This dispute has been around for a while. The court’s introduction gives you a sense of the case: “The briefs and statements of facts alone come to 735 pages. With attachments, the paper reaches 35 inches and 84 pounds. But at the bottom of the 735 pages, 35 inches, and 84 pounds, there is no lawsuit.”
TLI (and president Kramer) and GNI (and president Gaspari) compete to sell bodybuilding-related supplements. TLI sued GNI mostly for false advertising, alleging that GNI falsely marketed its Novedex XT, Halodrol Liquigels, Halodrol MT, and SuperPump 250 as “safe,” “natural,” “DSHEA-compliant,” and “legal.” (DSHEA is the federal law that (barely) regulates supplements.) GNI counterclaimed with similar causes of action, alleging among other things that TLI disparaged GNI’s products.
The court first kicked out a number of expert reports. For example, TLI’s consumer survey went because it essentially asked past GNI purchasers whether they’d have changed their minds if they’d known that GNI falsely advertised its products as ‘Natural,’ ‘Legal,’ ‘DSHEA-compliant’ and ‘Safe.’ The respondents weren’t shown to be representative, and the questions were “worded to obtain a response favorable to TLI,” such as asking respondents “how important is it that the supplement contains ingredients that are legal?” and then offering them the answers “Very important; I would never purchase a supplement I knew contained an illegal drug”; “Somewhat important; I would prefer to purchase a supplement that did not contain an illegal drug;” and “Not important; in purchasing a supplement, I do not consider whether the product might contain an illegal drug.” The survey didn’t ask about the effects of “natural” etc. claims on supplement purchase intentions; it didn’t control for how respondents’ satisfaction levels with their purchases influenced their responses regardless of the ads. So even if the sample had been representative, it wouldn’t have been relevant to the materiality of the challenged claims.
An expert report on whether GNI’s supplements were DSHEA-compliant and safe also went, because the expert opined on whether the results of studies were sufficient to substantiate a safety claim rather than on the key issue of the falsity of the safety claim itself; DSHEA doesn’t require the kind of substantiation he said should be required. (If properly characterized as an establishment claim, a safety claim could be disproven by showing that the evidence didn’t support the claim.) The court concluded the testimony about insufficient evidence wouldn’t aid the jury, which “likely would be confused and easily misled without a standard for determining what is ‘safe.””
Similar fates awaited TLI’s market share and damages experts, GNI’s counterclaim damages expert, and GNI’s legal expert (offered to give legal testimony on the legal meanings of the relevant terms), the last because experts aren’t allowed to testify about law.
Turning to the merits: Novedex XT and the Halodrol products were sold as supplements to increase testosterone levels, while SuperPump 250 was “a preworkout dietary supplement to assist in the development of lean body mass.” Neither Halodrol MT nor SuperPump 250 has been the subject of a recall. However, TLI questioned GNI’s ability to obtain turkesterone, an ingredient of SuperPump 250, claiming to have an exclusive agreement for its sale in the US. It also challenged GNI’s claim that an ingredient in Halodrol MT was 95% pure.
In early 2010, the FDA announced that a third-party retailer was conducting a voluntary nationwide recall of 17 supplements, including Novedex XT and Halodrol Liquigels, sold during several months in 2009. The FDA was concerned that the products might contain ingredients appropriately classified as steroids. The retailer stated that it couldn’t independently confirm the FDA’s concerns, but it was undertaking a voluntary recall out of an abundance of caution. As the FDA’s press release said, steroids can cause harmful effects, including acute liver injury, shrinkage of the testes, male infertility, adverse effects on blood lipid levels, and increased risk of heart attack, stroke, and death. The FDA later announced that GNI was conducting a voluntary recall of Novedex XT, after being informed by the FDA that an ingredient didn’t meet the definition of a dietary ingredient and thus violated the FDCA. The press release also described unpleasant potential adverse side effects from the ingredient.
