Ameritox

Complaint Filed in Federal Court Against Millennium Laboratories for “Misleading” Press Release

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND NORTHERN DIVISION

AMERITOX, LTD. Plaintiff,
v.
MILLENNIUM LABORATORIES, INC., Defendant.

COMPLAINT

James P. Ulwick (Bar# 00536)
KRAMON & GRAHAM, P.A.
One South Street, Suite 2600
Baltimore, MD 21202-3201
Phone: (410) 752-6030
Fax: (410) 539-1269
julwick@kg-law.com

Michael R. Osterhoff
(pro hac vice oral motion)
Adam L. Marchuk
(pro hac vice oral motion)
K&L GATES LLP
70 W. Madison Street, Ste. 3100
Chicago, Illinois 60602
Phone: (312) 372-1121
Fax: (312) 827-8000
michael.osterhoff@klgates.com
adam.marchuk@klgates.com

Peter B. Bensinger, Jr. (pro hac vice oral motion)
Matthew W. Brewer (pro hac vice oral motion)
Nevin M. Gewertz (pro hac vice oral motion)
BARTLIT BECK HERMAN PALENCHAR
& SCOTT LLP
54 West Hubbard Street, Suite 300
Chicago, IL 60654
Phone: (312) 494-4400
Fax: (312) 494-4440
peter.bensinger@barlit-beck.com
matthew.brewer@bartlit-beck.com
nevin.gewertz@bartlit-beck.com

Attorneys for Plaintiff Ameritox, Ltd.

NATURE OF ACTION

1. This is an action against Millennium Laboratories, Inc. (“Millennium”) for injunctive and monetary relief for violations of the Lanham Act (15 U.S.C. § 1125, et seq.).

2. On June 13, 2012, Millennium published a “press release” on its website entitled “Millennium Laboratories Wins Lawsuit; Federal Jury Finds Ameritox Repeatedly Lied to Physicians Regarding Rx Guardian and Rx Guardian CD.”

3. The press release contains announcements relating to litigation between Millennium and Ameritox (No. 10-cv-3327) in the District Court of Maryland.

4. Millennium provided a copy of the Press Release to PR Newswire.

5. At least a dozen media outlets picked up the Press Release at PR Newswire, and made the press release available at various websites, including but not limited to, www.sacbee.com, www.bizjournals.com, and www.marketwatch.com. See Brewer Decl. Exs. A – O, filed concurrently herewith and incorporated herein.

6. Millennium’s Press Release contains false and misleading statements about Ameritox, the scope of its litigation with Millennium, and the June 13, 2012 Consent Order.

7. On information and belief, Millennium made false and misleading oral statements to news and media outlets.

JURISDICTION AND VENUE

8. This Court has jurisdiction over the subject matter of this action pursuant to 15 U.S.C. § 1121. This Court has original jurisdiction of this action under 28 U.S.C. §§ 1331-32, in that the case involves a federal question and is a civil action between citizens of different states in which the amount in controversy exceeds $75,000, exclusive of interest and costs. – 3 –

9. This Court has personal jurisdiction over Millennium, in that Millennium has minimum contacts with the forum state. Millennium conducts, engages in, and carries on business in interstate commerce, including in Maryland and, on information and belief, including this Judicial District. Furthermore, Millennium’s posting of false and misleading statements on the world-wide web were directed at this forum and caused effects therein.

10. Venue is proper in the District of Maryland pursuant to 28 U.S.C. § 1391(b) because a substantial part of the actions that form the basis of Ameritox’s claims against Defendant occurred in this District. Venue is also proper in this Judicial District because Defendant is subject to personal jurisdiction in this district and thus is deemed a resident hereof pursuant to 28 U.S.C. §§ 1391(b) and (c).

PARTIES 

11. Ameritox is a limited partnership organized under the laws of Texas with its principal place of business at 300 East Lombard Street, Suite 1610, Baltimore, MD. Ameritox is a clinical laboratory in the business of testing specimens and monitoring results for health care providers, who prescribe medications used to treat patients for chronic pain and addiction.

12. Upon information and belief, Millennium is a corporation organized under the laws of California with its principal place of business at 16981 Via Tazon, San Diego, CA. Millennium is a competitor of Ameritox in the business of testing specimens and monitoring the results for health care providers.

FACTUAL ALLEGATIONS

13. Ameritox and Millennium directly compete for market share in the urine drug testing and medication monitoring market nationwide. Ameritox and Millennium both test urine specimens and monitor results for health care providers treating chronic pain patients and other patients, who prescribe opiates and other controlled pain medications. The health care providers prescribe medications to treat patients for chronic pain and/or addiction. Because these drugs are susceptible to abuse by the patient or third parties, companies such as Ameritox or Millennium provide urine drug monitoring services for patients who are prescribed the aforementioned medications. Urine drug monitoring companies provide health care providers and their patients with test results over a period of time through the sending of reports to providers. Urine specimens are typically referred to the same laboratory over a period of time to benefit from the monitoring services that the laboratories, such as Ameritox and Millennium, provide.

