ImprimisRx, LLC v. OSRX, Inc.

• Court: District Court, S.D. California
• Decided: April 12, 2023
• Docket: 3:21-cv-01305
• Status: Unknown

Opinion

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 10 IMPRIMISRX, LLC, Case No. 21-cv-01305-BAS-DDL 11 Plaintiff, ORDER: 12 v.

13 (1) DENYING PLAINTIFF’S MOTION TO STRIKE (ECF 14 OSRX, INC.; OCULAR SCIENCE, INC., No. 94); AND 15 Defendants. (2) GRANTING IN PART DEFENDANTS’ MOTION FOR 16 PARTIAL JUDGMENT ON 17 THE PLEADINGS (ECF No. 96)

21 Before the Court is Plaintiff’s Motion to Strike (ECF No. 94) and Defendants’ 22 Motion for Partial Judgment on the Pleadings (ECF No. 96). Having considered the parties’ 23 filings, the Court DENIES Plaintiff’s Motion to Strike and GRANTS IN PART 24 Defendants’ Motion for Partial Judgment on the Pleadings. 25 I. BACKGROUND 26 On July 20, 2021, Plaintiff commenced this action and filed a Complaint alleging 27 false advertising, trademark infringement, false designation of origin, common law unfair 28 competition, copyright infringement, and violations of California’s Unfair Competition 1 Law. (ECF No. 1.) The parties are compounding pharmacies focused on medications used 2 in optometry and ophthalmology. (SAC, ECF No. 84.) Plaintiff alleges Defendants have 3 “attempted to take business from [Plaintiff] by cutting corners and engaging in tortious 4 conduct.” (Id. ¶ 3.) Three claims are relevant to the present motions. First, the SAC alleges 5 false advertising under the Lanham Act—failing to disclose risks, deceiving customers 6 with respect to safety and efficacy, and misrepresenting FDA compliance. (Id. ¶¶ 45–47.) 7 Second, it alleges unfair competition under California state law (“UCL”), based on false 8 advertising and trademark infringement. (Id. ¶ 87.) Third, it alleges copyright infringement 9 of a “valid copyright” that Plaintiff “owns.” (Id. ¶¶ 81–82.) 10 Defendants answered on October 22, 2021 and counterclaimed against Plaintiff. 11 (ECF No. 5.) Subsequently, Plaintiff amended its Complaint (ECF No. 28), and Defendants 12 answered (ECF No. 30). During discovery, Plaintiff moved to amend its Complaint again, 13 seeking to add two more trademarks to the list of allegedly infringed trademarks. (ECF No. 14 67.) The Court granted the motion to amend (ECF No. 83), and Plaintiff filed a Second 15 Amended Complaint (ECF No. 84). Defendants then filed an Amended Answer to 16 Plaintiff’s Second Amended Complaint, which added two affirmative defenses. (ECF No. 17 90.) Defendants’ twenty-eighth Affirmative Defense states Plaintiff’s Lanham Act claim 18 and UCL claim are precluded or preempted by the federal Food, Drug, and Cosmetic Act 19 (“FDCA”) (“Preclusion Defense”). (Id. at 15.) Defendants’ Twenty-Ninth Affirmative 20 Defense states, inter alia, Plaintiff lacks standing to sue for copyright infringement 21 (“Standing Defense”). (Id.) Plaintiff then filed the present Motion to Strike these two 22 affirmative defenses from Defendants’ Amended Answer. (ECF No. 94.) Just a few days 23 later, Defendants filed their Motion for Partial Judgment on the Pleadings based on the 24 Preclusion Defense and the Standing Defense. 25 II. LEGAL STANDARD 26 A. Motion to Strike 27 Federal Rule of Civil Procedure (“Rule”) 12(f) provides that a court may strike 28 from a pleading “an insufficient defense or any redundant, immaterial, impertinent, or 1 scandalous matter.” “[T]he function of a 12(f) motion to strike is to avoid the expenditure 2 of time and money that must arise from litigating spurious issues by dispensing with those 3 issues prior to trial.” Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 4 1983). 5 “Motions to strike are generally regarded with disfavor because of the limited 6 importance of pleading in federal practice, and because they are often used as a delaying 7 tactic.” Neilson v. Union Bank of Cal., 290 F. Supp. 2d 1101, 1152 (C.D. Cal. 2003). 