OR AG seeks to have GNC case heard in state court, countering company's motion for federal court

By Hank Schultz contact

- Last updated on GMT

Related tags: Gnc, Supreme court of the united states, United states

OR AG seeks to have GNC case heard in state court, countering company's motion for federal court
Oregon Attorney General Ellen Rosenblum has moved to have the lawsuit she filed against GNC heard in state court, countering a motion filed by the company to have the case moved into federal court.

In the original lawsuit, filed in late October, Rosenblum cited GNC for the sale of dietary supplements alleged to contain illegal dietary ingredients, specifically picamilon and BMPEA, alternately listed as Acacia rigidula​. The suit seeks significant penalties for what the OR AG alleges is violation of that state’s consumer protection statutes.

Sales for GNC were trading at around $39.50 before the OR AG announced her actions​. Share prices subsequently fell by almost 15% but and are still off, trading at $30.90 at market close on Thursday.  

Michael Mulè, a partner at Rivkin Radler LLP, told NutraIngredients-USA that filing a motion to remove to federal court is a standard tactic and is a very simple procedure.

“There are two bases for removal,” ​he told us. “The first is that the underlying lawsuit involves a federal question, and the second is diversity, meaning that the defendants are incorporated or headquartered in another state to the plaintiffs.”

Question of federal jurisdiction

GNC indeed made the argument that the case hinges on questions of federal jurisdiction. “Products sold by GNC are regulated by the U.S. Food and Drug Administration. GNC's vendors certify that they are in full compliance with the Food, Drug and Cosmetic Act (FDC Act), and to guarantee that their products meet all applicable Federal and state laws,” ​the company said in a statement issued in late October.

Rosenblum disagreed, arguing that state consumer protection actions that hinge on purported violations of Federal law are nothing new. She had this to say in the motion filed on Nov. 20: “GNC’s arguments ignore the reality that state law consumer protection claims embedding FDCA standards are now commonplace, and have been endorsed and sanctioned multiple times by both the Supreme Court and the courts of this District. As the Supreme Court detailed in its opinion in Wyeth v. Levine, 555 U.S. 555 (2009), the history of the FDCA’s enactment shows quite plainly that it was intended to accommodate, and not to displace or preempt, state consumer claims of the type in ​[the] Oregon complaint—and their assertion here is therefore not, as GNC claims, a backhanded attempt to usurp any exclusive federal prerogative to FDCA enforcement.”

Oregon has requested an oral argument in the Portland division of the United States District Court of the District of Oregon on its motion. The state is also seeking costs, including legal fees, for having the case remanded to state court.

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