PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA,
Plaintiff-Appellee,

v.

KANASCO, LIMITED,
Claimant-Appellant,

and
                                                                  No. 96-1996
VARIOUS ARTICLES OF DRUG, BULK
ANTIBIOTICS, IDENTIFIED IN
ATTACHMENT A, WHICH ARE
LOCATED AT 6110AND 6118
ROBINWOOD ROAD, BALTIMORE,
MARYLAND,
Defendant.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Alexander Harvey II, Senior District Judge.
(CA-95-912-H)

Argued: June 6, 1997

Decided: September 10, 1997

Before MURNAGHAN, WILLIAMS, and MOTZ,
Circuit Judges.

_________________________________________________________________

Affirmed by published opinion. Judge Motz wrote the opinion, in
which Judge Murnaghan and Judge Williams joined.

_________________________________________________________________
COUNSEL

ARGUED: David Phelps Kennedy, GREER & KENNEDY, L.L.C.,
Towson, Maryland, for Appellant. Annamarie Kempic, Associate
Counsel for Enforcement, FOOD & DRUG ADMINISTRATION,
Rockville, Maryland, for Appellee. ON BRIEF: Kreg Paul Greer,
GREER & KENNEDY, L.L.C., Towson, Maryland for Appellant.
Frank W. Hunger, Assistant Attorney General, Lynne A. Battaglia,
United States Attorney, Donna C. Sanger, Assistant United States
Attorney, Baltimore, Maryland, for Appellee.

_________________________________________________________________

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

The United States filed a complaint for forfeiture requesting the
seizure and condemnation of approximately 104 drums of adulterated
bulk antibiotics manufactured by Kanasco, Limited. After federal
marshals seized the drugs, Kanasco filed an answer to the complaint
and a claim for the drugs. Kanasco argued that the drugs were not
adulterated, and requested their release and return.

Following discovery, the Government moved for summary judg-
ment maintaining that the drugs were adulterated because they were
not manufactured according to "current good manufacturing practice,"
as defined in 21 U.S.C.A. § 351(a)(2)(B) (West Supp. 1997). Kanasco
filed a cross-motion for summary judgment. The company did not
dispute that the drugs were not manufactured according to "current
good manufacturing practice;" instead, it argued that the drugs were
exempt from the manufacturing requirements of § 351 because they
were intended for export, and thus fell within the export exemption
to the Food, Drug, and Cosmetic Act. See 21 U.S.C.A. § 381(e)(1)
(West 1972 & Supp. 1997).

In a well-reasoned memorandum opinion, the district court rejected
Kanasco's argument and granted summary judgment to the Govern-
ment. See United States v. Various Articles of Drugs, Bulk Antibiotics,

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Civ. No. H-95-9121 (D. Md. June 6, 1996). Kanasco subsequently
appealed to this court.1 We affirm.

We review the district court's grant of summary judgment de novo.
See McGahren v. First Citizens Bank & Trust Co. (In re Weiss), 111
F.3d 1159, 1168 (4th Cir. 1997). In order to prevail on a motion for
summary judgment the moving party must establish that no genuine
issue of material fact exists, and that it is entitled to judgment as a
matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986). We consider the facts in the light most favorable to the non-
moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986).

Pursuant to 21 U.S.C.A. § 351(a)(2)(B) a drug is "adulterated" if
"the methods used in, or the facilities or controls used for, its manu-
facture, processing, packing, or holding do not conform to or are not
operated or administered in conformity with current good manufactur-
ing practice." 21 U.S.C.A. § 351(a)(2)(B). Adulterated drugs are sub-
ject to forfeiture under 21 U.S.C.A. § 334(a)(1) (West 1972 & Supp.
1994).

