De Simone v. VSL Pharm., Inc., Civil Action No. TDC-15-1356

CourtUnited States District Courts. 4th Circuit. United States District Court (Maryland)
Writing for the CourtTHEODORE D. CHUANG, United States District Judge
Citation395 F.Supp.3d 617
Parties Claudio DE SIMONE, Plaintiff/Counterclaim Defendant, ExeGi Pharma, LLC, Plaintiff, v. VSL PHARMACEUTICALS, INC., Defendant/Counterclaim Plaintiff, Leadiant Biosciences, Inc., and Alfasigma USA, Inc., Defendants, v. Danisco USA, Inc., Counterclaim Defendant.
Docket NumberCivil Action No. TDC-15-1356
Decision Date20 June 2019

395 F.Supp.3d 617

Claudio DE SIMONE, Plaintiff/Counterclaim Defendant,

ExeGi Pharma, LLC, Plaintiff,
v.
VSL PHARMACEUTICALS, INC., Defendant/Counterclaim Plaintiff,

Leadiant Biosciences, Inc., and Alfasigma USA, Inc., Defendants,
v.
Danisco USA, Inc., Counterclaim Defendant.

Civil Action No. TDC-15-1356

United States District Court, D. Maryland.

Signed June 20, 2019


395 F.Supp.3d 621

Jeremy W. Schulman, Jeffrey Samuel Gavenman, Koushik Bhattacharya, Schulman Bhattacharya, LLC, Bethesda, MD, for Plaintiffs/Counterclaim Defendant.

Charles S. Fax, Rifkin Livingston Levitan and Silver LLC, Bethesda, MD, Liesel Johanna Schopler, Rifkin Weiner Livingston Levitan and Silver LLC, Annapolis, MD, Erinn M. Maguire, Robert Scott Brennen, Miles and Stockbridge PC, Baltimore, MD, Lydia Ferrarese, Mark A. Weissman, Brian T. Carr, Pro Hac Vice, Herzfeld and Rubin PC, New York, NY, for Defendants.

Andrew D. Mathews, Pro Hac Vice, Douglas Michael Nabhan, Pro Hac Vice, Harold E. Johnson, Pro Hac Vice, Lauren M. Wheeling, Pro Hac Vice, Venable LLP, Washington, DC, James Philip Head, Williams Mullen PC, McLean, VA, Richard Thomas Matthews, Pro Hac Vice, Williams Mullen PC, Raleigh, NC, William P. Dickinson, III, Pro Hac Vice, Kaleo Legal, Virginia Beach, VA, John Brian Cashmere, Williams Mullen, Tysons Corner, VA, for Defendant/Counterclaim Plaintiff.

Brian Lawrence Schwalb, Venable LLP, Washington, DC, Turner A. Broughton, Williams Mullen PC, Richmond, VA, for Alfasigma USA, Inc. and VSL Pharmaceuticals, Inc.

Shari Ross Lahlou, Astor Heaven, Crowell and Moring LLP, Washington, DC, for Counterclaim Defendant.

MEMORANDUM OPINION

THEODORE D. CHUANG, United States District Judge

395 F.Supp.3d 622

On November 20, 2018, after a 14-day trial, the jury returned a verdict (1) in favor of Plaintiff Claudio De Simone against Defendant VSL Pharmaceuticals, Inc. ("VSL") on Count II of his Complaint, a claim for breach of contract, and awarded damages in the amount of $967,435; (2) in favor of De Simone against VSL and Defendant Leadiant Biosciences, Inc. ("Leadiant") on Count III of his Complaint, a claim for unjust enrichment, and awarded damages in the amount of $1,874,602 against VSL and $172,004 against Leadiant; (3) in favor of Plaintiff ExeGi Pharma, LLC ("ExeGi") against Leadiant and Defendant Alfasigma USA, Inc. ("Alfasigma") on Count VI of its Complaint, a claim for false advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a) (2012), and awarded damages in the amount of $15,000,000 against Alfasigma; and (4) in favor of Counterclaim Defendant De Simone against Counterclaim Plaintiff VSL on Count IV of VSL's Counterclaim, alleging breach of fiduciary duty.

Before the case was submitted to the jury, VSL, Leadiant, and Alfasigma (collectively, "the VSL Parties") each made Motions for Judgment as a Matter of Law under Federal Rule of Civil Procedure 50(a). The Court reserved its decision on these motions. See Fed. R. Civ. P. 50(b). The VSL Parties have now each renewed their Rule 50 motions and have also filed Motions for a New Trial under Rule 59. See Fed. R. Civ. P. 50(b), 59. De Simone and ExeGi (collectively, "the De Simone Parties") have opposed the Motions. Having reviewed the submitted materials, the Court finds no hearing necessary. See D. Md. Local R. 105.6. For the reasons set forth below, the Motions are DENIED.

