A Berkley medical supply company is arguing in court the Federal Trade Commission has no authority to sue the company for marketing a supplement that allegedly claimed to treat COVID-19, because the FTC allegedly skipped around the Justice Department in bringing the action.
Precision Patient Outcomes recently filed a motion in U.S. District Court for the Northern District of California, asking Judge Vince Chhabria to dismiss the action brought against Precision and CEO Margrett Priest Lewis by the Federal Trade Commission (FTC).
The FTC suit, which was filed in November, alleged Precision marketed an over-the-counter dietary supplement, COVID Resist — later renamed VIRUS Resist — that Precision directly or indirectly claimed was scientifically proven to prevent or treat COVID-19, without any proof to back that claim. The FTC asserted the supplement, which was in capsule form, contained "nothing more than vitamins, zinc, and a flavanoid."
John Vecchione
| New Civil Liberties Alliance
The FTC further alleged Precision changed the product's name from COVID Resist to VIRUS Resist, but continued to promote it as a COVID treatment, only after the company learned of an FTC action against a chiropractor for allegedly staking out similar claims about the ingredients present in Precision's product.
In May 2021, Precision asked the FTC to review the proposed product's labeling and promotional materials, according to court papers. The FTC said it told Precision the FTC does not conduct such reviews and the company should seek legal advice as to whether its proposed advertising complied with truth-in-advertising laws.
Precision then changed COVID Resist to VIRUS Resist, and marketed the product until June 2022, court papers said.
The FTC said it warned Precision it was allegedly engaging in "deceptive advertising" with VIRUS Resist, but Precision kept making the same claim, which prompted the suit. The FTC said each instance of Precision's allegedly "deceptive advertising" could result in a fine of as much as $46,517 under the U.S. COVID-19 Act.
Precision is contending the FTC overstepped its authority.
"FTC does not have the constitutional power to bring this action in this Court and has no power to bring a claim given to FDA [U.S. Food and Drug Administration]. FTC has no agency competence in what dietary supplements can and cannot do. Congress has explicitly granted FDA the ability to set the standard of what can and cannot be said about dietary supplements," Precision said.
Precision went on to argue the FTC must consult with the U.S. Attorney General before filing a suit, such as the one against Precision, and can only pursue such an action on its own, if the Attorney General declines to do so. The filing of a suit against Precision, is a power belonging to the executive branch of government, not the FTC, which has "quasi-legislative" and "quasi-judicial" functions, Precision said, quoting from a 1935 U.S. Supreme Court decision.
Precision further maintained none of its promotional statements listed in the suit claimed its product combated COVID-19. Rather, the statements claimed the product boosted the body's immune system, according to Precision.
Apart from the question of which entity has authority, Precision argued there is no federal requirement that dietary supplements undergo clinical studies. And the FTC failed to specify when any allegedly false advertising occurred and whether any consumer saw it, much less was induced to buy the product, Precision said.
Precision further pointed out the suit does not name any person harmed by its product, but instead "posits an imaginary customer who, in FTC's mind, is harmed."
Precision has been defended by John J. Vecchione and Kara M. Rollins, of New Civil Liberties Alliance in Washington, D.C., as well as by Fredrick A. Hagen, of Berding & Weil, of Walnut Creek, Calif.
The Federal Trade Commission has been represented by San Francisco-based in-house lawyers Abdiel T. Lewis and Evan Rose.