News Desk: A Closer Look at Eleventh Circuits Ruling in FTC/Hi-Tech Case

Earlier this month, a three-judge panel of the 11th Circuit vacated a contempt order against dietary supplement firm Hi-Tech Pharmaceuticals, its president Jared Wheat, and two other individuals.

Earlier this month, a three-judge panel of the 11th Circuit vacated a contempt order against dietary supplement firm Hi-Tech Pharmaceuticals, its president Jared Wheat, and two other individuals. FTC’s years-long campaign against Hi-Tech began in 2008, when federal judge Charles A. Pannell Jr. found Hi-Tech and the other defendants had violated the Federal Trade Commission Act because they failed to substantiate their weight-loss representations with clinical trials of the actual products. Pannell issued injunctions that prohibited the defendants from making further representations without “competent and reliable scientific evidence,” which FTC claimed the company violated again three years later.

On May 5, the 11th Circuit held that Pannell misapplied a legal doctrine known as collateral estoppel when he refused to allow Hi-Tech to produce evidence that it was in compliance with the 2008 injunctions. The tides may have turned in Hi-Tech’s favor, but the campaign against the supplement firm may be far from over. The case was sent back to Pannell who must reevaluate the admissibility of the evidence and determine whether “any evidence of substantiation, if admissible, satisfies the standard of the injunctions for ‘competent and reliable scientific evidence,’” according to the 11th Circuit.

Historically, FTC requires “competent and reliable scientific evidence” to substantiate health and safety claims. However, recent litigation has narrowed FTC’s interpretation of “competent and reliable scientific evidence” to two double-blind, placebo controlled clinical studies or randomized clinical trials (RCTs) on dietary supplements touting health-related claims. Yet, the supplement industry contends human clinical trials aren’t required to meet the substantiation standard.

As the case against Hi-Tech illustrates, it could be some time before the federal courts ultimately determine whether industry or government is correct.

To read more about recent litigation and its effects on FTC’s two-RCT standard for claims, check out INSIDER’s article, “The POM/FTC Court of Appeals Decision: What Did POM Win?,” by Steven Shapiro, and the INSIDER video, “POM Court Decision: Two RCTs Not the Gold Standard for Claims,” featuring Ivan Wasserman, Partner, Manatt, Phelps & Phillips LLP.

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