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IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA COURT


JIM J. TOZZI, in his personal capacity, and as
President of Multinational Business Services, Inc.
     11 Dupont Circle, Suite 700
     Washington, DC 20036, 

EMPIRE STATE RESTAURANT & TAVERN 
ASSOCIATION, INC.,
     40 Sheridan Ave.
     Albany, NY 12210, 

GREENBAUM & GILHOOLEY'S 
     1400 Route 9 
     Wappingers Falls, NY 12590, and

BREVET INDUSTRIES and BREVET, INC., 
     16661 Jamboree Blvd. 
     Irvine, CA 92606-5118 
Plaintiffs, Appellants, 

v.

UNITED STATES DEPARTMENT OF 
HEALTH AND HUMAN SERVICES, et al., 
 
Defendants, Appellees.

                  

 Civ. No. 00-5364

 On Appeal from the U.S
 District Court for the District
 of Columbia (Civil Div.)

 



APPELLANTS' MOTION FOR INJUNCTION PENDING APPEAL

Appellants, through their undersigned attorneys, respectfully move this Court for an Order, pursuant to Fed. R. App. P. 8(a), enjoining Defendants/Appellees from publishing the dioxin listing in the "known" category of the 9th Report on Carcinogens ("9th RoC") during the pendency of Appellants' forthcoming appeal. Counsel for Appellants attempted to contact counsel for Appellees by telephone yesterday to advise her of Appellants' intent to file the instant motion, a copy of which is being served by hand on counsel for Appellees this morning.

FACTUAL AND PROCEDURAL BACKGROUND

This case involves a challenge to Appellants' proposed upgraded listing of the chemical 2,3,7,8 tetrachlorodibenzo-p-dioxin ("dioxin") in the 9th Report on Carcinogens ("RoC"). Plaintiffs/Appellants are businesses whose products have been alleged contribute to human dioxin exposure, and Appellants are very concerned that the proposed upgraded cancer classification for dioxin in the RoC will adversely and irreparably harm their businesses.

The RoC, a report which HHS is directed by statute to publish, lists suspected carcinogens in one of two possible classifications, either (i) "known" or (ii) "reasonably anticipated" to be carcinogenic to humans. Dioxin has been listed in the "reasonably anticipated" category for the past several editions of the RoC (since 1982) and, pursuant to agreement of the parties before the Court below, remains in that category today, pending the outcome of this litigation.

The full 9th RoC was published on May 15, 2000. The report lists 218 chemicals, including dioxin, as either "known" or "reasonably anticipated" human carcinogens. A footnote in the "reasonably anticipated" dioxin listing indicates that a proposal to upgrade the listing to the "known" category awaits the outcome of litigation.

Following oral argument on June 14, 2000, Defendants voluntarily agreed to forebear from publishing the revised listing of dioxin. Def. Notice (July 10, 2000) (attached as Exhibit 1).(1) Defendants indicated in their notice that they would provide the Court and Appellants a minimum of ten days' notice before publishing a revised listing. Counsel for Appellees did not return a phone call by counsel for Appellants yesterday (November 16) seeking to confirm the agency's intent to abide by this 10-day notice commitment.

On September 30, 2000, the Court below granted Defendants' cross-motion for summary judgment and denied Plaintiffs' cross-motion for summary judgment. The Court also granted in part and denied in part Defendants' motion to dismiss, ruling that Plaintiffs Brevet Industries and Brevet, Inc. had satisfied the requirements for standing. A copy of the District Court's September 30, 2000, Opinion and Order is attached as Exhibit 2. Plaintiffs filed their notice of appeal of this decision on October 13, 2000.

The case turns on revised RoC listing criteria published September 26, 1996 (61 Fed. Reg. 50499-50500) (attached as Exhibit 3). The three principal reasons the District Court gave for ruling in favor of Defendants/Appellees on the meaning of the revised RoC listing criteria were that (i) the Defendant agency was entitled to deference in interpreting its own criteria, (ii) Defendants' interpretation in this case was "eminently reasonable", and (iii) "the presentation of the proposed listing in the Federal Register makes it clear that the proposed change is intended to apply to the criteria for both the 'known' and the 'reasonably anticipated' categories." Exh. 2 at 10-11. The Court did not address Plaintiffs' arguments that Defendants' new interpretation of the listing criteria represented an arbitrary and capricious change in agency position without notice and a reasoned explanation.

