Bellion Spirits, LLC v. United States
Bellion Spirits, LLC v. United States
Opinion of the Court
MEMORANDUM OPINION
JAMES E. BOASBERG, United States District Judge *36A vodka maker's hopes of advertising the health benefits of its product were thwarted when a federal administrative agency found the claims to be unsubstantiated. This vodka maker, which is actually two entities - Plaintiffs Bellion Spirits, LLC and Chigurupati Technologies Private Ltd. (jointly, "Bellion") - then filed suit in this Court against the administrative agency - the Alcohol and Tobacco Tax and Trade Bureau (TTB) - and a host of other governmental entities. Bellion asserts claims under the Administrative Procedure Act and the First and Fifth Amendments to the U.S. Constitution. In this litigation's first volley, Plaintiffs seek to supplement the record with two peer-reviewed scientific articles and three declarations. Finding that this case does not present one of the narrow circumstances in which a party can supplement an administrative record on judicial review, the Court will deny the Motion.
I. Background
Given the early stage of this litigation, a cursory rehearsal of the facts will do. Bellion Spirits is an independent distributor of Bellion Vodka, which is infused with NTX, a proprietary blend of ingredients developed by Chigurapati Technologies. See ECF No. 16 (Am. Compl.), ¶¶ 15-16. Plaintiffs sought approval to add eight claims espousing the health benefits of NTX to the label of Bellion Vodka. These statements included, among other things, that NTX reduces "alcohol-induced oxidative damage to the liver," "helps maintain normal liver enzyme production and function," "helps protect DNA from alcohol-induced damage," and "reduces alcohol-induced DNA damage." Id., ¶ 24. Under the applicable regulatory regime, Bellion first had to pass through TTB's administrative process before printing these claims, as the agency's governing regulations prohibit health-related claims that are false or misleading. See
Bellion thus filed a petition with TTB, which sought the Food and Drug Administration's counsel in evaluating the health claims. See ECF No. 22 (Pl. Motion) at 4; ECF No. 23 (Def. Opp.) at 4. After receiving and reviewing a memorandum from the FDA memorializing its findings, TTB denied Bellion's petition. It found that "none of the eight claims is adequately substantiated" and their inclusion on a label would "create a misleading impression as to the effects on health consumption of alcoholic beverages infused with NTX." Pl. Motion, Exh. F (Petition Response Letter) at 35.
Bellion, dissatisfied with TTB's ruling, filed this suit against the agency and a number of other governmental entities, which the Court will collectively refer to as "TTB." Plaintiffs challenge TTB's denial of Bellion's two claims concerning NTX's effect on DNA, but raise no opposition to TTB's denial of the other six here. See Am. Compl., ¶¶ 1, 24. Plaintiffs bring both statutory and constitutional causes of action. In their statutory count, Bellion contends *37that, by relying on the FDA's advice, TTB acted beyond its authority and thus ran afoul of the APA (Count III). See
Bellion also advances three constitutional claims, two of which arise under the First Amendment. In one (Count I), Plaintiffs take issue with TTB's conclusion that Bellion's health claims are not substantiated by credible scientific evidence. They allege various errors in TTB's conclusion and assert that, because Bellion's claims are in fact supported by credible evidence, barring them violates Plaintiffs' First Amendment rights.
Before any briefing on the merits of the parties' dispute has occurred, Bellion now moves to supplement the administrative record with five documents and the testimony of two live witnesses. The first two documents are peer-reviewed studies that, Plaintiffs say, support their claims about NTX's effect on alcohol-induced DNA damage. See Pl. Motion at 10-11. TTB, however, did consider these studies before their publication in peer-reviewed literature, and those earlier versions are indeed part of the administrative record. Plaintiffs thus seek only to add to the record the fact of peer review.
Bellion also wishes to submit three declarations and in-court testimony of two of those declarants. The first declaration, from Dr. Jeffrey Blumberg, concludes that credible scientific studies support Bellion's health claim and criticizes FDA's memorandum finding the contrary.
II. Legal Standard
In reviewing agency action, "it is black-letter administrative law that ... a reviewing court 'should have before it neither more nor less information than did the agency when it made its decision.' "
*38Hill Dermaceuticals, Inc. v. Food & Drug Admin.,
A plaintiff can supplement an administrative record by adding evidence not before the agency: "(1) when the agency failed to examine all relevant factors; (2) when the agency failed to explain adequately its grounds for decision; (3) when the agency acted in bad faith; or (4) when the agency engaged in improper behavior." Styrene Info. & Research Ctr., Inc. v. Sebelius,
III. Analysis
Because Plaintiffs' claims arising under the APA and the Constitution implicate distinct considerations, the Court will address each separately.
