Diet-Pill Settlement Appeal Called Premature

(CN) - The 10th Circuit refused to intervene in the enforcement of a settlement that the maker of a weight-loss supplement reached with consumers and then sought to cancel.

Dissatisfied buyers sued Basic Research and Dynakor Pharmacal in Utah for false and misleading advertising regarding the product Akavar 20/50, which promised "eat all you want and still lose weight.

The parties eventually drafted and signed a document outlining settlement terms, and they told a federal judge that mediation was successful.

After hitting a snag in drafting, however, the defendant companies informed the court that they no longer intended to settle.

The class moved to enforce the settlement, and the court did so because it found that the parties had entered into an "enforceable agreement."

Basic Research and Dynakor Pharmacal appealed to the Denver, Colo.-based 10th Circuit, claiming that there is no basis to find that the parties reached a binding settlement.

In addition to the "serious or irreparable consequences" that the lower court's order imposes on them, the defendants said the settlement was "fundamentally unfair" to putative class members and that the class would view notification of the settlement as a "tacit acknowledgment of liability," the 10th Circuit recounted.

The plaintiffs meanwhile challenged the 10th Circuit's interlocutory jurisdiction.

A three-judge panel agreed with the class Tuesday that the settlement-enforcement order in the 7-year-old case qualifies neither for interlocutory review nor review under the collateral-order doctrine.

The federal appeals court lacks jurisdiction until the District Court issued a final decision, according to the 10-page ruling.

"We conclude that the case is an impermissible interlocutory appeal because no exceptions apply to the general rule that we must wait for a final judgment in the underlying case before exercising appellate jurisdiction," Judge Timothy Tymkovich wrote for the court. "Finding that we lack jurisdiction, we dismiss the appeal."

Basic Research and Dynakor Pharmaca failed to show that it might prejudice their ability to reach a more favorable settlement or a fair trial if the current deal is not approved, according to the ruling.

"In any event, if the district court approves the settlement, the court's decision will eventually be reduced to a final judgment susceptible to appellate review, including the efficacy of the settlement and other issues (such as class definition) that might flow from a rejection of the settlement," Tymkovich added (parentheses in original).

Basic Research, which calls the diet pill a "European weight-loss breakthrough," defends the marketing on its website by stating "we couldn't say it in print if it wasn't true."

Purchasers claimed they relied on the marketing pitch, but were dissatisfied with the results.

"In sum, because the district court's order does not qualify for interlocutory review or review under the collateral order doctrine, we lack jurisdiction until the district court issues a final decision and therefore dismiss this appeal," Tymkovich wrote.

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