De Simone v. VSL Pharm., Inc.

• Decision Date: 15 July 2021
• Docket Number: Civil Action No. TDC-15-1356
• Parties: CLAUDIO DE SIMONE and EXEGI PHARMA, LLC, Plaintiffs/Counterclaim Defendants, v. VSL PHARMACEUTICALS, INC., LEADIANT BIOSCIENCES, INC. and ALFASIGMA USA, INC. Defendants/Counterclaim Plaintiffs, v. DANISCO USA, INC., Counterclaim Defendant.
• Court: U.S. District Court — District of Maryland

CLAUDIO DE SIMONE and EXEGI PHARMA, LLC, Plaintiffs/Counterclaim Defendants, v. VSL PHARMACEUTICALS, INC., LEADIANT BIOSCIENCES, INC.and ALFASIGMA USA, INC. Defendants/Counterclaim Plaintiffs, v. DANISCO USA, INC., Counterclaim Defendant.

Civil Action No. TDC-15-1356

UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND

July 15, 2021

MEMORANDUM OPINION

Pending before the Court is the latest conflict in a long-standing dispute between former business partners about a proprietary formulation ("the De Simone Formulation") used in a probiotic previously known by the tradename VSL#3 and now known by the tradename Visbiome. Plaintiff ExeGi Pharma, LLC ("ExeGi") has filed a Motion for an Order of Civil Contempt against Defendant and Counterclaim Plaintiff VSL Pharmaceuticals, Inc. ("VSL") and Defendant Alfasigma USA, Inc. ("Alfasigma") (collectively, "the VSL Parties") asserting that they have violated this Court's June 20, 2019 permanent injunction ("the Permanent Injunction") barring the VSL Parties from making certain representations about their new version of VSL#3 manufactured in Italy ("new VSL#3" or "Italian VSL#3"). Defendant Leadiant Biosciences, Inc. is not named in the Motion. The VSL Parties oppose the Motion. Having reviewed the briefs and submitted materials, the Court finds no hearing necessary. D. Md. Local R. 105.6. For the reasons set forth below, the Motion will be DENIED.

BACKGROUND

Prior relevant factual background and rulings are set forth in the Court's September 23, 2015 Memorandum Opinion on the First Motion for a Preliminary Injunction, De Simone v. VSL Pharm., Inc., 133 F. Supp. 3d 776 (D. Md. 2015); its June 20, 2016 Memorandum Opinion on the Second Motion for a Preliminary Injunction, De Simone v. VSL Pharm., Inc., No. TDC-15-1356, 2016 WL 3466033 (D. Md. June 20, 2016); its October 9, 2018 Memorandum Opinion on the Parties' Cross Motions for Summary Judgment, De Simone v. VSL Pharm., Inc., 352 F. Supp. 3d 471 (D. Md. 2018); its June 20, 2019 Memorandum Opinion on the VSL Parties' Rule 50 and 59 Motions, De Simone v. VSL Pharm., Inc., 395 F. Supp. 3d 617 (D. Md. 2019); its June 20, 2019 Memorandum Opinion on Plaintiffs' Motion for a Permanent Injunction, De Simone v. VSL Pharm., Inc., No. TDC-15-1356, 2019 WL 2569574 (D. Md. June 20, 2019); and its July 30, 2020 Memorandum Opinion on Plaintiffs' Motion for an Order of Civil Contempt, De Simone v. VSL Pharm., Inc., No. TDC-15-1356, 2020 WL 4368103 (D. Md. July 30, 2020). Additional facts and procedural history are provided below as necessary.

In November 2018, a jury returned a verdict in favor of Claudio De Simone and ExeGi (collectively, "the De Simone Parties") on all counts against the VSL Parties, including a verdict finding Leadiant and Alfasigma liable for false advertising of VSL#3 in violation of the Lanham Act, 15 U.S.C. § 1125(a) (2018). In light of that verdict, and pursuant to a motion filed by the De Simone Parties, on June 20, 2019, the Court issued the Permanent Injunction, which enjoined the VSL Parties from:

(1) stating or suggesting in VSL#3 promotional materials directed at or readily accessible to United States consumers that the present version of VSL#3produced in Italy ("Italian VSL#3") continues to contain the same formulation found in versions of VSL#3 produced before January 31, 2016 ("the De Simone Formulation"), including but not limited to making statements that VSL#3 contains the "original proprietary blend" or the "same mix in the same proportions" as earlier versions of VSL#3; and

(2) citing to or referring to any clinical studies performed on the De Simone Formulation or earlier versions of VSL#3 as relevant or applicable to Italian VSL#3.

Permanent Injunction at 2, ECF No. 930.

In De Simone v. Alfasigma USA, Inc., 847 F. App'x 174 (4th Cir. 2021), the United States Court of Appeals for the Fourth Circuit affirmed the jury verdict and this Court's rulings on post-trial motions, and it largely affirmed the Permanent Injunction, vacating its terms only as to the prohibition on "citing to or referring to any clinical studies performed on the De Simone Formulation or earlier versions of VSL#3 as relevant or applicable to Italian VSL#3." Id. at 184. In so narrowing the Preliminary Injunction, the Fourth Circuit clarified that:

To the extent that this language is intended to prohibit the VSL Parties from citing or referring to the clinical studies as though they were performed on Italian VSL#3 (rather than on the Danisco-made version), it's superfluous to prohibiting claims of continuity between the products. But prohibiting the VSL Parties from citing or referring to the clinical studies as even relevant to Italian VSL#3 goes too far, as they could feasibly do so without claiming continuity between their old product and their new one.

