Hi-Tech Pharm., Inc. v. HBS Int'l Corp.

• Decision Date: 04 December 2018
• Docket Number: No. 17-13884,17-13884
• Citation: 910 F.3d 1186
• Parties: HI-TECH PHARMACEUTICALS, INC., Plaintiff-Appellant, v. HBS INTERNATIONAL CORP., Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

910 F.3d 1186

HI-TECH PHARMACEUTICALS, INC., Plaintiff-Appellant,

v.HBS INTERNATIONAL CORP., Defendant-Appellee.

No. 17-13884

United States Court of Appeals, Eleventh Circuit.

December 4, 2018

David M. Barnes, Robert F. Parsley, Miller & Martin, PLLC, CHATTANOOGA, TN, Charles Ronald Bridgers, Edmund J. Novotny, Jr., DeLong Caldwell Bridgers & Fitzpatrick, LLC, ATLANTA, GA, for Plaintiff-Appellant.

Ragesh K. Tangri, Joseph Gratz, SAN FRANCISCO, CA, Ana Nicole DeMoss, Holly Hawkins Saporito, Alston & Bird, LLP, ATLANTA, GA, for Defendants-Appellees.

Before TJOFLAT and WILLIAM PRYOR, Circuit Judges, and MURPHY,^* District Judge.

WILLIAM PRYOR, Circuit Judge:

This appeal from the dismissal of a complaint raises questions about the relationship between the labeling requirements of the Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq. , and state and federal laws against deceptive advertising. Hi-Tech Pharmaceuticals, Inc., filed a complaint that the label of a protein-powder supplement distributed by HBS International Corp. misleads customers about the quantity and quality of protein in each serving, violating both the Georgia Uniform Deceptive Trade Practices Act, O.C.G.A. § 10-1-372(a), and the federal Lanham Act, 15 U.S.C. § 1125(a). The district court dismissed the complaint on the grounds that the state-law claim is preempted by the Food, Drug, and Cosmetic Act and that the complaint fails to state a claim under the Lanham Act because it is not plausible that the label is misleading. We agree that the state-law claim is preempted, but we disagree that the label is not plausibly misleading. And we reject HBS's arguments that the Food, Drug, and Cosmetic Act bars the claim under the Lanham Act. We affirm in part, reverse in part, and remand.

I. BACKGROUND

Hi-Tech Pharmaceuticals, Inc., is a Georgia-based firm that manufactures, markets, distributes, and sells dietary-supplement products. HBS International Corp. is a Canadian firm that distributes throughout the United States and Canada bodybuilding and sports-nutrition supplements supplied by its wholly owned subsidiary, Allmax Nutrition, Inc. One of the Allmax products HBS distributes, the "Ultra-Premium 6-Protein Blend Hexa[P]ro," is a protein-powder drink mix marketed as a bodybuilding and workout-recovery aid.

Because this appeal arises from the dismissal of a complaint, "we accept as true the facts alleged in the complaint, drawing all reasonable inferences in [the] plaintiff's favor." Bailey v. Wheeler , 843 F.3d 473, 480 (11th Cir. 2016). Under the doctrine of incorporation by reference, we may also consider documents attached to the motion to dismiss if they are referred to in the complaint, central to the plaintiff's claim, and of undisputed authenticity. See Horsley v. Feldt , 304 F.3d 1125, 1134 (11th Cir. 2002) ; Brooks v. Blue Cross & Blue Shield of Fla., Inc. , 116 F.3d 1364, 1369 (11th Cir. 1997). In particular, we consider the undisputed HexaPro marketing label attached to the motion to dismiss by HBS.

Hi-Tech filed a complaint against HBS and other defendants not involved in this appeal. As relevant here, the complaint alleges that the following HexaPro marketing label violates the Georgia Uniform Deceptive Trade Practices Act, O.C.G.A. § 10-1-372(a), and the Lanham Act, 15 U.S.C. § 1125(a) :

For ease of inspection, we provide close-up images of the three sections of the label. The front of the panel identifies the product as an "Ultra-Premium 6-Protein Blend" with "25 G[rams] Protein Per Serving," and it touts the product's "6 Ultra-High Quality Proteins" and "5 Amino Acid Blend with BCAAs [Branch-Chain Amino Acids]":

The left side of the label again identifies HexaPro as "an Ultra-Premium, Ultra-Satisfying Blend of 6 High-Quality Proteins." It elaborates on that claim by identifying the six whole-protein sources that HexaPro contains: whey protein concentrate, milk protein concentrate, whey protein isolate, micellar casein, egg albumin, and hydrolyzed whey. And it states that the product "is also fortified with 5 Amino Acids to enhance recovery":

Finally, the right side of the label features the nutrition-facts table, which states that HexaPro contains 25 grams of protein per serving, and the list of ingredients. This side also provides a table labeled "Amino Acid Profile." Although the heading of the table indicates that HexaPro contains 44 grams of amino acids per serving, the table itemizes only 25,000 milligrams, or 25 grams:

