New Litigation Risks Possible From Pending Allergan V. Athena Case

Lower court decisions identifying Athena Cosmetics, Inc.'s RevitaLash products as unapproved drugs that compete unfairly against Allergan's Latisse drug could have broader legal implications for the cosmetics industry if the Supreme Court denies the firm's request for review. Already beleaguered by false-advertising class actions on the tails of FDA warning letters, firms could be at further risk of being hit with opportunistic lawsuits if it's left to federal courts to determine products' intended use and regulatory status.

Cosmetic firms already are at risk of being sued following an FDA warning letter for overreaching product claims, but a pending decision from the U.S. Supreme Court could incentivize litigation against companies even in instances where FDA has been silent regarding their marketing.

Athena Cosmetics, Inc. awaits the Supreme Court's decision on its request for a hearing following lower court rulings that determined its RevitaLash products unapproved drugs in violation of California law.

Solicitor General Donald Verrilli has advised the Supreme Court not to hear Allergan et al. v Athena, agreeing that Athena's products compete unfairly against Allergan, Inc.'s FDA-approved Latisse treatment for hypotrichosis of the eyelashes, or "inadequate" lashes (Also see "Supreme Court Review Of Athena Cosmetics Case, Federal Preemption Argument Unlikely" - HBW Insight, 10 Jun, 2015.).

"I think this case presents serious concerns, and opening the [litigation] floodgate is top of the list." – Strasburger & Price partner Michael Walsh

The courts, and Verilli, have rejected Athena's argument that FDA should have primary jurisdiction over matters of cosmetics oversight, and specifically the question of whether a cosmetic exceeds boundaries set by the Federal Food, Drug and Cosmetic Act and, on that basis, warrants regulation as an unapproved drug.

The Supreme Court usually follows Solicitor General recommendations, and if it does in this case, the decision could set a landmark precedent with significant implications for the broader industry.

"I think this case presents serious concerns, and opening the [litigation] floodgate is top of the list," noted Michael Walsh, a partner at law firm Strasburger & Price, in a June 17 email to "The Rose Sheet."

In a June 9 blog post, the attorney pointed out that "manufacturers of FDA-regulated products have generally enjoyed a decade of favorable rulings on the issue of federal preemption and the primacy of jurisdiction of the FDA, but the political climate and emerging new approaches by the courts threaten to reshape the litigation landscape."

He suggests that "the FDA itself has flip-flopped from its prior view favoring preemption to its position that now assists private litigants in pursuing private tort and Lanham Act 'labeling' claims under the Food Drug and Cosmetic Act."

Many suits against cosmetics players have piggybacked on FDA warning letters for claims that render products unapproved drugs in the agency's eyes (Also see "Audio Feature: FDA Monitoring Cosmetic Claims, But Litigation Remains Biggest Threat" - HBW Insight, 14 May, 2015.). Typically, such letters require firms to work with FDA on reforming their marketing and make labeling revisions as needed, which carries costs and negative PR.

But litigants are adding insult to injury by following with suits alleging false advertising, consumer fraud and related violations. L'Oreal USA, Inc., which was targeted in recent years by the Federal Trade Commission as well as FDA for Lancome and L'Oreal Paris product claims citing gene-related benefits, has been hit with suits in the aftermath of those enforcement actions, which it continues to contest in the courts.

The high-profile nature of L'Oreal's regulatory battle likely has contributed to similar complaints against cosmetics firms for stem-cell and gene-related marketing claims.

Suits filed in New York northern district court in recent months have cited Reviva Labs, Inc. for claims associated with its Stem Cell Booster Serum, which features Swiss apple stem cells popular in recent years for their purported anti-aging benefits, and GMC Skin Care USA, Inc. (doing business as G.M. Collin) for Phyto Stem Cell+ claims.

Plaintiffs in both cases are being represented by Faruqi & Faruqi LLP and the Law Offices of Ronald A. Marron.

'An Invitation To Litigation Chaos'

The Athena case is relatively unique in that it stemmed from a drug company's allegations, rather than from consumer action, and because it led federal courts to interpret the intended use of RevitaLash products – and whether that intended use identifies the products as unapproved drugs – in the absence of any enforcement action or input from FDA.