Id.

DISCUSSION

In the wake of the Fourth Circuit's opinion, ExeGi has filed a Second Motion for an Order of Contempt, asserting that the VSL Parties have continued to violate the Permanent Injunction. Specifically, ExeGi argues that the VSL Parties should be found in contempt based on (1) the December 2020 publication in a scientific journal of an article reporting results of a clinical study on Italian VSL#3 and citing to the prior clinical studies conducted on the De Simone Formulation;(2) the posting on the VSL#3 website of a Fact Sheet that allegedly impermissibly implies continuity between Italian VSL#3 and Visbiome, and Alfasigma's responding to inquiries on Facebook about whether VSL#3 had changed by directing consumers to the Fact Sheet; and (3) an email from Luca Guarna, VSL's Chief Executive Officer, to various practitioners in the probiotic field asserting that the Fourth Circuit's decision allows prior clinical studies of VSL#3 to be cited without restriction in discussing Italian VSL#3.

I. Legal Standard

To support a finding of civil contempt, each of the following elements must be established by clear and convincing evidence: (1) the existence of a valid decree of which the alleged contemnor had actual or constructive knowledge; (2) that the decree was in the movant's favor; (3) that the alleged contemnor by its conduct violated the terms of the decree and had knowledge or constructive knowledge of such violation; and (4) that the movant suffered harm as a result. Ashcraft v. Conoco, Inc., 218 F.3d 288, 301 (4th Cir. 2000) (internal citation omitted).

As to the third element, in determining whether there was a violation of a court order, there is no requirement that the violation was willful. "Civil as distinguished from criminal contempt is a sanction to enforce compliance with an order of the court or to compensate for losses or damages sustained by reason of noncompliance. Since the purpose is remedial, it matters not with what intent the defendant did the prohibited act." McComb v. Jacksonville Paper Co., 336 U.S. 187, 191 (1949) (internal citations omitted). However, because intent is irrelevant, the order allegedly violated must be one that sets forth in "specific detail an unequivocal command." In re General Motors Corp., 61 F.3d 256, 258-59 (4th Cir. 1995) (internal citation omitted). A party therefore should not be found in civil contempt where there is "a fair ground of doubt as to the wrongfulness of [their] conduct." Taggart v. Loremen, 139 S. Ct. 1795, 1801 (2019). However, civil contemptneed not be limited to addressing only activities that were "specifically enjoined," because such a narrow requirement "would give tremendous impetus to [a] program of experimentation with disobedience of the law." McComb, 336 U.S. at 192. Instead, "[i]t is enough protection for defendants if close questions of interpretation are resolved in the defendant's favor in order to prevent unfair surprise." Schering Corp. v. Ill. Antibiotics Co., 62 F. 3d 903, 906 (7th Cir. 1995).

Here, there is no dispute that the first two elements are satisfied. The dispute centers only on whether the VSL Parties' conduct violated the Permanent Injunction and, if so, if any such violations resulted in harm to ExeGi. Because the Court does not find that the conduct violated the Permanent Injunction, it need not, and so does not, address the issue of harm.

II. The Journal Article

ExeGi asserts that the publication in the scientific journal Inflammatory Bowel Diseases of an article entitled "Impact of the Trophic Effect of the Secretome From a Multistrain Probiotic Preparation on the Intestinal Epithelia" ("the Journal Article"), authored by 15 scholars including Valentina Petito, Antonio Gasbarrini, and Lucrezia Laterza, violated the Permanent Injunction. The article reports the results of a clinical study conducted on Italian VSL#3 and cites to prior clinical studies conducted on the De Simone Formulation. Petito and Gasbarrini are on the Scientific Advisory Board of Actial, a company owned by the Cavazza family, which also owns VSL. Laterza is a consultant for Actial. Based on these connections, ExeGi asserts that the article is a VSL#3 "promotional piece masquerading as a scientific study," and that because it cites to the prior clinical studies, it runs afoul of the Permanent Injunction. Mot. at 5, ECF No. 1015.

Without reaching the question of whether the citations improperly suggest a continuity between Italian VSL#3 and the De Simone Formulation, the Court finds that the Journal Article cannot support a finding of contempt. Federal Rule of Civil Procedure 65(d) defines the personsbound by a federal court injunction as "parties; the parties' officers, agents, servants, employees, and attorneys; and other persons who are in active concert or participation with [any of the parties named above]" if they have received "actual notice" of the injunction by "personal service or otherwise." Fed. R. Civ. P. 65(d)(2)(A)-(C). The named authors of the Journal Article are not parties to this action, nor is there any allegation that they are officers, agents, servants, or employees of VSL or Alfasigma. Nor can ...