Court Opinion

ID: 2658629
Source: CourtListenerOpinion
Date Created: 2014-03-31 10:03:18.321732+00
Date Added: 2024-06-11T12:23:16.861241
License: Public Domain

UNITED STATES DISTRICT COURT
                    FOR THE DISTRICT OF COLUMBIA

                                )
HI TECH PHARCEUTICALS, INC.,    )
                                )
     Plaintiff,                 )
                                )
     v.                         ) Civ. Action No. 13-489 (EGS)
                                )
FEDERAL TRADE COMMISSION,       )
                                )
     Defendant.                 )
                                )

                    MEMORANDUM OPINION AND ORDER

I.   INTRODUCTION

     Plaintiff Hi-Tech Pharmaceuticals, Inc. (“Hi-Tech”) has

brought an action for declaratory and injunctive relief against

the Federal Trade Commission (“FTC”).      On April 12, 2013, the

Court ordered Hi-Tech to show cause why the case should not be

transferred to the United States District Court for the Northern

District of Georgia, where an underlying Enforcement Action at

issue in this case has been pending before Judge Charles A.

Pannell, Jr. since 2004.    See Fed. Trade Comm’n v. Nat’l

Urological Group, Inc., No. 04-cv-3294 (CAP) (hereinafter, the

“Enforcement Action”).    Plaintiff filed a response to the

Court’s order on April 26, 2013.       The FTC filed its own response

on June 5, 2013 arguing that the case should be transferred to

the Northern District of Georgia, and Hi-Tech filed a reply on

June 20, 2013.    Upon review of the parties’ filings, the

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applicable law, and the entire record, the Court hereby

TRANSFERS this action to the Northern District of Georgia.

II.   BACKGROUND

      Hi-Tech is a Georgia corporation that manufactures and

distributes dietary supplements, including weight loss products.

Compl. ¶ 1; Plaintiff’s Mem. of Law Showing Cause (“Show Cause

Mem.”) at 2.   In this action, Hi-Tech seeks an order declaring

that the term “competent and reliable scientific evidence,” as

used in a Final Judgment and Permanent Injunction issued in the

Enforcement Action, “has no fixed meaning” and “requires case,

product and claim specific adjudication and may result in

different meanings even in the same case.”     Compl. ¶ 3a.   Hi-

Tech alleges that the FTC has adopted a new standard for

“competent and reliable scientific evidence” that requires “two

double blind, placebo controlled, product specific studies.”

Id.   Hi-Tech argues instead that a particular claim about a

product is substantiated by “competent and reliable scientific

evidence” if it is supported by evidence that: “(i) is based on

the expertise of professionals in the relevant area; (ii) is

conducted and evaluated in an objective manner by a person

qualified to do so; (iii) uses procedures generally accepted in

the profession to yield accurate and reliable results; and (iv)

has a causal connection to the particular claim being challenged

as interpreted by the Court.”   Compl. ¶ 3b.

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     The parties have a long history of litigating the

substantiation standard for product claims and Hi-Tech has

raised similar arguments regarding the FTC’s purported attempt

to change the standard several times before.    In 2008, the Court

granted summary judgment for the FTC in the Enforcement Action

and held that Hi-Tech had violated Section 5 of the FTC Act.

See Fed. Trade Comm’n v. Nat’l Urological Group, Inc., 645 F.

Supp. 2d 1167 (N.D. Ga. 2008), aff’d, 356 F. App’x 368 (11th

Cir. 2009), cert. denied, 131 S. Ct. 505 (2012).    The Court

accepted the FTC expert’s conclusions regarding the appropriate

level of substantiation for any claims made by Hi-Tech regarding

its products, holding that to substantiate weight loss claims,

including those for dietary supplements, a party must present

“appropriately analyzed results of independent, well-designed,

randomized, double-blind, placebo-controlled clinical trials,

given at the recommended dosage involving an appropriate sample

population in which reliable data on appropriate end points are

collected over an appropriate period of time.”    Id. at 1202.

Moreover, the Court ruled that “some form of clinical trial must

have been conducted on the product itself or an exact duplicate

of the product to substantiate the defendants’ claims regarding

the overall product.”   Id. at 1202-03.   These standards were

incorporated in a permanent injunction entered in December 2008.

