A federal appeals court on Wednesday ruled a judge improperly dismissed a lawsuit involving a dispute between two competitors in the sports supplement industry.
The decision by a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit marked a setback for IronMag Labs LLC and its CEO Robert DiMaggio.
Nutrition Distribution LLC accused IronMag Labs, DiMaggio and IronMag Research of violating the Lanham Act, a federal statute governing unfair competition, and California law through false and misleading statements about products (OSTA RX and Super DMZ 4.0) containing ostarine.
In 2016, U.S. District Court Judge Manuel L. Real granted defendants’ motion to dismiss the lawsuit. Invoking the legal doctrine known as primary jurisdiction, the judge held FDA hadn’t made a final determination whether ostarine was a new drug under federal law.
The Ninth Circuit interpreted Real’s order as a dismissal “with prejudice,” which the appeals court found was an abuse of discretion under the circumstances due to a misapplication of the law.
“As noted, a court applying the primary jurisdiction doctrine has discretion either to stay the proceedings or dismiss the case without prejudice,” the appellate court wrote in its five-page memorandum, remanding the case to the district court with instructions to reconsider its application of the doctrine.
Robert Tauler, a lawyer representing Nutrition Distribution, said his client was pleased “the Ninth Circuit recognized the right of plaintiff to move forward with its claims.”
In exercising its discretion, the Ninth Circuit ordered the district court judge to consider whether a dismissal of the lawsuit without prejudice would unfairly disadvantage the parties.
“The district court should further consider whether, during the pendency of this appeal, the FDA has provided sufficient ‘expert advice that would be useful to the court in considering this lawsuit,’ … obviating the need for further guidance from the FDA,” the appeals court wrote in the memorandum, quoting a 2015 decision from the Ninth Circuit, Astiana v. Hain Celestial Group Inc.
Nutrition Distribution and GTx Inc.—a pharmaceutical company primarily developing ostarine (otherwise known as enobosarm) to treat stress urinary incontinence—argued to the Ninth Circuit that a 2017 warning letter to IronMag Labs confirmed ostarine cannot be sold in supplements because it was authorized for investigation as a new drug and the subject of substantial clinical trials made public.
“It is important that the creators of drugs like ostarine are able to protect their inventions and the integrity of the clinical trial process to ensure the safety of products,” Tauler said in an emailed statement.
In its memorandum, the Ninth Circuit granted GTx’s request to file an amicus brief. GTx proclaimed its ongoing clinical trials confirm federal law prohibits the use of ostarine in dietary supplements.
During the appeal, IronMag Labs argued FDA’s warning letter didn’t preclude the district court’s application of primary jurisdiction because the letter was informal and advisory—and the agency could change its position. The Ninth Circuit, however, seemingly rejected those arguments.
“In contrast to other contexts where a ‘final’ agency determination is necessary … under the primary jurisdiction doctrine, the agency’s guidance need not be given in connection with formal proceedings or as part of a final determination,” the appeals court wrote in its memorandum. “If the FDA is aware of but expresses no further interest in the subject matter of the lawsuit, the court should not invoke the primary jurisdiction doctrine.”
The Ninth Circuit’s decision impacts claims brought by Nutrition Distribution under the Lanham Act and California state law for false advertising and unfair competition. While the company also appealed from the dismissal of a claim brought under the Racketeer Influenced and Corrupt Organizations Act (RICO), the Ninth Circuit noted the claim was not reviewable on appeal.
Neither IronMag Labs nor GTx immediately commented on the appellate court’s ruling.