Many of the allegedly false ads came from posts on the bulletin board of bodybuilding.com, e.g., Kramer called Gaspari “a joke in this industry peddling protein from his garage.” (Gaspari said in an interview that he began selling product out of his car and used his mother’s garage and basement as his warehouse and office.) Kramer also posted that “Gaspari was a joke in this industry,” “knows nothing about supplements,” and “would be a personal trainer at 24 Hour Fitness” without another party. TLI, posting under the name “Truth Speaker,” posted lab test results from GNI’s Vasotropin. The post title was “GASPARI selling SAW DUST? ? ?” and the post stated that “independent lab test results” indicated that each tablet of Vasotropin contained an ineffective amount of ingredient: “A dose that will do NOTHING for anyone expecting a pump but may make Gayspari [sic ] and the scammers that work for him rich and you a sucker!” GNI alleged that the post falsely suggests that this ingredient was the key ingredient in Vasotropin.
Out of this hot mess, the court first analyzed TLI’s claims that GNI falsely represented its products as legal, DSHEA-compliant, naturally occurring, safe/“the safest,” and containing particular ingredients. First, the DSHEA bars private enforcement, so the court refused to determine whether the products were “legal,” “DSHEA-compliant,” “naturally occurring,” and/or “safe” when the FDA hadn’t made such a determination. (This analysis is a pretty unusual extension of Pom Wonderful and any appeal is likely to be influenced by the outcome of that case in the Supreme Court; the long-suffering judge may not be done.) Under the DSHEA, the burden is on the FDA to prove a supplement adulterated, so a supplement can’t be “unsafe, not DSHEA compliant, and/or illegal” unless the FDA proves it adulterated. Judicial determination of these claims would usurp the FDA’s authority. Plus, a layperson’s statements purporting to interpret a statute or regulation are opinion, not factual claims. Thus, GNI’s statements about safety (!), DSHEA compliance, and legality were not false when made. (I think the court’s annoyance with the litigants has led it to reason too broadly—safety can be assessed without the FDA’s ruling, and given the DSHEA’s allowed-by-default rule, a ruling that the product was unsafe would not conflict with the FDA’s authorization of the product, since none has occurred, as it might in the case of prescription drugs.)
The court also kicked out challenges to GNI’s ads that Novedex XT “is the safest way to naturally cause positive anabolic effect,” is a “natural vehicle,” contains “naturally occurring anti-aromatase inhibiting compounds,” and “has been shown to increase natural production.” The parties disputed whether the ingredient could be considered “natural” or “naturally occurring” because the ingredient can be synthesized from naturally occurring material. (If it could only be synthesized, and doesn’t occur in nature, I’m not sure how it could be considered natural by any definition, but ok.) But the court held that it didn’t have a standard for determining what was “natural” or “naturally occurring,” and with no FDA determination, the statements were just opinions. (I would think that consumer perception would provide the appropriate standard, though there doesn’t seem to be any expert evidence left here.) TLI didn’t meet its burden of showing the falsity of the other challenged claims. And because of the expert exclusions, it didn’t show materiality either. Nor did it show damage—it didn’t show that, but for the false advertising, consumers would have chosen TLI’s products, as opposed to those of numerous competitors.
Along the way the court rejected arguments that the statute of limitations and laches barred TLI’s claims, since the evidence showed that TLI might have had suspicions about various ingredients, but not enough knowledge to bar its claims as a matter of law.
GNI counterclaimed based on TLI’s disparagement of GNI products on internet message boards, similar to the false advertising arguments it made in this case: GNI products lacked claimed ingredients; they were ineffective; Gaspari was a “joke” who knew nothing about supplements and a “counterfeiter”; GNI used expired ingredients; the recalled GNI products were “spiked” with illegal steroids; this case would put GNI out of business; etc. “[E]ven when read in context, the statements allegedly made by or on behalf of TLI are … opinions, predictions, or not false.” Plus, GNI’s own arguments that comments on message boards weren’t commercial advertising or promotion applied to the statements it was challenging too. Without damages evidence, its claims had to fail.