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Nutrition Distribution LLC v. PEP Research, LLC

United States District Court, S.D. California

September 7, 2017

NUTRITION DISTRIBUTION LLC, an Arizona Limited Liability Company, Plaintiff,
v.
PEP RESEARCH, LLC, a Texas Limited Liability Company dba International Peptide; BRIAN REYNDERS, an individual; FRED REYNDERS, an individual; MASTERCARD INTERNATIONAL INCORPORATED, a Delaware Corporation; AUTHORIZE.NET, a Utah Corporation; AMAZON PAYMENTS, a Washington Corporation; and DOES 1 through 10, inclusive, Defendants.

          ORDER

          WILLIAM Q. HAYES United States District Judge

         The matter before the Court is the motion to dismiss filed by Defendants PEP Research LLC, Brian Reynders, and Fred Reynders. (ECF No. 11).

         I. BACKGROUND

         On December 30, 2016, Plaintiff Nutrition Distribution LLC filed a first amended complaint. (ECF No. 11). The amended complaint alleges a cause of action for false advertising in violation of § 42(a)(1)(B) of the Lanham Act against Defendant PEP Research LLC dba International Peptide ("PEP") and a cause of action for a violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962, against Defendants PEP, Brian Reynders, Fred Reynders, Mastercard International Incorporated, Authorize.net, Amazon Payments, and Does 1 through 10.[1]Id.

         On January 13, 2017, PEP, Brian Reynders, and Fred Reynders ("Defendants") filed a motion to dismiss for failure to state a claim. (ECF No. 11). On February 20, 2017, Plaintiff filed a response in opposition. (ECF No. 13). On February 27, 2017, Defendants filed a reply. (ECF No. 14).

         II. ALLEGATIONS OF THE COMPLAINT

         Plaintiff is a "cutting edge sports supplement manufacturer and marketer" and "leader in the nutritional supplement market, specifically for bodybuilding." (ECF No. 9 at ¶ 24). "Plaintiff has several categories of bodybuilding products, including pre-workouts, muscle-gainers, fat burners, and male performance enhancement." Id. ¶ 25. "Plaintiff has introduced numerous natural supplements that directly compete with Defendant's 'Research Chemicals, ' including but not limited so, 'Advanced PCT, ' "UltraReps, ''StackedBCAA, ' 'SuperSize, ' 'Gym Juice, ' and 'GermanCreatine.'" Id. ¶28.

         Defendant PEP is a competing supplement company. Id. ¶ 29. Defendant PEP is engaged in "false and misleading advertising and statements in connection with its various purported 'research peptides and chemicals, ' including but not limited to, numerous well-known prescription only drugs, Selective Androgen Receptor Modulators ('SARMS') and synthetic peptides (collectively, the 'Research Chemicals')." Id. ¶ 1. Defendant PEP offers "prescription-only drugs" such as Sildenafil Citrate and Talafadil for sale on its website. Id. ¶ 2. "Like the other products advertised and available for sale on its website, Defendant [PEP] has mislabeled these products as 'not for human consumption' and intended for laboratory research only.'" Id.

         "Defendant [PEP] markets and sells various S ARMs, which are synthetic drugs with similar effects to illegal anabolic steroids . . . [and] may pose significant health and safety risks to consumers." Id. ¶ 4. Defendant PEP "fails to disclose that SARMs are specifically prohibited for use in sporting events by the World Anti-Doping Agency and the U.S. Anti-Doping Agency, despite the fact that Defendant markets its products to bodybuilders, competitive athletes, and other consumers seeking to improve their physical performance and physiques." Id. ¶ 5.

         "Furthermore, Defendant [PEP] advertises and offers for sale various synthetic peptides, which cannot be dispensed for human use without a prescription from a licensed medical practitioner due to their toxicity and potentially harmful effects." Id. ¶ 6. "Defendant [PEP] mislabels these products as 'not for human consumption' and 'intended for laboratory research only, ' but clearly markets its 'research chemicals' to consumers for personal use." Id. ¶ 6.

Defendant represents to consumer that its so-called "research chemical" Sermorelin is commonly used as a "doping substance in sports, " and assures consumers of the product's safety for personal use, "Sermorelin alone or combined with GHRP-2 and GHRP-6 is a harmless and efficient way to stimulate and enhance your body's growth hormone production."

Id.¶7.

[T]he product description for Defendant's "research chemical" Clenbuterol acknowledges human consumption, despite its purported "disclaimers" - "Clenbuterol has been popularized in the public mind recently by media potrayals of off-label use for fat loss, as well as some professional athlete doping scandals involving the drug." [Defendant PEP] then proceeded to post advertisements on its Facebook account containing a free product give away contest for Clenbuterol, and to award a personal fitness trainer as the contest recipient of a free bottle of Clenbuterol."

Id. ¶ 8. "Defendant's use of falsely marketed substances has the tendency to deceive a substantial segment of the public and consumers . . . into believing that they are purchasing a product with different characteristics." Id. ¶ 50. "The deception is material because it is likely to influence a consumer's purchasing decision, especially if the consumer is unaware of the serious risks of using these purported 'Research Chemicals, ' and/or steroids or illegal substances." Id. ¶ 51. "[Defendant PEP's] 'Research Products' directly compete with Plaintiffs products . . . ." Id. ¶ 53. "Defendant's false and misleading advertising is harmful to the marketplace for dietary and natural nutritional supplements, including Plaintiffs products, and potentially to individual consumers." Id. ¶39. "[U]sers of [Defendant PEP's] 'Research Chemicals' have little incentive to use Plaintiff s natural nutritional supplements until they are hurt or the 'Research Chemicals' are taken off the market." Id. "Plaintiff has suffered both an ascertainable economic loss of money and reputational injury by the diversion of business from Plaintiff to [Defendant PEP] and the loss of goodwill in Plaintiffs products." Id. ¶ 54.

         III. LEGAL STANDARD

         Federal Rule of Civil Procedure 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). Federal Rule of Civil Procedure 8(a) provides that "[a] pleading that states a claim for relief must contain... a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to ...


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