United States Court of Appeals
For the First Circuit
No. 21-1492
AZURITY PHARMACEUTICALS, INC.,
Plaintiff, Appellant,
v.
EDGE PHARMA, LLC,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
Before
Barron, Chief Judge,
Howard and Thompson, Circuit Judges.
James H. Hulme, with whom Nadia A. Patel, Valerie C. Samuels,
and Arent Fox LLP were on brief, for appellant.
Robert J. Fluskey, Jr., with whom Linda L. Morkan, William J.
Egan, Julianna M. Charpentier, Robinson & Cole LLP, and Hodgson
Russ LLP were on brief, for appellee.
August 12, 2022
BARRON, Chief Judge. Azurity Pharmaceuticals, Inc.
("Azurity") is a specialty pharmaceutical company. It markets a
hydrochloride vancomycin drug that received pre-market approval
from the United States Food and Drug Administration ("FDA"). Edge
Pharma, LLC ("Edge") is a drug compounding company. It markets a
hydrochloride vancomycin drug that competes with Azurity's but has
not been given pre-market FDA approval.
In 2020, Azurity filed suit in the United States District
Court for the District of Massachusetts against Edge under both
the Lanham Act and a Massachusetts consumer protection law, Mass.
Gen. Laws. ch. 93A ("Chapter 93A"), based on statements that Edge
allegedly made on its website. The suit alleges that a number of
these statements represent or convey the impression that Edge is
not in violation of section 503B of the Food, Drug, and Cosmetic
Act ("FDCA"), which authorizes drug compounders who meet certain
conditions to market their compounded drugs without first
obtaining FDA approval. The suit alleges that these statements
are literally false and/or misleading. The suit further alleges
that another one of Edge's statements on its website is false
and/or misleading because it holds out Edge's vancomycin drug as
being superior to Azurity's.
Edge moved to dismiss Azurity's claims for, among other
things, failure to state a claim on which relief could be granted
under Federal Rule of Civil Procedure ("Rule") 12(b)(6). The
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District Court granted Edge's Rule 12(b)(6) motion as to Azurity's
Lanham Act claim on the ground that the FDCA precluded Azurity's
claim. The District Court based this ruling on the determination
that the claim would require a court to interpret the meaning of
section 503B in a way that would interfere with the FDA's authority
to administer and enforce the FDCA. Azurity Pharms., Inc. v. Edge
Pharma, LLC, 540 F. Supp. 3d 141, 144 (D. Mass. 2021). The District
Court also ruled that, because the FDCA precluded Azurity's Lanham
Act claim, Azurity's Chapter 93A claim "likewise fails as it is
premised on the same allegations" as Azurity's Lanham Act claim.1
Id. (citing Reed v. Zipcar, Inc., 883 F. Supp. 2d 329, 334–35 (D.
Mass. 2012)).2 We affirm in part (albeit on an alternative ground)
and vacate in part.
1 Azurity's complaint contains two counts, one for violation
of the Lanham Act and another for unfair and deceptive trade
practices under Chapter 93A. The District Court treated Azurity
as having made one "claim" under each statute. See Azurity, 540
F. Supp. 3d at 144. On appeal, Azurity frames its complaint has
having stated four distinct claims under the Lanham Act. Following
the District Court, we use the singular "claim" to encompass all
of the theories that Azurity argues for finding Edge to have
violated the Lanham Act, and we do the same with respect to Chapter
93A.
2 In granting Edge's motion to dismiss, the District Court
also denied Azurity's motion for a preliminary injunction as moot.
Azurity, 540 F. Supp. 3d. at 145. Azurity referred to this denial
in its notice of appeal, but it makes no mention of it in its
briefing to us so any challenge to that ruling is waived. See
United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990).
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I.
Because this appeal is from the grant of a motion to
dismiss Azurity's complaint for failure to state a claim under
Rule 12(b)(6), we accept all well-pleaded facts in Azurity's
operative complaint as true. See Clorox Co. P.R. v. Proctor &
Gamble Com. Co., 228 F.3d 24, 30 (1st Cir. 2000). We also draw
all reasonable inferences in Azurity's favor. Id.
A.
The FDCA requires the FDA's pre-approval to market any
drug. However, the FDCA exempts "compounded" drugs -- which are
drugs that are produced by "combining, admixing, mixing, diluting,
pooling, reconstituting, or otherwise altering . . . a drug or
bulk drug substance," 21 U.S.C. § 353b(d)(1) -- from the FDCA's
pre-approval requirements in some circumstances.
The circumstances are set forth in section 503B of the
FDCA, 21 U.S.C. § 353b. That section provides that certain pre-
approval requirements "shall not apply to a drug compounded by or
under the direct supervision of a licensed pharmacist in a facility
that elects to register as an outsourcing facility if each of
the . . . conditions [set forth in section 503B] is met." 21
U.S.C. § 353b(a). The FDCA defines an "outsourcing facility" as
a facility that "is engaged in the compounding of sterile drugs;
has elected to register as an outsourcing facility; and complies
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with all of the requirements of [section 503B of the FDCA]." Id.
§ 353b(d)(4)(A)(i)-(iii).
In specifying the conditions that an outsourcing
facility must meet, section 503B provides that an "outsourcing
facility" may not compound a drug that is "essentially a copy of
one or more approved drugs." Id. § 353b(a)(5). Section 503B
defines "essentially a copy" to mean:
(A) a drug that is identical or nearly
identical to an approved drug . . . unless, in
the case of an approved drug, the drug appears
on the drug shortage list in effect under
section 356e of this title at the time of
compounding, distribution, and dispensing; or
(B) a drug, a component of which is a bulk
drug substance that is a component of an
approved drug . . . , unless there is a change
that produces for an individual patient a
clinical difference, as determined by the
prescribing practitioner, between the
compounded drug and the comparable approved
drug.
Id. § 353b(d)(2).
Another portion of section 503B concerns the use by
"outsourcing facilities" of a "bulk drug substance." Id.
§ 353b(a)(2). That provision requires, as a "condition" for an
"outsourcing facility" to market a compounded drug without prior
FDA approval, that:
The drug is compounded in an outsourcing
facility that does not compound using bulk
drug substances . . ., unless--
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(A)(i) the bulk drug substance appears on a
list established by the Secretary identifying
bulk drug substances for which there is a
clinical need, by--
(I) publishing a notice in the Federal
Register proposing bulk drug substances
to be included on the list, including the
rationale for such proposal;
(II) providing a period of not less than
60 calendar days for comment on the
notice; and
(III) publishing a notice in the Federal
Register designating bulk drug
substances for inclusion on the list; or
(ii) the drug compounded from such bulk drug
substance appears on the drug shortage list in
effect under section 356e of this title at the
time of compounding, distribution, and
dispensing . . . .
Id.
B.
The vancomycin hydrochloride drug that Azurity markets
is called FIRVANQ. FIRVANQ is "indicated for treatment of
Clostridium difficile-associated diarrhea and enterocolitis caused
by Staphylococcus aureus, including methicillin-resistant
strains." Azurity does not purport to be an "outsourcing
facility," but it has received FDA pre-approval to market FIRVANQ.
Edge "produces and markets an oral vancomycin solution
that competes directly with Azurity's FIRVANQ." Edge markets the
drug under the generic name "Vancomycin Oral Solution." Unlike
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Azurity, Edge has not received FDA pre-approval to market this
drug. Edge is registered, however, as an "outsourcing facility".
Prior to this suit, Edge made the following statements
about its operations, each of which appeared on Edge's website:
a. "Edge Pharma is a pharmaceutical sterile
and non-sterile 503B Outsourcing Facility
offering high quality, innovative solutions
for the health care community."
b. "As your compliance partner, we are
dedicated to providing turnkey 503B
outsourcing with the highest level of quality,
easy ordering, simple logistics, and excellent
customer support."
c. "Edge Pharma is an FDA-registered and
state-licensed, 503B Outsourcing Facility
providing service to hospital pharmacies,
outpatient surgery Centers, and clinics."
d. "Our facility is compliant with the
following state, local, and federal
regulations and guidelines:
USP 795, USP 797, USP 800[,]
Occupational Safety and Health
Administration (OSHA)[,]
Food and Drug Administration (FDA)[,]
US Pharmacopeia (USP)[,]
Applicable Good Manufacturing Practice
(GMP) Guidelines."
e. "Edge Pharma is a USP 797 and cGMP compliant
FDA-Registered 503B Outsourcing Facility that
specializes in a wide array of sterile and
non-sterile compounded medications."
f. "As an FDA registered and inspected 503B
Outsourcing facility, Edge has the ability to
react quickly to customer requirements and
deliver cost effective solutions."
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In addition, "Edge . . . claim[ed] to be a 'Registered
and Inspected FDA Outsourcing Facility'" in its marketing
materials. Edge also stated on its website: "commercially
available options are not ideal for use in the hospital setting."
We will refer to the statements that refer to Edge's
"compliance" with the law as the "Compliance Statements." We will
refer to the statements that refer to Edge being a "registered"
and "inspected" "Outsourcing Facility" as the "Registration
Statements." We will refer to the statement that "commercially
available options are not ideal for use in the hospital setting"
as the "Superiority Statement."
C.