The district court found that the drugs at issue here were not manu-
factured according to "current good manufacturing practice" and
Kanasco does not appeal that finding. Instead, Kanasco argues that
the district court erred by refusing to apply the"intended for export"
exemption from this requirement. See 21 U.S.C.A. § 381(e)(1). Pursu-
ant to this exemption, a drug is not "adulterated" (and thus not subject
to forfeiture) if the drug is "intended for export" and meets a four fac-
_________________________________________________________________
1 After the appeal was noted, United States marshals destroyed the
drugs. However, the case is not moot:

          Simply because the government destroys or otherwise disposes
          of property sought by the movant, the motion for its return is not
          thereby rendered moot. See [Mora v. United States, 955 F.2d
          156, 159 (2d Cir. 1992)] (collecting cases). When a court pos-
          sessing equitable powers has jurisdiction over a complaint that
          seeks equitable relief, it has authority to award whatever dam-
          ages are incident to the complaint. Id.

Soviero v. United States, 967 F.2d 791, 793 (2d Cir. 1992).

                    3
tor test. See 21 U.S.C.A. § 381(e)(1). A drug "intended for export
shall not be deemed to be adulterated" if it:

          (A) accords to the specifications of the foreign purchaser,

          (B) is not in conflict with the laws of the country to which
          it is intended for export,

          (C) is labeled on the outside of the shipping package that
          it is intended for export, and

          (D) is not sold or offered for sale in domestic commerce.

21 U.S.C.A. § 381(e)(1).

Kanasco claims that the drugs were "intended for export" and that
they satisfy the four factor test. The burden of pleading and proving
the applicability of § 381(e)(1) is on Kanasco-- the party that seeks
the benefit of the exemption. See United States v. 76,552 Pounds of
Frog Legs, 423 F. Supp. 329, 337 (S.D. Tex. 1976) (interpreting a
related exemption); United States v. Articles of Drug, 634 F. Supp.
435, 452 (N.D. Ill. 1985) (citing Frog Legs and holding that
"[i]mporters seeking to reexport drugs under" similar "provisions
have the burden of pleading and proving satisfaction of the statutory
requirements"), vacated as moot, 818 F.2d 569 (7th Cir. 1987).

John Capanos, president of Kanasco, filed an affidavit stating that
the seized drugs were "intended for export." Based on this affidavit,
the district court held that Kanasco raised a dispute of fact as to the
"threshold requirement" of § 381(e)(1) that the drugs be "intended for
export." The Government does not dispute this point, and we agree
that there is a factual dispute as to Kanasco's intent.

We also concur with the district court, however, that this factual
dispute is not "material" because Kanasco clearly cannot satisfy the
requirements of § 381(e)(1)(A) or (B). Kanasco has come forward
with no evidence that the drugs seized "accord[ ] to the specifications
of the foreign purchaser" or are "not in conflict with the laws of the
country to which [they are] intended for export." 21 U.S.C.A.
§ 381(e)(1)(A)-(B).

                    4
Kanasco contends that § 381(e)(1) does not require that the drugs
be manufactured for a specific foreign purchaser, or that the drugs
comply with "the laws of" a particular country. The company asserts
that Capanos' affidavit, which stated that he could find a foreign pur-
chaser, and that the drugs met the requirements of unnamed and
unspecified "foreign countries," satisfies the first two prongs of
§ 381(e)(1).

"Under the most basic canon of statutory construction, we begin
interpreting a statute by examining the literal and plain language of
the statute." Carbon Fuel Co. v. USX Corp. , 100 F.3d 1124, 1133 (4th
Cir. 1996). Sections 381(e)(1)(A) and (B) require that in order to be
deemed not adultered, drugs meet "the specifications of the foreign
purchaser," and that drugs not be "in conflict with the laws of the
country to which" they are "intended for export." 21 U.S.C.A.
§ 381(e)(1)(A)-(B) (emphasis added). By using the definite article
"the," Congress signaled that § 381(e)(1) requires proof that a drug
accords with both the specifications of a specific foreign purchaser
and the laws of a specific foreign country. See Gates & Fox Co. v.
OSHRC, 790 F.2d 154, 156 (D.C. Cir. 1986) (interpreting "the haul-
age equipment" in a regulation and noting that use of "the definite
article suggest[s] that some specific haulage equipment is referred to,
rather than merely haulage equipment in general"); Voluntary Hosps.
of America, Inc. v. National Union Fire Ins., 859 F. Supp. 260, 262
(N.D. Tex. 1993) (stating that "[o]bviously, the term `the Insured'" in
an insurance contract "refers to a specific insured") (emphasis in orig-
inal), aff'd, 24 F.3d 239 (5th Cir. 1994).

