About 15 months ago, Elysium filed a lawsuit against ChromaDex in New York federal court alleging False Advertising, Trade Libel, Deceptive Business Practices, and Tortious Interference based on a citizen petition ChromaDex filed with the FDA.
Today, the Court dismissed those claims, finding that ChromaDex's filing of the Citizen Petition was protected by the First Amendment.
You can read the court's decision here:
I have frequently said, e.g., here, here, and here, that Elysium's claims should be dismissed, because the Noerr-Pennington argument was strong. So the outcome today is not exactly a surprise.
Moreover, the dismissal does not end Elysium's side of the litigation in New York, because a few months ago, on October 12, Elysium, perhaps properly worried about the fate of their original claims, filed a new set of claims in New York that were not based on ChromaDex's FDA citizen petition. The new claims of False Advertising, Unfair Competition, and Deceptive Practices were based on a long list of public statements by ChromaDex, such as:
(1) ChromaDex gives the false impression that it discovered NR
(2) ChromaDex gives the false impression that it is the only seller of NR
(3) ChromaDex falsely claims that its products have been reviewed and tested by the FDA
(4) There is a NEW Prop 65 chemical to worry about in Niagen -- acetimide
(5) The Niagen recommended dose is TOO HIGH because the FDA submissions referred to 180mg per day, not 250 mg/day
(6) The Niagen recommended dose is TOO LOW because the efficacy tests that ChromaDex relies on include dosages of 1,000mg/day not 250mg/day
(7) ChromaDex's 60% increase in NAD claim is deceptive because the participants in the study that shows 60% gain did not use 250mg/day
(8) ChromaDex improperly suggests that Basis is "counterfeit," when in fact the Mystery NR does not purport to be Niagen
(9) ChromaDex falsely claims that Niagen is the only NR to be safety-tested, when Basis has safety testing also
(10) ChromaDex places ads on Right of Assembly, which and impliedly endorses the blog's claims
(11) The Right of Assembly blog falsely claims that ChromaDex's NR product can prevent or treat a whole litany of diseases
I haven't hazarded a guess as to whether these claims are significant or even actionable or whether ChromaDex is likely to move for dismissal.
But I have written at some length as to why Elysium's claims about my blog are false, such as Elysium's claim that ChromaDex places ads on my website and Elysium's claim that I have made improper advertising claims by describing the ongoing NR research:
The truth could easily have been discovered by Elysium without filing legal papers not properly grounded in fact or law, and more likely intended to silence a journalist in further disrespect of the First Amendment.
So first we'll take a look at why the Court dismissed Elysium's original claims on Noerr-Pennington grounds, and then we'll consider the relative strength of the parties' positions with respect to the remaining claims.
Noerr-Pennington Immunity
As the Court said,
The Noerr-Pennington doctrine holds that that attempts to influence legislative, executive, judicial, or administrative action are immune from liability by virtue of the First Amendment right to petition the government for a redress of grievances.
However,
Noerr- Pennington immunity, though formidable, is not an absolute shield to liability. It will not attach where the petitioning activity ostensibly directed toward influencing governmental action is a mere sham to cover an attempt to violate federal law.
The Court found that ChromaDex's petition was not objectively baseless, and therefore not a sham, because the petition was reasonably calculated to elicit a favorable outcome, and, indeed, succeeded in doing so, and thus was not a sham.
The Court noted that Elysium had told the FDA in its supplemental comment [which we covered here -- this is the famous claim to have removed the toluene that was never there] that Elysium had removed the toluene in Basis.
Prompting Elysium to remove the toluene in Basis, said the Court, was by definition a favorable outcome because the Citizen Petition expressly stated that ChromaDex hoped to remove Basis from the market as long as it contained a deleterious substance that rendered Basis injurious to health. And Elysium conceded in its supplemental comment that it removed the toluene to ensure superior product quality, which, the Court found, was an admission that the toluene in Basis represented a potential health threat to consumers.
ChromaDex achieved the very outcome it petitioned for -- the removal of toluene from a supplement sold directly to consumers that it believed rendered the product potentially injurious to public safety. Having achieved a favorable outcome, the petition cannot be said to be objectively baseless....While Elysium does not attribute to the filing of the citizen petition its decision to remove the toluene from Basis, denying the connection between the two events would be unreasonable...The Court need not speculate as to whether the petition was designed to elicit a favorable outcome, because the proof is in the pudding -- it did.
The Court goes on to explicate some legal reasoning that I think will be of great interest to scholars of First Amendment immunity, clarifying what constitutes a favorable outcome for Noerr-Pennington purposes, and boldly stating,
That ChromaDex is alleged to have used arguably improper tactics in seeking this outcome -- asking for relief that may have been beyond the purview of the Citizen Petition process -- does not render its efforts any less susceptible to Noerr-Pennington protection.
Now What?
At the top of Elysium's minds will be whether it can appeal this judgment. The answer of course is yes, and that appeal would be to the Second Circuit. But there are good reasons to think that Elysium won't appeal.
First, Elysium got slam-dunked in this opinion. It's not a close call, and the Court relied on Elysium's own statements to reach its carefully reasoned decision. We have elsewhere suggested that Elysium's supplemental comment to the FDA was possibly incoherent, but at least not a great piece of lawyering. The fact that the Court relied heavily on this comment to rule against Elysium reinforces our sense that Elysium was not well-served by its counsel, as well as our sense that Elysium is getting consistently worse legal representation than ChromaDex is.
Second, the Court did not reach ChromaDex's second argument for Noerr-Pennington immunity, which means that even if Elysium won on appeal, it wouldn't necessarily achieve a favorable judgment. Instead, it would simply have to face ChromaDex's second argument. Thus, it would be a long-shot appeal that could only lead to another round of litigation. If Elysium does appeal, it will suggest that they'd rather fight than win, that's sure.
Third, Elysium still has pending claims against ChromaDex that are somewhat similar to the ones that were dismissed -- False Advertising, Unfair Competition, and Deceptive Practices -- just based on different facts. So Elysium might be wise to simply pursue its newer claims rather than try to resuscitate the original claims.
Viability of Elysium's Newer Claims
Just kidding -- I'm not going to hazard a guess as to how Elysium's new claims will fare.
I am certain that Elysium's claims referencing me are highly improper.
But what about all of the other nitpicking about ChromaDex's advertising language? My intuition is that these claims lack merit in the sense that they aren't false or deceptive, or if they are technically false or deceptive it is too minor to make a federal case of, and maybe impossible to show significant damages.
But the same could be said of ChromaDex's claims against Elysium, which Judge McMahon has already allowed to proceed -- e.g., that Elysium:
(1) Should not have characterized Basis as "Pure"
(2) Should not have characterized Basis as "FDA-Approved,"
(3) Should not have suggested that Elysium was responsible for the science behind Basis," and
(4) Should not have suggested that Elysium's clinical study involved Basis when the substance Elysium was selling was not the ChromaDex NRPT used in the study
So we'll have to see.
If ChromaDex moves to dismiss Elysium's new counterclaims, then we'll have some argument to evaluate. However, it might be that if the assertions were in fact made, the legal implications -- whether they were deceptive or how deceptive -- require fact-finding, and we'll end up in discovery and summary judgment.
All I can say is that I'll keep you posted.
But I would think that the New York litigation, at least, is now ripe for settlement.