On February 12, 2020, Azurity sued Edge in the District
Court for the District of Massachusetts based on the statements
just described. One count of Azurity's two-count complaint alleges
that the Compliance and Registration Statements, as well as the
Superiority Statement, constitute unfair competition and false
advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a).
The other count alleges that the Compliance and Registration
Statements, as well as the Superiority Statement, constitute
unfair or deceptive acts or practices under Chapter 93A, Mass.
Gen. Laws. ch. 93A, § 2(a).
To prove a Lanham Act claim for unfair competition and
false advertising, a plaintiff must demonstrate that
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(1) the defendant made a false or misleading
description of fact or representation of fact
in a commercial advertisement about his own or
another's product; (2) the misrepresentation
is material, in that it is likely to influence
the purchasing decision; (3) the
misrepresentation actually deceives or has the
tendency to deceive a substantial segment of
its audience; (4) the defendant placed the
false or misleading statement in interstate
commerce; and (5) the plaintiff has been or is
likely to be injured as a result of the
misrepresentation, either by direct diversion
of sales or by a lessening of goodwill
associated with its products.
Cashmere & Camel Hair Mfrs. Inst. v. Saks Fifth Ave., 284 F.3d
302, 310–11 (1st Cir. 2002).
A description or representation of fact in an
advertisement may be either literally false or "true or ambiguous
yet misleading." Id. at 311. Literal falsity and misleadingness
represent two "independent" theories of recovery under the Lanham
Act. Clorox, 228 F.3d at 36.
In assessing a Lanham Act claim for unfair competition
and false advertising, a determination first must be made as to
what the statement by the defendant that grounds the claim
communicates. Id. at 34. A determination then must be made about
whether that statement, given what it communicates, is either false
and/or misleading. See id. at 34, 36. The Lanham Act prohibits
only "false or misleading description[s] of fact." 15 U.S.C.
§ 1125(a)(1) (emphasis added).
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The plaintiff bears the burden of proving that the
statement at issue is false and/or misleading. Clorox, 228 F.3d
at 33. That question is typically for the factfinder to determine.
Id. at 34, 37.
If the statement is alleged to be literally false, "a
violation [of the Lanham Act] may be established without evidence
of consumer deception." Cashmere & Camel Hair Mfrs. Inst., 284
F.3d at 311. If the statement is alleged to be only misleading,
rather than literally false, there is generally "an additional
burden . . . placed upon the plaintiff to show that the
advertisement . . . conveys a misleading message to the viewing
public."3 Id. (second alteration in original) (quoting Clorox,
228 F.3d at 33).
"[F]actfinders usually base literal falsity
determinations upon the explicit claims made by an advertisement."
Clorox, 228 F.3d at 34-35. However, "they may also consider any
claims the advertisement conveys by 'necessary implication.'" Id.
at 35 (quoting Southland Sod Farms v. Stover Seed Co., 108 F.3d
1134, 1139 (9th Cir. 1997)). We have explained that "[a] claim is
conveyed by necessary implication when, considering the
3 "[A] plaintiff alleging an implied falsity claim, however,
is relieved of the burden of demonstrating consumer deception when
there is evidence that defendants intentionally deceived the
consuming public." Cashmere & Camel Hair Mfrs. Inst., 284 F.3d at
311 n.8. No such argument is made here.
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advertisement in its entirety, the audience would recognize the
claim as readily as if it had been explicitly stated." Id.
When the Lanham Act claim is predicated on finding the
advertisement to be misleading, the question is whether "the
advertisement, though explicitly true, nonetheless conveys a
misleading message to the viewing public." Id. at 33. In other
words, in that circumstance, the question is whether the
advertisement, though "literally true or ambiguous," nonetheless
is "likely to mislead and confuse consumers" into believing a
"false . . . representation of fact." Id. 33 & n.6. Moreover,
when the plaintiff is pursuing a claim based on a statement's
misleadingness, "the plaintiff must show how consumers have
actually reacted to the challenged advertisement, rather than
merely demonstrating how they could have reacted." Id. at 33.
Chapter 93A provides that "[u]nfair methods of
competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce are hereby declared unlawful."
Mass. Gen. Laws ch. 93A, § 2(a). The elements of a Chapter 93A
claim "overlap[]" with those of a Lanham Act false advertising
claim. See Cashmere & Camel Hair Mfrs. Inst., 284 F.3d at 320.
D.
Edge moved to dismiss Azurity's complaint on March 20,
2020, pursuant to Rule 12(b)(6) and Rule 12(b)(1). Edge gave the
following grounds for dismissal.
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First, Edge contended that Azurity had not plausibly
alleged a claim under the Lanham Act based on any of the statements
described above because the complaint plausibly alleges no more
than that each of the statements contains "non-actionable puffery,
opinion, and generalized comments about compliance with
administrative law." Edge asserted in support of that contention
that Azurity's complaint lacked the factual allegations necessary
to plausibly allege a Lanham Act claim for either literal falsity
or misleadingness, insofar as the claim relies on the Compliance
or Registration Statements.
Edge contended in the alternative that, under the
analysis set forth in POM Wonderful, the FDCA precludes Azurity's
Lanham Act claim in any of its variants. Thus, Edge contended,
Azurity's Lanham Act claim must be dismissed even if the complaint
plausibly alleges that any or all of the statements at issue are
literally false or misleading.
Relatedly, Edge contended that Azurity's Lanham Act
claim -- again, even if based on plausible allegations of literal
falsity or misleadingness, and no matter on which of the statements
that claim is based -- must be dismissed under the doctrine of
primary jurisdiction. That doctrine requires a federal court
presented with an issue that falls within the primary jurisdiction
of a regulatory agency to "defer any decision in the action before
it until the agency has addressed the issue that is within its
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primary jurisdiction." Ass'n of Int'l Auto. Mfrs., Inc. v. Comm'r,
Mass. Dep't of Env't Prot., 196 F.3d 302, 304 (1st Cir. 1999)
(quoting 2 Kenneth Culp Davis & Richard J. Pierce, Jr.,
Administrative Law Treatise 271 (3d ed. 1994)).
Finally, Edge asserted that Azurity's Chapter 93A claims
must be dismissed. That was so, according to Edge, "because the
allegedly false statements cited by Azurity are not actionable"
under the Lanham Act, Cashmere & Camel Hair Mfrs. Inst., 284 F.3d
at 320 (explaining there that if "plaintiffs were unable to satisfy
the requirements of a Lanham Act claim, they would not be able to
prove their state law claims, as the two have overlapping
requirements"), and because "to the extent that Azurity's state
law claims mirror its Lanham Act claims, they are preempted by the
FDCA."
Azurity filed an opposition to the motion to dismiss.
The opposition addressed each of Edge's asserted grounds for
dismissal.
E.
The District Court granted Edge's motion and dismissed
the complaint per Rule 12(b)(6) on May 18, 2021. Azurity, 540 F.
Supp. 3d at 145. The District Court began by explaining its ruling
as to the Lanham Act claim. The District Court relied solely on
FDCA preclusion to dismiss the Lanham Act claim.
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In POM Wonderful LLC v. Coca-Cola Co., 573 U.S. 102
(2014), the Supreme Court of the United States rejected the
defendant's contention that the FDCA precluded a Lanham Act claim
that involved a challenge to a statement that had been made in a
label on a food item that was regulated by FDA pursuant to its
authority to administer the FDCA's food labeling provisions. POM
Wonderful, 573 U.S. at 121.
In so deciding, the Court reversed the Ninth Circuit's
holding that the claim was precluded by the FDCA. See POM
Wonderful LLC v. Coca-Cola Co. ("POM I"), 679 F.3d 1170 (9th Cir.
2012), rev'd, 573 U.S. 102 (2014). The Ninth Circuit had found
the claim precluded based on its own precedent establishing that
"a Lanham Act claim may not be pursued if the claim would require
litigating whether [the underlying] conduct [to which the alleged
misstatement refers] violates the FDCA" when the FDA itself has
not determined a violation occurred. See id. at 1176-78 (citing
PhotoMedex, Inc. v. Irwin, 601 F.3d 919, 924 (9th Cir. 2010)).
This was so, the Ninth explained in that prior case, because "the
FDCA may be enforced only by the [federal government]," id. at
1175 (citing 21 U.S.C. § 337(a)), and "allowing such a suit would
undermine" that exclusive enforcement authority, id. at 1176.
The Supreme Court thought differently. In POM
Wonderful, the Court reasoned that "the centralization of FDCA
enforcement authority in the Federal Government does not indicate
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that Congress intended to foreclose private enforcement of other
federal statutes." POM Wonderful, 573 U.S. at 117. Thus, because
the plaintiff there sought to "enforce the Lanham Act, not the
FDCA or its regulations," the FDA's exclusive enforcement
authority did not itself warrant preclusion of the plaintiff's
Lanham Act claim. Id.
In so concluding, the Court did not rule out the
possibility that the FDCA might preclude a Lanham Act claim in
some circumstances, id. at 118, and it specifically noted that the
case before it did not involve a claim of preclusion regarding a
statement about a drug, id. at 109, 116 ("Unlike other types of
labels regulated by the FDA, such as drug labels, it would appear
the FDA does not preapprove food and beverage labels under its
regulations and instead relies on enforcement actions, warning
letters, and other measures." (internal citation omitted)). But,
the Court did not purport to identify any circumstance in which
the FDCA would preclude a Lanham Act claim, and it noted that "the
FDCA and the Lanham Act complement each other in the federal
regulation of misleading food and beverage labels." Id. at 106.
