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issues which were determined in the libel proceeding, and to make its findings on such issues, either in whole or in part, the basis for its order.

There is force in respondent's contention that the issues tried and determined in the proceedings initiated by and had before it differed in essential particulars from those tried and determined by the court in the libel proceeding. It is apparent, however, that the government—having failed, in the libel proceeding, to secure a determination that the “Gizzard Capsules” were misbranded and that the representations made by the petitioner on labels and circulars were false on the ground that the product, which concededly would remove large roundworms from poultry, would not completely remove large tapeworms or pinworms—then initiated this proceeding through the Federal Trade Commission to secure a determination that the same or substantially the same representations which were asserted to be false and fraudulent in the libel proceeding were in truth and fact false and misleading and therefore constituted an unfair method of competition in commerce within the meaning of the Federal Trade Commission Act. Although the remedies sought by the government in the two proceedings were different-condemnation in the first, and a cease-and-desist order in the second,-it is obvious that the alleged falsity of the representations of the petitioner with respect to the therapeutic value and effectiveness of its product constituted the main basis for each of the proceedings; that in the libel proceeding the court determined that the representations that the product was a remedy for tapeworms and pinworms as well as large roundworms were not false, while the Commission later determined that the representations with respect to pinworms and large tapeworms were false and misleading. It is equally obvious that the Commission completely disregarded the effect of the decree entered in the libel case in conducting its proceedings and in making its findings of fact, conclusions of law, and order.

Where the underlying issue in two suits is the same, the adjudication of the issue in the first suit is determinative of the same issue in the second suit. Sunshine Anthracite Coal Co. v. Adkins (- U. S. 60 S. C. 907, 916). "There is privity between officers of the same government so that a judgment in a suit between a party and a representative of the United States is res judicata in relitigation of the same issue between that party and another officer of the government. See Tait v. Western Maryland Railway Co. (289 U. S. 620). Sunshine Anthracite Coal Co. v. Adkins, supra, (p. 917 of 60 S. Ct.). "Where a suit binds the United States, it binds its subordinate officials.” Sunshine Anthracite Coal Co. v. Adkins, supra, (p. 917 of 60 S. Ct.). The United States may not relitigate the same issue in successive libel proceedings involving different quantities of the same product (George H. Lee Co. v. United States, 9 Cir., 41 F. 2r 460), nor may it relitigate the same issue in any proceeding in which the parties are the same and the product is the same. The rule is "that a right, question, or fact distinctly put in issue and directly determined by a court of competent jurisdiction, as a ground of recovery, cannot be disputed in a subsequent suit between the same parties or their privies, and even if the second suit is for a different cause of action, the right, question or fact once so determined must, as between the same parties or their privies, be taken as conclusively established, so long as the judgment in the first suit remains unmodified.” Southern Pac. R. Co. v. United States (168 U. S. 1, 48); Mitchell v. First National Bank (180 U. S. 471, 480-481) ; Tait v. Western Maryland Railway Co. (289 U. S. 620, 623).

Unless a question which a court or an administrative board has power to decide is to be regarded as conclusively settled as between the parties by the final decree of the court or the final order of the board, there can be no end to a controversy except as the result of the financial disability of one of the parties. If the question of the falsity of the representations of the petitioner contained on its labels and circulars had been determined adversely to the petitioner in the libel proceeding, it could not have been heard to say in the proceedings in stituted by the Commission that such representations were true. By the same token, the United States and its instrumentality, the Commission, were not after the decree in the libel proceeding, entitled to say that the represenations made by he petitioner which had been finally adjudged not to be false, were in fact false. The government had had its full day in court on that issue, had lost its case, and could not collaterally attack, either directly or indirectly, the decree entered against it.