On October 6, 2000, the day after being notified of the District Court's September 30 Order, Plaintiffs filed a motion with the District Court, pursuant to Fed. R. Civ. P. 62(c), for an order enjoining the agency's anticipated publication of the upgraded dioxin listing, pending appeal to this Court. Copies of the briefing on Plaintiffs' motion for injunction pending appeal are attached hereto as Exhibits 4, 5 and 6.

On November 14, 2000, the District Court denied Plaintiffs' motion for an injunction pending appeal, and that Order was filed with the District Court Clerk on November 15, 2000. A copy of that Order is attached as Exhibit 7. Counsel for Appellants learned of the District Court's decision yesterday morning and notified the Circuit Court Clerk's Office that the instant motion would be filed forthwith.

ARGUMENT

I. The Applicable Standard Favors Maintenance of the Status Quo

Pursuant to Circuit Rule 8(a), a party seeking an injunction pending appeal is required to state how it meets the four-part test of: (i) likelihood that it will prevail on the merits; (ii) prospect of irreparable injury to the moving party if relief is withheld; (iii) possibility of harm to other parties if relief is withheld; and (iv) the public interest. The standard is thus similar to the traditional standard for issuance of injunctive relief prior to adjudication of the merits by the trial court. See Michigan Coalition of Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d 150, 153 (6th Cir. 1991); Washington Metropolitan Area Transit Comm'n v. Holiday Tours, Inc., 559 F.2d 841, 483 (D.C. Cir. 1977); Elsworth Assoc., Inc. v. United States, 917 F. Supp. 841, 847 (D.D.C. 1996).

Although the first requirement for the issuance of a preliminary injunction has often been stated as mandating a finding of "probability" of success on the merits, a court, when confronted with a case in which the other three factors strongly favor interim relief, may exercise its discretion to grant a stay if the movant has made a "substantial case on the merits." Holiday Tours, supra, 559 F.2d at 843 (emphasis added). The court is not required to find that ultimate success by the movant is a mathematical probability, and indeed the Court may grant a stay even though its own approach may be contrary to movant's view of the merits. Id.

Where the interests of justice require maintaining the status quo pending appeal, a court is on firm ground in granting a motion for injunction pending appeal. See Holiday Tours, supra, 559 F.2d at 844. See also Dalmo Sales Co. v. Tysons Corner Regional Shopping Center, 308 F. Supp. 988, 995 (D.D.C. 1970) (granting an injunction under Fed. R. Civ. P. 62(c)(2) for ninety days from the date of the order or until disposition of the case upon summary hearing, whichever occurred first). In Dalmo Sales, even though the court had denied plaintiffs' request for a preliminary injunction, the court noted that a temporary restraining order had been in effect since the previous year, and the parties would not be unduly inconvenienced by a further extension of the status quo. Id. See also Coastal Corp. v. Texas Eastern Corp., 869 F.2d 817, 820 (5th Cir. 1989) (district court's power to alter an injunction pending appeal under Rule 62(c) is limited to "maintaining the status quo").

Here, the "status quo" is that dioxin has again been listed in the "reasonably anticipated" category, this time with a footnote indicating that a proposal to upgrade the listing is in litigation. This has been the status quo for over six months, since 9th RoC was published on May 15, 2000. Indeed, the "reasonably anticipated" classification has been the status quo since dioxin was first listed in the RoC back in 1982. In order to preserve the status quo pending final adjudication of the case, the Court should grant this motion and issue an order enjoining Appellees from altering the current listing while the appeal is pending.

II. Appellants Satisfy the Requirements for an Injunction Under Rule 8(a).

Appellants in this case meet the four requirements for an injunction pending appeal under Fed. R. App. P. 8(a) and Circuit Rule 8(a).

A. Appellants Are Likely to Succeed on the Merits.

Appellants have demonstrated a strong likelihood of success on the merits, and they are likely to prevail on the appeal. As discussed below, the three key pillars upon which the District Court based its merits determination must be seriously questioned. Moreover, the District Court entirely failed to address a central argument of Plaintiffs' case, i.e., that the new interpretation of the listing criteria espoused by the Defendants/

Appellees represents an enormous change in long-standing agency position, a change adopted without notice or reasoned justification. At a very minimum, Appellants' showing on the merits must be considered "substantial", which is all the applicable standard requires.