None of the statements at issue in this case appear on
any label that must be approved by the FDA. The statements are
all ones that Edge allegedly made on its website. Nonetheless,
the District Court concluded that the FDCA precluded Azurity's
Lanham Act claim -- seemingly in all its variants -- on the ground
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that the evaluation of the merits of the claim necessarily "would
require the court to determine whether defendant is violating the
FDCA and the FDA's interim policies." Azurity, 540 F. Supp. 3d at
143-44. The District Court explained that the FDA had not itself
made those determinations and that "[e]nforcement of the FDCA and
the detailed prescriptions of its implementing regulations is
largely committed to the FDA," id. at 144 (quoting POM Wonderful,
573 U.S. at 115), such that "[i]t would be inappropriate . . . to
resolve plaintiff's Lanham Act claim, which necessitates
resolution of 'thorny questions that may require the FDA's
expertise,'" id. (quoting Allergan USA Inc. v. Imprimis Pharms.,
Inc., No. 17-1551, 2017 WL 10526121, at *7 (C.D. Cal. Nov. 14,
2017)); see also id. ("Because the FDCA forbids private rights of
action . . . [a] Lanham Act [claim] may not be pursued when, as
here, the claim would require litigation of the alleged underlying
FDCA violation where the FDA has not itself concluded that there
was such a violation." (quoting PhotoMedex, Inc., 601 F.3d at
924)). The District Court went on to explain that, because the
FDCA precluded the Lanham Act claim, Azurity's Chapter 93A claim
had to be dismissed as well. Id.
Azurity timely filed this appeal. We review de novo the
District Court's grant of Edge's Rule 12(b)(6) motion to dismiss
Azurity's Lanham Act and Chapter 93A claims. See Clorox, 228 F.3d
at 30.
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II.
We start with Azurity's challenge to the District
Court's dismissal of the variant of Azurity's Lanham Act claim
that alleges that Edge's Compliance and Registration Statements
communicate the message that Edge is not "in violation of"
section 503B of the FDCA. Azurity contends that its complaint
plausibly alleges in this variant of its Lanham Act claim that
Edge has engaged in conduct that is barred by the portion of
section 503B that restricts the marketing of compounded drugs that
are "essentially a copy" of approved drugs, 21 U.S.C. § 353b(a)(5).
Accordingly, Azurity contends, it has plausibly alleged that the
Compliance Statements are literally false and the Registration
Statements are misleading due to the messages that those statements
communicate concerning Edge's purported compliance with the
"essentially a copy" portion of section 503B and what conditions
that portion of that section of the FDCA sets forth. Azurity
further contends that, given that this variant of its Lanham Act
claim is otherwise actionable, the District Court erred in
dismissing it, because the FDCA does not preclude it.
We reject Azurity's challenge to the District Court
order of dismissal as to this variant of Azurity's Lanham Act
claim. We do not do so, however, based on FDCA preclusion, even
though Edge urges us to affirm the ruling below on that basis. We
do so because, as we will explain, we are persuaded by the
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alternative ground that Edge advances to us on appeal for affirming
the District Court's order of dismissal for this variant of
Azurity's Lanham Act claim. See Lin v. TipRanks, Ltd., 19 F.4th
28, 36 (1st Cir. 2021) ("We, of course, may affirm the District
Court's ruling on any ground manifest in the record.").
A.
We begin with Edge's assertion that, FDCA preclusion
aside, Azurity fails to state a claim on which relief can be
granted in the variant of its Lanham Act claim that alleges that
the Compliance Statements, insofar as they communicate that Edge
is not in violation of the "essentially a copy" provision of
section 503B, make a literally false representation of fact.4 In
advancing this non-preclusion-based ground for dismissal, Edge
relies chiefly on two out-of-circuit precedents that set forth a
framework for assessing when a statement that concerns whether an
entity is in violation of a law is actionable under the Lanham
Act. The two precedents are Coastal Abstract Service, Inc. v.
Azurity mentions in passing that the Compliance Statements
4
"mislead health care providers and other customers into believing
that Edge's vancomycin product complies with state and federal
law, and that it is safe, effective, and legal." But, Azurity
develops no argument as to whether, or why, the Compliance
Statements are misleading as to the "safe[ty], effective[ness],
and legal[ity]" of Edge's vancomycin product if the assertion that
Edge is not in violation of section 503B is not literally false.
Thus, any such argument is waived for lack of development. See
Zannino, 895 F.2d at 17.
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First American Title Insurance Co., 173 F.3d 725 (9th Cir. 1999),
and Dial A Car, Inc. v. Transportation, Inc., 82 F.3d 484 (D.C.
Cir. 1996).5
In Coastal Abstract, the Ninth Circuit considered
whether a plaintiff could state a Lanham Act claim based on a
defendant's statement that the plaintiff "was not licensed in
California as an escrow company," 173 F.3d at 729, and the fact
that the defendant "stated or clearly implied" that such a license
was "required [by California law] . . . for [the plaintiff's]
activities in connection with refinancing California property,"
id. at 731. The Ninth Circuit concluded that, "[a]bsent a clear
and unambiguous ruling from a court or agency of competent
jurisdiction, statements by laypersons that purport to interpret
the meaning of a statute or regulation are opinion statements, and
not statements of fact," and, as such, are "not generally
actionable under the Lanham Act." Id. The Ninth Circuit ruled on
5In its briefing to us, Edge also cites to a district court
case that presented a similar situation to Dial A Car, in which
that court adopted the reasoning of the D.C. Circuit in that case,
Greenwich Taxi, Inc. v. Uber Techs., Inc., 123 F. Supp. 3d 327,
335-36 (D. Conn. 2015), as well as several other cases in which
the district courts there concluded that a legal opinion could not
form the basis of a Lanham Act claim, see Metro. Reg'l Info. Sys.,
Inc. v. Am. Home Realty Network, Inc., 948 F. Supp. 2d 538, 554
(D. Md. 2013); Language Line Servs., Inc. v. Language Servs.
Assocs., LLC, No. 10-02605, 2011 WL 5024281, *11 (N.D. Cal. Oct.
13, 2011). These cases accord with our understanding that Edge is
asking us to apply the analytic framework that Dial A Car and
Coastal Abstract adopt.
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that basis that the plaintiff had not sufficiently plead that the
statement at issue was false or misleading in violation of the
Lanham Act, because "the correct application of [the statutory
licensing requirement] was not knowable to the parties at the time
that [the defendant] made the licensure statement." Id. at 732.
In Dial A_Car, the D.C. Circuit considered a plaintiff's
contention that the defendants "violat[ed] the Lanham Act by
misrepresenting to [the plaintiff]'s actual and potential . . .
customers that [the defendants'] taxicabs can legally provide
within [Washington, D.C.]" point-to-point transportation to
corporate clients using taxicabs licensed in Virginia or Maryland,
but not D.C. 82 F.3d at 486. The plaintiff argued there that an
order by the D.C. Taxicab Commission Office prohibited the
defendants' taxicabs from providing the service in question to or
from D.C. unless their passengers' origin or destination was in
the county of the taxicabs' licensure. Id. The D.C. Circuit held
that the defendants' representations at issue were not actionable
under the Lanham Act, because "there must be a clear and
unambiguous statement from the Taxicab Commission regarding [the
defendants'] status before a Lanham Act claim can be entertained"
based on the defendants' statements "that they lawfully may
perform" a particular service and there was none in that case.
Id. at 485, 489 (emphasis in original).
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The D.C. Circuit did acknowledge that it was possible
that "a regulation might conceivably be drafted that would be so
clear on its face that no good faith doubt concerning its
interpretation would be possible, even without an explicit
statement from the [relevant regulatory entity]." Id. at 489 n.3.
In such a circumstance, the court posited, the meaning of the
regulation in question could be "so clear as to be a fact for
Lanham Act purposes," id., such that a representation concerning
the meaning of that law in advertising -- as a representation as
to whether the defendant was violating a law would necessarily
make -- might be actionable as a "false or misleading
representation of fact," 15 U.S.C. § 1125(a)(1). But, the D.C.
Circuit explained, the regulation at issue in that case was not of
that sort. Dial A Car, 82 F.3d at 489 n.3. It thus held the
Lanham Act claim there could not go forward on that basis. Id.
Azurity does not take issue with the framework for
analysis that Coastal Abstract and Dial A Car set forth. Azurity
also makes no argument that the framework is inapplicable here.
It contends instead that, even under that framework, it has
plausibly alleged an actionable Lanham Act claim based on the
literally false representation or description of fact that it
contends that the Compliance Statements make in communicating a
message regarding the relationship between Edge's conduct and the
"essentially a copy" provision of section 503B. Azurity contends
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that is so because "the section 503B requirements," unlike the
regulation involved in Dial A Car, "are explicit in the statute,
and the FDA has issued clear and unambiguous guidance on how to
apply those requirements."
Azurity refers here to a document cited in its complaint
that the FDA issued in January 2018. See Compounded Drug Products
That Are Essentially Copies of Approved Drug Products Under Section
503b of the Federal Food, Drug, and Cosmetic Act Guidance For
Industry, 2018 WL 953053 (Jan. 2018) [hereinafter "Essentially a
Copy Guidance"]. That document purports to provide non-binding
guidance about how the FDA "intends to consider" a "compounded
drug" with respect to whether it is "identical or nearly identical
to an approved drug" pursuant to the "essentially a copy" provision
of section 503B, see 21 U.S.C. § 353b(d)(2).