At the California district court level, and again on appeal, there was found "no genuine dispute that [Athena] objectively intends for the products at issue to be used to affect the structure of eyelashes," Verrilli noted in his amicus curiae brief to the Supreme Court.

"Plaintiffs trolling warning letters [for targets] is easy prey, but here they could have serious ammunition for marketing claims even without FDA action," Walsh noted.

Moreover, inaction on the part of FDA does not signal necessarily that a cosmetic product is being marketed in compliance with the FDCA or similarly themed state laws, the courts decided.

On those bases, the courts ruled against Athena, enjoining the company from selling its products in California.

If the Supreme Court denies Athena's petition for review, the case could encourage a new wave of litigation wherein complainants target companies for what they perceive as drug claims on cosmetic products and rely on the courts to use their discretion in deciding whether such claims violate the FDCA.

Walsh noted: "Plaintiffs trolling warning letters [for targets] is easy prey but here they could have serious ammunition for marketing claims even without FDA action. Those of us defending FDA-regulated companies seek to have claims dismissed based on federal preemption, and ruling along the lines the Solicitor General suggests would give the plaintiffs significant new authority to defeat preemption."

In this climate, he suggested, it no longer will be for the FDA alone to decide whether a product’s intended use is that of a drug or a cosmetic. From Walsh's point of view, "leaving the classification decision to the ipse dixit of state court juries is an invitation for litigation chaos."

Anti-Aging Market Could Be At Greatest Risk

In recent years, anti-aging skin-care marketers have been taking the greatest liberties with product claims in their bids to compete effectively, and the vast majority of FDA warnings have been issued for such claims accordingly (Also see "Regulatory Roulette: Playing In Today’s Skin-Care Market A Gamble" - HBW Insight, 17 Mar, 2015.).

It's not necessarily or even typically that companies lack scientific evidence demonstrating their products' anti-aging effects. They simply can't promote their products as impacting body structure or function, whether such statements or warranted or not, without a costly new drug approval.

Many consider the FDCA's cosmetic definition – which restricts claims to statements about cleansing, promoting attractiveness or altering the appearance – outdated or, at any rate, a poor fit for the marketplace of products available to consumers today.

Ingredient innovation in the sector has given rise to skin care, hair care and other cosmetics that undeniably "do something" beyond moisturizing, cleansing, covering imperfections or imparting color, but touting such benefits can put companies at odds with the FDCA (Also see "Cosmetics That ‘Do Something’ A Regulatory Compliance Challenge" - HBW Insight, 31 Mar, 2015.).

Couching claims in "appearance" language generally has proven a safe route for cosmetics manufacturers, such that products containing potent anti-aging ingredients, for example, have rarely drawn FDA's attention if they are promoted as reducing the appearance of wrinkles rather than wrinkles themselves.

Notably, however, Athena's careful claims language, which currently positions RevitaLash products as eyelash conditioners to "enhance the look of luxurious eyelashes," did not convince the courts that its products are intended for purely cosmetic uses.

Should the case establish a precedent for plaintiff use, anti-aging skin-care manufacturers may have to be more careful than ever about crafting claims to stay within FDCA-defined parameters, as lack of attention from FDA may not be sufficient to keep them off plaintiffs' radars or protected in the courts by a preemption argument.

An upsurge in false-advertising class actions could put more companies in the vulnerable position of having to concede and settle allegations that their claims are deceptive, or defend the legitimacy of their claims and tacitly acknowledge that by FDCA standards their offerings could be considered unapproved drugs.

Different Views On What Comes Next

The Supreme Court will decide officially whether to grant or deny Athena's petition at an upcoming conference. Four of nine Justices must vote in favor of its acceptance for the case to be heard.

Some attorneys have suggested that the chances of a Supreme Court review, following Verrilli's recommendation to decline the request, are slim to none.

But Walsh isn't so certain. "I don’t know that it is going to be easy for the Supreme Court to follow the Solicitor General here," he said.

If the court does, that affirmance of the lower court decisions "could be viewed as a good day for tort lawyers but a landmark mistake for industry," he said.