CDXC's Reply in Motion to Dismiss Elysium's FDA Complaint
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You will recall that in August ChromaDex filed a citizen petition with the FDA complaining of an undisclosed toluene residue in the Elysium's newly formulated Basis. In September Elysium filed a public response with the FDA, and a complaint in federal court (SDNY) suggesting that the FDA petition constituted deceptive advertising and an unfair trade practice.
Last Thursday -- it's always right AFTER I check -- ChromaDex filed its
In its Motion to Dismiss, ChromaDex argued that petitioning the FDA is privileged First Amendment activity about which Elysium does not get to complain in federal court (citing three privileges -- Noerr-Pennington, Litigation, and Anti-SLAPP).
In its Opposition, Elysium argued that the privileges do not apply because ChromaDex's petition contained false statements and was solely intended to harm Elysium (Noerr-Pennington and Litigation), and because Elysium did not have business before the FDA about which ChromaDex was commenting (anti-SLAPP).
My analysis was that ChromaDex's Motion to Dismiss would likely be granted on Noerr-Pennington grounds because Elysium did not show that the petition was baseless. I was less certain about the applicability of the Litigation and anti-SLAPP privileges.
ChromaDex's Reply Brief
But the most interesting part of ChromaDex's Reply Brief, in my view, is how ChromaDex frames the dispute as a whole. So I will quote the first four paragraphs, and then look at some of the specific legal arguments.
CMDX has spent years of time and millions of dollars ensuring the safety of its products and it regards consumer health as a guiding principle. CMDX has filed an NDIN covering its NR with the FDA, obtained GRAS recognition for its NR, and conducted human clinical trials to ensure that its NR is actually safe. Elysium has done none of the above and now sells a product contaminated with a chemical identified by the Center for Disease Control as dangerous.
After its relationship with CMDX ended, Elysium continued to deceptively market Basis as if its ingredients were still backed by the safeguards and qualifications procured by CMDX, notwithstanding that Elysium’s NR ingredient was coming from a new (and unknown) source. CMDX tested the “new” Basis and found that it contains toluene, which was never in Basis when Elysium obtained its NR from CMDX. CMDX petitioned the FDA to alert the federal agency charged with regulating supplements about the adulteration and safety issues associated with Basis, and requested that the FDA exercise its discretion to use its regulatory and enforcement tools to protect consumers from unknowingly ingesting a recognized toxin to the central nervous system that can cause adverse health effects. CMDX’s Citizen Petition constitutes speech which is absolutely protected by the First Amendment. It does not matter whether the FDA ultimately elects to seize Elysium’s product—what matters is that CMDX exercised its free speech rights believing that the facts it shared would influence the FDA to intercede and ensure the public’s safety pursuant to its legislative mandate and discretion. There is simply no plausible inference that can be drawn from Plaintiff’s Complaint that CMDX’s sole purpose was to injure and defame Plaintiff—the purpose was to bring a serious public health concern to the FDA’s attention. Nothing in Plaintiff’s Opposition brief resuscitates, or could resuscitate, the Complaint’s wholly insufficient allegations.
Immunity is absolute under the Noerr Pennington Doctrine unless Plaintiff persuades this Court that both (1) the Petition was objectively baseless, and (2) it concealed a subjective intent to interfere directly with Plaintiff’s business relationships. Neither element is satisfied here. First, the Petition legitimately raised public health issues for the FDA’s evaluation and is objectively reasonable (and was when filed) because it appropriately sought to persuade the FDA to exercise its discretionary authority. Plaintiff is obviously wrong that the FDA’s hypothetical denial of a petition mechanistically means that a petition is per se baseless; rather, the Court must determine whether a petition was reasonably calculated to achieve a favorable outcome when it was filed. As FDA regulations make clear, the agency welcomes information submitted via citizen petition for potential discretionary enforcement actions. Second, Plaintiff also fails to allege plausible facts showing that CMDX petitioned the FDA solely to disparage Plaintiff’s product, as opposed to also genuinely persuading the FDA to act. The Petition was not solely intended to disparage Basis or Elysium because CMDX reasonably and objectively expected (and expects) a favorable outcome from petitioning the FDA. Indeed, the harm alleged by Elysium was self-inflicted resulting from its sale of an adulterated, unsafe, contaminated product. CMDX’s legitimate intention was to bring these facts to the FDA’s attention to encourage the FDA to investigate and act to advance and preserve consumer health.
Plaintiff’s arguments that the litigation privilege and New York’s anti-SLAPP law do not apply are also wrong. Clear precedent shows that information submitted to the FDA falls under the litigation privilege, and no exception to the privilege applies because the Petition was not filed solely to disparage Basis. Further, Plaintiff’s public pronouncements that its product is certified as safe by the FDA show that it is a “public permittee” under the anti-SLAPP law. The Petition commented on those public representations and accordingly, CMDX is entitled to protection against Plaintiff’s attempt to silence it with litigation asserting liability based entirely on filing the Citizen Petition. Finally, Plaintiff attempts to conjure a factual dispute to eek past the Rule 12(b)(6) dismissal stage, but its allegations are unmoored from the very documents on which they are based and fail to plead facts supporting the required elements for each claim.
It seems pretty plausible from ChromaDex's account that they are allowed to do what they did. I did not find much or anything in Elysium's complaint or opposition to suggest otherwise.
ChromaDex makes its strongest case yet that Noerr-Pennington immunity applies, and also soundly rebuts Elysium's arguments on the Litigation and anti-SLAPP privileges:
Noerr-Pennington: ChromaDex had a legitimate purpose, and the FDA could very reasonably respond to the petition (hence, not baseless).
Litigation Privilege: Stega immunizes speech preliminary to an FDA action, and Stega can't be distinguished based on additional procedural safeguards.
Anti-SLAPP: Elysium requires FDA permission to sell Basis, so Elysium is a petitioner under the statute.
These are all very strong arguments, which I recognized in my prior analysis, but Cooley has articulated the points so well, and cited so much on point authority, that I will be very surprised if ChromaDex's motion is denied.
ChromaDex also turns the screws on the merits of Elysium's claims.
There simply was not a false statement. What Elysium is REALLY complaining about is not ChromaDex's true statements that Basis is adulterated with an unsafe substance (toluene), but obvious implication that Basis itself might be rendered unsafe because of it.
Elysium can't succeed in showing that this is a false conclusion as a matter of law because it is the FDA's call, not Elysium's or the federal district court's call. To accept Elysium's argument, the SDNY will basically have to say that the FDA COULD NOT legally determine that trace amounts of toluene were unsafe. There is inadequate record to support that kind of a finding, and the SDNY is not going to do it.
So instead, the parties are going to have to agree to disagree about whether trace quantities of toluene in food supplements are safe or not, and neither side's allegations are going to be held false as a matter of law unless they make those statements again AFTER the FDA decides one way or the other. [And even then, one can disagree with the FDA, and the FDA has been known to change its mind, so disagreement with the FDA still might not prove bad faith.]
At least that's what I think. We'll see what the Court says.