The document states that the
FDA intends to consider a compounded drug
product to be identical or nearly identical to
an approved drug if the compounded drug
product and the FDA-approved drug have the
same:
• active ingredient(s),
• route of administration,
• dosage form,
• dosage strength, and
• excipients.
Essentially a Copy Guidance, 2018 WL 953053, at *5.
Azurity asserts that, in light of this document, its
complaint plausibly alleges that "FIRVANQ and Edge's vancomycin
- 22 -
product satisfy each of the applicable factors" for making a
compounded drug "identical or nearly identical" to an approved one
under section 503B's "essentially a copy" provision. And, that is
so, according to Azurity, because its complaint plausibly alleges
that its vancomycin drug and Edge's each has the same active
ingredient, is administered orally, and is liquid.6
Azurity acknowledges that its complaint does not allege
that Vancomycin Oral Solution has the same "excipients" as FIRVANQ.
But, Azurity points out that its complaint plausibly alleges that
information about the "excipients" in FIRVANQ is not publicly
available. Thus, Azurity contends, the absence of any allegation
in its complaint about the two drugs sharing the same excipients
is of no concern, given that the FDA's Essentially a Copy Guidance
expressly states that when information about the approved drug's
excipients is not publicly available the agency "does not intend
to consider whether the compounded drug has the same excipients
that the approved drug is labeled to contain in determining whether
a compounded drug is identical or nearly identical to an approved
drug." Id. at *5 n.15.
6 Azurity's complaint does not allege that the two products'
dosage strengths are the same, but Azurity did argue to the
District Court that its product is administered in the same dosage
strength as Edge's. Additionally, Edge argues that the products
have different "dosage form[s]" because FIRVANQ is made and sold
as "powder and diluent" for oral administration, whereas "Edge's
product is a single-dose syringe of oral solution."
- 23 -
Azurity does not deny, however, that it is premising
this variant of its Lanham Act claim on the complaint plausibly
alleging that, in the Compliance Statements, Edge made a false
representation or description of fact about the meaning of the
"essentially a copy" provision of section 503B. And yet, to
support the contention that the complaint does plausibly so allege,
Azurity is not relying on any ruling by the FDA, or any court,
that Edge has in fact violated section 503B by engaging in conduct
barred by the "essentially a copy" provision. See Coastal Abstract
Serv., 173 F.3d at 731. Nor is Azurity relying even on a binding
ruling by an agency or a court about the meaning of the
"essentially a copy" provision itself with respect to what the
"applicable factors" are for determining whether two drugs are
identical or nearly identical under that provision of
section 503B. Instead, Azurity is relying solely on a guidance
document from the FDA that the FDA itself describes as "only
recommendations" that are non-binding, see Essentially a Copy
Guidance, 2018 WL 953053, at *1, and that states only that the FDA
"intends to consider" a compounded drug to be "identical or nearly
identical" within the meaning of the "essentially a copy" portion
of section 503B to an approved drug when the five-factor test set
forth above is satisfied, id. at *5 & n.15.
Moreover, Azurity is relying solely on that non-binding
guidance document to support the contention that it has plausibly
- 24 -
alleged that, in the Compliance Statements, Edge has made a
literally false representation or description of fact about the
meaning of the "essentially a copy" provision of section 503B even
though the text of section 503B does not itself make clear, on its
face, that two drugs can be "identical or nearly identical" even
if they have divergent "excipients." Indeed, the relevant
statutory text does not refer to any of the five factors set forth
in the FDA's non-binding guidance document, see 21 U.S.C.
§ 353b(d)(2) -- let alone suggest that fewer than all of them need
to be satisfied for a compounded drug to be "essentially a copy"
of an FDA-approved one for purposes of section 503B.
Thus, Azurity does not explain how there is the kind of
"clear and unambiguous ruling" from a court or agency -- either
that Edge specifically is in violation of the relevant provisions
of law, or that interprets the "essentially a copy" provision of
section 503B -- that could ground the variant of the claim that is
at issue under the framework for determining whether this variant
of the claim is actionable that Azurity accepts applies. See
Coastal Abstract Serv., 173 F.3d at 731; Dial A Car, 82 F.3d at
489 & n.3; cf. Metro. Reg’l Info. Sys., Inc. v. Am. Home Realty
Network, Inc., 948 F. Supp. 2d 538, 554 (D. Md. 2013) ("any
statements made by [the counterclaim-defendants] regarding the
copyrightability of [particular information] were nonverifiable
legal opinions that are not actionable under the Lanham Act");
- 25 -
Sandoz Pharms. Corp. v. Richardson-Vicks, Inc., 902 F.2d 222, 230
(3d Cir. 1990) (rejecting a Lanham Act false labeling
claim -- premised on the argument that FDA regulations required a
label that the defendant's product lacked -- on the grounds that
the plaintiff "has not proved that [the defendant's] labeling is
false" because "interpretation of FDA regulations, absent direct
guidance from the promulgating agency, is not as simple as [the
plaintiff] proposes" and therefore did not compel the conclusion
that the defendant's labeling was false). Nor can Azurity argue
that the text of section 503B, given what that text sets forth, is
clear enough on its face to make up for the absence of there being
any such ruling. Cf. Dial A Car, 82 F.3d at 489 n.3. Thus, we
agree with Edge that this variant of Azurity's Lanham Act claim
cannot survive the motion to dismiss under Rule 12(b)(6) because
it fails plausibly to allege that Edge made any literally false
description or representation of fact.
We recognize that Azurity does attempt to fend off Edge's
non-preclusion-based ground for affirming the District Court's
dismissal of this variant of the Lanham Act claim by directing our
attention to a different portion of the "essentially a copy"
provision of section 503B from the "identical or nearly identical"
one that has been our concern thus far. That portion of section
503B reads:
- 26 -
The term 'essentially a copy of an approved
drug' means . . . a drug, a component of which
is a bulk drug substance that is a component
of an approved drug . . ., unless there is a
change that produces for an individual patient
a clinical difference, as determined by the
prescribing practitioner, between the
compounded drug and the comparable approved
drug.
21 U.S.C. § 353b(d)(2)(B).
Azurity contends that the Compliance Statements are
literally false because they communicate that Edge is not engaging
in conduct barred by section 503B based on this "prescribing
practitioner" portion of it. Azurity points as support for that
contention to a different portion of the FDA's non-binding
Essentially a Copy Guidance:
If an outsourcing facility compounds a drug,
the component of which is a bulk drug
substance that is a component of an approved
drug, there must be a change that produces a
clinical difference for an individual patient
as determined by the prescribing practitioner.
If an outsourcing facility intends to rely on
such a determination to establish that a
compounded drug is not essentially a copy of
an approved drug, the outsourcing facility
should ensure that the determination is noted
on the prescription or order (which may be a
patient-specific prescription or a non-
patient specific order) for the compounded
drug.
FDA is aware that a health care practitioner
who orders a compounded drug from an
outsourcing facility for office stock will not
know the identity of the individual patients
who will receive the compounded drug at the
time of the order. In that case, the
outsourcing facility should obtain a statement
- 27 -
from the practitioner that specifies the
change between the compounded drug and the
comparable approved drug and indicates that
the compounded drug will be administered or
dispensed only to a patient for whom the
change produces a clinical difference, as
determined by the prescribing practitioner for
that patient. Such assurances should be
provided by the health care practitioner or a
person able to make the representation for the
health care practitioner.
2018 WL 953053, at *7 (emphasis added).
Azurity's complaint, however, is bereft of allegations
that support the prescriber documentation theory for permitting
its Lanham Act claim based on the literal falsity of the Compliance
Statements to go forward that Azurity now presses on appeal. Its
complaint alleges that "the vancomycin [Edge] sells is essentially
a copy of an FDA-approved drug," but the complaint refers in doing
so only to facts and statutory language that bear on the "identical
or nearly identical" portion of that provision of section 503B.
Indeed, Azurity conceded at oral argument to us that no allegations
in its complaint bore on its prescriber documentation theory
specifically. Accordingly, we agree with Edge that Azurity has
not pleaded its "prescribing practitioner" theory of noncompliance
with the "essentially a copy" provision, such that the Compliance
Statements are plausibly alleged to violate the Lanham Act.7
7 Azurity argues in the alternative that if its complaint
cannot support its prescriber documentation theory, it should be
- 28 -
B.
We turn, then, to Azurity's challenge to the District
Court's dismissal of the Lanham Act claim insofar it rests on the
allegation that the Registration Statements "are materially
misleading to health care providers." Azurity's theory is that
while Edge's representations that it is a "registered" outsourcing
facility may be literally true, such representations give health
care providers the false impression "that Edge complies with state
and federal law," including "[section] 503B." And that is so,
according to Azurity, because despite those statements conveying
entitled to amend its complaint. We leave that determination to
the discretion of the District Court on remand. See Fed. R. Civ.
P. 15(a)(2); cf. Nikitine v. Wilmington Tr. Co., 715 F.3d 388, 389
(1st Cir. 2013) ("We review a district court's denial of leave to
amend for abuse of discretion.").
