“FedEx Pleads Not Guilty”
DEA Chronicles 07/29/14 By Larry P. Cote and D. Linden Barber
As expected, FedEx appeared in federal district court and entered a plea of not guilty to the charges brought against the company by the Drug Enforcement Administration (“DEA”) and the United States Attorney’s Office for the Northern District of California. As we have recently discussed, this is an unprecedented action by the government seeking to hold a shipper responsible under the Controlled Substances Act (“CSA”) for the contents of packages delivered on behalf of its pharmacy customers. While it is generally DEA registrants that must follow a litany of recordkeeping, reporting, security, and other obligations found in the CSA and DEA’s regulations, the government is alleging that FedEx knew or should have known that it was facilitating the unlawful diversion of controlled substances by shipping packages on behalf of its customers. This case will ultimately turn on whether the Government can prove that lawful pharmaceutical products were being illegally prescribed and dispensed and, if so, whether FedEx, through its employees, knew that its delivery of packages from certain pharmacies was facilitating what the government has labeled as illegal Internet pharmacy diversion schemes. The outcome will also hinge on FedEx’s resolve to challenge the government’s extraordinary action against the third-party logistics provider. All indications thus far are that FedEx will not acquiesce and will continue to maintain its innocence and fight this through the criminal justice system. It also appears that the government’s aggressive posture will continue as it seeks to present a superseding indictment to a grand jury later next month.