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USPlabs Executives Gain Small Victory in Lingering Court Battle over Supplements

<p>Sylvia Ogbonna alleged her daughter ingested USPlabs supplements that caused her to suffer liver failure and other complications that led to her death on Dec. 13, 2011.</p>

EL PASO, TEXAS--In lawsuits filed in Texas against the sports dietary supplement maker USPlabs, lawyers for the plaintiffs have been seeking to hold the top executives personally liable.

The attempts to “pierce the corporate veil" have been unsuccessful to date in one federal case. In a separate lawsuit, the parties are fighting over whether or not Jacob Geissler, chief executive, and Jonathan Doyle, president, should be held personally responsible for the alleged acts of a company whose products have been linked to a number of deaths.

Both lawsuits are far away from a trial date.

In a case filed by Sylvia Ogbonna on behalf of her late daughter Demekia Cola, a federal court in the Western District of Texas earlier this summer dismissed the veil-piercing theories but granted Ogbonna the right to file an amended lawsuit.

Ogbonna alleged her daughter ingested USPlabs supplements that caused her to suffer liver failure and other complications that led to her death on Dec. 13, 2011.

She essentially argued there was no distinction between the executives and the USPlabs limited liability companies that were incorporated in Texas and Wyoming because Geissler and Doyle controlled the LLCs and the defendants were engaged in the same enterprise of developing, marketing and distributing the supplements.

Such allegations, even if true, aren’t adequate to pierce the corporate veil, U.S. District Judge Kathleen Cardone found.

“The Amended Complaint does not, for example, contain allegations of undercapitalization, a failure to observe company formalities, intermingling of assets, or any other factor that could justify piercing Wyoming Defendants," she wrote.

The June 10, 2014 ruling wasn’t a total victory for USPlabs and its executives. Cardone refused to dismiss all the substantive claims against the defendants, including Texas-based USPlabs, LLC.

“Even if one of the USP Defendants ultimately cannot be held liable for the legal obligations of its co-defendants because of its separate entity status, that Defendant may still be held directly liable for its own tortious activities, if proven," Cardone wrote.

In another case filed against USPlabs and its executives on behalf of a deceased soldier who ingested the pre-workout supplement Jack3d, the lawyers are haggling over discovery and the veil-piercing theory, court records show.

Michael Sparling, a soldier in the U.S. Army, collapsed on June 1, 2011, while training with his unit at the military base in Fort Bliss, Texas. He suffered cardiac arrest and died.

USPlabs argued last month that plaintiffs—the soldier’s parents Michael and Leanne Sparling—failed to allege facts necessary to pierce the corporate veil and moved to dismiss the entire lawsuit. The plaintiffs have asked the court to deny the request.

Last week, the Sparlings’ lawyers also claimed the defense has been uncooperative with requests for discovery, and the parties are continuing to disagree over the scheduling of depositions.

The wrongful death lawsuit was transferred last year from California to El Paso, some 600 miles from USPlabs’ headquarters in Dallas.

USPlabs is a defendant in number of additional civil lawsuits as well. In spite of a number of deaths and other health ailments that have been linked to USPlabs’ supplements, including a 2013 outbreak of hepatitis, the company maintains its products are safe.

TAGS: Regulatory
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