In so doing, we recognize that we leave unaddressed the
question of whether a Lanham Act claim predicated on the prescriber
documentation theory would be precluded by the FDCA, and if such
a claim were precluded, that would render any such amendment
futile. But, given that the preclusion analysis depends in large
part on the precise nature of the claim brought, and Azurity has
not represented to us the precise contours of its proposed
amendment, we do not attempt to address the preclusion of any such
amended claim here. See PDK Lab'ys Inc. v. DEA, 362 F.3d 786, 799
(D.C. Cir. 2004) (Roberts, J., concurring in part) ("[I]f it is
not necessary to decide more, it is necessary not to decide
more."). We do not mean in any way to suggest, by opting for this
restrained approach at this juncture, what we would decide as to
preclusion or that the argument for preclusion would be any
stronger with respect to such an amended claim than we conclude
that it is for the version of Azurity's Lanham Act claim predicated
on the Compliance Statements and Section 503A's bulk drug substance
provision. See infra at Part IV.
- 29 -
that impression, its complaint plausibly alleges that Edge is in
violation of the "essentially a copy" provision of section 503B
due to the shared characteristics of FIRVANQ and Vancomycin Oral
Solution.8
Edge responds to this argument in part by disputing that
Azurity has plausibly alleged that the Registration Statements
convey the implicit message that Edge is not "in violation of"
section 503B for having engaged in conduct prohibited by the
"essentially a copy" provision of that statute. Edge contends
that the Registration Statements merely convey true and undisputed
facts about its status: that it is registered and inspected. But,
even if we were to conclude otherwise, the question remains as to
whether that implicit message is one that Azurity has plausibly
alleged makes a "misleading representation of fact," 15 U.S.C.
§ 1125(a) (emphasis added), under Dial A Car and Coastal Abstract,
see Coastal Abstract Serv., 173 F.3d at 731; Dial A Car, 82 F.3d
at 489 & n.3. Yet, as to that question, Azurity merely makes the
same arguments based on the non-binding FDA guidance document that
8 Azurity also asserts that the Registration Statements give
the false impression "that the FDA has approved the drugs or given
its seal of approval to Edge's drugs, and therefore the compounded
drugs are safe and effective." However, it develops no argument
as to whether, or why, that message would be false or misleading
if Edge had not violated section 503B by engaging in conduct
prohibited by its "essentially a copy" provision. Thus, we deem
any such argument waived. See Zannino, 895 F.2d at 17.
- 30 -
we found wanting in connection with its "essentially a copy"
argument with respect to the Compliance Statements. As a result,
we reject Azurity's challenge to the District Court's dismissal of
this variant of the Lanham Act claim as well, because we agree
with Edge that Azurity does not plausibly allege that the
Registration Statements, insofar as they implicitly convey a
message about Edge's compliance with the "essentially a copy"
provision of section 503B, make a misleading representation of
fact.
III.
We now turn to Azurity's challenge to the District
Court's dismissal of the variant of the Lanham Act claim that rests
on allegations about the way that Edge's Compliance and
Registration Statements implicate a different provision of
section 503B -- namely, the "bulk drug substance" provision, 21
U.S.C. § 353b(a)(2)(A). That provision "conditions" the ability
of an "outsourcing facility" to market a drug without prior FDA
approval on the facility "not compound[ing] using bulk drug
substances . . . unless" the substance in question appears on a
list of "bulk drug substances for which there is a clinical need"
promulgated by the FDA or the compounded drug appears on the drug
shortage list. Id. (emphasis added).
The District Court dismissed this variant of Azurity's
Lanham Act claim -- just as it dismissed all variants of it -- on
- 31 -
the ground that it was precluded by the FDCA. Azurity argues on
appeal that the District Court was wrong to do so. But, before we
take up that argument, we first must address Edge's contention
that, even if the FDCA does not preclude this variant of Azurity's
Lanham Act claim, it still must be dismissed because Azurity's
complaint fails plausibly to allege that the Compliance and
Registration Statements are false and/or misleading. See
TipRanks, 19 F.4th at 36.
A.
We start with Edge's contention that the viability of
this "bulk drug substance"-based variant of Azurity's Lanham Act
claim fails under the analytic framework set forth in Coastal
Abstract and Dial A Car insofar as the claim is premised on the
allegation that the Compliance Statements are literally false.
For, Edge contends, Azurity does not allege that there has been
any ruling that Edge has violated section 503B by failing to
conform to the requirements in the "bulk drug substance" provision
of that section of the FDCA, or any binding ruling from the FDA or
a court that interprets the FDCA to impose a requirement that
Edge's alleged use of bulk drug substances would violate. See
Coastal Abstract Serv., 173 F.3d at 731 ("Absent a clear and
unambiguous ruling from a court or agency of competent
jurisdiction, statements by laypersons that purport to interpret
the meaning of a statute or regulation are opinion statements, and
- 32 -
not statements of fact. Statements of opinion are not generally
actionable under the Lanham Act." (internal citations omitted));
Dial A Car, 82 F.3d at 489.
Azurity responds as follows. It contends that the text
of the provision of law at issue -- namely, the "bulk drug
substance" provision of section 503B -- clearly prohibits the use
of bulk drug substances in compounding where the bulk drug
substance used does not appear on the FDA's official list of "bulk
drug substances for which there is a clinical need," or on the
operative drug shortage list. See 21 U.S.C. § 353b(a)(2)(A). It
further contends that FDA guidance confirms that same
understanding of the meaning of this statutory provision. And,
finally, Azurity argues it has plausibly alleged that Edge is using
a bulk drug substance that is not on either the bulk drug substance
list or the drug shortage list to which the "bulk drug substance"
provision of section 503B refers. Thus, Azurity contends, this
case is factually distinguishable from Dial A Car, such that this
variant of Azurity's Lanham Act claim is actionable even under the
analytic framework that precedent sets forth. And, we note, that
same contention, if it holds up, also would suffice to distinguish
this case, factually, from Coastal Abstract.
We are persuaded by Azurity's response to Edge's
argument that this variant of the Lanham Act claim must be
dismissed even if the FDCA does not preclude it. Recall that
- 33 -
section 503B provides that an outsourcing facility cannot market
a compounded drug without prior FDA approval "unless" the substance
in question appears on a list of "bulk drug substances for which
there is a clinical need" promulgated by the FDA or the compounded
drug appears on the drug shortage list. Id. § 353b(a)(2)(A)
(emphasis added). Given that text, there is no interpretation
necessary to determine whether section 503B, through the "bulk
drug substance" provision, sets as a condition for the sale of a
compounded drug that is made using a bulk drug substance that the
bulk substance be on either of the lists that the statutory
provision specifies. Section 503B plainly does.
That is significant. Dial A Car itself recognized the
possibility that a law or regulation could be " so clear on its
face that no good faith doubt concerning its interpretation would
be possible, even without an explicit statement from the [relevant
regulatory entity]," such that it is "so clear as to be a fact for
Lanham Act purposes," 82 F.3d at 489 n.3. Nor are we aware of any
precedent that holds to the contrary. Cf. Dial A Car, Inc. v.
Transp., Inc., 884 F. Supp. 584, 592 (D.D.C. 1995) ("[The
d]efendants were expressing an opinion on an inconclusive question
of law and were not making representations of verifiable or 'hard
definable facts.'" (emphasis added) (quoting Licata & Co. Inc. v.
Goldberg, 812 F. Supp. 403, 408 (S.D.N.Y. 1993))), aff'd, 82 F.3d
484 (D.C. Cir. 1996). And, the statutory provision at issue is of
- 34 -
a kind that is unusually susceptible of being clear enough on its
face as to what condition it establishes for the scope of the
condition to be a fact. The provision at issue specifies exactly
which substances cannot be used unless they are on readily
identifiable lists. Yet, one of these lists does not yet even
exist, while there is no dispute that Azurity has plausibly alleged
that the other list does not include the bulk drug substance in
question.
This case is also not one in which the administering
agency has purported to give the statutory provision at issue a
different construction from the one that its plain text appears to
demand. Rather, here, the FDA has merely stated its intention --
in, we add, a non-binding guidance document -- with respect to the
"action" it "intends to take" on the event the condition at issue
is not met. Nothing in that statement suggests that section 503B
does not impose the condition that it plainly imposes with respect
to the use of "bulk drug substances." Indeed, to the extent that
the FDA's interim guidance makes a representation about what
section 503B's bulk substance provision means, which is the
operative question under the framework set forth in Coastal
Abstract and Dial A Car, that guidance acknowledges both that
vancomycin hydrochloride is not on the "503B Bulks List" and that
an "outsourcing facility" that compounds a "drug product from a
bulk drug substance" that is not on the list "does not meet the
- 35 -
conditions of section 503B(a)(2)," see Interim Policy On
Compounding Using Bulk Drug Substances Under Section 503b of the
Federal Food, Drug, and Cosmetic Act Guidance For Industry, 2017
WL 345598 at *4, *7 (Jan. 2017) [hereinafter "Interim Bulk Drug
Policy"], and identifies vancomycin hydrochloride as being among
them. Id. at *4, *7.
