HOFFMAN-LaROCHE, LTD. and ) HOFFMAN-LaROCHE, INC., )
vs. ) CASE NOS. 96-2751RP
Respondent. )
These matters came before the undersigned on respondent's motion to dismiss petition for lack of standing filed on July 1, 1996. A response in opposition to the motion was filed by petitioners on July 5, 1996. The issue is whether petitioners have standing to initiate these rule proceedings. The parties were represented as follows:
For Petitioners: Deborah A. Getzoff, Esquire
E. A. Mills, Jr., Esquire Post Office Box 1438 Tampa, Florida 33601-1438
Kenneth W. Suhkia, Esquire
For Respondent: Marty E. Moore, Esquire
Gregory A. Chaires, Esquire Department of Legal Affairs
The following facts are not in dispute. On May 20, 1996, respondent, Department of Legal Affairs, published notice of its intent to adopt proposed rule 2-40.002, Florida Administrative Code, pursuant to Section 893.035, Florida Statutes. That statute authorizes the Attorney General to "transfer (by rule) a (controlled) substance between schedules, if he finds that it has the potential for abuse and he makes with respect to it the other findings appropriate for classification in the particular schedule under s. 893.03 in which it is to be placed." The proposed rule reads as follows:
2-40.002 Transfer of Flunitrazepam to Schedule I, subsection 893.03(1)(a), F.S.
Under the authority of section 893.035,
F.S., the controlled substance Flunitrazepam (Rohypnol) is hereby transferred from Schedule IV, subsection 893.03(4), F.S., to Schedule I, subsection 893.03(1)(a), F.S.
All provisions of Chapter 893, F.S. applicable to controlled substances listed in Schedule I, subsection 893.03(1)(a), F.S., shall be applicable to Flunitrazepam (Rohypnol).
As provided in section 893.35 (sic), F.S., this rule shall remain in force until June 30 of the year after this rule takes effect.
If adopted, the rule would have the effect of transferring the controlled substance Flunitrazepam, also known as Rohypnol or "roofies," from Schedule IV to Schedule I(a) in Section 893.03, Florida Statutes. By definition, a Schedule I drug "has a high potential for abuse," "has no currently accepted medical use in treatment in the United States," and its "use under medical supervision does not meet accepted safety standards." It is undisputed that the drug is not approved for use in the United States, and until the federal Food and Drug Administration (FDA) does so, no one can legally manufacture, market, sell or distribute the drug in this country.
On June 26, 1996, or after the proposed rule was challenged, respondent promulgated Emergency Rule 2ER96-1, which is essentially the same as proposed rule 2-40.002. By law, the emergency rule "may not be effective for a period longer than 90 days." Also, by law, the proposed rule, if adopted, will expire on June 30, 1997. Because the same parties and subject matter are involved, the two cases have been consolidated for purposes of this final order.
Citing various statutory grounds, petitioners, F. Hoffman-LaRoche, Ltd. and Hoffman-LaRoche, Inc., who are engaged in the manufacture and marketing of pharmaceutical drugs and prescription medications throughout the world, have timely contended that the proposed and emergency rules are an invalid exercise of delegated legislative authority. Under another theory, they also claim that the rules are unconstitutional. As to standing, petitioners allege that they "hold the exclusive rights around the world . . . (and) in the United States" relating to Rohypnol. They further assert that if the proposed rule is adopted, or the emergency rule is allowed to remain effective, it "will negatively impact the marketability of Rohypnol, its chances of gaining regulatory approval in the United States and elsewhere, and therefore substantially reduce the value of Petitioners' existing economic and property rights to and in Rohypnol." For purposes of this motion, the foregoing well-plead allegations in the petition are taken as being true.