The contentions of the respondent that the court in the libel proceeding merely determined that the petitioner had not intentionally misrepresented the therapeutic qualities of its product, whereas the Commission in the proceeding before it ruled that the petitioner's representations were untrue and misleading, is not borne out by the record. The court in the libel proceeding determined that the representations, directly challenged and distinctly put in issue by the government, were not false, and, in doing so, necessarily determined that the product of the petitioner was a remedy for the three kinds of worms in poultry. The Commission, on the other hand, has determined that the representations upon which the libel proceeding was based were in fact false and misleading. The main underlying issue in both the proceedings was the same, namely, Are the representations made by the petitioner false because the product has not the therapeutic qualities claimed for it?

Whether the Commission, if it had accepted as a fact that the representations which had been alleged to be false in the libel proceeding were not false, could have found other representations in the advertising of the petitioner which would have justified findings and conclusions that petitioner had been guilty of unfair competition in interstate commerce, we are not asked to decide, and manifestly could not decide upon the record presented. The order of the Commission is based, in large part at least, upon its finding that the representations that petitioner's product was an effective remedy or vermifuge for all three kinds of worms were untrue. The Commission thus plainly failed to accord to the decree in the libel proceeding the effect to which it was entitled. The Commission redetermined an issue which was already settled by a court of compe jurisdiction and reached a contrary conclusion. Under the circumstances, we think that its order cannot stand.

The order is vacated without prejudice to such further proceedings as are not inconsistent with this opinion.

Docket 3100

IN THE UNITED STATES CIRCUIT COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

No. 8398. October Term, 1943, January Session, 1944

THE UNITED STATES OF AMERICA, LIBEL--APPELLANT

vs. WILLARD TABLET COMPANY, CLAIMANT-APPELLEE

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE SOUTHERN

DISTRICT OF INDIANA, INDIANAPOLIS DIVISION

March 7, 1944
Before SPARKS and MAJOR, Circuit Judges, and LINDLEY, District Judge.

MAJOR, Circuit Judge. The United States (libelant) instituted this proceeding for condemnation of a quantity of Willard's Tablets shipped in interstate commerce on the ground that the labeling thereof was false, in violation of the Food, Drug, and Cosmetic Act, 21 U. S. C. A. 352 (a), 352 (f), and the articles were therefore subject to seizure and confiscation (21 U. S. C. A. 334). The claimant filed an answer to the government's amended libel, setting up three affirmative defenses. The lower court sustained the claimant's defense of res judicata, based upon a prior proceeding before the Federal Trade Commission, and dismissed the action. From the order of dismissal, the government has appealed.

The only question for decision is whether the proceedings before the Federal Trade Commission are res judicata, and, therefore, binding upon the District Court and determinative of the issues involved herein.

The government urges as a basis for overruling the lower court's holding that (1) the issues herein involved were not determined by the Federal Trade Commission; (2) unaffirmed decisions of the Federal Trade Commission do not have the finality necessary to constitute res judicata; (3) there is no mutuality of estoppel; (4) the lower court's holding would impair the enforcement of the Food, Drug, and Cosmetic Act; and (5) the District Court improperly dismissed the amended libel as to that part alleging that the directions for use on the labeling were inadequate.

The facts as stipulated and adopted by the lower court effectively dispose of the government's first contention. The stipulation discloses : (1) that the state

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ments relied upon by the government to uphold the charge of misbranding are identical with those approved by the Federal Trade Commission; (2) that the fundamental issue of fact as to whether the Willard Tablets would give the relief claimed was considered by the Federal Trade Commission. We, therefore, have the incongruous situation of one branch of the government approving the method now pursued by the claimant and another branch seeking to condemn. This is, to say the least, placing claimant in an embarrassing situation and should be avoided if possible.