First, as Plaintiffs explained in briefing below and at oral argument (Tr. at 60-61) (Exhibit 8 hereto),(3) the case precedent requiring courts to give deference to an agency's interpretation of its own rules -- including U.S. Supreme Court and D.C. Circuit precedent -- recognizes two critical exceptions to that doctrine, at least one of which is present here. An agency's reading of its own rule should not be accorded deference where an alternative reading is compelled by (i) "the regulation's plain language", or (ii) "other indications of the Secretary's intent at the time of the regulation's promulgation." Gardebring v. Jenkins, 485 U.S. 415, 430 (1988); see also S.G. Loewendick & Sons, Inc. v. Reich, 70 F.3d 1291, 1294 (D.C. Cir. 1995) (quoting Gardebring).

Putting aside for the moment the question of whether the "plain language" of the listing criteria compels a reading contrary to the agency's current interpretation -- Appellants believe that it does -- in the case below, Plaintiffs presented two extraordinarily powerful pieces of contemporaneous evidence regarding the agency's contrary intent at the time the revised criteria were published. The lower Court addressed neither of these documents, nor this pivotal argument, in its opinion granting Defendants' motion for summary judgment.

To appreciate the seriousness of this omission, and the significance of these two pieces of documentary evidence, it is important to understand that Defendants/Appellees have maintained that the RoC listing criteria were revised in 1996 to allow, for the first time, consideration of evidence other than human epidemiological data in support of "known" category listings. Prior to 1996, listings in the "known" category required that a causal relationship be indicated by "sufficient" evidence in the form of human epidemiological data, and only human epidemiological data. Appellees contend that the 1996 revisions permitted the agency also to list substances in the "known" category by reference to "mechanism of action" data (as is being attempted in this case). Because the criteria had not permitted consideration of such data to support previous "known" category listings, the 1996 revisions significantly changed the criteria for the "known" category. Appellants, by contrast, maintain that the 1996 revisions effected no such change to the criteria for the "known" category.

The first piece of contemporaneous evidence contrary to the agency's current reading was a Department of Health and Human Services press release, issued the very day the revised criteria were published, which stated, "The original criteria for listing a substance as a known human carcinogen remain unchanged." Exhibit 9 at 2. The second piece of contemporaneous evidence was an August 1996 article in Environmental Health Perspectives, the official journal of the Appellee agency that oversees the National Toxicology Program,(4) confirming that same agency intention. Exhibit 10. The article stated, "The revised criteria for listing a substance as 'known to be a human carcinogen' are substantively unchanged from the former criteria. . . ."

If the agency intended the 1996 revised criteria to allow consideration of mechanistic data for "known" category listings -- truly a sea change in RoC methodology -- then why were these two documents ever issued? Neither of these crucial pieces of record evidence has ever been satisfactorily explained. The Court below questioned government counsel about the press release at oral argument (Exh. 8 at 41-43), but counsel's only explanation was that the release was "somewhat misleading". (Exh. 8 at 43). Given this strong contemporaneous evidence of contrary agency intent, the District Court should have accorded no deference to the new interpretation that Appellees asserted during litigation. As noted, neither of these critical pieces of evidence, which Appellants will address in further detail during the appeal, was even mentioned in the District Court's opinion. The District Court thus ignored the rule in Gardebring by summarily holding that the agency is to be accorded deference in its interpretation of the listing criteria.

The reason Gardebring bears so heavily on Appellants' request for an injunction pending appeal is that there was absolutely no contemporaneous evidence of a contrary agency intent in either Thomas Jefferson Univ. v. Shalala, 512 U.S. 504 (1994), Wyoming Outdoor Council v. United States Forest Service, 165 F.3d 43 (D.C. Cir. 1999), or Rollins v. United States EPA, 937 F.2d 649 (D.C. Cir. 1991), the principal cases upon which the District Court relied in granting "substantial deference" to Defendants' interpretation of the listing criteria. (See Exh. 2 at 10-11). Had evidence even approximating the probative value of the HHS press release (Exh. 9) or the Environmental Health Perspectives article (Exh. 10) been adduced in those cases, the rule in Gardebring would have come into play, and a different outcome might well have been reached. The Thomas Jefferson, Wyoming Outdoor Council, and Rollins cases, however, have nothing to do with contemporaneous evidence of a contrary agency intent and thus offer no basis for the District Court's finding that substantial deference is warranted here, where such contemporaneous evidence is clearly present.

Second, the District Court's conclusion regarding the reasonableness of the agency's interpretation (Exh. 2 at 11) must also be questioned. The Court accepted without comment Defendants/Appellees' extraordinary assertion that the final "descriptive" paragraph of the revised criteria was intended to modify both the "known" and "reasonably anticipated" listing categories. This paragraph, which permits listings to be based on consideration of "all relevant evidence", applies only to the "reasonably anticipated" category, however, and cannot reasonably be interpreted to apply to both categories.(5) For nearly three years after the revised criteria were adopted, the agency never interpreted the criteria in the way Defendants advanced in the case below, and it was only with the specter of this litigation looming that Defendants' lawyers constructed the painful contrivance that the lower Court embraced as "eminently reasonable".