In its motion to dismiss filed on July 1, 1996, respondent contends that petitioners have not alleged sufficient facts to establish that they will suffer "a real and sufficiently immediate injury in fact," and they have failed to show how the alleged injury is within the zone of interest to be regulated or protected. On July 3, 1996, respondent supplemented its motion to dismiss by adding a contention that petitioners had no standing to bring this action since they had never registered to do business in the State of Florida. During the course of a telephonic hearing with the parties conducted on July 3, 1996, petitioners were directed by the undersigned to file a response to the motion setting forth in greater detail and clarity the purported bases for their standing. A lengthy response, with attachments, was filed by petitioners on July 5, 1996.
As a general rule, standing in a rule challenge proceeding encompasses a broader range of considerations than standing in licensing or other proceedings regarding final agency action. Dep't of Pro. Reg. v. Fla. Dental Hygienist Assn., 612 So.2d 646, 651 (Fla. 1st DCA 1993). Thus, unlike in a conventional regulatory action, an assertion of interest economic in nature, as is present here, can form the basis for standing to challenge a proposed rule. See, e.g., Dep't of Prof. Reg. v. Sherman College of Straight Chiropractic, 20
F.L.W. D2534 (Fla. 1st DCA, November 16, 1995). Even with these broader considerations, however, it is still appropriate to use the long-established standard for demonstrating standing in an administrative proceeding found in the case of Agrico Chem. Co. v. Dep't of Environ. Reg., 406 So.2d 478 (Fla. 2d DCA 1981), rev. den., 415 So.2d 1359 (Fla. 1982). There the court stated:
(B)efore one can be considered to have a substantial interest in the outcome of the proceeding he must show 1) that he will suffer injury in fact which is of sufficient immediacy to entitle him to a section 120.57 hearing,
and 2) that his substantial injury is of a type or nature which the proceeding is designed to protect.
Id. at 482.
Under the foregoing test, petitioners can satisfy the injury-in-fact standard by demonstating either that they had sustained actual injury at the time of the filing of the petition, or that they are immediately in danger of sustaining some direct injury as a result of the challenged action. See, e.g., Village Park Mobile Home Ass'n, Inc. v. State Dep't of Bus. Reg., 506 So.2d 426,
432 (Fla. 1st DCA 1987). In a section 120.54(4) proceeding, the alleged injury can, of course, be economic in nature. Fla. Dental Hygienist Assn., supra.
In this case, petitioners have made the following factual allegations in an effort to satisfy the first part of the standing test:
(the proposed and emergency rules) will negatively impact the marketability of Rohypnol, its chances of gaining regulatory approval in the United States and elsewhere, and therefore substantially reduce the value of Petitioners' existing economic and property rights to and in Rohypnol.
As further clarified in their response, which has been treated as an amendment to the initial pleading, petitioners allege that, if the rule is adopted, or the emergency rule is allowed to stand, they will suffer economic harm in the "worldwide marketplace" and damage to their reputation, both of which translate into economic loss. They further allege that "(t)he collateral effect of placing Rohypnol in Schedule I . . . will effectively prohibit Rohypnol from being marketed in the future in the United States for legitimate medical purposes," and thus the proposed rescheduling "will substantially and immediately reduce the value of (its) existing property rights and will impair, if not preclude, any future approval of the drug in the United States." These allegations, which are supplemented by affidavits attached to the response, must be accepted as being true for purposes of ruling on the motion. Therefore, as supplemented by the response, the initial petition arguably contains sufficient factual allegations to demonstrate that petitioners will suffer an injury-in-
fact in the form of economic harm if the proposed rule is adopted or the emergency rule is allowed to stand.
The next inquiry is whether the alleged injury-in-fact arguably falls within the zone of interest to be protected or regulated. In other words, petitioners must adequately demonstrate that the challenged rule "encroaches upon an interest protected by a statute or the constitution." Ward v. Board of Trustees of the Internal Improvement Trust Fund, 651 So.2d 1236, 1238 (Fla. 4th DCA 1995).