The plain language of § 381(e)(1) thus requires a particular foreign
buyer and country; not a generalized assertion that the drugs can be
sold to some buyer and that sale is consistent with the laws of some
foreign country. Kanasco maintains that this interpretation of
§ 381(e)(1) subverts the objective of the export exemption because
drugs that could be sold in foreign markets will instead be destroyed.
This argument, however, examines the export exemption in a vacuum,
ignoring the fact that it is an exception to the Food, Drug, and Cos-
metic Act. "[E]xceptions from a general policy which a law embodies
should be strictly construed." Spokane & Inland Empire R.R. v.
United States, 241 U.S. 344, 350 (1916); see also Commissioner of
Internal Revenue v. Clark, 489 U.S. 726, 739 (1989) ("In construing

                    5
provisions . . . in which a general statement of policy is qualified by
an exception, we usually read the exception narrowly in order to pre-
serve the primary operation of the provision."); Monahan v. County
of Chesterfield, Va., 95 F.3d 1263, 1267 (4th Cir. 1996) (stating that
"exceptions" to the Fair Labor Standards Act"are to be narrowly con-
strued against the employer asserting them") (quoting Johnson v. City
of Columbia, S.C., 949 F.2d 127, 129-30 (4th Cir. 1991)); Rodriguez
v. MEBA Pension Trust, 872 F.2d 69, 72 (4th Cir. 1989) (noting that
"exceptions to ERISA's preemption provisions" are "narrowly con-
strued").

Moreover, it is particularly appropriate to construe the export
exemption narrowly, because a broad interpretation could seriously
damage the "overriding purpose" of the Food, Drug, and Cosmetic
Act, "to protect the public health." United States v. Bacto-Unidisk,
394 U.S. 784, 798 (1969); see also United States v. Dotterweich, 320
U.S. 277, 280 (1943) ("The purposes of this legislation thus touch
phases of the lives and health of people which, in the circumstances
of modern industrialism, are largely beyond self-protection. Regard
for these purposes should infuse construction of the legislation . . . .").
Kanasco's expansive interpretation would undermine this purpose by
crippling the effectiveness of enforcement actions against violators.
Drug manufacturers could ignore the statutory quality requirements
and produce adulterated drugs for sale in the United States, secure in
the knowledge that if caught they could claim the export exemption
and subsequently find a foreign buyer for the drugs. Manufacturers
could thus produce adulterated drugs with little fear of any effective
sanction.

Facing a similar argument in a case involving adulterated food, the
Second Circuit reached an interpretation of the export exemption
identical to ours:

          The practical aspects of the situation would seem to support
          this construction, for there is nowhere disclosed an intention
          that a violator of the Act may avoid the consequences of his
          wrong by then exporting the outlawed goods to some for-
          eign country which will receive them. However laudatory
          may be the purpose to conserve the food supply (perhaps
          even of a condiment or relish such as catsup), an attempt to

                     6
         rewrite the Act along these lines seems likely to have the
         effect of nullifying its chief purposes.

United States v. Kent Food Corp., 168 F.2d 632, 634 (2d Cir. 1948).

In sum, Kanasco's interpretation of the export exemption is con-
trary to the plain language of § 381(e)(1), and would create an unwar-
ranted escape hatch for violators of the Act. The district court
properly rejected that interpretation.2

AFFIRMED
_________________________________________________________________
2 In light of our holding, we need not reach the district court's rulings
as to § 381(e)(1)(C) and (D).

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