8 “[The] motion . . . should not be granted unless the matter to be stricken clearly could 9 have no possible bearing on the subject of the litigation. If there is any doubt . . . the court 10 should deny the motion.” Platte Anchor Bolt, Inc. v. IHI, Inc., 352 F. Supp. 2d 1048, 1057 11 (N.D. Cal. 2004) (internal citations omitted). 12 B. Motion for Judgment on the Pleadings 13 “After the pleadings are closed—but early enough not to delay trial—a party may 14 move for judgment on the pleadings.” Fed. R. Civ. P. 12(c). “A Rule 12(c) motion is 15 ‘functionally identical’ to a Rule 12(b)(6) motion, and the same legal standard applies to 16 both.” Keck v. Alibaba.com Hong Kong Ltd., 369 F. Supp. 3d 932, 935 (N.D. Cal. 2019) 17 (quoting Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1054 n.4 (9th 18 Cir. 2011)). Therefore, “[a] judgment on the pleadings is properly granted when, taking all 19 the allegations in the pleadings as true, the moving party is entitled to judgment as a matter 20 of law.” Nelson v. City of Irvine, 143 F.3d 1196, 1200 (9th Cir. 1998). 21 III. ANALYSIS 22 A. Motion to Strike 23 Plaintiff moves to strike two of Defendants’ affirmative defenses: the Preclusion 24 Defense and the Standing Defense. 25 To begin, a lack of standing argument cannot be waived under Rule 12(h). See Fed. 26 R. Civ. P. 12(h); Ctr. for Biological Diversity v. Kempthorne, 588 F.3d 701, 708 (9th Cir. 27 2009) (“Like standing, ripeness can be raised at any time and is not waivable.”); see also 28 United States v. Viltrakis, 108 F.3d 1159, 1160 (9th Cir. 1997) (“[T]he jurisdictional issue 1 of standing can be raised at any time.”). As a result, the Court is perplexed as to the reason 2 for Plaintiff’s Motion to Strike. Whether or not the Court strikes this affirmative defense 3 in the Amended Answer, Defendants remain free to raise the substantive arguments in its 4 Motion for Judgment on the Pleadings, at summary judgment, or at trial.1 5 Regardless, the Court analyzes the waiver issue. The prevailing approach to adding 6 new affirmative defenses to an amended answer is the so-called “moderate approach.” 7 Natural-Immunogenics Corp. v. Newport Trial Group, No. SACV 15-2034 JVS (JCGx), 8 2020 WL 5239856, at *5 (C.D. Cal. Aug. 3, 2020) (noting that district courts in the Ninth 9 Circuit “generally utilize” the “moderate approach”). Under the “moderate approach,” a 10 defendant may file an amended answer without leave of court “only when the amended 11 complaint changes the theory or scope of the case, and then, the breadth of the changes in 12 the amended response must reflect the breadth of the changes in the amended complaint.” 13 Coppola v. Smith, No. 1:11-CV-1257 AWI BAM, 2015 WL 2127965, at *2 (E.D. Cal. May 14 6, 2015) (quoting Va. Innovation Scis., Inc. v. Samsung Elecs. Co., 11 F. Supp. 3d 622, 632 15 (E.D. Va. 2014)). In this case, the Second Amended Complaint merely added two 16 additional trademarks to the list of allegedly infringed trademarks. (SAC ¶ 36.) The 17 preemption and standing defenses clearly exceed the scope of the amendments to the First 18 Amended Complaint. Thus, under the “moderate approach,” Defendants did not have the 19 right to add these defenses to its amended answer without leave of court. 20 The Court, however, need not strike the preemption defense if a defendant “would 21 nevertheless have been granted leave, on its motion, to amend its answer to assert . . . the 22