In sum, Edge appears to accept -- and certainly develops
no argument to the contrary -- that the statements that reference
Edge's "compliance" with section 503B are, plausibly, understood
to make representations about the meaning of section 503B's "bulk
drug substance" provision and not merely representations about
what enforcement action the FDA will or will not take against the
company in the event the condition that is set forth in the "bulk
substance" provision is not satisfied. And, for the reasons we
have given, Azurity has plausibly alleged that, in the Compliance
Statements, Edge represents, in effect, that section 503B does not
say what it plainly says, given that there is no dispute that
Azurity plausibly alleges that the bulk drug substance used by
Edge in compounding -- vancomycin hydrochloride -- is not on either
the bulk drug substance list or the drug shortage list. Thus, we
cannot agree with Edge that we may affirm the District Court's
ruling dismissing this variant of Azurity's Lanham Act claim --
namely, the variant rooted in the Compliance Statements as they
- 36 -
relate to the "bulk drug substance" provision -- on the non-
preclusion-based ground that Edge advances.9
B.
We next address Edge's non-preclusion-based ground for
affirming the dismissal of Azurity's Lanham Act claim with respect
to the variant of that claim that alleges that the Registration
Statements are misleading in light of the "bulk drug substance"
provision of section 503B. Here, Azurity alleges that the
statements that Edge is a "registered" outsourcing facility, while
literally true, are misleading because they convey the message
that Edge is not in violation of section 503B, even though Edge is
using a bulk drug substance in a circumstance that is barred by
that provision.
Edge emphasizes that when a plaintiff alleges that an
advertisement is misleading, but not literally false, it bears an
"additional burden . . . to show that the advertisement . . .
conveys a misleading message to the viewing public." Cashmere &
Camel Hair Mfrs. Inst., 284 F.3d at 311 (quoting Clorox, 228 F.3d
9 We note that in finding this version of Azurity's Lanham
Act claim viable, we do not mean to foreclose the possibility that
a factfinder may conclude that Edge's Compliance Statements
represented that Edge was in compliance with the FDCA as the FDA
said it was going to enforce it. See Clorox, 228 F.3d at 34
("Whether an advertisement is literally false is typically an issue
of fact. . . . [A] factfinder must determine the claim conveyed
by the advertisement.").
- 37 -
at 33) (second omission in original). And, Edge then contends
that Azurity has not met this burden because Azurity "pleads no
facts to satisfy this burden" with respect to this variant of its
Lanham Act claim and instead sets forth conclusory allegations
"that the statements could give a misleading impression." We
agree.
Azurity's complaint contains only the allegations that
Edge's statements "are materially misleading to health care
providers and are intended to induce health care providers into
believing that Edge complies with state and federal law," and the
conclusory assertion that "[Edge]'s false and misleading
statements actually deceive and have the tendency to deceive a
substantial segment of the intended audience." Azurity makes no
allegations that explain how, or why, the Registration Statements
could mislead an audience about Edge's conduct with respect to the
"bulk drug substance" provision specifically.
Azurity does cite as support to McGrath & Co., LLC v.
PCM Consulting, Inc., No. 11-10930, 2012 WL 503629 (D. Mass. Feb.
15, 2012). But, the complaint in that case alleged a specific
misimpression that the statements at issue communicated -- that
the statements "give the incorrect impression that . . . 'PCM is
a larger company than it actually is,'" id. at *2, *5. Here, by
contrast, Azurity's complaint alleges only that the statements
"are materially misleading and are intended to induce health care
- 38 -
providers into believing that Edge complies with state and federal
law." The complaint makes no allegations that the Registration
Statements actually misled their audience into believing that Edge
does not violate the "bulk drug substance" provision of
section 503B specifically.
Clorox Co. Puerto Rico v. Proctor & Gamble Com. Co., 228
F.3d 24 (1st Cir. 2000), accords with our conclusion. The
complaint there laid out in detail the nature of the misleading
impression the statements at issue conveyed. By contrast,
Azurity's complaint lacks any specific explanation as to how the
Registration Statements could mislead an audience as to Edge's
conduct related to the "bulk drug substance" provision in
particular. See id. at 36-37.
Azurity's complaint does state that the Registration
Statements "are intended to induce health care providers into
believing that Edge complies with state and federal law" (emphasis
added). But, Azurity does not argue to us that it has plausibly
pleaded that Edge made those statements with the intention of
deceiving its consumers. See Cashmere & Camel Hair Mfrs. Inst.,
284 F.3d at 311 n.8 ("[A] plaintiff alleging an implied falsity
claim, however, is relieved of the burden of demonstrating consumer
deception when there is evidence that defendants intentionally
deceived the consuming public."). Thus, any such argument is
waived. See Zannino, 895 F.2d at 17.
- 39 -
Accordingly, for reasons independent of possible FDCA
preclusion, we agree with Edge that this variant of Azurity's
Lanham Act claim fails plausibly to allege a statement that is
actionably "misleading."10 Accordingly, we affirm the dismissal
of the claim on that basis. See Intermountain Stroke Ctr., Inc.
v. Intermountain Health Care, Inc., 638 F. App'x 778, 793 (10th
Cir. 2016) (affirming dismissal of Lanham Act claim in part because
"at no point during these proceedings have Plaintiffs explained
how consumers might infer" the misleading representation of fact
that the plaintiff asserted had been made).
IV.
Although we have put the preclusion issue aside up to
this point, we do need to return to it. For, Edge does also
contend that the District Court was right to dismiss the "bulk
drug substance"-based variant of Azurity's Lanham Act claim based
10 Similarly, insofar as Azurity has alleged and argued that
the Compliance Statements are misleading -- rather than literally
false -- because of what they communicate concerning Edge's conduct
under the "bulk drug substance" provision of section 503B, that
allegation, too, fails plausibly to state a claim under the Lanham
Act.
Azurity also asserts that the Registration Statements give
the false impression "that the FDA has approved the drugs or given
its seal of approval to Edge's drugs, and therefore the compounded
drugs are safe and effective." But, here too, Azurity has failed
to develop any argument as to why that message would be false or
misleading if Edge had not been in violation of section 503B's
"bulk drug substance" provision at the time the Registration
Statements were made. Any such argument is therefore waived. See
Zannino, 895 F.2d at 17.
- 40 -
on FDCA preclusion (insofar as Azurity's complaint alleges with
respect to this variant of its Lanham Act claim that the Compliance
Statements are literally false) because the adjudication of that
claim "would undoubtedly interfere with an FDA policy judgment."
In support of that contention, Edge seizes upon the
enforcement priorities stated in the FDA's Interim Bulk Drug
Policy. Based on them, it argues that, because the FDA has
indicated that it does not intend to take action against
outsourcing facilities compounding drugs by using vancomycin
hydrochloride, the FDCA precludes the claim at issue. Interim
Bulk Drug Policy, 2017 WL 345598, at *7.
Edge contends that this conclusion follows from POM
Wonderful, which it contends establishes that the FDCA precludes
Lanham Act claims that would "directly conflict[] with the agency's
policy choice" or otherwise "undermin[e] an agency judgment," 573
U.S. at 120. But, insofar as POM Wonderful could be read to imply
that FDCA preclusion could be warranted under some circumstances,
we find no basis for dismissing this variant of Azurity's Lanham
Act claim on the ground that the FDCA precludes it.
First, like in POM Wonderful, which found no preclusion,
the FDA did not preapprove the statements by Edge that Azurity
alleges were made in violation of the Lanham Act. Thus, this case
is not one in which a finding that the statement is actionable
- 41 -
under the Lanham Act calls into question the lawfulness of a
statement that the FDA has deemed proper.
Second, POM Wonderful found no preclusion even where an
FDA regulation governed some aspects of the challenged label. See
573 U.S. at 108. Here, the case for finding no preclusion would
only seem to be stronger. After all, the parties have identified
no FDA regulation that governs the statements that outsourcing
facilities may make in advertising -- let alone a regulation that
would risk subjecting Edge to inconsistent obligations if its
Compliance Statements could be the basis of Lanham Act claims.
Third, and relatedly, like in Pom Wonderful, this is not
a case in which a plaintiff is attempting to enforce the FDCA
indirectly. True, the FDCA does not furnish a private right of
action. Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341, 349
n.4 (2001); 21 U.S.C. § 337(a). But, we fail to see the import of
that observation here. For, while Edge does argue that "Azurity
seeks to enforce a 'bulk drug substance' provision of the FDCA
under circumstances in which the FDA has expressly declined to
take any enforcement action," Azurity "seeks to enforce the Lanham
Act, not the FDCA or its regulations," POM Wonderful, 573 U.S. at
117.
Section 503B does regulate how compounded drugs may be
labeled. See 21 U.S.C. § 353b(a)(10). But, neither party suggests
that section 503B or any other provision of the FDCA regulates the
- 42 -
statements that outsourcing facilities may make in advertising.
So, rather than enforcing the FDCA, Azurity is merely pursuing a
private right of action under the Lanham Act. See id. at 120
(noting that "the FDA does not have authority to enforce the Lanham
Act" and finding it insufficient to preclude a Lanham Act claim
that the FDA "enacted regulations that touch on similar subject
matter but do not purport to displace that remedy or even implement
the statute that is its source").