A. APA Claim
Little need be said here. In their Reply brief, Plaintiffs concede that "[n]one of Bellion's proposed extra-record evidence is relevant to Bellion's lone APA claim" and urge the Court to "resolve the APA claim by reviewing the extant record without regard to the scientific affidavits and testimony." ECF No. 25 (Pl. Reply) at 5. This settles the matter.
Even had Plaintiffs not made this concession, the Court would reach the same conclusion. For the reasons articulated in its discussion of Bellion's constitutional claims, none of the accepted exceptions to the general rule barring extra-record evidence applies. Nor is there any other reason that such material should be considered here. The core of Plaintiffs' APA claim asserts that TTB exceeded its statutory authority by relying on the FDA's analysis in evaluating Bellion's petition. Bellion's proposed extra-record evidence, which goes to whether their asserted health benefits are substantiated by credible science, has no bearing on the merits of their APA claim.
B. Constitutional Claims
The propriety of extra-record evidence for Bellion's three constitutional claims, conversely, warrants further scrutiny. Plaintiffs mount their attack from two fronts. First, they contend that this case falls into one of the accepted circumstances in which a party is permitted to supplement an administrative record on *39judicial review. Second, Bellion says that the Court need not actually rely on these exceptions at all. Rather, they assert, the fact that they bring constitutional claims frees them of the limitations of APA review. Neither argument persuades.
1. Accepted Exceptions
Taking the accepted exceptions first, Plaintiffs have not shown that their case falls into one of the four "highly exceptional[ ] circumstances" in which a party may supplement an administrative record. See Cape Hatteras Access Preservation Alliance,
Bellion's arguments on these grounds land wide of the mark. Although they repeatedly maintain that TTB "failed to examine all relevant factors," the grievances that back up this assertion have little to do with an agency's neglect of a factor that it was obligated to address. They say, for instance, that "TTB based its decision on factors that could not have been foreseen by Bellion," Pl. Motion at 8 - i.e. , by consulting with the FDA - and that the "abdication of TTB's statutory obligations" - again, by consulting with the FDA - "involved TTB's failure to consider all relevant factors." Pl. Reply at 3. Tacking, Bellion also asserts that "[b]y refusing to provide Bellion with an opportunity to present [its] evidence below before it issued a Decision[,] ... TTB failed to examine all relevant factors." Id. at 12-13.
These are simply not the circumstances contemplated by the exception. Nowhere does Bellion point the Court to a specific factor that TTB was required, but failed, to examine and that the Court must also consider on judicial review. This is what the exception demands. See, e.g., United Student Aid Funds,
That is not the case here. Bellion's primary arguments all trace back to their unhappiness with TTB's decision to involve the FDA. This decision does not establish, however, that TTB failed to consider a relevant factor. Perhaps, as Plaintiffs contend, they were not afforded a sufficient opportunity to counter the agencies' findings before TTB, or perhaps, as the Government argues, these processes were adequate. That dispute is for another day. What matters here is that, regardless of its merit, TTB's decision does not deprive the Court of a sufficient administrative record to evaluate the agency's finding on a relevant factor. In fact, on the key question to which Bellion's proposed extra-record evidence is relevant - whether their health claims are true (or, at least, not false) - the administrative record already contains a heap of studies and articles submitted by Bellion to TTB (112, to be *40precise) along with additional expert reports. See Pl. Motion at 3.
Lurking behind this deficiency in Plaintiffs' argument is a larger one. It is only in Bellion's APA count (Count III) that they specifically target TTB's interaction with the FDA. As already detailed, however, Plaintiffs concede that the Court need not admit extra-record evidence to evaluate this part of their suit. To succeed in admitting extra-record evidence on their constitutional claims, the "relevant factor" must be one relevant to the constitutional analysis. Plaintiff has articulated no connection - and the Court discerns no link - between TTB's purported "statutory abdication" and this analysis.
Bellion does say, however, that "[b]y refusing to provide Bellion with an opportunity to present [its] evidence below before it issued a Decision[,] ... TTB failed to examine all relevant factors." Pl. Reply at 12-13. To the degree this statement is intended to refer to Bellion's contention in its Motion that TTB's process is constitutionally inadequate because it did not give Bellion an opportunity to respond, it does not help them. Bellion's desire to critique the agencies' analysis implies not that the agency failed to consider a factor, but that Bellion disagrees with its conclusion as to those factors.
