expeditiously weighed against the prejudice to plaintiff caused by a delay; (4) the private interests of and burdens of the defendants; (5) the interest of the court; and (6) the public interest. Walsh Securities, 7 F.Supp.2d at 527 (citing Trustees of Plumbers and Pipefitters Nat'l Pension Fund v. Transworld Mechanical, Inc., 886 F.Supp. 1134, 1139 (S.D.N.Y. 1995). The Court will address each of the relevant factors in turn.

1.The Extent to Which the Issues in the Criminal & Civil Cases Overlap The similarity of the issues presented in a criminal and civil case is the most important factor in determining whether or not to grant a stay of the civil case. Walsh Securities, 7 F.Supp.2d at 527. Here, it is evident that the civil and criminal cases share common issues arising from the same set of facts and occurrences. The civil case and the government's criminal investigation both arise from the sale of allegedly contaminated medical devices, including the Claimant's in rem. Therefore, it stands to reason that the same conduct and products will be relevant to both ...


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