DISCUSSION

I. Motions for Judgment as a Matter of Law

A. Legal Standard

A district court may overturn a jury verdict by rendering judgment as a matter of law only if there is no "legally sufficient evidentiary basis to find for the [prevailing] party on that issue." Fed R. Civ. P. 50(a). Thus, a party is entitled to judgment as a matter of law under Rule 50 only "if the nonmoving party failed to make a showing on an essential element of his case with respect to which he had the burden of proof." Price v. City of Charlotte, N.C. , 93 F. 3d 1241, 1249 (4th Cir. 1996) (citations omitted). In determining whether the non-moving party has carried its burden as a matter of law, the district court "may not substitute [its] judgment for that of the jury or make credibility determinations." Id. , see generally U.S. Const. amend. VII (guaranteeing the right to a civil trial by jury and requiring that "no fact tried by a jury ... shall be otherwise reexamined in any Court of the United States"). The court must instead "view the evidence in the light most favorable to the non-moving party and draw legitimate inferences in its favor." Anheuser-Busch, Inc. v. L & L Wings, Inc. , 962 F. 2d 316, 318 (4th Cir. 1992). Thus, if there is any evidence on which a reasonable jury could return verdicts in favor of the non-moving party, the court must deny a Rule 50 motion. Price , 93 F.3d at 1249–50. However, courts must not merely "rubber stamp"

395 F.Supp.3d 623

a jury verdict, as they "have a duty to reverse the jury verdict[ ] if the evidence cannot support it." Id. at 1250.

B. False Advertising

The jury found both Alfasigma and Leadiant liable to ExeGi for false advertising, in violation of the Lanham Act, 15 U.S.C. § 1125(a). Although ExeGi did not seek damages from Leadiant on this claim, it sought monetary relief from Alfasigma in the amount of $27,843,149, representing Alfasigma's profits from sales of VSL#3 from July 1, 2016 through the end of trial, as calculated by ExeGi's damages expert, Bryan Callahan. The jury awarded ExeGi $15,000,000 on its false advertising claim against Alfasigma.

Alfasigma and Leadiant seek judgment as a matter of law on the false advertising claim on the grounds that ExeGi failed to establish each of the elements of the claim. To prevail on a Lanham Act claim of false advertising, a plaintiff must establish that:

(1) The defendant made a false or misleading description of fact or representation of fact in a commercial advertisement about its product or the product of another;

(2) The misrepresentation is material, in that it is likely to influence the purchasing decision;

(3) The misrepresentation actually deceives or has the tendency to deceive a substantial segment of its audience;

(4) The defendant placed the false or misleading statement in interstate commerce; and

(5) The plaintiff has been or is likely to be injured as a result of the misrepresentation, either by direct diversion of sales or by a lessening of goodwill associated with its product.

Scotts Co. v. United Indus. Corp. , 315 F.3d 264, 272 (4th Cir. 2002). The contested statement may either be "false on its face" or "although literally true, likely to mislead and to confuse consumers given the merchandising context." Id. (quoting C.B. Fleet Co. v. SmithKline Beecham Consumer Healthcare L.P. , 131 F.3d 430, 434 (4th Cir. 1997) ). If an advertisement is literally false, a party can succeed on a false advertising claim without evidence of any consumer deception. Id. at 273. However, "if a plaintiff's theory of recovery is premised upon a claim of implied falsehood, a plaintiff must demonstrate, by extrinsic evidence, that the challenged advertisements tend to mislead or confuse consumers." Id. When a false advertising claim involves multiple statements, a plaintiff "may not mix and match statements, with some satisfying one Lanham Act element and some satisfying other"; rather, at least one challenged statement must satisfy all five elements. Verisign, Inc. v. XYZ.COM, LLC , 848 F.3d 292, 299 (4th Cir. 2017).

In arguing that ExeGi's evidence was legally insufficient to support the verdict on false advertising, Alfasigma broadly asserts that none of the challenged advertisements meets all of the requirements of a Lanham Act false advertising claim. At trial, ExeGi's false advertising claim against Alfasigma was based largely on three challenged items: a page of the VSL#3 website entitled "VSL#3: new formula dairy-free" ("the VSL#3 Webpage"), Trial Exhibit ("Tr. Ex.") 412; an August 31, 2016 press release that was then posted, in whole or in part, on the VSL#3 website entitled "VSL#3, A Leader in Probiotic Medical Foods, is Now Dairy Free," ("the VSL#3 Press Release"), Tr. Ex. 341; and statements made on the VSL#3 Facebook page ("the VSL#3 Facebook Page"), Tr. Ex. 375. The false advertising claim against Leadiant centered on the following two items: a frequently asked