Appellees' interpretation allowing consideration of "all relevant information" for both the "known" and "reasonably anticipated" listings would completely vitiate any distinction between the two categories. As Appellants' counsel attempted to explain at oral argument (Exh. 8 at 11-14), the undisputed data set on dioxin carcinogenicity is a perfect fit with the language of the "reasonably anticipated" category. Those criteria state that a substance shall be classified as a "reasonably anticipated" human carcinogen if:

There is less than sufficient evidence of carcinogenicity in humans . . . however . . . there is convincing relevant information that the agent acts through mechanisms indicating it would be likely to cause cancer in humans.

61 Fed. Reg. at 50500-50501 (Exh. 3). Appellee's own statements regarding the scientific record confirm that the evidence of dioxin carcinogenicity consists of:

less than "sufficient" human epidemiological data;
strong animal data; and
a basic similarity in mechanism of action

See, e.g., Exhibit 11 hereto at RC-1 (excerpt from NTP's Draft Background Document for TCDD, summarizing basis for proposed listing).

Under Appellees' theory, the "all relevant information" language from the final descriptive paragraph would permit upgrades to the "known" category, based on mechanistic data, where the human data were less than sufficient. But if the final paragraph applies to both the "known" and the "reasonably anticipated" categories, then any substance with the above profile could be placed into either category. Such an irrational blurring of the two categories would be both contrary to past agency practice and a direct contravention congressional intent.(6) How can an "interpretation" allowing simultaneous placement of the same chemical into two separate categories -- categories which both Congress and the Appellee agency intended to remain distinct -- be considered reasonable?

Third, the District Court's conclusion that "the presentation of the proposed change in the Federal Register" supports Appellees' position (Exh. 2 at 11) cannot bear scrutiny. Appellees themselves had long urged the Court to disregard the formatting in the Federal Register and to rely instead on shifting margins in unpublished internal agency documents purporting to show that the final "descriptive" paragraph applies to both the "known" and the "reasonably anticipated" categories. Appellants, by contrast, have sought from day one -- even prior to the lawsuit -- to point out how the Federal Register formatting supports the conclusion that the final descriptive paragraph cannot apply to the "known" category. See, e.g., Exhibit 12 at 3 (January 19, 1999 letter from undersigned counsel for Appellants to HHS counsel noting how Federal Register section headings contradict HHS position).

Finally, as noted above, the District Court did not explain how its decision could be reconciled with the long line of cases holding that an agency violates the bar on arbitrary and capricious agency action by changing its policy or position on the meaning of a rule or statute without providing notice of that change and a reasoned explanation. See Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 41-42 (1983); DSE, Inc. v. United States, 169 F.3d 21, 31 (D.C. Cir. 1999) (finding Small Business Administration had acted contrary to its long-standing policy, but that error was non-prejudicial); Troy Corp. v. Browner, 120 F.3d 277, 286-87 (D.C.Cir. 1997); Pontchartrain Broadcasting Co. v. FTC, 15 F.3d 183, 185 (D.C. Cir. 1994); Graphic Communications Int'l Union, Local 554 v. Salem-Gravure Div. of World Color Press, Inc., 843 F.2d 1490, 1493-94 (D.C. Cir. 1988) (agency action imposing new discovery requirement that was a departure from established precedent was arbitrary and capricious because the agency did not supply reasoned explanation), cert. denied, 489 U.S. 1011 (1989). Outside of the context of this litigation, Appellees have never provided public notice and a reasoned explanation for their decision to allow consideration of mechanistic data to support "known" category listings. Thus, even if the Circuit Court were to adopt the Appellees' and the District Court's interpretation of the 1996 revised listing criteria, including the final paragraph, the Court should still hold that Appellees' change in position was arbitrary and capricious.

Given these substantial errors in the District Court's analysis of the record, the Circuit Court is very likely to reverse the decision below on the merits.

B. Appellants Face Irreparable Harm.

Plaintiff Brevet, as the District Court correctly concluded, has demonstrated a threat of injury sufficient to support standing.(7) Exh. 2 at 6. Appellants submit that this harm, if it does come to pass because of Appellees' publication of the upgraded dioxin listing, is clearly irreparable. As stated at oral argument:

THE COURT: But I may be wrong in my analysis or decision. If I'm wrong, the damage, if there is any, will have been done if the report is released, assuming there's damage, assuming there's standing.

