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  • Shelly Albaum

Elysium's Bid to Ignore CDXC's Supplemental FDA Petition


Skadden has submitted to SDNY Judge Caproni on Elysium's behalf a brief, five-paragraph response to the letter Cooley sent last week noting ChromaDex's supplemental FDA petition. You can read Skadden's letter here:

Skadden's Letter Re: CDXC's Supplemental FDA Petition

In short, Skadden says that the supplemental petition does not matter to the SDNY litigation.

It absolutely does matter, and it is surprising how much there is to say about such a short letter!

I will first argue first that Skadden has just confessed how incredibly weak Elysium's complaint is. If there was before any doubt that Elysium's complaint would be dismissed, now it is a practical certainty.

I will next note that what Skadden says in its letter is absolutely correct in a narrow, technical sense.

I will finally argue that even though what Skadden says is technically correct, it is absolutely wrong in the actual context of this litigation. As a bonus, I will attempt to predict how Judge Caproni will respond.

Onward!

Elysium's Terrible, Horrible, Very Bad, No Good Legal Position

We agreed with Cooley here and here that ChromaDex has a constitutional right to petition the FDA, even in a self-interested way to the detriment of its competitors, and that the Court was likely to recognize this right by invoking the Noerr-Pennington doctrine.

We are used to Skadden's court filings being delivered by a hoard of angry lawyers riding atop a bullshit cannon and spraying rage all over everything. What I would EXPECT to find in this Skadden letter would go something like this:

"OMG, ChromaDex just did it AGAIN! They are hell-bent on abusing the FDA's citizen petition process to smear their competitors. On top of their prior demands, they have added even more of the same! This just goes to show how deeply corrupt ChromaDex is. In lieu of proper marketing they simply use the federal government's website as a competitor-smear factory. They are unfair-competition addicts. Even after we warned them with our complaint, they keep going back to the same poisonous well. The federal court must intervene at once!

[Having been recently passed over for the position of ChromaDex

general counsel, I hereby apply for a position on Skadden's Rage Brigade.]

That's what I expected. Instead, we get something more like this:

That supplemental petition doesn't matter. We sued them over the first petition, and the second one might be the most reasonable thing in the world, but that wouldn't cleanse the bad thing they did. After all, if ChromaDex simply retracted the first petition, that wouldn't unring the bell or undo the harm, and so neither can any subsequent supplementation or modification.

Or, in Skadden's actual, more precise language:

For purposes of the sham exception to Noerr-Pennington immunity, the analysis of whether a petition is "objectively baseless" looks to the challenged petition itself; it does not depend on an evaluation of the challenged conduct in conjunction with other developments...

Were this not the case, parties could escape liability for their sham petitioning efforts merely by strategic withdrawals or replacements of baseless petitions after achieving their improper goals—here, the injury to Elysium's business arising from ChromaDex's publication and dissemination of its original petition.

Elysium thus submits that the supplemental petition has no relevance to the Court's analysis of objective baselessness and the application of the sham exception to Noerr-Pennington immunity to ChromaDex's conduct here.

Skadden's actual legal argument is of course correct. If the first petition was improper, a second petition doesn't cure the first one.

But why did Skadden leave their comfort zone? Why not go the outrage route? Because they absolutely could have.

Here are ChromaDex's two requests for relief in the original petition -- requests so outrageous that they spawned a federal lawsuit and many pages of indignant rage:

"ChromaDex specifically requests the following actions take place:

1. Make a determination that Elysium's Basis product is adulterated under 21 U.S.C. § 342(a) and (f) based on the undeclared presence of toluene in the product at a level of 96-144 mg/kg and to take all appropriate remedial action...

2. Make a determination that Elysium's Basis product contains a new dietary ingredient under 21 U.S.C. § 350b and that Elysium has not submitted a NDI notification..."

In other words (1) Determine that Basis is adulterated, and (2) Determine that Basis lacks an NDIN.

In the supplemental petition, ChromaDex adds three new requests:

(1) Declare that the drug guidelines Elysium is relying on do not apply to Basis

(2) Declare that NR in Basis is not reasonably expected to be safe

(3) Prioritize enforcement of these rules against Elysium

These three new requests do not represent some completely different subject matter or intent. They arise from the exact same operative facts, and request the same kinds of relief. If anything, they are MORE aggressive than the original requests.

If Elysium's original complaint was any good, ChromaDex just handed Elysium a LOT more ammunition to support Elysium's claim of improper use of FDA process.