23 1 Courts are split on whether preemption is a waivable affirmative defense. Some conclude, based on Rule 12, that preemption cannot be waived; others interpret Rule 8 to require a defendant to plead 24 preemption. Compare Yumul v. Smart Balance, Inc., No. CV 10-00927 MMM, 2011 WL 1045555, at *5 25 (C.D. Cal. Mar. 14, 2011) (concluding that a defendant is “entitled to raise its preemption defense in its answer, in a motion for judgment on the pleadings under Rule 12(c), or at trial”), with Stephens v. Union 26 Pac. R.R. Co., No. 1:17-CV-00385-BLW, 2018 WL 4701784, at *5 (D. Idaho Oct. 1, 2018) (finding that preemption is a “defense that has to be plead as an affirmative defense”), aff’d, 935 F.3d 852 (9th Cir. 27 2019); see also 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1278 (4th ed. 2022) (outlining the controversy among courts). The Court need not rule on this issue as it ultimately 28 1 new affirmative defenses to the claims.” Adobe Sys. Inc. v. Coffee Cup Partners, Inc., No. 2 C 11-2243 CW, 2012 WL 3877783, at *6 (N.D. Cal. Sept. 6, 2012). In essence, the issue 3 is whether the Court should retroactively grant Defendants leave to amend under Rules 4 16(b) and 15(a). See Jackson v. Laureate, Inc., 186 F.R.D. 605, 607 (E.D. Cal. 1999). 5 Pursuant to Rule 16, “[a] schedule may be modified only for good cause and with the 6 judge’s consent.” Fed. R. Civ. P. 16(b)(4). If Rule 16(b) is satisfied, then the court considers 7 the propriety of amendment pursuant to Rule 15(a). “[A] party may amend its pleading 8 only with the opposing party’s written consent or the court’s leave. The court should freely 9 give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2). 10 As Defendants explained in their briefing and exhibits, changes in the law and new 11 information unearthed in discovery support good cause for leave to amend. Regarding 12 standing, testimony from Plaintiff’s employees about the ownership of the copyright in 13 question exposed the standing issue. (Elsea Decl., ECF No. 102-1.) Regarding preemption, 14 a recent Ninth Circuit case2 clarified the law of preemption relating to the Food and Drug 15 Administration. Thus, under the Rule 16(b) and 15(a) standards, the Court finds leave to 16 amend appropriate. 17 Accordingly, the Court DENIES Plaintiff’s Motion to Strike. (ECF No. 94.) 18 B. Motion for Partial Judgment on the Pleadings 19 In their Motion for Partial Judgment on the Pleadings, Defendants make three 20 arguments. First, the FDCA precludes Plaintiff’s Lanham Act claim and preempts 21 Plaintiff’s UCL claim. Second, in the alternative, the primary jurisdiction doctrine bars 22 these same claims. Third, Plaintiff lacks standing to bring its copyright infringement claim. 23 1. Preclusion and Preemption 24 The FDCA prohibits private enforcement: “all proceedings to enforce or restrain 25 violations of the FDCA must be ‘by and in the name of the United States,’ except for certain 26 proceedings by state governments.” Nexus Pharms., Inc. v. Central Admixture Pharmacy 27

28 1 Servs., Inc., 48 4th 1040, 1044 (9th Cir. 2022). Defendants aver this prohibition precludes 2 Plaintiff’s Lanham Act and UCL claims. 3 This issue implicates two opposing precedents. On the one hand, the Supreme Court 4 in POM Wonderful LLC v. Coca-Cola Co. examined the issue of whether the FDCA 5 precludes a food or beverage false advertising claim under the Lanham Act. 573 U.S. 102, 6 111 (2014). The Court reasoned that the Lanham Act is a federal statute, and as a result, 7 principles of statutory interpretation, and not principles of preemption, frame the inquiry. 8 Id. The Court held that the FDCA and the Lanham Act pursue complementary but distinct 9 goals: “[T]he Lanham Act protects commercial interests against unfair competition, while 10 the FDCA protects public health and safety.” Id. at 115. And accordingly, the FDCA does 11 not preclude causes of action under the Lanham Act. Id. Thus, POM Wonderful seems to 12 settle the issue: Lanham Act claims are not precluded by the FDCA. 13 On the other hand, however, the Ninth Circuit recently held that the FDCA preempts 14 state law claims that seek to privately enforce the FDCA. See Nexus, 48 F.4th at 1050. In 15 Nexus, the plaintiff alleged the defendant