Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—SDCal: Supplement Purchaser’s Claims Not Stayed, Dismissed in Deference to FDA Authority, (Jun 7, 2013)

By Jody Coultas, J.D.

A supplement purchaser’s California Unfair Competition Law (UCL) and False Advertising Law (FAL) claims against SEI Pharmaceuticals, Inc. were not stayed or dismissed in deference to the authority of the Food and Drug Administration (FDA) under the primary jurisdiction doctrine, according to the federal district court in San Diego (Velasco v. SEI Pharmaceuticals, Inc., June 5, 2013, Hayes, W.). The court also declined to dismiss class allegations.

SEI manufactures a dietary supplement that was marketed as having the ability to provide increased energy, athletic performance, and heightened focus. The ingredient list contained an ingredient known as DMAA, and the label advertised that the DMAA was extracted from geraniums. The purchaser’s UCL and FAL class action claims noted that the DMAA was synthetic and not extracted from geraniums and that the FDA had warned SEI that DMAA was not a dietary ingredient, was not edible, and was not to be used as an active ingredient in a dietary supplement. SEI no longer sells supplements that contain DMAA.

Primary jurisdiction doctrine. The court declined to stay the action or dismiss on the basis of the primary jurisdiction doctrine. SEI alleged that the claims should be resolved by the FDA, as the FDA is the agency in charge of regulating dietary supplements. The primary jurisdiction doctrine allows a court to stay or dismiss a complaint pending the resolution of the issue at hand by an administrative agency with regulatory authority over the relevant industry. The purchaser argued that the FDA had already acted by sending a warning letter requiring SEI to cease distribution of the supplement. SEI could not identify a procedure available for the parties to seek an administrative ruling from the FDA if the court stayed or dismissed the action based on the primary jurisdiction doctrine. Therefore, the court declined to apply the doctrine.

Class allegations. SEI’s motion to dismiss or strike the class allegations was denied by the court because the purchaser alleged each element necessary for certification under Federal Rule of Civil Procedure 23. Issues related to class suitability were more appropriately adjudicated on a motion to dismiss. As long as the class allegations address each element of Rule 23, relate to the subject matter of the allegations, and are not redundant, immaterial, or impertinent, the allegations survive a motion to dismiss or strike.

The case is No. 12cv1060-WQH-MDD.

Attorneys: Amir David Benakote (Kirtland & Packard LLP) for Anthony Velasco. Paul William Smigliani (Munro Smigliani & Jordan) for SEI Pharmaceuticals, Inc.

Companies: SEI Pharmaceuticals, Inc.

Cases: StateUnfairTradePractices CaliforniaNews