See Enforcement Action, ECF No. 230.

                                 3
     In May 2012, in an Order granting a motion by the FTC for

an order to show cause why Hi-Tech should not be held in

contempt, the Court again noted that it had already adopted the

FTC’s definition as to what constituted “competent and reliable

scientific evidence” in its 2008 opinion.     See Fed. Trade Comm’n

v. Nat’l Urological Group, Inc., No. 04-cv-3294, ECF No. 390 at

7.   In granting the FTC’s motion for an order to show cause, the

Court noted that the FTC’s substantiation standard was “part of

the law of the case” and therefore “not subject to

relitigation.”    Id. at 8-9.   Following extensive briefing in

which Hi-Tech made almost identical arguments to those it has

made in its Complaint regarding the substantiation standard, the

Court granted the FTC’s motion to hold Hi-Tech and other

defendants in the Enforcement Action liable for contempt of the

December 2008 permanent injunction in August 2013.     See FTC’s

Notice of Filing.

     In addition to the litigation in the Enforcement Action,

Hi-Tech brought a substantially similar action to the one

currently before this Court in the Northern District of Georgia

in June 2012.    See Hi-Tech Pharmaceuticals, Inc. v. Federal

Trade Commission, No. 12-cv-2043 (CAP).     That action was

voluntarily dismissed on Plaintiff’s motion after the FTC filed

a motion to dismiss.    In its motion to dismiss the FTC argued

that the level of substantiation for advertising claims was not

                                   4
a “rule” promulgated by the FTC, and that Hi-Tech was

collaterally estopped from re-litigating an issue that had

already been litigated in the Enforcement Action.   Moreover, the

FTC argued that even if Hi-Tech could re-litigate the issue, the

proper forum would be the Enforcement Action and not a separate

action.   See FTC Mot. to Dismiss, ECF No. 7, Hi-Tech

Pharmaceuticals, Inc. v. Federal Trade Commission, No. 12-cv-

2043 (CAP).

III. STANDARD OF REVIEW

     Pursuant to 28 U.S.C. § 1404(a), “[f]or the convenience of

the parties and witnesses, in the interest of justice, a

district court may transfer any civil action to any other

district where it might have been brought.”   In so doing, the

district court has discretion to transfer a case based on an

“‘individualized case-by-case consideration of convenience and

fairness.’”   Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29

(1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964));

see also Demery v. Montgomery County, 602 F. Supp. 2d 206, 210

(D.D.C. 2009) (“Because it is perhaps impossible to develop any

fixed general rules on when cases should be transferred[,] . . .

the proper technique to be employed is a factually analytical,

case-by-case determination of convenience and fairness.”)

(internal quotation marks omitted)).   The moving party bears the

burden of establishing that transfer of the action is proper.

                                 5
Devaughn v. Inphonic, Inc., 403 F. Supp. 2d 68, 71 (D.D.C.

2005); see also SEC v. Savoy Indus., Inc., 587 F.2d 1149, 1154

(D.C. Cir. 1978) (noting that the district court’s denial of a

motion to transfer “was effectively a ruling that [the

appellant] had failed to shoulder his burden”).

     In order to justify a transfer, defendants must make two

showings.    First, they must establish that the plaintiff could

have brought suit in the proposed transferee district.

Devaughn, 403 F. Supp. 2d at 71-72; Trout Unlimited v. United

States Dep’t of Agric., 944 F. Supp. 13, 16 (D.D.C. 1996).

Second, defendants must demonstrate that considerations of

convenience and the interests of justice weigh in favor of a

transfer.    Devaughn, 403 F. Supp. 2d at 72; Trout Unlimited, 944

IV. DISCUSSION

     Plaintiff argues that venue is proper in the District of

Columbia pursuant to 28 U.S.C. § 1391(e), which provides that

“[a] civil action in which a defendant is . . . an agency of the

United States . . . may, except as otherwise provided by law, be

brought in any judicial district in which (A) a defendant to the

action resides, (B) a substantial part of the events or

omissions giving rise to the claim occurred . . . or (C) the

plaintiff resides if no real property is involved in the

action.”    Under this standard, Hi-Tech contends that venue is

not improper in the District of Columbia because the FTC is

                                  6
headquartered in the District.     The FTC argues that the case

should be transferred because “Hi-Tech has already litigated, in

the enforcement action, the issue it seeks to raise here and,

even if it could relitigate the issue, the proper forum would be

the enforcement action.”   Response to Hi-Tech at 3.

