Outlaw Lab., LP v. Shenoor Enter., Inc.

371 F. Supp. 3d 355
CourtDistrict Court, N.D. Texas
DecidedMarch 4, 2019
DocketCIVIL ACTION NO. 3:18-CV-2299-B
StatusPublished
Cited by8 cases

This text of 371 F. Supp. 3d 355 (Outlaw Lab., LP v. Shenoor Enter., Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Outlaw Lab., LP v. Shenoor Enter., Inc., 371 F. Supp. 3d 355 (N.D. Tex. 2019).

Opinion

JANE J. BOYLE, UNITED STATES DISTRICT JUDGE

*358Outlaw is a manufacturer of male dietary supplements, the Tristeel Products. Outlaw has sued convenience stores because they "advertise and offer for sale" competing male dietary supplements, the Rhino Products. Outlaw alleges that these retailers have committed false advertising under the Lanham Act because they disseminate false statements through the sale of the Rhino Products; specifically, the Rhino Products are labeled "all natural" and state they contain "no harmful synthetic chemicals." Outlaw alleges that these labels are false because Rhino Products contain "dangerous undisclosed ingredients" typically found only in prescription drugs, not over-the-counter supplements. Outlaw argues these retailers are liable for false advertising because they display and sell the falsely labeled Rhino Products in their stores.

Some of the retailers have appeared and moved to dismiss Outlaw's complaint on various grounds. The Court held a hearing on these motions. At the hearing, the Court dismissed Outlaw's complaint for failing to state a claim on which relief could be granted. See Doc. 87, Order. The Court issues this Memorandum Opinion and Order, which is consistent with and elaborates on the reasoning of that ruling.

I.

BACKGROUND

A. Factual Summary

This case arises out of a string of FDA announcements notifying the public that certain male dietary products, including the Rhino Products, contain hidden drug ingredients that could be dangerous. Doc. 1, Compl., ¶¶ 25, 31-32. The FDA warned that Rhino Products were tested and found to contain sildenafil and other undisclosed chemicals. Id. ; see also Doc. 59-1, Ex. A ("FDA News Release"), 1-4. Sildenafil is the active ingredient in the prescription drug Viagra. The FDA has recognized that it is illegal to sell a drug containing sildenafil without a prescription. The Rhino Products do not disclose that they contain sildenafil, which is dangerous for some people because it can cause serious side effects. Doc. 1, Compl., ¶¶ 31-32.

Plaintiff Outlaw is a manufacturer and distributor of male dietary supplements, the Tristeel Products. Id. ¶¶ 58-59. Plaintiff alleges that it uses only all-natural ingredients in the Tristeel Products. Id. Plaintiff alleges it sells the Tristeel products through its website and at retail locations *359across the United States. Id. Plaintiff alleges all-natural products like the Tristeel Products are more expensive to manufacture than synthetic products are. Id.

Sometime after these FDA announcements were made, Outlaw filed this lawsuit. Doc. 1, Compl. The complaint alleges false advertising under the Lanham Act related to the sale of the Rhino Products. Id. ¶¶ 21-30. Named in the complaint are fourteen retail outlets (gas stations and convenience stores) that allegedly sell the Rhino Products. Id. ¶¶ 44-57. Outlaw generally alleges that these retailers ("Retail Defendants") did the following: Retail Defendants "are engaged in a scheme to distribute and sell" Rhino Products; Retail Defendants have "knowingly and materially participated in false and misleading marketing, advertising, dissemination and labeling to promote and sell the Rhino Products," all of which have been the subject of an FDA announcement stating they contain the hidden drugs, including sildenafil; the hidden drugs either require a prescription or are not FDA approved; the Rhino Products do not disclose that they contain these drugs; instead, the Rhino Products have labels stating they are "all natural," with "no harmful synthetic chemicals," do not require a prescription, and have limited side effects. Id. ¶¶ 21-30. Further, Outlaw alleges that Defendants "advertise and offer for sale" these Rhino products. Id. ¶ 61. Outlaw alleges that Defendants "mislabel" the Rhino Products and thus make "numerous false and misleading representations. Id. ¶ 62. Outlaw alleges "Defendants knew, or should have known, that their Rhino Products contain hidden drug ingredients," and that Defendants failed to disclose this to their customers. Id. ¶¶ 63 & 65. Outlaw alleges that these misrepresentations are material and that the goods have been introduced into interstate commerce. Id. ¶¶ 67-68. Finally, Outlaw alleges it has been injured by Defendants' false and misleading statements because it has suffered commercial and reputational damage in the sale of its competing Tristeel Products. Id. ¶ 69.

For relief, Outlaw requests preliminary and permanent injunctions, compensatory damages, disgorgement of Defendants' profits, restitution, treble damages, punitive damages, and costs and fees. Id. at 13-14.

B. Procedural Background

Outlaw filed this complaint on August 30, 2018 (Doc. 1). Outlaw brings the same false-advertising claim under the Lanham Act against all Defendants. The complaint named 14 Retail Defendants and 1-100 unnamed John Does. Here is a list of the named Defendants and their status in this case:

(1) Defendants Shenoor Enterprise, Inc., Rohail Enterprise, Inc., Kzak Enterprises, Inc., and 8th St. Petroleum Inc. have filed motions to dismiss (Docs. 56 & 64);
(2) A & Z Irving Investments, Inc. has joined another Defendant's motion to dismiss (Doc. 37) (joining Doc. 10);
(3) Sahil Ismail Inc. has filed an answer (Doc. 9) and an out-of-time motion to dismiss (Doc. 40);
(4) M & V Enterprise, Inc. has filed an answer (Doc. 7) and a motion to dismiss (Doc. 6);
(5) Bansal Properties has filed a motion to dismiss (Doc. 21);
(6) Refai Investments, Inc. has appeared pro se and filed an answer (Doc. 20);
(7) Defendants PMR Oil & Gas Company, Inc., Mola Investments Inc., and MacLaren Group Ops., LLC have settled with Outlaw and have been terminated from the case; and *360(8) Two Defendants, Cosectra Consortium, Inc. and Swami Management, have not appeared in the case despite being served. Outlaw has not yet moved for default judgment as to these two Defendants.

Defendants moved to dismiss the case on substantially the same grounds. Outlaw has responded to these motions to dismiss in a timely manner. On February 27, 2019, the Court held a hearing on these motions to dismiss; counsel for the parties that filed motions appeared and argued their positions. After considering the arguments, the Court dismissed Plaintiff's complaint. Doc. 87. The Court issues this Memorandum Opinion and Order, which is consistent with and elaborates on the reasoning of that ruling.

II.

LEGAL STANDARD

A. Federal Rule of Civil Procedure 12(b)(1)

" 'Federal courts are courts of limited jurisdiction.' " MacKenzie v. Castro , No. 3:15-cv-0752-D,

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371 F. Supp. 3d 355, Counsel Stack Legal Research, https://law.counselstack.com/opinion/outlaw-lab-lp-v-shenoor-enter-inc-txnd-2019.