The nature of the evidence Bellion seeks to add confirms that its actual beef is with the substance of the agency's decision. Such a position does not permit Bellion to supplement the record. As the Court of Appeals has stated, "[T]he familiar rule that judicial review of agency action is normally to be confined to the administrative record ... exerts its maximum force when the substantive soundness of the agency's decision is under scrutiny." Esch v. Yeutter,
Even more probative, two of the declarations' stated purpose is to attack the substance of TTB's decision and FDA's memorandum and demonstrate why the "DNA Claims are substantiated by credible evidence." Pl. Motion at 13. This charge, quite clearly, attempts to strike at the substantive heart of FDA's decision. Where Plaintiffs' complaint is with the substance of the decision rather than the agency's failure to consider any relevant factor, they are confined to the administrative record.
For similar reasons, Bellion's contention that the agency failed to adequately explain its reasoning is unavailing. Plaintiffs contend that the agency's decision is "void of any foundational explanation in science for its conclusion that the two DNA claims were invalid." Pl. Motion *41at 9. TTB, however, articulated its reason for denying Bellion's claim in a 47-page letter. See Petition Response Letter. Bellion may very well disagree with its conclusion. But "[t]his is not a case where the agency failed 'to explain administrative action [so] as to frustrate effective judicial review.' " IMS,
Finally, Bellion sprinkles throughout its briefs additional arguments untethered to any of the specified exceptions. Most prominently, they point out that supplementing the record may be appropriate where "the procedural validity of the agency's action remains in serious question." CTS Corp. v. EPA,
2. Constitutional Argument
Perhaps anticipating this conclusion, Plaintiffs alternatively offer a different approach. They eschew any reliance on the exceptions addressed above and instead argue that because their claim originates under the Constitution, the strictures of the APA do not apply. As a quick reminder, Plaintiffs assert three constitutional causes of action. Bellion's first constitutional claim (Count I) arises under the First Amendment and challenges the agency's finding that their health claims are misleading and insufficiently substantiated. Counts II (also under the First Amendment) and IV (under the Fifth Amendment), conversely, take issue with the procedures employed by TTB. Because the proposed extra-record evidence either criticizes the agencies' analysis or adds purported substantiation for Bellion's health claims, it is most clearly relevant to Count I. It is with that count, therefore, that the Court begins.
The caselaw on a plaintiff's ability to supplement an administrative record to support a constitutional cause of action is sparse and in some tension. See, e.g., *42Chiayu Chang v. U.S. Citizenship & Immigration Servs.,
Plaintiffs set forth the principle that constitutional claims are typically reviewed de novo. See Pl. Motion at 9. As a general matter, they are correct. See Nat'l Oilseed Processors Ass'n v. Occupational Safety & Health Admin.,
Under this test (or any test, for that matter), evaluating an agency's decision rooted in complex scientific data is no easy lift. Reacting to this complexity, circuit precedent dictates that a reviewing court's task is to critically analyze the agency's logic and explanation rather than engage in a comparative evaluation of conflicting scientific evidence. See Whitaker v. Thompson,
This task would be markedly harder with a supplemented record. There would be little meaningful way to review the logic of an agency's attempt to sort through scientific evidence and the bases of its decision if the record before the court differed from that before the agency. This is especially so for a scientific claim in a commercial-speech context. In this case, a court may be called on to review an agency's determination about the credibility of scientific evidence in support of a health claim and whether that evidence is "qualitatively weaker than the evidence against the claim." Whitaker,
*43Said otherwise, the gravamen of Bellion's constitutional complaint in Count I faults a decision made by an administrative agency - namely, its conclusion that Bellion's health claims are misleading. The Court's evaluation of the agency's decision is not aided by considering evidence to which the agency was not privy. The nature of Bellion's assertion and the method in which the Court is obligated to review the agency's scientific conclusions in this case, buttressed by practical considerations, thus militate in favor of treating Bellion's first First Amendment claim (Count I) in the same manner as a similar challenge brought under the APA - i.e., confined to the administrative record.