14. On November 24, 2010, Millennium sued Ameritox for false advertising in this District (No. 10-cv-3327). Millennium tried its false advertising claims before an advisory jury from approximately May 21 through June 13, 2012. Millennium’s claims at trial were limited to four discontinued Ameritox advertisements. The Court excluded Millennium’s damages case. Ameritox did agree, however, to a Consent Order as to the four advertisements at issue. The Court accepted the Consent Order on June 13, 2012.

15. About two hours after the Court accepted the parties’ Consent Order, Millennium issued a press release entitled “Millennium Laboratories Wins Lawsuit; Federal Jury Finds Ameritox Repeatedly Lied to Physicians Regarding Rx Guardian and Rx Guardian CD.” See Brewer Decl. Exs. A-O.

16. The Press Release constitutes a commercial advertisement and promotional material under the Lanham Act.

17. Millennium, through its Press Release, seeks to gain a competitive advantage over Ameritox in the marketplace.

18. Millennium’s Press Release contains false and misleading claims about the lawsuit and Ameritox. Millennium’s false and misleading statements form the basis of this Complaint.

19. The Press Release includes, but is not limited to, the following statements that are literally false and/or misleading:

20. The headline of the Press Release states that a “Federal Jury Finds Ameritox Repeatedly Lied to Physicians Regarding Rx Guardian and Rx Guardian CD.” Brewer Decl. Ex. A, emphasis added.

21. The first sentence of the Press Release states that “a federal jury” found Ameritox’s advertising claims to be “material” and that they “‘actually deceive[d] or had the
tendency to deceive’ physicians.” Id.

22. The second and third paragraphs of the Press Release make references to a “jury verdict” suggesting the advisory jury verdict is binding and enforceable. Id.

23. The Court impaneled an advisory jury under Federal Rule of Civil Procedure 39(c). The advisory jury was impaneled for a limited purpose. The findings of such a jury are advisory. The Court must make its own findings, which are reviewed as if there had been no verdict from an advisory jury at all.

24. The advisory jury did not find (or even address) whether the challenged Ameritox advertising claims were “material” to the purchasing public.

25. The advisory jury did not find (or even address) whether Millennium suffered harm or injury as a result of Ameritox’s advertising statements.

26. The advisory jury did not conclude that Ameritox is liable under the Lanham Act because it did not consider whether Millennium suffered harm or injury as a result of Ameritox’s advertising statements.

27. Millennium, through its Press Release, misstated the scope, role, and findings of the advisory jury to suggest to the market that a federal jury found Ameritox liable for false advertising under the Lanham Act.

28. The first paragraph of the Press Release states, “[t]he court found that monetary damages would be insufficient to correct the harm imposed by Ameritox’s ad campaign and that the public interest would be served by a permanent injunction prohibiting the dissemination of any advertisements promoting the ability of Ameritox’s Urine Drug Tests (UDT) to determine dosage compliance or adherence.” The Court did not make any such “finding” as the parties’ Consent Order addressed the issue. In fact, the Court excluded Millennium’s damages case after excluding Millennium’s damages expert’s opinion and after finding that Millennium’s damages case was too speculative.

29. The final paragraph of the Press Release states, “[y]et for years, Ameritox lied in its advertisements by misleading doctors about its products.” Brewer Decl. Ex. A.

30. The use of the word “lied” connotes intentional deception.

31. According to the Merriam-Webster dictionary, the word “lied” means “to make an untrue statement with intent to deceive.” See Merriam-Webster Dictionary, http://www.merriamwebster.comldictionary /lie?show=2&t=1339612448 (last visited June 13, 2012).

32. Millennium knows the advisory jury and Court did not enter any findings on the issue of intent. The Court excluded Millennium’s alleged evidence of intent to deceive. Contrary to the parties’ Consent Order, Millennium’s Press Release states that the Court and advisory jury found that Ameritox “lied,” making deliberate, intentional false and misleading  advertising statements.

33. The first paragraph of the Press Release states, the “Court ordered Ameritox’s CEO Ancelmo Lopes to promptly send a ‘corrective advertising’ letter to all current Ameritox customers, and post to its website, conceding Ameritox’s false advertising campaign from 2008 through 2012.” Exhibit A, emphasis added.

34. The Court did not order “corrective advertising” in the Consent Order.

35. The words “corrective advertising” do not appear in the Consent Order. Ameritox, through the Consent Order, agreed to send a letter from its CEO to Ameritox customers addressing points outlined in the Consent Order.