In George H. Lee Co. v. Federal Trade Commission, 113 Fed. (20) 583, the Circuit Court of Appeals for the Eighth Circuit upheld, and we think properly so, the defense of res judicata. Therein, the condemnation proceedings were instituted prior to the action before the Federal Trade Commission. The court on page 585 said:

“Although the remedies sought by the government in the two proceedings were different-condemnation in the first, and a cease-and-desist order in the second-it is obvious that the alleged falsity of the representations of the petitioner with respect to the therapeutic value and effectiveness of its prod

uct constituted the main basis for each of the proceedings And further, on page 586 :

"If the question of the falsity of the representations of the petitioner contained on its labels and circulars had been determined adversely to the petitioner in the libel proceeding, it could not have been heard to say in the proceedings instituted by the Commission that such representations were true. By the same token, the United States and its instrumentality, the Commission, were not, after the decree in the libel proceeding, entitled to say that the representations made by the petitioner which had been finally adjudged not to be false, were in fact false. The government had had its full day in court on that issue, had lost its case, and could not collaterally

attack, either directly or indirectly, the decree entered against it.” And on page 585, the court stated :

"Where the underlying issue in two suits is the same, the adjudication of the issue in the first suit is determinative of the same issue in the second

suit.” As was stated by the Supreme Court in Sunshine Coal Co. v. Adkins, 310 U. S. 381, 402:

"A judgment is res judicata in a second action upon the same claim between the same parties or those in privity with them. Cromwell v. County of Sac, 94 U. S. 351. There is privity between officers of the same government so that a judgment in a suit between a party and a representative of the United States is res judicata in relitigation of the same issue between that party and another officer of the government. See Tait v. Western Maryland

Ry. Co., 289 U. S. 620.” The government's second contention seems to rest solely upon the provisions of the Federal Trade Commission Act, as amended (15 U. S. C. A. 45 (b) (g)), that the Commission may, under certain conditions, modify its order after the expiration of time for appeal. Therefore, the contention is that such power of modification leaves an unappealed order without that finality essential to invoke the doctrine of res judicata. With this contention we do not agree.

The Act provides that an order of the Commission shall become final at the expiration of sixty days if no appeal is taken (45 (g)), and further provides for heavy penalties for violation of such order (45 (1)). It further provides that “the findings of the Commission as to the facts, if supported by evidence, shall be conclusive.” Thus, even the reviewing court in the same proceeding is bound by the findings of the Commission. To allow their finality to be attacked in a collateral proceeding would seem to run counter to the provisions and purposes of the Act. As was said in the case of United States v. Piuma, 40 Fed. Supp. 119, 122:

"Is it the province of the court to try the truth or falsity of the defendant's advertisements already found to be false by the Commission? The answer to this question depends upon the meaning to be given the word 'final' as used in subsection (g). The purpose of the provision was to bring the doctrine of res judicata into the Federal Trade Commission's jurisprudence. This court will not now retry that issue.”

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With this construction of the Act we agree. We must, therefore, uphold the decision of the lower court that the issues of fact tried by the Commission have a finality upon which res judicata may be predicated.

We agree with appellee's contention that mutuality of estoppel is not herein involved. We have held that the facts found by the Federal Trade Commission are conclusive and binding upon the District Court. The same result would obtain if the government were depending upon these findings to sustain its charge of misbranding. The doctrine of res judicata is not dependent upon mutuality of estoppel by judgment, as is contended by the government. The cases cited in support of this contention are not applicable to the instant situation.

What we have heretofore said sufficiently disposes of the argument that the decisions of the Federal Trade Commission should not be allowed to impair the enforcement of the Food, Drug, and Cosmetic Act. Under the facts stipulated herein and to which this decision is limited, there can be no impairment of the enforcement of the afore-mentioned Act.

The last contention of the government to be considered is that the plea of res judicata was directed to but one count of the libel and that it is entitled to a trial upon the other count, i. e.,, upon the issue of whether the labels give adequate direction for use. We are of the view that this contention is not tenable. As appears from the record, this case was submitted by both parties upon a stipulation of "all of the facts.” The parties so understood it and so did the lower court. The suit was tried upon the issue of res judicata as to the whole libel, and the government's contention to the contrary comes too late. The judgment of the District Court is

AFFIRMED. Mr. O'HARA. Were you through, Mr. Cassedy? Mr. CASSEDY. Yes, sir.

