Another chapter in the Outlaw Laboratories litigation drama has ended with another defeat for Outlaw.
In 2018 the FDA warned consumers that some “Rhino” products—supplements that compete with Outlaw’s own “male enhancement” supplements—were adulterated with the active ingredients found in prescription drugs like Viagra and Cialis. Outlaw launched a series of false advertising suits against stores and distributors selling Rhino products. Outlaw alleged that that these defendants violated the Lanham Act and comparable state law because the Rhino labels falsely promoted those products as “all natural”, despite including synthetic chemicals, and failed to disclose the prescription drug ingredients.
In his most recent opinion, Judge Gonzalo P. Curiel held that his previous grant of summary judgment dismissing claims against other retailer defendants (In re Outlaw Lab., LP Litig., 424 F. Supp. 3d 973 (S.D. Cal. 2019)) precluded Outlaw from claiming direct Lanham Act liability against a retailer based on alleged false affirmative statements on the Rhino products’ packaging. In re Outlaw Lab., LLP, No. 3:18-CV-0840-GPC, Slip Op. at 9-10 (S.D. Cal. May 29, 2020). The court also rejected Outlaw’s theory that the failure to disclose the prescription drug ingredients was false and misleading, holding that an omission is not a sufficient basis for a false advertising claim. Id. (Notably, however, other courts have recognized that an omission is actionable under the Lanham Act if it “renders an affirmative statement false or misleading.” Lokai Holdings LLC v. Twin Tiger USA LLC, 306 F. Supp. 3d 629, 639-40 (S.D.N.Y. 2018))
While acknowledging that the Ninth Circuit has not expressly recognized a contributory false advertising liability theory under § 43(a) of the Lanham Act, Judge Curiel recognized the potential viability of such a claim, but dismissed it in this case as insufficiently plead: “Outlaw’s only allegations as to the Stores in particular is that they sell the products.” Opinion at 10 (S.D. Cal. May 29, 2020) (applying Duty Free Americas, Inc. v. Estee, Lauder Companies, Inc., 797 F.3d 1248 (11th Cir. 2015) and ADT Sec. Servs., Inc. v. Sec. One Int’l, Inc., No. 11-CV-05149-YGR, 2012 WL 4068632 (N.D. Cal. Sept. 14, 2012)).
Outlaw is left with a theoretical claim for injunctive relief under California’s Unfair Competition Law, but no prospect of a monetary award. Opinion, at *21.