violated the “laws of several states . . . all of 16 which ‘prohibit the sale of drugs not approved by the FDA.’” Id. at 1044. The claims 17 required “litigation of whether [defendant’s] compounded drugs are ‘essentially a copy’ of 18 [an approved drug] where the FDA has not itself so concluded.” Id. at 1048. The term 19 “essentially a copy” is defined by the FDCA, and so the claims required the district court 20 to rule on the FDCA issue. Id. at 1043. In this way, the FDCA violation was integral to the 21 state law claim. After cataloguing and synthesizing circuit precedent, the Ninth Circuit held 22 that the FDCA preempts state law claims that “incorporate federal law” and accordingly 23 depend on litigating FDCA violations. Id. at 1047, 1050. Thus, Nexus stands for the 24 principle that state law false advertising claims should be precluded when they “would 25 require litigation of the alleged underlying FDCA violation in a circumstance where the 26 FDA has not itself concluded that there was a violation.” Id. at 1048 (quoting PhotoMedex, 27 Inc. v. Irwin, 601 F.3d 919, 924 (9th Cir. 2010)). 28 1 Lanham Act claim: Defendant argues that Plaintiff’s Lanham Act claim relies on an 2 embedded FDCA violation. Neither POM Wonderful nor Nexus squarely settles whether 3 the FDCA precludes a Lanham Act claim with an embedded or integral FDCA issue. In 4 Nexus, the Ninth Circuit considered only state-law preemption rather than federal-law 5 preclusion. In POM Wonderful, the Lanham Act claim did not have an embedded FDCA 6 issue. The complaint alleged that the defendant’s juice labels deceived consumers and, as 7 a result, harmed the plaintiff as a competitor. POM Wonderful, 573 U.S. at 110. No aspect 8 of the claim required the courts to interpret the FDCA. Thus, this case presents an unsettled 9 issue: whether a Lanham Act claim with an embedded FDCA issue is precluded by the 10 FDCA’s prohibition on private enforcement. 11 The Court finds the reasoning of POM Wonderful more logically extends to 12 Plaintiff’s Lanham Act claim. The Supreme Court in POM Wonderful made clear that a 13 state-law preemption analysis is separate and distinct from an “alleged preclusion of a 14 cause of action under one federal statute by the provisions of another federal statute.” Id. 15 at 111. The Court acknowledged that the statutes intersect, but reasoned, “The Lanham Act 16 and the FDCA complement each other in major respects, for each has its own scope and 17 purpose.” Id. at 106, 115. The FDCA and its regulations are not “a ceiling” on the 18 regulation of advertising. See id. at 119 (“The Government assumes that the FDCA and its 19 regulations are at least in some circumstances a ceiling on the regulation of food and 20 beverage labeling. But, as discussed above, Congress intended the Lanham Act and the 21 FDCA to complement each other with respect to food and beverage labeling.”). This 22 strongly favors the coexistence of the FDCA and the Lanham Act enforcement 23 mechanisms. As a result, the Court finds that the FDCA does not preclude Lanham Act 24 claims, even when an FDCA violation is embedded. 25 Moreover, even if Nexus did control, only one part of Plaintiff’s theory of liability 26 relies on an FDCA violation. Plaintiff alleges three theories under the Lanham Act and the 27 UCL: (1) Defendants falsely asserted they comply with Section 503A of the FDCA 28 (“Compliance Theory”), (2) Defendants falsely represented that their drugs are safe and 1 effective and appropriate for treatment of certain conditions, despite a lack of FDA 2 approval (“Safe and Effective Theory”), and (3) Defendants relied on unreliable studies to 3 represent benefits and safety (“Studies Theory”). There is no embedded FDCA claim in 4 the Safe and Effective Theory or the Studies Theory. The Safe and Effective Theory 5 includes an allegation that Defendants’ products are not FDA approved, but that in itself 6 does not make the FDCA integral to the claim. FDA approval is a factual allegation that 7 requires no interpretation of the FDCA or FDA regulations. Similarly, the Studies Theory 8 does not implicate FDCA violations. The crux of Plaintiff’s allegations is that insufficient 9 scientific studies support representations in Defendants’ advertising. Thus, the Safe and 10 Effective Theory and the Studies Theory would survive this Motion for Partial Judgment 11 on the Pleadings, even if the Court found the FDCA precludes Lanham Act claims with 12 embedded FDCA issues. 13 Accordingly, the Court denies the Motion for Partial Judgment on the Pleadings with 14 respect to Plaintiff’s Lanham Act claim. 15 UCL claim: The Court next considers Plaintiff’s UCL claim. Unlike the Lanham 16 Act, principles of preemption do apply to California law. This issue falls within the Ninth 17 Circuit’s holding in Nexus. Therefore, if an FDCA violation is integral to Plaintiff’s UCL 18 claim, then the FDCA’s prohibition on private enforcement preempts the claim. See Nexus, 19 48 F.4th at 1050. Plaintiff argues that UCL claims adhere to Lanham Act claims when they 20 are based on the same theories and allegations. (ECF No. 104 at 20.) But Plaintiff cites to 21 cases that compare and equate the substantive requirements of the Lanham Act and 22 California’s UCL, not a preemption analysis. (See id. at 20–21 (citing United Fabricare 23 Supply, Inc. v. 3Hanger Supply Co., Inc., No. CV 12-03755-MWF FFMX, 2012 WL 24 2449916, at *5 (C.D. Cal. June 27, 2012); Cleary v. News Corp., 30 F.3d 1255, 1262–63 25 (9th Cir. 1994)).) Although a California UCL claim may substantively mirror a Lanham 26 Act claim, preemption is a separate inquiry. State law shifts the inquiry from a statutory 27 interpretation exercise to the purview of the Supremacy Clause and the “state-federal 28 balance.” See POM Wonderful, 573 U.S. at 111. Nexus provides an answer to this inquiry: 1 if an FDCA violation is integral to a state-law claim, then the FDCA preempts the claim. 2 See Nexus, 48 F.4th at 1050. Thus, to the extent that Plaintiff’s UCL claim relies on 3 violations of the FDCA, it is preempted. 4 Plaintiff’s UCL claim, however, is largely not premised on violations of the FDCA. 5 Again, Plaintiff’s Safe and Effective Theory and Studies Theory do not rely on FDCA 6 violations. Further, Plaintiff’s UCL claim is also based on another theory—the 7 unauthorized use of trademarks—which has not been challenged in this Motion for Partial 8 Judgment on the Pleadings. Accordingly, the FDCA only preempts Plaintiff’s theory of 9 liability to the extent that it relies on a FDCA violation. 10 Thus, the Court GRANTS IN PART Defendants’ Motion for Judgment on the 11 Pleadings. Specifically, the Court denies Defendants’ Motion with respect to Plaintiff’s 12 Lanham Act claim; and the Court grants in part Defendants’ Motion with respect to 13 Plaintiff’s UCL claim. Plaintiff may proceed with its UCL claim under its Safe and 14 Effective Theory and its Studies Theory, as well as any theories unrelated to false 15 advertising, but the Court precludes Plaintiff from relying on the Compliance Theory to 16 establish UCL liability. 17 2. Primary Jurisdiction Doctrine 18 The Court now turns to Defendants’ alternative argument that the primary 19 jurisdiction doctrine bars Plaintiff’s Lanham Act and UCL claims. The Court finds it does 20 not. 21 The primary jurisdiction doctrine is “a prudential doctrine under which courts may, 22 under appropriate circumstances, determine that the initial decision-making responsibility 23 should be performed by the relevant agency rather than the courts.” Syntek Semiconductor 24 Co. v. Microchip Tech. Inc., 307 F.3d 775, 780 (9th Cir. 2002). Primary jurisdiction is not 25 sufficient to dismiss a claim on the merits, but where it applies, allows a court discretion 26 to “stay proceedings or dismiss the case without prejudice” to allow an administrative 27 agency to act in the first instance. Astiana v. Hain Celestial Group, Inc., 783 F.3d 753, 761 28 (9th Cir. 2015). This doctrine is reserved for a “limited set of circumstances” and is not 1 intended to “secure expert advice from agencies every time a court is presented with an 2 issue conceivably within the agency’s ambit.” Clark v. Time Warner Cable, 523 F.3d 1110, 3 1114 (9th Cir. 2008) (internal quotations omitted). 