But the original complaint is not any good, and apparently Elysium knows that it is not any good, because instead of accusing ChromaDex of doubling down on their offense, which is what ChromaDex actually did, Elysium is running damage control on their own complaint.

That's how you know that the original complaint is about to go down in flames.

But Skadden Is Right, Too

Skadden is absolutely correct that if the original petition was bad, the supplemental petition won't cure the badness. There is no denying that.

But That's Sleight of Hand

However, Skadden's argument is a clever diversion, because even though the supplemental petition can't cure a defect in the original petition, the supplemental petition can nonetheless serve as EVIDENCE to help determine whether the original petition was in fact bad.

To answer the key question that Skadden begs -- whether the original petition was in fact bad -- the court considers two issues: (1) Did ChromaDex INTEND for the FDA to act on its petition, and (2) Was there any possibility that the FDA would act? Those are the elements of the sham petition exception to the Noerr-Pennington defense.

It turns out that although the supplemental petition doesn't cure any defect in the original petition, it DOES in fact cast light on both ChromaDex's intent and on the FDA's opportunity to act on the original petition, and thus is absolutely relevant in helping to understand whether the original petition was proper in the first place.

Here is what Skadden argued in its motion to dismiss the original petition:

ChromaDex's pretension to Noerr-Pennington immunity disregards that Elysium has pled that the Sham Petition was just that: a sham, not brought to actually prompt any action by FDA, but solely to disparage a competitor. Elysium's detailed allegations explaining the basis for its contention that ChromaDex brought the Sham Petition in bad faith and with no belief that it would achieve its stated purpose more than suffice to plead the "sham exception" to NoerrPennington immunity, which strips the privilege from one who has brought a petition that is "(i) 'objectively baseless,' and (ii) 'an attempt to interfere directly with the business relationships of a competitor through the use of the governmental process.'" (emphasis added)

The supplemental petition introduces new information about the ORIGINAL petition that indicates that ChromaDex was acting in good faith, that it was intended to prompt action by the FDA, and that it could achieve its stated purpose.

The new information I have in mind are things like

(1) Policy statements by the FDA consistent with a concern over market participants disregarding the NDIN requirement,

(2) A policy statement by the FDA welcoming citizen comments alleging adulteration, and

(3) Elysium's subsequent actions demonstrating the need for the FDA to grant the relief requested in the ORIGINAL petition.

So although a new petition cannot cure a bad petition, it can provide additional evidence that the original petition was both properly asserted and should be acted upon -- the two elements that Elysium denies.

That is why when Skadden asserts in its most recent letter to the court:

"...The supplemental petition has no relevance to the Court's analysis of objective baselessness and the application of the sham exception to Noerr-Pennington immunity to ChromaDex's conduct here."

Skadden is wrong.

I would like to think that it is the kind of error that law students are supposed to be able to spot in law school exams, but I know for sure it is the kind that SDNY clerks and judges will spot immediately.

What's Next

So what will Judge Caproni do?

Judge Caproni does not have to wade into this. She can just dismiss the complaint on Noerr-Pennington grounds based on the facts before her, without considering the content of the supplemental petition or the propriety of considering the content of the supplemental petition. Because that is the path of least resistance to the inevitable conclusion of this phase of the litigation, it is the one I predict will be taken.

One of the paradoxes of legal argument is that the most obvious legal propositions are the most difficult to prove, and the most outlandish legal propositions are the most difficult to disprove, because no one has ever bothered to make them before. So you can't find some prior court saying, "That's ridiculous," because no one has ever had to.

That's why firms like Skadden Arps Slate Meagher Flom & The Kitchen Sink can cause so much trouble by making arguments that are obviously wrong, but for which there is no authority SAYING they are wrong because no one previously has had the audacity to even suggest it.

It may well be that no court has ever passed upon the propriety of considering a supplemental FDA petition in the context of considering the propriety of an original petition.

Judge Caproni would do the world a favor by publicly rejecting the point raised in Skadden's letter in writing, so that in case anybody else ever tries it, future jurists will have a club readily at hand.

However, the game of legal whack-a-mole never ends, and Judge Caproni has more important things to do than to clean up this tiny corner of the law, so it is unlikely we'll ever hear about this again.

But for those following the litigation, Elysium's letter is an eye-opener.

#CDXC #ChromaDex #ElysiumHealth #Litigation

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