MR. SMITH: Right.

Exh. 8 at 45. The damage the District Court recognized will indeed "have been done if the [final dioxin listing] is released".

The District Court's conclusion regarding the threat of harm posed by the upgraded dioxin listing was well grounded in the record. Appellant Brevet is a small California firm that manufactures polyvinyl chloride ("PVC") connectors for use in surgery and other medical procedures. Plaintiffs submitted evidence that several activist groups have attempted to link PVC manufacturing and disposal to environmental dioxin levels and that these groups would trumpet the proposed dioxin listing in furtherance of their efforts to eliminate all PVC use. According to the President of Brevet, his company has already lost some customers due to public and shareholder concern regarding dioxin and has a reasonable basis to believe that additional losses would follow from publication of the proposed listing. See Brewer Affid. (attached as Exhibit 13) at 6-9.(8)

The injuries Appellants will suffer, to the extent they are calculable, are not compensable. No action for money damages will lie against the government here. Noncompensable damage is, by definition, irreparable.

Moreover, once the upgraded dioxin listing is released in final form, there would be no way to undo the harm if Appellants ultimately prevailed before this Court. Even a full retraction of the upgrade by Appellees would be unlikely to make Appellants whole for the lost sales or other damage to business relationships they would suffer.

C. There is No Threat of Harm to Appellees.

This element of the injunction test is easily satisfied here. As noted above, the 9th RoC has been published in final form for over six months. Of the 218 chemical listings in the report, 217 are fully complete. Appellees have thus finished all work on the 9th RoC, save for the final resolution of this litigation. Appellees will expend no additional funds on the 9th RoC or incur any other harm while this case is on appeal. Indeed, the only harm Appellees face is the possible cost of later attempting to undo an upgraded dioxin listing if it is published at this time.

D. The Public Interest Favors Granting an Injunction Pending Appeal.

The public will be well served by forgoing premature publication of the final dioxin listing pending appeal. Until this case is finally resolved, Appellants submit that any RoC dioxin listing denominated as "final" constitutes severe overreaching by the agency. While this case is pending, the dioxin listing will not, in the truest sense, be "final". Ensuring that the information provided in the RoCs is accurate and in conformance with the agency's listing criteria and the scientific evidence also weighs heavily in favor of granting an injunction.

CONCLUSION

For the foregoing reasons, Appellants' motion for an injunction pending appeal should be granted.

Respectfully submitted,


___________________________________
Charles J. Fromm
DC Bar No. 420021
Multinational Legal Services, PLLC
11 Dupont Circle, Suite 700
Washington, DC 20036
Ph: (202) 797-7124
Fax: (202) 939-6969

Attorneys for Appellants

Dated: November 17, 2000


END NOTES:
1. Pursuant to Fed. R. App. P. 8(a)(2)(B)(iii), Appellants are attaching the most recent and crucial filings from the District Court docket in support of the instant motion. In so doing, however, Appellants do not imply that, for purposes of the appeal, all "relevant parts of the record" are attached.

2. The four-part standard for issuance of an injunction under Fed. R. App. P. 8(a) is the same as that under Fed. R. Civ. P. 62(c).

3. Excerpts from the June 14, 2000 oral argument transcript are attached hereto as Exhibit 8. The full transcript was filed with the District Court on June 16, 2000 (Dist. Clerk's Dkt. Item No. 55).

4. Environmental Health Perspectives is the official "Journal of the National Institute of Environmental Health Sciences". The journal is edited by personnel in NIEHS/NTP with responsibility for administering the Report on Carcinogens Program, including Defendant George W. Lucier, who was Co-Editor-in-Chief at the time the article was published.

5. The paragraph at issue appears in the first column on p. 50500 of the Federal Register notice (see Exh. 3), and begins, "Conclusions regarding carcinogenicity in humans or experimental animals. . . ."

6. See Statement of Chairman Rogers, Cong. Rec. (Oct. 10, 1978) at H34938 ("[T]he report should be properly organized so that no possible confusion could exist between clearly demonstrated carcinogens and those for which convincing data are not yet available. . . .").

7. Appellants intend to challenge the District Court's conclusion that only Brevet has standing. For purposes of the present motion, however, the Court need not consider which Plaintiffs have standing if it finds that Brevet meets the criteria necessary for a stay pending appeal.

8. Plaintiffs submitted additional documentation regarding the threatened harm to other Plaintiffs and intend to discuss this material further in their appeal brief.