     A. Private Interest Factors

     The private interest factors the court will consider in

deciding whether to transfer an action include, inter alia: (1)

the plaintiff’s choice of forum, unless the balance of

convenience is strongly in favor of the defendant; (2) the

defendant’s choice of forum; (3) whether the claim arose

elsewhere; and (4) the convenience of the parties.     See Spurlock

v. Lappin, 870 F. Supp. 2d 116, 122 (D.D.C. 2012) (citing Trout

Unlimited v. Dep’t of Agric., 944 F. Supp. 13, 16 (D.D.C.

1996)).

     Hi-Tech argues that “the District of Columbia is a more

appropriate forum to address the constitutional and statutory

issues raised in the complaint,” Plaintiff’s Show Cause Mem. at

7, though it has proffered few reasons why that might be the

case.   Indeed, Hi-Tech’s principal argument against transfer is

essentially that this Court should not transfer the action

because its choice of forum should be afforded deference.     In

its response to the Court’s April 12, 2013 Minute Order, Hi-Tech

makes no mention of the similar complaint it filed in the

                                   7
Northern District of Georgia in June 2012, which it later

voluntarily dismissed, nor does it address the similarities

between the arguments it presents here and those that were at

issue in contempt proceedings in the Enforcement Action.

      In addressing the private interest factors, Hi-Tech argues

that the claim arose in the District of Columbia because the FTC

has made relevant decisions in this jurisdiction.    However, it

does not address the fact that the Injunction at issue in this

matter was entered after litigation in the Northern District of

Georgia, or how that fact affects where the claim arose.

Plaintiff’s Show Cause Mem. at 7.    Hi-Tech also argues that a

District of Columbia forum would not only be more convenient for

its New Jersey based counsel, but also for the FTC.    Id. at 7-8.

According to Hi-Tech, after years of costly litigation it can no

longer afford to pay counsel to travel to Georgia.    Id. at 8.

As a result, it argues that as the plaintiff in this action, it

is “seeking the advantage of a more conveniently located forum.”

Id.   Finally, Hi-Tech claims that the fact that the parties have

litigated in the Northern District of Georgia in the past has no

bearing on this Court’s transfer analysis.    Id.

      The FTC argues that in this case, the Defendant’s choice of

forum should take precedence because of the existing Enforcement

Action pending in the Northern District of Georgia.    Response to

Plaintiff’s Show Cause Mem. at 8.    According to the FTC, its

                                 8
choice of forum is further supported by the fact that the claim,

contrary to Hi-Tech’s assertion that it arose in the District of

Columbia, actually arose in the Enforcement Action.     Id.

Moreover, according to the FTC, Hi-Tech “seeks to make the same

arguments here that the Court in Georgia has repeatedly

addressed and rejected.”     Id.

     The Court agrees.    While Hi-Tech is correct that a

plaintiff’s choice of forum is generally accorded deference,

“where the chosen forum is not plaintiff’s home forum” or “where

there is an insubstantial factual nexus between the case and

plaintiff’s chosen forum, deference to the plaintiff’s choice of

forum is . . . weakened.”     New Hope Power Co. v. U.S. Army Corps

of Eng’rs, 724 F. Supp. 2d 90, 95 (D.D.C. 2010).     This deference

is further lessened where, as here, the transferee forum has

“substantial ties” to both the plaintiff and “the subject matter

of the lawsuit.”   Trout Unlimited, 944 F. Supp. at 17.     Indeed,

as Hi-Tech concedes in its response to the Court’s show cause

order, “this case is about how the FTC may or may not enforce

the Injunction” entered in the Enforcement Action.     Plaintiff’s

Show Cause Mem. at 7.     As such, the Court concludes that the

claims Hi-Tech is attempting to bring arise directly out of the

Enforcement Action pending before Judge Pannell in the Northern

District of Georgia.     The only tie to the District of the

Columbia seems to be that the FTC is headquartered here, which

                                   9
is not sufficient, on its own, for this Court to maintain

jurisdiction.    See Sheffer v. Novartis Pharmaceuticals, 873 F.

