September 23, 2021

Dietary supplement maker gets another bite at Texas AG

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Stock photo of an apple. Full CD "Apples & Oranges" on file. Photo by Jason R. Bennitt/Daily Report (3/28/2006).

Stock photo of an apple. Full CD “Apples & Oranges” on file. Photo by Jason R. Bennitt/Daily Report (3/28/2006).

By Miriam Rozen, From Texas Lawyer

A Utah-based dietary supplement maker may pursue constitutional claims against Texas Attorney General Ken Paxton in his official capacity, according to a ruling from the U.S. Court of Appeals for the Fifth Circuit.

A three-judge panel of the Fifth Circuit reversed a trial court in part. In 2011, the AG sent letters to both the supplement maker, NiGen Biotech, and some retailers that sold the Utah-based company’s products. The AG’s letters stated that the state top lawyer’s office would start enforcement actions as a result of the dietary supplementary makers’ allegedly misleading packaging.

As a result, CVS, Walgreens and Wal-Mart pulled the NiGen products from their shelves in Texas and other states, allegedly costing NiGen millions of dollars in lost revenue, according to the Fifth Circuit ruling.

According to the opinion, NiGen filed suit in December 2011 under 42 U.S.C. §1983, alleging violations of its rights under the First Amendment, Fourteenth Amendment due process and equal protection clauses, the commerce clause and the supremacy clause. The company also alleged a state law claim of tortious interference with existing business relations. NiGen sought a declaration that its labeling did not violate federal law, damages and attorney fees.

In response, the AG sought a dismissal, arguing that NiGen lacked standing because its only injury was the result of third-party action and that state sovereign immunity barred the money damages and state law claims.

According to the Fifth Circuit opinion, “For reasons not apparent in the record,” Senior U.S. District Judge A. Joe Fish of the Northern District of Texas did not rule for almost two years.

“Then, despite the plethora of jurisdictional issues before it, the court dismissed the entire case as barred by state sovereign immunity,” concludes the Fifth Circuit opinion, drafted by Judge Edith H. Jones, who was joined by Judge W. Eugene Davis and Judge Edith Brown Clement.

Although the district court dismissed NiGen’s constitutional and state law claims against the AG on the sole basis of state sovereign immunity, “we conclude that it is at least partially correct that NiGen’s claims are not barred from federal jurisdiction,” Jones wrote.

Ron Breaux, a partner in the Dallas office of Haynes and Boone, who represents NiGen, referred questions to the company’s Utah counsel, Jason Kerr of Salt Lake City’s Price Parkinson & Kerr. Kerr, whose partner David Parkinson served as lead counsel at the Fifth Circuit, did not return a call about this story.

Cynthia Meyer, a spokeswoman for the AG, said in an email that her office is reviewing the ruling.

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