We are always delighted to find a case that bars a claim based on FDA preemption, but Nexus Pharms., Inc. v. IntegraDose Compounding Servs., LLC, 2022 Minn. Dist. LEXIS 1734 (Minn. 4th Dist. May 24, 2022), is unusual. It is not a product liability case. Rather, a pharmaceutical company sued a compounder for fraudulently stealing business from it. The plaintiff manufactured an ephedrine sulfate solution used to control blood pressure in surgical patients. The unique benefit of the plaintiff’s ephedrine solution was its 5 mg/ml concentration. It did not need to be diluted from the standard 50 mg/ml concentration. The FDA approved the plaintiff’s 5 mg solution, and the only other FDA approved ephedrine solutions came in the 50 mg concentration.
But along came the defendant large-scale compounder, which started prefilling syringes with a 5 mg solution that had been diluted from 50 mg. It was not FDA approved. The plaintiff cried foul, claiming that the defendant had copied its product, violated Minnesota law regulating pharmaceutical compounding, and defrauded customers. The defendant moved to dismiss the case.
The Nexus court held that the Minnesota Pharmacy Act, which formed the basis of the plaintiff’s lawsuit, was inapplicable. It governed compounding practices by pharmacies, but did not deal at all with large-scale outsourcing compounding facilities such as the defendant. The plaintiff groused that it was improbable that Minnesota would not regulate outsourcing facilities. Not so, said the Nexus court, because “any such facility would be duly regulated under the FDCA, and the Minnesota Legislature’s decision to forego regulation of federal outsourcing facilities is not unusual.”
And that gets us to federal preemption. The Nexus court went on to hold that even if there was a claim under the Minnesota statute, such claim would be impliedly preempted. Minnesota courts have held that to avoid being preempted by Buckman, a claim “must rely on traditional state law which had predated the federal enactments in question.” That didn’t happen here. Instead, all of the plaintiff’s claims “exist solely by virtue of the FDCA requirements.” The only way for the court to consider the claim would be to look at the FDCA, from which the Minnesota legislature had copied terms in its state legislation.
The plaintiff in Nexus trotted out the presumption against preemption. The Nexus court entertained no such presumption, quoting Buckman to the effect that “[when] the relationship between a federal agency and the entity it regulates is inherently federal in character because the relationship originated from, is governed by, and terminates according to federal law … no presumption against preemption obtains.”
The Nexus court found multiple bases to pour out the plaintiff’s claims. (Multiple, alternate bases for ruling against a party can make an appeal look much less appetizing.) The plaintiff’s fraud claims flunked the particularity test. The complaint alleged “no facts suggesting Defendant IntegraDose intended to deceive purchasers, and no facts regarding who, if anyone, saw or relied on the statements on IntegraDose’s website or when they were seen.” Further, the statements on the website were general and not specific to the product at issue.
But wait, there’s more. Some of the plaintiff’s state law consumer deception claims amounted to private attorney general actions. To bring such claims under Minnesota law, the plaintiff must demonstrate that its cause of action benefits the public. Here, the complaint did not lay out any harm to the public. On the contrary, the harm seems to have been visited upon the plaintiff itself (its sales and reputation). The Nexus court saw the case as a beef about harm to a competitor, not a harm to competition or to consumers. (That is why there is a Lanham Act.) This discussion reminds us of the central point in our Antitrust class at the University of Chicago Law School almost 40 years ago: the problem is harm to consumers, not competitors. We recognize that there are now plenty of people pushing back against the Chicago School consumer welfare theory of antitrust law, but we’re sticking with it. It is one of the three or four things we remember from Law School. (Other tidbits stuck in our brain pan include the Rule in Shelley’s Case and the distinction between larceny by trick and taking under false pretenses. Bexis asked us about the rule against perpetuities. Yes, we remember that, too, but more from the movie Body Heat than from our Property or Trusts & Estates classes.) Don’t try teaching this old dog new tricks. We’re likely to bite you or piddle on the rug.
The Nexus court granted the plaintiff’s motion to dismiss with prejudice. But as if to give the hapless plaintiff an extra kick in the rear as it was being hustled out the courtroom door, the Nexus court reasoned that the plaintiff’s claim that the defendant had impermissibly copied its product turned on matters placed within the special competence of the FDA. Thus, even if any of the plaintiff’s causes of action could somehow survive, dismissal without prejudice would be appropriate pursuant to the doctrine of primary jurisdiction.
We DDL bloggers frequently grouse about other lawyers, but, in truth, most of our favorite people are lawyers. More often than not, they are smart, kind, and funny.
This week saw the passing of one of the smartest, kindest, and funniest, our good friend Irv Hurwitz. Irv devoted his efforts to raising money for nonprofits. That is completely characteristic of his generosity and public spiritedness.
We are so grateful to have known Irv. How lucky for us that when we (reluctantly) moved to Philly from LA 25 years ago, Irv was our next door neighbor. We had a lot in common besides a boundary. We both had two kids — a girl and a boy. Our birthdays were only two weeks apart. We were almost exactly the same height. We literally and figuratively saw things eye to eye. We used to ride the morning train in together, chatting about work, current affairs, family, and the Phillies.
We are so grateful that we got the chance to say goodbye. We are so grateful we told Irv how much he meant to us. Irv recalled one splendid day we spent together, driving out to Pottsville to tour the Yuengling beer factory (where we met Dick Yuengling and thanked him for brewing such a swell lager), viewed a beautiful valley from a pagoda perched on top of Mount Penn (thanking whoever had the crazy idea of placing a pagoda in Reading), and attended a Reading Phillies game (where we ran into Charlie Manuel, who had managed the Philadelphia Phillies to a world championship. We incoherently and repeatedly showered Charlie with thanks). Irv was always prompting feelings of gratitude.
We are so grateful that, amidst convulsions of sorrow, we managed to hug and thank Irv for being such a good friend and seeing us through some tough personal times. He was the sweetest and loveliest man. He was a mensch. He brought us so much joy and wisdom over the last quarter of a century.
Some day we will tally the tears and know they were greatly outnumbered by all the laughs Irv shared with us. But not today.