Tuesday, April 11, 2017

false advertising dispute based on study in medical journal should proceed, judge recommends

Theodosakis v. Clegg, 2017 WL 1294529, No. CV-14-02445 (D. Ariz. Jan. 30, 2017) (magistrate judge)

Theodosakis and Supplement Testing Institute sued defendants for defamation, commercial disparagement, tortious interference with business expectancy, false advertising and unfair competition under the Lanham Act, and violation of Arizona’s Consumer Fraud Act, based on their alleged participation in a study and the subsequent report that was published in New England Journal of Medicine, that plaintiffs claimed contained false and misleading statements.

STI sells glucosamine and chondroitin dietary supplements, including Avosoy Complete. Theodosakis wrote “The Arthritis Cure” (1997), which allegedly first reported that osteoarthritis could be successfully treated through a nine-step treatment program that included two supplements, glucosamine and chondroitin. This was a best-seller and Theodosakis wrote a follow-up. Sales of the supplements allegedly “skyrocketed,” including STI’s.  In 1998, NIAMS, the arthritis division of the National Institute of Health, commissioned a grant to perform human clinical research specifically on the supplements, the GAIT Glucosamine/Chondroitin Intervention Trial.  GAIT included the use of an active comparator, celecoxib (Celebrex).

The NEJM published the study results, with defendants as the lead authors. “The Report stated that Celebrex® passed the two primary outcomes, and that glucosamine and chondroitin, alone and in combination, were not significantly better than a placebo in reducing knee pain from osteoarthritis and do not effectively reduce knee pain from osteoarthritis.” This allegedly soured millions on the supplements, and “[a]s a direct result of publication of the Study and Report, Plaintiff Dr. Theodosakis’ consulting contracts with Rexall and Pharmavite were not renewed.” 

The complaint alleged that “[i]f the active comparator [in a study] underperforms as compared to the bulk of its prior studies, there is a high probability that the effects of treatment groups will be understated and could lead to a false-negative result.”  It further alleged that they’d been told that the raw data showed that celecoxib actually failed the two primary outcomes, though they didn’t have access to the raw data.  When the report was published, Dr. Clegg and Dr. Sawitzke were allegedly financially involved with commercial entities that were in direct market competition with the supplements, including plaintiffs’ products.

Dr. Clegg and Dr. Sawitzke argued that they had Eleventh Amendment immunity as members of the faculty of the University of Utah School of Medicine and employees of the University of Utah.  Plaintiffs filed a motion to amend the complaint to clarify that they were suing Dr. Clegg and Dr. Sawitzke in their individual capacities only, and defendants didn’t show that the relief sought would come from the state coffers, interfere with the public administration, or compel the State of Utah to act or restrain from acting.  Thus, defendants failed to meet their burden to show that the complaint should be dismissed on this ground.

Defamation: Defendants argued that “[a]side from acknowledging [Dr. Theodosakis] as a participating investigator and member of the GAIT study steering committee, the report does not mention Dr. Theodosakis.” Also, the “reported findings concern[ed] glucosamine and chondroitin, generic compounds naturally made in humans.”  A corporation, like STI, “has no personal reputation and may be libeled only by imputation about its financial soundness or business ethics.” The statements at issue didn’t implicate STI, so it didn’t state a claim. 

Defamatory statements “must be published in such a manner that they reasonably relate to specific individuals.” Dr. Theodosakis had the burden of showing that the publication was “of and concerning” him.  Statements in the report included: “The dietary supplements of glucosamine and chondroitin sulfate have been advocated, especially in the lay media, as safe and effective options for the management of symptoms of osteoarthritis.”   The report also said, “Studies have demonstrated substantial variation between the content listed on the labels of these products and the actual content. Because our study was conducted under pharmaceutical rather than dietary-supplement regulations, agents identical to the ones we used may not be commercially available.”

Given that “[t]he popular press ... published numerous articles ...” not only about Dr. Theodosakis’ book, but also about the supplements as well, “any alleged defamation occurred with regard to a group.” “When a group of persons are defamed, the statements must reasonably relate to a certain individual member or members.... If the group is so large, or the statements so indefinite, that the objects of the defamatory statements cannot readily be ascertained, the statements are not actionable.”  However, the complaint plausibly alleged that Theodosakis was uniquely identified with the supplements because he “publicly and on a nationwide scale staked his reputation on his position that glucosamine and chondroitin play a major role in treating osteoarthritis.”

Commercial disparagement:  The report was clear that the glucosamine and chondroitin utilized for the Study was conducted under pharmaceutical regulations, so they wouldn’t be identical to readily available supplements. Even though it questioned the effectiveness of the supplements specifically used in the study, the allegations weren’t enough to reasonably conclude that the statements concerned plaintiffs’ products in particular.

Defendants claimed qualified privilege under the First Amendment as to the remaining defamation claims. The judge agreed that a report in NEJM, published for educational purposes, qualified for the common interest privilege given that “ ‘scholarly activity generally fits within the common interest privilege.’ ”  Thus, plaintiffs had to allege abuse of privilege by showing either excessive publication or actual malice.  Plaintiffs alleged that the raw data didn’t support the published findings, and that the doctors were financially involved with Celebrex’s maker.  These reasonably supported the inference of abuse of the privilege with actual malice.  Also, plaintiffs were prepared to allege extensive republication of the claims “in interviews, journals and magazines,” including in a prepared statement from Dr. Clegg concerning the GAIT Study.

Tortious interference:  There was no factual basis alleged to plausibly support the claim that defendants were aware of plaintiffs’ alleged business relationships.

False advertising: A scientific article published in the NEJM isn’t commercial speech and thus can’t be commercial advertising or promotion.  The article didn’t advocate the purchase of one particular product over another.  Drs. Clegg and Sawitzke’s alleged financial interest in Celebrex’s manufacturer as well as an interest in other competitors of glucosamine and chondroitin didn’t change anything; they were only two of more than twenty authors. The publication’s purpose was to assess the efficacy of glucosamine and chondroitin for the treatment of osteoarthritis of the knee, “not as a means to sell Celebrex.”

However, plaintiffs argue that defendants’ republication of the statements allowed Lanham Act liability, since courts have distinguished between the defendant’s initial publication of the article and its continued distribution of reprints or republication. But plaintiffs didn’t specifically allege any particular secondary publication or other means; that wasn’t enough.  They wanted to amend the complaint to add allegations about “interviews, journals and magazines,” Dr. Clegg’s prepared statement, and Dr. Sawitzke’s article published in Arthritis & Rheumatism 2008.” I would have said that none of those were commercial advertising or promotion, for the exact same reasons—Gordon & Breach and similar cases allowing republication claims to continue involved a change in form, when the republication was used as part of a sales pitch.  But the court found that, once defendants were no longer two of twenty authors and each allegedly had a financial interest in Celebrex, making statements “arguably aimed at the medical field, who makes treatment decisions, and the general public touting the Study’s results in favor of Celebrex” were enough to state a claim under the Lanham Act, justifying leave to amend.

The Arizona Consumer Fraud Act claim was dismissed because only consumers can sue under it. 

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