395 F.Supp.3d 624

questions ("FAQ") training document entitled, "Potential Future HCP Objections, Misconceptions, Questions, or Concerns ... and Answers," Tr. Ex. 1203; and a May 17, 2016 letter from Mary Ocnean, Vice President of Sigma-Tau Pharmaceuticals, Inc. ("Sigma-Tau"), Leadiant's predecessor company, with the salutation, "Dear Healthcare Provider" ("the Healthcare Provider Letter"), Tr. Ex. 297. In arguing that no single item satisfied all five elements of a false advertising claim, Alfasigma asserts several evidentiary deficiencies, specifically, that (1) the contested statements are not literally false; (2) the contested statements are not actionable under the Lanham Act because they are a matter of scientific debate; (3) some of the contested statements do not...

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14 practice notes
  • Exela Pharma Scis., LLC v. Sandoz, Inc., CIVIL CASE NO. 1:19-cv-00318-MR
    • United States
    • United States District Courts. 4th Circuit. Western District of North Carolina
    • September 15, 2020
    ...in a manner sufficient to constitute commercial advertising placed in interstate commerce[.]" De Simone v. VSL Pharm., Inc., 395 F. Supp. 3d 617, 624 (D. Md....
  • Starr v. VSL Pharm., Inc., Civil Action No. TDC-19-2173
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • December 28, 2020
    ...3466033 (D. Md. June 20, 2016) ; De Simone v. VSL Pharm., Inc. , 352 F. Supp. 3d 471 (D. Md. 2018) ; De Simone v. VSL Pharm., Inc. , 395 F. Supp. 3d 617 (D. Md. 2019) ; and De Simone v. VSL Pharm., Inc. , No. TDC-15-1356, 2019 WL 2569574 (D. Md. June 20, 2019). New facts or revisited facts ......
  • De Simone v. VSL Pharm., Inc., 20-1846
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • June 7, 2022
    ...VSL#3 and thus to withhold their trade from ExeGi." De Simone , 2020 WL 4368103, at *6 (citing De Simone v. VSL Pharms., Inc. , 395 F. Supp. 3d 617, 628–30 (D. Md. 2019) ). So even if informational harms must be apparent, the misleading information VSL and Alfasigma spread meets that requir......
  • Metague v. Woodbolt Distribution, LLC, Civil Action No. 8:20-cv-02186-PX
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • June 16, 2021
    ...proposition, they cannot also argue that the proposition is 'literally false.'" Id. at 515; see also De Simone v. VSL Pharms., Inc, 395 F. Supp. 3d 617, 626 (D. Md. 2019), aff'd sub nom. De Simone v. Alfasigma USA, Inc., No. 19-1731, 2021 WL 613697 (4th Cir. Feb. 17, 2021) ("In the absence ......
  • Request a trial to view additional results
15 cases
  • Exela Pharma Scis., LLC v. Sandoz, Inc., CIVIL CASE NO. 1:19-cv-00318-MR
    • United States
    • United States District Courts. 4th Circuit. Western District of North Carolina
    • September 15, 2020
    ...in a manner sufficient to constitute commercial advertising placed in interstate commerce[.]" De Simone v. VSL Pharm., Inc., 395 F. Supp. 3d 617, 624 (D. Md....
  • Starr v. VSL Pharm., Inc., Civil Action No. TDC-19-2173
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • December 28, 2020
    ...3466033 (D. Md. June 20, 2016) ; De Simone v. VSL Pharm., Inc. , 352 F. Supp. 3d 471 (D. Md. 2018) ; De Simone v. VSL Pharm., Inc. , 395 F. Supp. 3d 617 (D. Md. 2019) ; and De Simone v. VSL Pharm., Inc. , No. TDC-15-1356, 2019 WL 2569574 (D. Md. June 20, 2019). New facts or revisited facts ......
  • De Simone v. VSL Pharm., Inc., 20-1846
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • June 7, 2022
    ...VSL#3 and thus to withhold their trade from ExeGi." De Simone , 2020 WL 4368103, at *6 (citing De Simone v. VSL Pharms., Inc. , 395 F. Supp. 3d 617, 628–30 (D. Md. 2019) ). So even if informational harms must be apparent, the misleading information VSL and Alfasigma spread meets that requir......
  • Metague v. Woodbolt Distribution, LLC, Civil Action No. 8:20-cv-02186-PX
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • June 16, 2021
    ...proposition, they cannot also argue that the proposition is 'literally false.'" Id. at 515; see also De Simone v. VSL Pharms., Inc, 395 F. Supp. 3d 617, 626 (D. Md. 2019), aff'd sub nom. De Simone v. Alfasigma USA, Inc., No. 19-1731, 2021 WL 613697 (4th Cir. Feb. 17, 2021) ("In the absence ......
  • Request a trial to view additional results

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