4 At this stage of the proceedings, the Court finds no reason to issue a stay. Defendants 5 have failed to establish the circumstances or factors that justify a stay. The Court may 6 determine at summary judgment that the issues presented are better suited to agency 7 expertise. But on the pleadings, the case appears to be well within the competence of the 8 Court. See Allergan USA Inc. v. Imprimis Pharms., Inc., No. SA CV 17-1551-DOC (JDEx), 9 2017 WL 10526121, at *9 (C.D. Cal. Nov. 14, 2017) (declining to stay under the primary 10 jurisdiction doctrine a case alleging violations of Section 503A of the FDCA). 11 Thus, the Court declines to stay this case based on the primary jurisdiction doctrine. 12 3. Standing 13 Defendants also move for judgment on the pleadings on Plaintiff’s copyright claim 14 based on a lack of standing. (Mot. 14.) The SAC alleges, “ImprimisRx owns a valid 15 copyright in its Order Form, which is registered with U.S. Copyright Office effective July 16 8, 2021.” (SAC ¶ 81.) Defendants argue that this assertion is false and therefore that 17 Plaintiff lacks standing to sue for copyright infringement. 18 In support, Defendants file a Request for Judicial Notice of a publicly filed copyright 19 registration. (Req. Judicial Notice (“RJN”), ECF No. 96-2.) Under Rule 201(b), the court 20 may judicially notice a fact that “can be accurately and readily determined from sources 21 whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). A copyright 22 registration is judicially noticeable. See City of Carlsbad v. Shah, 850 F. Supp. 2d 1087, 23 1100 n.2 (S.D. Cal. 2012) (taking judicial notice of a copyright registration); Warren v. 24 Fox Fam. Worldwide, Inc., 171 F. Supp. 2d 1057, 1062 (C.D. Cal. 2001) (“Copyright 25 certificates are the type of documents that the court may judicially notice under Rule 26 201(b)(2).”), aff’d, 328 F.3d 1136 (9th Cir. 2003). The Court therefore GRANTS 27 Defendants’ Request for Judicial Notice. 28 1 The copyright registration reveals that Harrow IP, LLC, and not Plaintiff, is the 2 ||owner of the copyright at issue. (Ex. 1 to RJN, ECF No. 96-3.) Plaintiff avers it is the 3 || “exclusive licensee” of the copyright, and exclusive licensees have standing to sue. See 4 || Righthaven LLC v. Hoehn, 716 F.3d 1166, 1169-70 (9th Cir. 2013). The Court agrees with 5 || Plaintiff on the law but cannot ignore the language of the Complaint. The Complaint alleges 6 ||ownership of the copyright, which the copyright registration refutes. Thus, the Court 7 ||GRANTS Defendants’ Motion for Partial Judgment on the Pleadings with respect to 8 || Plaintiff's copyright infringement claim and GRANTS Plaintiff leave to amend. 9 CONCLUSION 10 Plaintiff's Motion to Strike is DENIED. (ECF No. 94.). Defendants’ Motion for 11 || Partial Judgment on the Pleadings is GRANTED IN PART. (ECF No. 96.) Plaintiff is 12 || GRANTED leave to amend. Plaintiff may amend its SAC only to reflect its status as the 13 exclusive licensee of the copyright rather than the owner and may not add any new claims 14 |/ or other allegations. If it so chooses, Plaintiff must file a third amended complaint on or by 15 || April 14, 2023. 16 IT IS SO ORDERED. 17 / yy 18 || DATED: April 12, 2023 asf rd 4 Haha, 19 United States District Judge 20 21 22 23 24 25 26 27 28 41.