Case of Sour Grapes Shows Suing the FDA Doesn't Pay

Alexander Volokh
Knight-Ridder Financial News, January 4, 1996

There are certain fights that the prudent are ill-advised to pick, and suing the Food and Drug Administration falls into this category.

The FDA has been called "the agency that never loses," and it just proved itself again.

After six years of litigation, the Supreme Court recently declined to hear the appeal of 2,400 Chilean fruit growers and shippers in the infamous Chilean grapes case.

In March 1989, an anonymous caller to the U.S. Embassy in Chile announced that fruit headed to the U.S. had been injected with cyanide.

FDA inspectors searched and found some suspicious-looking grapes. Two had puncture marks and white rings. A third was slashed.

The grapes were analyzed at labs in Philadelphia and Cincinnati. The Philadelphia lab found cyanide. The Cincinatti lab found none.

Since the Philadelphia sample had been destroyed during testing, there was no way of finding out whether the contamination was the result of mishandling by chemists.

Now, if you injected grapes with cyanide, all the grapes in the case would be contaminated. So would the wood in the crate and the wrapping paper.

The other grapes, the wood and the wrapping paper were all analyzed. Nothing was found. The FDA scientists also knew that cyanide doesn't produce light circles. Instead, it produces an ugly yellow-purple blotch.

The scientists also knew that over the two-week boat trip, the cyanide would have dissipated. The Philadelphia lab had found so much cyanide, there was no way the grapes could have been contaminated in Chile. Everything pointed to a contamination in the lab itself. The FDA had botched its own testing.

And the white rings? The Cincinnati lab said they weren't cyanide.

Chilean grape growers use talc as a stabilizer in their pesticide sprays. When the spray hits the grape, it forms a water droplet. When the water evaporates, all that's left is the talc residue from the edges of the droplet.

"The Chilean Grape Scare of 1989, which was first perceived as an averted tragedy, and then as a severe overreaction by the FDA, eventually proved to be nothing less than a farce," reports Herbert Burkholz, author of The FDA Follies.

An expensive farce, though. The FDA urged small groceries and the public to dump any Chilean fruit they had. The FDA also impounded 2 million crates of fruit nationwide. Between 20,000 and 50,000 Chileans lost their jobs.

In January 1990, two FDA agents and three Chileans died in a plane crash in Chile. They were going to inspect security measures in a Chilean vineyard. They were the only casualties of the crisis.

But this is what the FDA calls erring on the side of safety. Future events revealed that the skeptics were right.

In a recently declassified phone conversation, the anonymous caller called back and told the Embassy phone operator, "There was nothing. . . . A lie, seņorita, the biggest lie. . . . We have laughed . . . and I am seeing all the foolish things they have done."

About 2,400 growers and shippers of Chilean fruit sued the FDA for $240 million for having effectively decimated an entire season's worth of Chilean fruit.

The basic law that allows you to sue the government is called the Federal Tort Claims Act.

Under FTCA, before taking an agency to court, you first have to exhaust all possible administrative remedies. This means you have to file a claim with the FDA and see if they reject it.

The Chileans had to file 2,400 individual claims. The FDA took the entire six months the law allowed and denied all 2,400. This is when the Chileans filed a suit in federal court.

The FDA's defense was that the case shouldn't even go to court because of the "discretionary function exemption."

This means that the government is immune from challenges to stupid policy decisions, like impounding grapes. The FDA was saying, in effect, "Even if we were stupid, you can't sue us."

Not so, said the Chilean grape folks -- you were sloppy for having botched the lab tests and found cyanide where there was none.

The discretionary function exemption doesn't protect sloppiness, only stupidity. But the FDA argued that the discretionary decision impounding the grapes was a "supervening event" that removes the lab negligence from the chain of causation.

As David Holzworth, the Chileans' attorney, puts it, "In layman's terms, this means that if you're sloppy and then stupid, you're off the hook."

The Chileans lost the case, but appealed it all the way to the Supreme Court. And now they've lost again.

A case of sour grapes? Not yet. The Chilean government may now intervene in the growers' favor, taking the case to international law courts or using it as a bargaining chip in trade negotiations.

Most likely, though, justice isn't going to be served. It rarely is, even when the FDA admits that it screwed up.

But this just goes to show what happens when you sue the FDA. David vs. Goliath confrontations make good copy, but the smart money bets on Goliath.

Industry folklore has it that Peter Barton Hutt, FDA's chief counsel in the 1970s, could win any case by coming into court and saying, "The Food and Drug Administration is the expert scientific agency charged by the U.S. Congress and the president to protect the safety of pregnant women and small children."

Almost no one sues the FDA, and when they do, the FDA almost always wins. It's big. It uses complicated science. Judges defer to it most of the time and you, the taxpayer, are paying its legal tab.

Alexander Volokh is a policy analyst at the Reason Foundation, a public policy think tank based in Los Angeles. His views are not necessarily those of Knight- Ridder Financial News.