ThermoLife Intern., LLC v. Gaspari Nutrition, Inc., 2012 WL 1752977 (D. Ariz.)
The parties compete to market dietary supplements. ThermoLife alleged that Gaspari falsely
marketed Novedex XT, Halodrol Liquigels, Halodrol MT, and SuperPump 250 products—as
safe, natural, containing certain ingredients (Halodrol: 95%
3,4–divanillytetrahydrofuran; SuperPump: terkesterone), compliant with the
federal Dietary Supplement Health and Education Act of 1994 (DSHEA), and legal.
In 2010, however, the FDA stated that
Novedex XT and Halodrol products were not DSHEA compliant. ThermoLife also alleged that the products
contained unsafe materials that were not naturally occurring. It also alleged that, according to its tests,
commercial production of 95% 3,4–divanillytetrahydrofuran was cost prohibitive,
and that therefore Halodrol could not actually contain that concentration. Further, ThermoLife alleged that its tests of
SuperPump didn’t detect any turkesterone, and that if there was in fact any in
the product it couldn’t be enough to be an effective dose. It claimed to have an exclusive distribution
agreement with the only company known to produce turkesterone for use in
dietary supplements.
ThermoLife also alleged that Gaspari improperly prevented it
from attending and exhibiting at the 2009 Mr. Olympia Weekend Expo bodybuilding
competition and trade show by contacting American Media, Inc., the organizer of
the event, and threatening to pull its advertising if ThermoLife was allowed to
exhibit at the event, causing ThermoLife lost business opportunities and
unrecoupable preparatory costs.
Gaspari began with, sigh, a standing argument that
ThermoLife didn’t sufficiently allege direct competition or anything beyond
speculative injury. To the contrary, ThermoLife
specifically alleged that it sold directly competing products. Gaspari attempted to narrowly define the
universe of “competitive” products to “only products which are effectively
identical and advertised as such is unavailing. Plaintiff's allegations that
both Plaintiff and Defendant sold dietary supplements containing similar
ingredients, serving similar purposes, and targeting a specific audience (here,
competitive and amateur bodybuilders) is sufficient to allege direct
competition and justify the presumption of competitive injury at the motion to
dismiss stage.” The allegations raised a
presumption of injury through sales diversion and loss of goodwill to Gaspari
sufficient to confer standing.
Gaspari then argued that the claims were barred by the
statute of limitations, borrowed from the one-year period under the Arizona
Consumer Fraud Act. Ninth Circuit
precedent suggests but does not mandate that the proper analysis is laches
instead of an absolute bar, but the court didn’t need to resolve that because
the court agreed that Arizona’s 3-year fraud limitations period was instead the
proper period. Though ThermoLife alleged
false statements as far back as 2007, the pleadings didn’t disclose that it
discovered then that the statements were false. It was plausible to infer that
ThermoLife discovered the falsity when recalls of Gaspari’s products began in
2009 and 2010, and ThermoLife conducted its independent tests in 2009, all of
which fell within the 3-year period (the suit was filed in 2011). Thus the complaint couldn’t be dismissed as
time-barred.
On tortious interference, Gaspari argued that ThermoLife
failed to allege any specific party with which it expected to do business or
any specific damages (though Gaspari didn’t move to dismiss the claim of
tortious interference with ThermoLife’s relationship with American Media, Inc.). The court agreed: the only assertions that
ThermoLife would have earned business at the Expo were conclusory; the mere
hope of business is insufficient.
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