Angel A. Garganta at Arnold & Porter LLP, who is representing USPLabs, told NutraIngredients-USA that the proposed settlement was approved in court at a final hearing on December 18.
According to the official website for the USPlabs Settlement in the case Hogan et al vs USPLabs, both sides agreed to settle to “avoid the cost and risk of further trial".
Texas-based USPLabs, which has recently reformulated Jack3d to remove DMAA, creatine and beta-alanine and re-badged it Jack3d Micro, has not admitted any liability, however.
The firm “denies all of the legal claims in this case”, and stresses that the settlement “does not mean that any law was broken”.
Who is in the class?
The class action consolidates a series of complaints against USPLabs alleging that it made false and misleading statements about OxyELITE Pro and Jack3d, which contain DMAA, a stimulant the FDA argues is not a lawful dietary ingredient, and may cause serious adverse reactions.
The action represents plaintiffs Govinda Hogan, Catherine Giasone, Heather Bodor, James Manning, Adrian Haro, Jeffrey Sherrill, Johnnie Pacheco, and Isabella Janovick, individually and other consumers nationwide that bought the supplements between January 1, 2008 and August 17, 2012.
Under the terms of the settlement, approved by the Superior Court of California, Los Angeles County, USPLabs has agreed to allocate $2m to settle the case.
Consumers qualify as a member of the class if they "purchased for personal consumption, and not for re-sale, one or more bottles of the USPlabs Products in the United States during the class period."
How to make a claim
Under the settlement, class members who submit a valid claim with receipts will be refunded the full amount they paid, with no limit on the number of bottles refunded.
Those who submit a valid claim without receipts are entitled to $30 per bottle of OxyELITE Pro and $20.00 per bottle of Jack3d purchased, up to a maximum of $150, if they can remember (and be willing to swear to) where the purchase took place, the quantity purchased, and the approximate dates of purchase.
“In addition”, says the website, “USPlabs has agreed to modify its labeling of the USPlabs Products in a way that will make the warning statements on them larger and more easily understood”.
It added: “Should the claims exceed the amount of the fund, the amount of reimbursement per bottle will be adjusted downward on a per bottle basis. If the claims do not exceed the fund, the remaining money will be paid out as a pro rata distribution to claimants, up to an amount of $300 per claimant.”
DMAA: Legal, or not?
USPLabs has always maintained that DMAA is safe, and - as a synthetic copy of a botanical constituent (geranium extract) - legal.
However, the FDA begged to differ last April, sending warning letters to 10 supplement makers including USPLabs claiming that synthetically produced DMAA is not a dietary ingredient, and is therefore not permitted for use in dietary supplements.
It also claimed that DMAA increased blood pressure, which could "increase the work of the heart such that it could precipitate a cardiovascular event".
The action prompted a scientific and regulatory firestorm in the trade, raising broader questions about the regulatory status of synthetic botanical constituents, and reigniting a heated debate over whether DMAA is actually in geranium in the first place.
Ed Wyszumiala, general manager of dietary supplements programs at NSF International, said: "This settlement will have no bearing on their argument that DMAA is present in the few unique Chinese specimens of geranium they purport to have found. That issue is still to be finalized and defined by the FDA."
The case is Hogan, et al., v. USPlabs, LLC at the Superior Court for the State of California, Los Angeles County
Case No: BC486925.
The settlement class is represented by Michael Louis Kelly at Kirtland & Packard LLP and Scott J. Ferrell at Newport Trial Group, while Angel A. Garganta at Arnold & Porter LLP is representing USPLabs.
Click here for a summary of the settlement
Click here to read the settlement agreement in full.
Defamation lawsuit update
Separately, a judge has dismissed a defamation lawsuit filed by USPLabs against a Max Muscle franchisee in Reno, Nevada that accused owner Philip Tracy of making "false and disparaging" comments about Jack3d.
In the complaint, filed in Dallas, Texas, on May 23, 2012, against MMRNV LLC (doing business as Max Muscle Sports Nutrition, Reno, Nevada) and owner Philip J. Tracy, USPLabs said an interview Tracy had done with local TV station KRNV had damaged its reputation and harmed its business.
In the segment, Tracy described Jack3d as “a derivative of rat poisoning” and “an amphetamine-like compound” that “speeds up your heart rate”.
However, granting a motion to dismiss the case, US District judge Reed O’Connor said that the Texas court lacked specific jurisdiction in the case because Tracy’s comments were addressed to local residents in Reno, Nevada.