36. The sub-headline of the Press Release states, “Ameritox found to have disseminated literally false advertisements from 2008 to 2012.” Brewer Decl. Ex A. The first paragraph of the Press Release states, “Court ordered Ameritox’s CEO Ancelmo Lopes to promptly send a ‘corrective advertising’ letter to all current Ameritox customers, and post to its website, conceding Ameritox’s false advertising campaign from 2008 though 2012.” Id.

37. The third paragraph of the Press Release states, “[t]he jury’s verdict should put an end to Ameritox’s nearly decade-long practice of using false claims and advertising practices …” Id.

38. The press release creates the false and misleading impression that Millennium challenged at trial Ameritox’s entire advertising campaign from 2008 through 2012, and that the CEO letter is a concession of a “false advertising campaign from 2008 through 2012.”

39. The Court threw out Millennium’s “brand promise” theory, which attempted to attack Ameritox’s entire advertising campaign. See 5/18/2012 Order, D.E. 262 ¶ 1.

40. The Court and advisory jury did not address any advertising “campaign.” The Court and advisory jury considered only four isolated ads.

41. The second paragraph of the Press Release states, “Ameritox’s re-introduction of Rx Guardian as Rx Guardian CD – or ‘Compliance Data base’ in June 2011 – was literally false and deceptive because the patients in the ‘Compliance Database,’ described by Ameritox as ‘known adherent’ patients, were not in fact known to be adherent.” Brewer Decl. Ex. A, emphasis added.

42. The Court and advisory jury considered a single advertisement relating to Rx Guardian CD, the “Rx Guardian CD Fact Sheet,” and made no finding about “the reintroduction of Rx Guardian as Rx Guardian CD.”

43. The fifth paragraph of the Press Release states, “Judge Legg established at the outset of the trial that UDT, including Rx Guardian and Rx Guardian CD, cannot determine whether or not a patient is taking the prescribed dosages of a prescribed pain management drug.” Brewer Decl. Ex. A.

44. Before trial, the parties told the Court that they agreed that no urine drug test can definitively determine whether a patient has taken the dosage of medication prescribed. The issue was not contested before the Court or advisory jury, contrary to the false and misleading implication of the fifth paragraph of the Press Release.

45. The Press Release states that the testimony of Ameritox’s Chief Medical Officer, Dr. Harry Lieder, “doomed” Ameritox’s case because “[d]uring rigorous cross-examination” he “admitted to Rx Guardian’s failings” when he testified that Rx Guardian cannot determine the dosage of a medication that a patient is taking. Id. The Press Release creates the false and misleading impression that the issue was contested, when Millennium knows that the parties had already stipulated that no urine drug test can definitively determine whether a patient has taken the dosage of medication prescribed.

46. The Press Release creates the false and misleading impression that Ameritox argued in the litigation proceedings that its Rx Guardian and Rx Guardian CD urine drug testing services could determine so called “dosage compliance,” and that the Judge held otherwise. Rather, Ameritox agreed at all stages of the case that urine drug testing cannot definitively determine whether or not a patient is taking the prescribed dosage of prescribed pain medication. Ameritox has maintained that its services are one tool a physician can use to help assess patient compliance. Judge Legg’s instructions to the advisory jury were based on party-agreed stipulations to this effect.

47. The Press Release also creates the false and misleading impression that the Court and advisory jury found that Rx Guardian and Rx Guardian CD harm patients and lead to improper patient dismissals. The Press Release states:

Millennium’s case was supported by Howard A. Heit, MD, FACP, FASAM, who provided expert testimony on the adverse consequences that may occur when clinicians rely on Rx Guardian to determine how the patient has been taking their medications, both in terms of overall dosage and frequency of medication use. According to Dr. Heit, “The decision to alter a patient’s medication regimen based on false scientific data can easily lead to patient harm through dose reduction, and a worsening of the patient’s complaints of pain. Worse still, we know that some clinicians discharge their patients based on Urine Drug Test results. Any clinical decision based on unsound laboratory testing can expose the patient as well as the prescriber to significant risk and potentially devastating adverse outcomes. It is only a matter of time before an injured patient holds his prescriber legally accountable for actions taken against him based on UDT results that claim more than they can deliver.

48. Similarly, the final paragraph of the Press Release (before the tag information about Millennium) quotes Millennium’s CEO, Jim Slattery:

Urine drug testing provides significant clinical value in improving patient care, but only if the results of the test can be trusted. Yet for years, Ameritox lied in its advertisements by misleading doctors about its products. It hurt physicians. It hurt patients. It hurt this industry. This was a long and difficult fight, but ultimately the truth prevailed.