For these and similar reasons, district courts have been hesitant to permit a plaintiff asserting a constitutional challenge to agency action to avoid the APA's bar on extra-record evidence. For example, one court bound a plaintiff's First Amendment claim to the APA's procedural provisions because the case was "an appeal of an agency action in every respect" and permitting a broader record on judicial review for a constitutional claim would "incentivize every unsuccessful party to agency action to allege bad faith, retaliatory animus, and constitutional violations to trade in the APA's restrictive procedures for the more even-handed ones of the Federal Rules of Civil Procedure." Jarita Mesa Livestock Grazing Ass'n v. U.S. Forest Serv.,
There appears to be a common thread running through these cases: when a constitutional challenge to agency action requires evaluating the substance of an agency's decision made on an administrative record, that challenge must be judged on the record before the agency. In fact, the one case cited by Bellion in which a court permitted extra-record evidence for a constitutional claim accords with this principle. See Rydeen v. Quigg,
So here is the bottom line: Given the dearth of caselaw on point in this circuit, the Court declines to adopt any bright line or categorical rule. It finds that in this particular case, Bellion is not entitled to supplement the administrative record *44for any constitutional claim that requires the Court to analyze the substance of an agency's decision that is, in turn, based on an evaluation of that record. This conclusion disposes of Plaintiffs' Motion with respect to its First Amendment claim challenging the agency's conclusion that Bellion's health claims are misleading or inadequately substantiated (Count I).
In Counts II and IV, however, Plaintiffs challenge the agency's procedures rather than the substance of its decision. Bellion contends in Count II that TTB's procedures amount to an unconstitutional prior restraint in violation of the protections afforded by the First Amendment. Count IV raises a challenge under the Fifth Amendment - namely, that TTB regulations are unconstitutionally vague. Because these claims do not require the Court to evaluate the substance of the existing administrative record, the prior analysis does not necessarily apply. Rather, the question here is whether Plaintiffs' proposed evidence is relevant to their allegations. It would be an exercise in futility to permit extra-record evidence that has no bearing on Bellion's claims.
The Court would forgive a careful reader for being confused by Bellion's assertion that its evidence is relevant to its procedural claims. Plaintiffs conceded, as earlier mentioned, that "[n]one of Bellion's proposed extra-record evidence is relevant to Bellion's APA claim," which, like the constitutional claims, attacks the procedures employed by TTB. See Pl. Reply at 5. Similarly, nowhere in Bellion's Motion do they connect their extra-record evidence to their procedural arguments. On the other hand, they explicitly assert that the declarations and peer-reviewed articles attack the substance - rather than procedure - of FDA's conclusion. They say, for example, that the Blumberg declaration is "probative of whether [the] DNA Claims are substantiated by credible evidence" and "challenge[s] the scientific deficiencies that were overlooked by the TTB in its Decision." Pl. Motion at 13-14.
After the Government pointed out this logical disconnect, Bellion changed tack in their Reply. There, Plaintiffs contend that "each of the items Bellion seeks to add to the record are relevant to the issue of whether TTB's procedural process was valid." Pl. Reply at 12. Bellion says that the Chigurupati declaration - which "respond[s] to a specific critique of TTB" - "proves that if TTB provided Bellion with sufficient notice of the standards upon which it would adjudge Bellion's substantiation, Bellion could have quickly included the ... declaration in the record below."
As an initial matter, the Court is skeptical that these substantive declarations can prove that Bellion was afforded a constitutionally inadequate process in the manner asserted in Counts II and IV. Such a ruling, however, might dance too close to the merits of Plaintiffs' claim, which will be the subject of future merits briefing. The Court thus grants for now the premise that Bellion's inability to respond to the agency's conclusion could be relevant to Counts II and IV. The question then becomes whether Plaintiffs need to supplement the record in order to demonstrate this connection. They do not. On the existing record, they are free to assert in future briefing, for instance, that TTB never offered them a chance to respond. Should the Government argue that such response would not change the outcome, Bellion is similarly free to outline the contours of the evidence they would have presented. For *45this, they also need not supplement the record. Plaintiffs thus do not explain, nor does the Court discern any reason, why admitting the declarations now would help them in making their case for Counts II and IV. Said otherwise, admitting the extra-record evidence does not advance the ball for Plaintiffs beyond their current position. On the briefing before it, the Court thus concludes that Bellion cannot bootstrap in evidence attacking the substance of the agency's decision merely by asserting that they would have submitted this evidence had the procedures been as they desired.
This is not to say, however, that Bellion is without remedy. If Plaintiffs believe that the administrative record is too incomplete to give them a fair shake, their request should be directed to the agency to consider the evidence in the first instance, not this Court. See CTS Corp.,
IV. Conclusion
For these reasons, the Court will deny Plaintiffs' Motion to File Extra-Record Evidence. A separate Order so stating will issue this day.
Reference
- Full Case Name
- BELLION SPIRITS, LLC v. UNITED STATES of America
- Cited By
- 13 cases
- Status
- Published