Scilex Pharm. Inc. v. Sanofi-Aventis U.S. LLC

• Citation: 552 F.Supp.3d 901
• Decision Date: 05 August 2021
• Docket Number: Case No. 21-cv-01280-JST
• Parties: SCILEX PHARMACEUTICALS INC., Plaintiff, v. SANOFI-AVENTIS U.S. LLC, et al., Defendants.
• Court: U.S. District Court — Northern District of California

552 F.Supp.3d 901

SCILEX PHARMACEUTICALS INC., Plaintiff,

v.SANOFI-AVENTIS U.S. LLC, et al., Defendants.

Case No. 21-cv-01280-JST

United States District Court, N.D. California.

Signed August 5, 2021

David K. Callahan, Pro Hac Vice, Matthew W. Walch, Pro Hac Vice, Sophia Louise Jane Mendez, Pro Hac Vice, Latham & Watkins LLP, Chicago, IL, Jamie Lynne Wine, Latham & Watkins LLP, New York, NY, Steven N. Feldman, Latham & Watkins LLP, Los Angeles, CA, for Plaintiff.

David Ramraj Singh, Weil, Gotshal and Manges LLP, Redwood Shores, CA, Randi Wolkenbreit Singer, Melissa D. Rutman, Pro Hac Vice, Weil Gotshal & Manges LLP, New York, NY, for Defendants Sanofi-Aventis U.S. LLC, Chattem, Inc.

Armin Ghiam, Pro Hac Vice, James E. Rosini, Pro Hac Vice, Jeremy Boczko, Pro Hac Vice, Hunton Andrews Kurth LLP, New York, NY, Juliene Drei Munar, Hunton Andrews Kurth LLP, San Francisco, CA, for Defendant Hisamitsu America, Inc.

ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO DISMISS; DENYING MOTION TO STRIKE

Re: ECF Nos. 56, 57

JON S. TIGAR, United States District Judge

Before the Court are motions to dismiss filed by Defendant Hisamitsu America, Inc. ("Hisamitsu"), ECF No. 57, and Defendants Sanofi-Aventis U.S. LLC and Chattem, Inc. (collectively, "Chattem"), ECF No. 56. The Court will grant the motions to dismiss in part and deny them in part. The Court will deny Hisamitsu's motion to strike.

I. BACKGROUND¹

Plaintiff Scilex Pharmaceuticals Inc. ("Scilex") "markets, distributes, and sells the FDA-approved, prescription-strength topical analgesic self-adhesive patch under the brand name ZTlido®." First Amended Complaint ("FAC"), ECF No. 42 ¶ 17. Scilex brings this action to address Hisamitsu and Chattem's (collectively, "Defendants") "ongoing false and deceptive advertising of their respective over-the-counter ("OTC") lidocaine

patch products." Id. ¶ 1. Scilex alleges that ZTlido "is often prescribed for off-label uses, including general neuropathic pain, such as back and spinal pain," id. ¶ 26, and that Defendants’ OTC lidocaine patch products "directly compete with Scilex's ZTlido," id. ¶ 75. Scilex contends that "Defendants’ false and misleading advertising" – including claims that "OTC products: (a) contain and/or deliver to the area of pain the maximum amount of lidocaine

available in patch form; (b) block and/or numb pain; (c) target and/or desensitize aggravated nerves; (d) target more pain receptors than other lidocaine patch products; (e) adhere to the skin and provide pain relief for periods of 8 or 12 hours, depending on the product, (f) are indicated by the FDA for treatment of nerve and neuropathic pain, including back and spinal pain; and/or (g) are FDA-approved, prescription products," id. ¶ 10 – "causes consumers to be misled and to choose Defendants’ products over FDA-approved lidocaine patches, including Scilex's ZTlido® product, causing Scilex significant harm," id. ¶ 62.

Scilex filed the instant suit against Defendants on February 23, 2021. ECF No. 1. The operative complaint brings four causes of action: (1) false and misleading representations regarding FDA approval in violation of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A) ; (2) false and deceptive advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B) ; (3) violations of California's False Advertising Law ("FAL"), Cal. Bus. & Prof. Code §§ 17500, et seq. ; and (4) violations of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200, et seq. FAC ¶¶ 74-108. Hisamitsu and Chattem each filed a motion to dismiss. ECF Nos. 56, 57. Hisamitsu also moves to strike certain paragraphs in the FAC. ECF No. 57 at 35. Scilex filed separate oppositions, ECF Nos. 64, 65, to which Defendants replied, ECF Nos. 71, 72. The Court held a hearing on July 22, 2021.