In its complaint, Hi-Tech alleges that HexaPro's label misleads consumers in three distinct but related ways. The first concerns the quantity of protein in a serving of HexaPro. Although HexaPro contains whole proteins, it also contains free-form amino acids and other non-protein ingredients. Hi-Tech alleges that that an analysis that excludes these "spiking agents" and counts only "total bonded amino acids"—which alone are molecularly complete proteins—yields an "actual protein content" of "17.914 grams per serving," not 25 grams per serving. But Hi-Tech does not allege that the HexaPro label is inconsistent with the applicable regulation of the Food and Drug Administration, which permits "[p]rotein content [to] be calculated on the basis of the factor 6.25 times the nitrogen content of the food," 21 C.F.R. § 101.9(c)(7), even if not all of a product's nitrogen content derives from whole-protein sources.

Second, Hi-Tech alleges that the label is misleading about the source of the protein content. In Hi-Tech's view, the label suggests that the product's entire stated protein content derives from the whole-protein sources identified on the left side of the panel. Observing that the front label identifies HexaPro as an "Ultra-Premium 6-Protein Blend," Hi-Tech alleges that this "statement of identity is intended to lead consumers to believe that the Product contains protein derived exclusively from the ‘Ultra-Premium 6-Protein Blend.’ "

Third, Hi-Tech alleges that the front of the label is misleading about both the quantity and the source of the product's protein content. Hi-Tech alleges that the proximity of the phrase "Ultra-Premium 6-Protein Blend" to the phrase "25 G Protein Per Serving" on the front of the label misleads consumers into believing that HexaPro "contains 25 grams of the ‘Ultra-Premium 6-Protein Blend’-type protein per serving," that is, the six whole-protein sources. This representation is untrue because the product is "spike[d] ... with free form amino acids and non-protein ingredients" and, in fact, "contains only 17.914 grams of the ‘Blend’-type protein per serving."

HBS moved to dismiss the complaint for failure to state a claim, see Fed. R. Civ. P. 12(b)(6), and the district court granted the motion. The district court ruled that Hi-Tech's claim under the Georgia Uniform Deceptive Trade Practices Act was preempted by the federal Food, Drug, and Cosmetic Act for two reasons: first, Hi-Tech's claim fell within the ambit of the federal Act's express preemption clause, which prohibits state-law "claim[s] seek[ing] to impose food labeling requirements that differ from the applicable federal regulation"; and second, Hi-Tech failed to allege that it had established the true protein content of HexaPro using a test that complies with the protein-testing requirements of the Food and Drug Administration, see 21 C.F.R. § 101.9(g). And the district court ruled that Hi-Tech failed to state a claim under the Lanham Act because HexaPro's label "provides a detailed breakdown of all ... ingredients, including the mix of amino acids." The district court stated that "[t]hese statements indicate to consumers that the product is not made solely of the ultra-premium protein blend, but contains other ingredients as well."

II. STANDARD OF REVIEW

"We review de novo the district court's grant of a Rule 12(b)(6) motion to dismiss for failure to state a claim, accepting the complaint's allegations as true and construing them in the light most favorable to the plaintiff." Chaparro v. Carnival Corp. , 693 F.3d 1333, 1335 (11th Cir. 2012) (quoting Cinotto v. Delta Air Lines Inc. , 674 F.3d 1285, 1291 (11th Cir. 2012) ).

III. DISCUSSION

We divide our discussion in three parts. First, we reject HBS's contention that Hi-Tech "waived" or forfeited dispositive arguments by failing to challenge them in the district court when HBS raised them in its motion to dismiss. Second, we explain that federal law preempts Hi-Tech's state-law claim. Third, we explain that federal law does not bar Hi-Tech's theory that the HexaPro label is false or misleading under the Lanham Act, and we conclude that Hi-Tech has stated a plausible claim for relief. We affirm in part and reverse in part.

A. Hi-Tech Has Not "Waived" or Forfeited Dispositive Arguments.

HBS contends that we need not reach the merits of this appeal because Hi-Tech "waived"—HBS's word, although "forfeited" would be more appropriate, see United States v. Phillips , 834 F.3d 1176, 1183 (11th Cir. 2016) —three dispositive arguments by failing to respond to them in the district court when HBS raised them in its motion to dismiss. First, HBS argued that Hi-Tech failed to plead a plausible claim for relief because it did not attach test results to its complaint to support its allegation that the HexaPro label overstates its protein content. Second, HBS argued that Hi-Tech could not allege a plausible claim for relief because the HexaPro label "prominently disclosed the presence of amino acids on both the principal display and information panels of the label." Third, HBS argued that Hi-Tech's claim under the Lanham Act is precluded because there is a "genuinely irreconcilable conflict," POM Wonderful LLC v. Coca-Cola Co. , 573 U.S. 102, 134 S.Ct. 2228, 2237, 189 L.Ed.2d 141 (2014), between the Food and Drug Administration's regulations and the labeling that Hi-Tech claims the Lanham Act requires.

HBS "misunderstand[s] the law. Parties can most assuredly waive [or forfeit] positions and issues on appeal,...