Supp. 2d 371, 376 (D.D.C. 2012) (finding that transfer was

warranted where the only tie to the District of Columbia was

that the court had in personam jurisdiction over the defendant).

Therefore, the deference usually afforded to the Plaintiff’s

choice of forum has been greatly diminished and weighs in favor

of transfer.

     Moreover, in this case, the Defendant would prefer the

transferee forum, and with good reason.    Given the inextricable

links between this action and the Enforcement Action, the

Northern District of Georgia would be more convenient for the

parties despite Hi-Tech’s argument regarding the cost of

litigating in Georgia. 1   See Plaintiff’s Show Cause Mem. at 8.

Hi-Tech cannot circumvent Judge Pannell’s multiple rulings on

the substantiation standard, made after years presiding over the

case, by trying to re-litigate an already-decided question in

this Court.     Contrary to Plaintiff’s allegations that the FTC

has somehow amended the substantiation standard and now requires

“in all cases, a double blind, placebo-controlled, product

1
  As the FTC points out, the Enforcement Action is still pending
and counsel in this matter have entered appearances in the
Enforcement Action. Response to Plaintiff’s Show Cause Mem. at
9. Given that, the Court fails to see how litigating this issue
in the Northern District of Georgia would significantly increase
Hi-Tech’s legal fees.
                                  10
specific study,” Plaintiff’s Show Cause Mem. at 3, that

requirement was imposed by the Court and is the law of the case

in the Enforcement Action.    Any issues that Hi-Tech may have

with that standard or how the FTC enforces the Injunction as a

whole must therefore be litigated in the Enforcement Action, not

in this Court.

     B. Public Interest Factors

     In addition to the private interest factors discussed

above, the Court must also consider several public interest

factors before transferring the case to another forum.    These

factors include: “1) the transferee’s familiarity with the

governing laws, 2) the relative congestion of each court, and 3)

the local interest in deciding local controversies at home.”

Montgomery v. STG Int’l, Inc., 532 F. Supp. 2d 29, 34 (D.D.C.

2008) (citing Liban v. Churchkey Group II, L.L.C., 305 F. Supp.

2d 136, 143 (D.D.C. 2004)).

     Neither party disputes that all of Plaintiff’s claims arise

under various federal statutes and the United States

Constitution, or that both districts have the requisite

familiarity with the law and are equally able to resolve the

present dispute.    See Plaintiff’s Show Cause Mem. at 9; FTC

Response at 10.    See also Montgomery, 532 F. Supp. 2d at 34

(citing In re Korean Air Lines Disaster of Sept. 1, 1983, 829

F.2d 1171, 1175 (D.C. Cir. 1987)).     While there may be no local

                                  11
interest in deciding the case in Georgia, because, as Hi-Tech

argues, the Injunction applies nationally, there is an interest

in having issues related and arising out of the Injunction

litigated in the forum in which they were originally brought. To

the extent that Hi-Tech is challenging enforcement of the

Injunction, over which the Georgia Court has retained

jurisdiction, that Court is more familiar with the particular

issues raised by Hi-Tech than this one. See e.g., United States

ex rel Westrick v. Second Chance Body Armor, Inc., 771 F. Supp.

2d 42, 46-47 (D.D.C. 2011) (declining to transfer a case to

another forum because the Court was “familiar with the multiple

issues and lengthy procedural history of the case, and [had]

decided [defendants’] dispositive motions,” and because it would

have taken another court “a substantial amount of time to

familiarize itself with the case”).   Because “[l]itigation of .

. . related claims in the same forum is strongly favored,” the

Court finds that the public interest factors weigh in favor of

transfer as well.   Id. (quoting Islamic Republic of Iran v.

Boeing Co., 477 F. Supp. 142, 144 (D.D.C. 1979)).

V.   CONCLUSION AND ORDER

     The Court concludes that the interests of justice would be

best served by transferring this case to the Northern District

of Georgia.   Accordingly, it is hereby

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     ORDERED that, pursuant to 28 U.S.C. § 1404(a), the Clerk’s

Office is directed to TRANSFER this case to the United States

District Court for the Northern District of Georgia.

     SO ORDERED.

Signed:   Emmet G. Sullivan
          United States District Judge
          December 20, 2013

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