In the case at bar, the alleged direct economic harm to be suffered is a potential diminution in sales of the drug in foreign countries due to an adverse perception arising out of this state's action. Even so, petitioners have cited no relevant statutory or constitutional provision which purports to protect in a 120.54(4) rule proceeding, either directly or indirectly, the potential loss of revenues from sales outside the United States. The two cases principally relied upon by petitioners are readily distinguishable. In Dep't of Pro. Reg., Board of Chiro-practic v. Sherman College of Straight Chiropractic, supra, an out-of-state chiropractic college was determined to be a substantially affected person for purposes of challenging a rule that would bar its students from taking the licensure examination in Florida, and allegedly cause the school to lose donations from its Florida alumni, lose tuition and fees from prospective Florida students, and tarnish its reputation. Id. at D2534-35. In Televisual Communications, Inc. v. State, Dept. of Labor & Employ. Sec., 667 So.2d 372 (Fla. 1st DCA 1995), an out-of-state corporation was found to have standing to challenge a rule which would prevent it from marketing a home study course for the Florida physician certification program. In both cases, the proposed or existing rules sought to take away a right previously enjoyed by the challengers, a situation not present here. More importantly, however, the protected economic harm was directly attributable to the loss of business in Florida, or the loss of tuition, fees and donations from potential Florida students and alumni, respectively. This Florida nexus is also absent.
It is an accepted fact that, even without the proposed or emergency rules, petitioners cannot legally market, sell or distribute Rohypnol in the United States (and Florida), and any potential economic harm will arguably occur through a decline in sales in foreign countries. It is difficult to conceive that the legislature intended that a potential decline in foreign drug sales is a legitimate interest to be protected under Section 893.035, Florida Statutes, the law being implemented. While it is true, as petitioners state, that the protected zone of interest need not be found in the enabling statute of the challenged rule, Ward at 1238, petitioners have cited no other relevant statute or constitutional provision upon which this concern encroaches, and the undersigned is unaware of any. Therefore, it is concluded that the potential economic harm is not a statutory or constitutional concern in the context of these rule proceedings, and thus it does not fall within the zone of interest to be protected.
Petitioners have further alleged economic harm by virtue of the proposed and emergency rules having the collateral effect of impairing their ability to obtain FDA approval of the drug in the future, and thus reducing the value of their existing property rights to market the drug in this country. In other words, they suggest that in a rulemaking proceeding under section 893.035 to reclassify a controlled substance, a necessary and protected concern is whether the proposed rule may impact their ability, at some future time, to obtain FDA approval for a drug now banned from use in the United States. Even assuming this concern to be real, it is difficult to accept the notion that the
legislature intended this collateral interest to be a matter of statutory concern in this type of rulemaking proceeding. Moreover, petitioners have cited no relevant statutory or constitutional provision to support their view. This being so, it is concluded that this type of potential economic harm does not fall within the zone of interest to be protected in this proceeding. Therefore, the motion to dismiss is granted, and the petitions are dismissed.
As an additional ground for dismissing the petitions, respondent contends that Section 607.1502(1), Florida Statutes, bars petitioners from bringing this action since they have failed to register to do business in the State. While there are no reported decisions directly on point, it is noted that the cited statute merely bars a non-registered entity from maintaining "a proceeding in any court," but not in an administrative tribunal such as the Division of Administrative Hearings. Further, although not an issue in Sherman College, supra, petitioners represent that the challenging party in that case was a non-registered corporation. See also Recreational Surfaces, Inc. v. School Bd. of Palm Beach County, Case No. 92-1869BID (Sch. Bd. Palm Bch. Cty., June 3, 1992)(low bidder not disqualified because of failure to register to do business in Florida where it proposed to register prior to commencing business in the state). The contention is accordingly deemed to be without merit.
Finally, in their response to the motion to dismiss, and by motion filed after this decision was orally announced to the parties on July 5, 1996, but prior to the rendition of this order, petitioners ask that, if their petition is deemed to be insufficient, then under the rationale found in All Risk Corp. of Fla. v. State, Dep't of Labor and Employ. Sec., 413 So.2d 1200 (Fla. 1st DCA 1982), they be granted further leave to amend their petition prior to dismissal. Since there appears to be no viable theory under which petitioners could demonstrate standing, and further amendments would serve no useful purpose, the dismissal is with prejudice.