49. The Court and advisory jury considered no evidence and made no findings about Rx Guardian or Rx Guardian CD harming patients or patients being improperly dismissed from pain management practices on account of Rx Guardian or Rx Guardian CD reporting. Yet, the Press Release creates the false and misleading impression that the Court and advisory jury found four ads to contain false statements that harmed patients and led to improper patient dismissals.

COUNT I
FALSE ADVERTISING IN VIOLATION OF THE LANHAM ACT, 15 U.S.C. § 1125(A) ET SEQ.

50. Ameritox hereby incorporates the allegations contained in Paragraphs 1 through 49 as if fully set forth herein.

51. Millennium has made false and/or misleading statements, including without limitation, the statements contained in Paragraphs 13-49, in commercial advertisements and promotional materials in violation of the Lanham Act, 15 U.S.C. § 1125.

52. Millennium’s statements are likely to deceive customers regarding the true nature and characteristics of the lawsuit between Millennium and Ameritox and Ameritox’s services.

53. Millennium’s statements likely have, had, and will likely continue to, influence materially purchasing decisions to the extent that Ameritox customers abandon Ameritox or current or prospective customers choose Millennium’s services instead of those offered by Ameritox.

54. Millennium’s false and misleading advertising claims likely have, had, and will likely continue to result in the loss of current and prospective customers who, but for Millennium’s advertising claims, would have done business with Ameritox.

55. Millennium’s statements affect and were placed into interstate commerce.

56. Millennium knew its commercial advertisements and promotional materials were false and/or misleading or acted in reckless disregard of the truth of such statements.

57. As a direct and proximate result of Millennium’s conduct, Ameritox has and continues to suffer injury, including but not limited to actual and likely diversion of sales, as well as likely and actual loss of goodwill.

58. As a direct and proximate result of Millennium’s conduct, Ameritox has incurred and will likely continue to incur actual damages, entitling Ameritox to an injunction, corrective advertising, treble damages, Millennium’s profits derived from its unlawful acts, and increased pursuant to the principles of equity in accordance with the provisions of 15 U.S.C. §§ 1116 and  1117.

JURY DEMAND

Ameritox hereby demands a jury trial on all issues so triable.

 

RELIEF REQUESTED

WHEREFORE, Ameritox asks this Court to enter judgment against Millennium granting the following relief:
(a) Judgment that Millennium has engaged in false advertising, promotion and descriptions under § 43(a) of the Lanham Act, 15 U.S.C. §1125(a);

(b) Awarding Ameritox damages in an amount to be proven at trial;

(c) Requiring Millennium to disgorge all ill-gotten gains flowing from the conduct described in this Complaint and award an appropriate pro-rata share of such ill-gotten gains to Ameritox;

(d) Preliminarily and permanently enjoining Millennium, its officers, agents, and employees, and all persons acting in concert with it, from further engaging in the conduct described in this Complaint, including but not limited to removing the Press Release from circulation;

(e) Requiring Millennium to issue a corrective Press Release retracting the false and misleading statements;

(f) Requiring Millennium to quote from the Consent Order and not mischaracterize the Consent Order or the litigation proceedings between the parties that gave rise to the Consent Order, or this litigation;

(g) An award to Ameritox of costs and attorneys’ fees associated with the suit herein, to the extent not covered or allowed by the above; and

(h) Such other and further relief as the Court and/or a jury deems just and proper.

 

Dated: June 14, 2012 Respectfully Submitted ,
By: /s/ James P. Ulwick

James P. Ulwick (Bar# 00536)
KRAMON & GRAHAM, P.A.
One South Street, Suite 2600
Baltimore, MD 21202-3201
Phone: (410) 752-6030
Fax: (410) 539-1269
julwick@kg-law.com

Michael R. Osterhoff
(pro hac vice oral motion)
Adam L. Marchuk
(pro hac vice oral motion)
K&L GATES LLP
70 W. Madison Street, Ste. 3100
Chicago, Illinois 60602
Phone: (312) 372-1121
Fax: (312) 827-8000
michael.osterhoff@klgates.com
adam.marchuk@klgates.com

Peter B. Bensinger, Jr. (pro hac vice oral motion)
Matthew W. Brewer (pro hac vice oral motion)
Nevin M. Gewertz (pro hac vice oral motion)
BARTLIT BECK HERMAN PALENCHAR & SCOTT
LLP
54 West Hubbard Street, Suite 300
Chicago, IL 60654
Phone: (312) 494-4400
Fax: (312) 494-4440
peter.bensinger@barlit-beck.com
michael.valaik@bartlit-beck.com
matthew.brewer@bartlit-beck.com
nevin.gewertz@bartlit-beck.com

Attorneys for Plaintiff Ameritox, Ltd.