II. JURISDICTION

This Court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1367.

III. LEGAL STANDARD

A. Rule 12(b)(1)

If a plaintiff lacks Article III standing to bring a suit, the federal court lacks subject matter jurisdiction and the suit must be dismissed under Rule 12(b)(1). Cetacean Cmty. v. Bush , 386 F.3d 1169, 1174 (9th Cir. 2004). "A Rule 12(b)(1) jurisdictional attack may be facial or factual. In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Safe Air for Everyone v. Meyer , 373 F.3d 1035, 1039 (9th Cir. 2004) (citation omitted). Where, as here, the defendant makes a facial attack, the court assumes that the complaint's allegations are true and draws all reasonable inferences in the plaintiff's favor. Wolfe v. Strankman , 392 F.3d 358, 362 (9th Cir. 2004).

B. Rule 12(b)(6)

A complaint need not contain detailed factual allegations, but facts pleaded by a plaintiff must be "enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). To survive a Rule 12(b)(6) motion to dismiss, a complaint must contain sufficient factual matter that, when accepted as true, states a claim that is plausible on its face. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. While this standard is not a probability requirement, "[w]here a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. (quotation marks and citation omitted). In determining whether a plaintiff has met this plausibility standard, the Court must "accept all factual allegations in the complaint as true and construe the pleadings in the light most favorable" to the plaintiff. Knievel v. ESPN , 393 F.3d 1068, 1072 (9th Cir. 2005). If the motion to dismiss is granted, the court should grant leave to amend "unless it determines that the pleading could not possibly be cured by the allegation of other facts." Doe v. United States , 58 F.3d 494, 497 (9th Cir. 1995) (quotation marks and citation omitted).

Any claims that are "grounded in fraud ... must satisfy the traditional plausibility standards of Rules 8(a) and 12(b)(6), as well as the heightened pleading requirements of Rule 9(b)." Davidson v. Kimberly-Clark Corp. , 889 F.3d 956, 967 (9th Cir. 2018). The heightened pleading standard of Federal Rule of Civil Procedure 9(b) requires that "a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). Allegations of fraud must "be specific enough to give defendants notice of the particular misconduct so that they can defend against the charge and not just deny that they have done anything wrong. Averments of fraud must be accompanied by the who, what, when, where, and how of the misconduct charged." Vess v. Ciba-Geigy Corp. USA , 317 F.3d 1097, 1106 (9th Cir. 2003) (quotation marks, alteration, and citations omitted).

C. Rule 12(f)

Under Rule 12(f) of the Federal Rules of Civil Procedure, the Court "may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." The function of a motion to strike pursuant to Rule 12(f) is "to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial." Whittlestone, Inc. v. Handi-Craft Co. , 618 F.3d 970, 973 (9th Cir. 2010) (citation omitted).

IV. DISCUSSION

All Defendants move to dismiss the FAC on the grounds that Scilex (1) lacks standing under Article III, the Lanham Act, and the FAL and the UCL and (2) fails to state a false designation of origin claim under 15 U.S.C. § 1125(a)(1)(A). Chattem also contends that all claims are barred by the equitable doctrine of laches, and Hisamitsu asserts that Scilex has failed to plead the falsity of Hisamitsu's statements and moves to strike allegations regarding the FDA's proposed Monograph.

A. Article III Standing

Article III standing requires that a "plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins , 578 U.S. 330, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016). "To establish injury in fact, a plaintiff must show that he or she suffered an invasion of a legally protected interest that is concrete and particularized and actual or imminent, not conjectural or hypothetical." Id. at 1548 (quotation marks and citations omitted). "The party invoking federal jurisdiction bears the burden of establishing these elements." Lujan v. Defs. of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Accordingly, "each element must be supported ... with the manner and degree of evidence required at the successive stages of litigation." Id. Defendants argue that Scilex has failed to meet any of the standing requirements.

1. Injury-in-Fact

Scilex alleges that its injuries include "diminished goodwill of the ZTlido® mark associated with its product offered under that mark and lost profits stemming from reduced demand for ZTlido® caused by Defendants’ false and deceptive advertising." FAC ¶¶ 80, 91. Defendants argue that Scilex does not support this conclusory allegation, and that Scilex cannot plead an injury from Defendants’ allegedly misleading advertising because Scilex and Defendants do not compete for the same customers. Scilex responds that it has adequately pleaded injury-in-fact through a "chain of inferences." ECF No. 64 at 14. Scilex explains that Defendants are direct competitors of Scilex because they all "sell lidocaine patches that...