Mr. O'HARA. Mr. Cassedy, yesterday, you introduced into the record the testimony with respect to the Larned Corp., the testimony of Dr. Sheldon Payne.

I have been looking through this this morning here, and I was curious as to where the situs of the trial of that case was originally? Was the Larned case filed here in Washington ?

Mr. Cassady. That testimony was taken in Los Angeles.

Mr. O'HARA. I understand that. I notice that it was taken in Los Angeles. I was curious as to whether the case was conducted out there, or was the case conducted in Washington ?

Mr. CASSEDY. Only the taking of the testimony of Dr. Payne, in that particular case, and in other cases another doctor testified. I believe as to the Miles Laboratories and Capudine cases, Dr. Payne also testified, and Dr. Burns testified.

Mr. O'Hara. I am talking about this particular case, the Larned case, which I assume was the only case.

Mr. CASSEDY. I had not outlined the procedure in the trial of the case before the Commission, because Judge Davis, I understand, will deal with that.

But I will say that in the trials of these cases we set hearings anywhere in the United States, and we take the court to the witness.

Mr. REECE. Do you mean anywhere or everywhere?
Mr. CASSEDY. Everywhere.

Mr. O'HARA. I was interested in the fact that a great many expert witnesses right here in the vicinity of Washington are qualified to testify with respect to the subject. I would like to know why it was necessary to go out there to Los Angeles and take the testimony of Dr. Payne, a gynecologist.

Mr. CASSEDY. Such cases, sir, are prepared in advance. The trial attorney, together with the medical advisory division, compile the medical literature and articles in medical journals and from that literature select the best qualified experts on the subjects involved.

Then we take the Commission to the witness. One of the methods of preparation, I referred to yesterday in answer to something Mr. Reece had said about the availability of information dealing with therapeutics.

I mentioned that in those very cases we got together large volumes of articles that were published in medical journals, the American Medical Association Journal, many State medical association journals, and all medical literature that could be had on the subjects of those drugs.

We read those and studied them. We picked out of those articles the scientists who in our opinion were the best qualified in the whole United States.

Then we went to those witnesses. At the time that Dr. Payne, since he has been made the subject of discussion, wrote an article regarding acetanilid, he was then located at the Duke University Hospital at North Carolina.

Mr. O'HARA. He wrote it while he was in medical school, as the testimony shows.

Mr. CASSEDY. Yes. And I want to point out that two other scientists down at Duke University, Drs. Hanes and Yates, also wrote articles based upon a study of the same subjects. They wrote an article, the title of which, if I remember correctly, was “400 cases of bromide intoxication."

They studied those cases in that hospital, and as a result of their study, they wrote these articles.

Mr. O'HARA. You are talking about the study of these two other experts, not Dr. Payne's!

Mr. CASSEDY. Dr. Payne was there as their assistant and worked with them in the same hospital. And as a result of their combined study, Dr. Payne having studied the subject of acetanilid and the others the subject of bromides, these articles were published.

And they were so widely recognized by all scientists over the United States as being the very best in the field, we thought it would be best, in representing the public's interest, as the Commission attempts to do and does do, to go to wherever these scientists were located and get their testimony in the record.

We have done that in numerous instances with respect to other people.

Mr. O'HARA. I was impressed with the fact that it obviously follows from the testimony that Dr. Payne never pursued any apparent interest in the subject of this article which had been written by him when he was a student at Duke University, and in fact all of his practice had been first in obstetrics and second in gynecology.

This certainly does not have any relation to toxicology or the use of drugs.

Mr. CASSEDY. I would admit that, but that does not detract from his qualifications as an expert on the study of acetanilid.

Mr. O'Hara. It would certainly affect his qualifications in my mind.

Mr. CASSEDY. Let me point this out: There are but a few scientists in that field in the United States who have made a study of acetanilid.

Mr. O'HARA. Well, he certainly has not made one and has not shown any interest in keeping up with that subject which he had studied while he was in medical college, by his own testimony.

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