Edge's only remaining argument for preclusion is that
Azurity's claim should be precluded because it depends on the
meaning of a law that the FDA administers. Such an argument may
be better understood to rest on the doctrine of primary
jurisdiction, rather than preclusion. See Pejepscot Indus. Park,
Inc. v. Me. Cen. R.R. Co., 215 F.3d 195, 205 (1st Cir. 2000)
(setting forth three factors that inform the decision to refer an
issue to an agency under the doctrine of primary jurisdiction:
"(1) whether the agency determination l[ies] at the heart of the
task assigned the agency by Congress; (2) whether agency expertise
[i]s required to unravel intricate, technical facts; and (3)
whether, though perhaps not determinative, the agency
determination would materially aid the court" (alterations in
original) (quoting Massachusetts v. Blackstone Valley Elec. Co.,
67 F.3d 981, 992 (1st Cir. 1995))). But, whatever the proper
label, the argument does not persuade us here.
- 43 -
Edge relies on the Federal Circuit's holding that
a complainant fails to state a cognizable
claim under [section 337 of the Tariff Act, 19
U.S.C. § 1337, based on alleged violations of
the Lanham Act] where that claim is based on
proving violations of the FDCA and where the
FDA has not taken the position that the
articles at issue do, indeed, violate the
FDCA. Such claims are precluded by the FDCA.
Amarin Pharma, Inc. v. Int'l Trade Comm'n, 923 F.3d 959, 968 (Fed.
Cir. 2019). The plaintiff's argument in Amarin was that a
competitor had falsely or misleadingly labeled its dietary
supplement products because "labeling the products as 'dietary
supplements' is literally false because the products 'cannot meet
the definition of "dietary supplement" in Section 201(ff) of the
FDCA.' . . . [T]he [competitor's] products 'are actually
unapproved "new drugs" under the FDCA.'" Id. at 967 (quoting the
plaintiff's complaint). But, despite the broad language of the
excerpt that Edge quotes, Amarin was in fact concerned with a lack
of guidance from the FDA about an unclear statutory question, the
resolution of which implicated the FDA's expertise: whether
synthetically produced omega-3 products were "new drugs" as
defined in the FDCA, which would trigger a requirement that the
FDA approve them for sale and use in the United States. See id.
at 961. Indeed, the Federal Circuit explicitly stated that it was
not making the "broader ruling -- that all such claims are
- 44 -
precluded regardless of whether the FDA has provided guidance."
Id. at 968.
Here, by contrast, the "bulk drug substance" provision
of section 503B is clear in the relevant respects, and that clear
statutory text is reinforced by the FDA's interim guidance. The
adjudication of Azurity's "bulk drug substance" claim thus does
not require a court to make a determination that "l[ies] at the
heart of the task assigned the agency by Congress" or requires
"agency expertise . . . to unravel intricate, technical facts."
Pejepscot Indus. Park, Inc., 215 F.3d at 205 (quoting Blackstone
Valley Elec. Co., 67 F.3d at 992 (alteration in original)).
Instead, the adjudication of this claim simply requires a court to
ascertain whether a particular drug appears on either the list of
"bulk drug substances for which there is a clinical need," or on
the drug shortage list. 21 U.S.C. § 353b(a)(2)(A); see also
Alpharma, Inc. v. Pennfield Oil Co., 411 F.3d 934, 936, 939 (8th
Cir. 2005) ("The question of whether [the defendant's product]
has been approved as safe and effective is much different from the
question of whether [the defendant's product] should be approved
as safe and effective, and it is only the latter that requires the
FDA's scientific expertise.").
Thus, even if we were to assume that the FDCA precludes
Lanham Act claims that "directly conflict with" the FDA's "policy
choice[s]" or "undermin[e] an agency judgment," see POM Wonderful,
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573 U.S. at 117, Azurity's bulk drug claim is not of that kind.
The plain text of the relevant portion of section 503B is clear:
one of the statutory "conditions" for "outsourcing facilit[ies]"
is that the "facility . . . does not compound using bulk drug
substances . . . unless" the substance in question appears on a
list the FDA has not yet promulgated in the manner prescribed by
statute. 21 U.S.C. § 353b(a)(2). Nothing in the FDA's guidance
suggests otherwise. See Belcher Pharms., LLC v. Hospira, Inc., 1
F.4th 1374, 1381 (11th Cir. 2021) (holding a Lanham Act claim not
precluded by the FDCA because the plaintiff "is . . . not asking
us to contradict any regulatory conclusion reached by the FDA" or
"to make any original determination that only the FDA could make—
such as whether the indications for use are safe or effective, or
whether [defendant]'s drug is approved or grandfathered").
Indeed, the FDA's interim bulk drug policy states that bulk drug
substances like vancomycin hydrochloride "[are] not on the 503B
bulks list," Interim Bulk Drug Policy, 2017 WL 345598, at *7.
That is not to deny that the FDA has made a statement
regarding the way it intends to exercise its enforcement
discretion. But, the FDA's choice not to enforce the terms of
this provision against outsourcing facilities that use such bulk
drug substances does not mean that the terms of the provision are
less than perfectly clear. See Allergan, 2017 WL 10526121, at *8
("[T]he FDA's decision to decline enforcement of certain
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. . . 503B requirements does not help [the defendant]. As an
executive agency, the FDA has discretion to enforce the law, but
the lack of enforcement does not make [the defendant's] actions
legal."). And, the Lanham Act claim at issue merely asks a court
-- with respect to the meaning of that provision -- to find that
the terms of the provision are as clear as they plainly are. Thus,
we perceive no basis for finding the kind of conflict between
Lanham Act enforcement and FDA policy discretion that Edge contends
could supply the basis for finding a Lanham Act claim to be
precluded by the FDCA.11
11 Edge does also contend, more broadly, that Azurity's
"Lanham Act claims are precluded because they require litigation
of alleged FDCA violations." And, Edge further argues, relying on
the Ninth Circuit's pre-POM Wonderful decision in PhotoMedex, "[a]
Lanham Act claim may not be pursued if the claim would require
litigating whether [the underlying] conduct violates the FDCA,"
PhotoMedex, Inc., 601 F.3d at 924. But, while Edge is right that
Azurity can only succeed on its Lanham Act claims if it can prove
that Edge was not in compliance with the relevant provision of
section 503B at the time the statements were made, the Supreme
Court rejected in POM Wonderful the argument that because only the
FDA can enforce the FDCA, Lanham Act claims based on a statement
also regulated by the FDCA are categorically precluded. POM
Wonderful, 573 U.S. at 117; see also ThermoLife Int'l, LLC v.
Gaspari Nutrition Inc., 648 F. App'x 609, 612 n.1 (9th Cir. 2016)
(acknowledging that POM Wonderful, by "explain[ing] that the
FDCA's exclusive enforcement authority 'does not indicate that
Congress intended to foreclose private enforcement of other
federal statutes,'" rejected the core rationale underlying the
Ninth Circuit's precedent that held that a Lanham Act claim may
not be pursued if the claim would require litigating whether the
underlying conduct violates the FDCA); JHP Pharms., LLC v. Hospira,
Inc., 52 F. Supp. 3d 992, 999 (C.D. Cal. 2014) ("PhotoMedex was
the primary case relied on by the lower courts in POM Wonderful,
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V.
That brings us to Azurity's contention that the District
Court erred in dismissing its challenge to the dismissal of the
variant of its Lanham Act claim that is premised on the Superiority
Statement. That statement, once present on a page of Edge's
website describing its Vancomycin Oral Solution, stated that
"commercially available options are not ideal for use in the
hospital setting."
Azurity argues that this statement by Edge constituted
"a literally false statement about vancomycin hydrochloride" in
violation of the Lanham Act. Edge responds that its statement is
"non-actionable puffery" and that we should affirm the District
Court's dismissal of this version of Azurity's Lanham Act claim on
that basis. We agree with Edge.
Azurity correctly notes that the District Court did not
specifically address the Superiority Statement-based theory in
granting Edge's motion to dismiss. We may also assume that Azurity
and although it was not specifically overruled, its precedential
value may be limited."); Innovative Health Solutions, Inc. v.
DyAnsys, Inc., No. 14-CV-05207, 2015 WL 2398931, at *7 n.4 (N.D.
Cal. May 19, 2015) (same); Surgical Instrument Serv. Co., Inc. v.
Intuitive Surgical, Inc., 571 F. Supp. 3d 1133, 1142 (N.D. Cal.
2021) ("PhotoMedex is no longer good law. . . . The 'reasoning and
theory' of PhotoMedex is [] 'clearly irreconcilable with the
reasoning and theory' of POM Wonderful, making PhotoMedex
'effectively overruled.'" (cleaned up, internal citations
omitted)). Accordingly, we are not persuaded by Edge's broader
argument.
- 48 -
is right that the preclusion rationale upon which the District
Court grounded its decision does not dictate the resolution of
this version of Azurity's Lanham Act claim, because evaluating the
falsity of the Superiority Statement does not require construing
the FDCA. And, that is so because we may affirm a district court's
judgment on any ground manifest in the record, see TipRanks, 19
F.4th at 36, and we conclude that Edge's statement is nonactionable
puffery.
"Advertising claims that fall in the category of
'puffing' are considered not to constitute false advertising and
are not in violation of the Lanham Act." 5 McCarthy on Trademarks
and Unfair Competition § 27:38 (5th ed.). McCarthy's treatise
recognizes two varieties of puffery: (1) "grossly exaggerated
advertising claims . . . [that] no reasonable buyer would believe
was true," and (2) "a general claim of superiority over a
comparative product that is so vague and indeterminate that it
will be understood as a mere expression of
opinion. . . . Advertising claims that a product or service is
'better' and 'superior' fall into this category." Id. But, "[a]
specific and measurable advertisement claim of product superiority
. . . is not puffery." Clorox, 228 F.3d at 38 (alteration in
original) (quoting Southland Sod Farms, 108 F.3d at 1145).
In Clorox, for example, we held that two statements in
advertisements for laundry detergent -- "Compare with your
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detergent . . . Whiter is not possible" and "Whiter is not
possible" -- were specific and measurable claims of superiority,
rather than puffery, id. at 38–39. The challenged statements, we
explained, "invite[] consumers to compare [the defendant's
detergent]'s whitening power against either other detergents
acting alone or detergents used with chlorine bleach," id. at 39,
in part because the tag line appeared in commercials that featured
"consumers who normally used bleach to achieve white clothes . . .
who [were] favorably impressed by the results obtained from using
[the defendant's product] alone," id. at 35.
Other circuits have concluded similarly. In Pizza Hut,
Inc. v. Papa John's International, Inc., 227 F.3d 489 (5th Cir.
2000), for example, the Fifth Circuit concluded that the slogan
"Better Ingredients, Better Pizza" standing alone constituted
nonactionable puffery under the Lanham Act, because "[t]he word
'better,' when used in this context is unquantifiable" "without
further description," id. at 498-99. But, when that slogan was
accompanied by ads that compared specific ingredients, such as the
tomatoes and the water that went into the dough, the slogan was
given "quantifiable, and fact-specific meaning" such that it no
longer constituted puffery. Id. at 500.
Likewise, in Castrol Inc. v. Pennzoil Co., 987 F.2d 939
(3d Cir. 1993), the Third Circuit upheld a trial court's
determination that the defendant's statement that its motor oil
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product "outperforms any leading motor oil against viscosity
breakdown" was not puffery, because "[v]iscosity breakdown" is a
specific attribute of motor oil that is measured and graded by
performance on "an industry-recognized laboratory test that
measures the 'kinematic viscosity' of motor oils." Castrol Inc.
v. Pennzoil Co., 799 F. Supp. 424, 429 (D.N.J. 1992), aff'd, 987
F.2d 939 (3d Cir. 1993). And, while the statement did not
explicitly mention any of the defendant's competitors, the fact
that the statement represented that the product was "superior to
other brands" invited the consumer to make that comparison by
necessary implication. Castrol, 987 F.2d at 946.
Azurity argues that Edge's Superiority Statement
represents a false "claim[] that [Edge's] product was 'ideal' for
use in a hospital setting, implying that products such as FIRVANQ
are not, or was otherwise superior to FDA-approved drugs such as
FIRVANQ." But, Azurity further argues, FIRVANQ is ideal for use
in hospitals because it is FDA approved, and, "[b]y its inherent
nature, an FDA-approved product is presumed to be safer and
superior to a compounded formulation using the same active
ingredient." Therefore, Azurity contends, Edge's Superiority
Statement is not nonactionable puffery, because it is "a specific
and measurable advertisement claim of product superiority" that
can form the basis of a Lanham Act claim.
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But, even if we assume that the challenged statement by
Edge does in fact necessarily imply that Edge's product is "ideal
for use in the hospital setting" and competing products such as
FIRVANQ are not, Azurity's argument rests on the premise that when
Edge represents its product to be "ideal for use in the hospital
setting," a "reasonable consumer" of these drugs would measure the
"ideal-ness" of each drug for use in the hospital setting by
whether the drugs were FDA-approved or not. Pizza Hut, 227 F.3d
at 501. But, Azurity provides no explanation why that is so. Nor
does the Superiority Statement itself invite the consumer to
compare the drugs along that dimension.12 See, e.g., Clorox, 228
F.3d at 38 (inviting the consumer to compare the "whiteness" of
their laundry when they use the defendant's product versus when
12 Nor does the word's definition indicate that, insofar as
it can be measured at all, the quality of being "ideal" is anything
other than "vague or subjective." Clorox, 228 F.3d at 38. The
Oxford English Dictionary defines "ideal" as, "[c]onceived or
regarded as perfect or supremely excellent in its kind; answering
to one's highest conception." Ideal, Oxford English Dictionary
Online (Dec. 2021 update); see also ideal, Merriam-Webster's
Unabridged Dictionary ("of or relating to an ideal or to perfection
of kind : existing as a perfect exemplar : embodying or
symbolizing an ideal").
Additionally, we note that the source that Azurity cites to
support its claim that FDA approval serves as proof that a drug is
"ideal" in fact belies the contention. Azurity cites the following
language from the FDA: "FDA approval of a drug means that data on
the drug’s effects have been reviewed . . . and the drug is
determined to provide benefits that outweigh its known and
potential risks for the intended population." A determination
that a drug's benefits outweigh its risks is a far cry from a
determination that the drug is "ideal."
- 52 -
they use bleach); Pizza Hut, 227 F.3d at 501 ("[A] reasonable
consumer would understand the slogan[, 'Better Ingredients, Better
Pizza,'] when considered in the context of the comparison ads, as
conveying the following message: Papa John's uses 'better
ingredients,' which produces 'better pizza' because Papa John's
uses 'fresh-pack' tomatoes, fresh dough, and filtered water."
(emphasis in original)). Because there are, perhaps, many other
factors that go into whether a drug is "ideal for use in the
hospital setting," such as ease of administration or reliable
supply of the drug in large quantities, that FDA approval itself
may not have a bearing on, we see no reason why FDA approval is
the only measure by which a consumer of these drugs would measure
the "ideal-ness" of them. See Impact Applications, Inc. v.
Concussion Mgmt., LLC, No. 19-3108, 2021 WL 978823, *7 (D. Md.
March 16, 2021) (rejecting the argument that a statement that
implied that the defendant's product was superior to that of the
plaintiff's was not nonactionable puffery on the ground that a
claim of superiority need not equate to a representation of FDA
approval, as "[i]t is unclear, if not unlikely, . . . that a device
that is not approved by the FDA can never be superior in any
respect to an FDA-approved device").
The claim allegedly being made in the Superiority
Statement, moreover, is not like a claim concerning a specifically
measurable attribute like motor oil viscosity (or its capability
- 53 -
to prolong engine life), see Castrol, 799 F. Supp. at 427–28, or
a claim in which the advertiser suggests that an attribute, if not
measurable, is comparable, see Ferring Pharms., Inc. v. Braintree
Lab'ys, Inc., 38 F. Supp. 3d 169, 178 (D. Mass. 2014) (finding
that a claim that a drug had a "'superior cleansing efficacy,'
[when] backed up by study results, [was] not mere 'puffery'"). It
is a claim about a product being "not ideal" is not susceptible to
specific measurement. But, we discern no objective way to measure
the quintessentially "vague [and] subjective," Clorox, 228 F.3d at
38, attribute of "ideal-ness" and compare it across products, and
Azurity does not supply us with any guidance.
Thus, we agree with Edge that Edge's statement is
nonactionable puffery. See Catilina Nominees Proprietary Ltd. v.
Stericycle, Inc., No. 15-CV-10734, 2021 WL 1165087, at *6 (N.D.
Ill. Mar. 26, 2021) (concluding, on a motion to dismiss, that
defendant's statement that its products are "ideal for patient
rooms and treatment areas where security and convenience are
critical" "employ[ed] . . . vague buzzwords" and constituted
"puffery"). We therefore affirm on this ground the District
Court's grant of Edge's motion to dismiss the variant of Azurity's
Lanham Act that is premised on Edge's statement that "commercially
available options are not ideal for use in the hospital setting."
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VI.
Azurity also brings a claim under Chapter 93A, the
Massachusetts state consumer protection law, based on Edge's
Compliance and Registration Statements, as well as its Superiority
Statement. The District Court held that Azurity's "Chapter 93A
claim . . . fails as it is premised on the same allegations" as
its Lanham Act claim. Azurity, 540 F. Supp. 3d at 144 (citing
Reed, 883 F. Supp. 2d at 334–35).
On appeal, Azurity focuses on its Lanham Act claim; it
develops no argument that its Chapter 93A claim can survive if it
has not plausibly alleged Lanham Act violations. On the other
hand, Edge develops no argument for affirming the District Court's
dismissal of Azurity's Chapter 93A claim insofar as any variant of
Azurity's Lanham Act claim can survive. And, as we have explained,
one such variant of that claim can: the "bulk drug substance"-
based one that alleges the Compliance Statements are literally
false. Thus, to the same extent, and for the same reasons, that
we vacate the District Court's dismissal of Azurity's Lanham Act
claim in and affirm that dismissal in part, we vacate and affirm
in part the District Court's dismissal of Azurity's Chapter 93A
claim.13
13We do note that FDCA preemption rather preclusion would
appear to be the operative doctrine to assess whether the FDCA
- 55 -
VII.
For the foregoing reasons, we affirm in part and vacate
in part the District Court's grant of Edge's motion to dismiss
Azurity's lawsuit, and remand for further proceedings. The parties
shall bear their own costs.
bars a Chapter 93A claim, given that it is a state law claim. But,
no such preemption argument has been advanced, and Edge does not
explain how preclusion could bar a Chapter 93A claim predicated on
the allegations underlying the "bulk substance"-based variant of
Azurity's Lanham Act claim that is the only variant that we
conclude states a claim.
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