SAN DIEGO (CN) – A federal judge has ruled the maker of a male-enhancement pill must face claims it sent shakedown letters to gas stations and markets that sold a competing brand of pill.
Houston-based Outlaw Laboratory, which markets and sells supplements called TriSteel and TriSteel 8 Hour, claimed by selling a competitor’s “Rhino” pill line the gas stations and markets were disseminating false information because the “Rhino” pills’ manufacturer claims they are “all natural” and do not require a prescription.
Outlaw claimed the Rhino pills were mislabeled and contained sildenafil – found in the prescription-only Viagra – along with other ingredients found in antidepressants and another ingredient found in Cialis, also a prescription-only pill for men.
Before suing in the Southern District of California last May, Outlaw sent out thousands of demand letters across the country to business owners claiming they were “selling illegal sexual enhancement drugs” which “subject your company to legal action for racketeering . . . under RICO (Racketeer Influenced Corrupt Organizations) and the Federal Lanham Act” Outlaw also told the markets they were obligated to pay Outlaw profits on four years of diverted sales.
The letters stated liabilities would be “over $100,000” but the company was willing to settle all claims for a one-time settlement of approximately $10,000.
According to counterclaimants Roma Mikha, NMRM and Skyline Market, some small businesses settled with Outlaw outright. Outlaw sent others that didn’t respond immediately smaller settlement options in what the counterclaimants say was a “shakedown” of small businesses across California and the country.
After U.S. District Judge Gonzalo Curiel dismissed the markets’ countersuit for lack of specificity on their sham litigation claims, the markets filed an amended complaint. In it, the markets added more allegations regarding what they say was the baseless of Outlaw’s demand letters. Outlaw again moved to dismiss, arguing the markets still hadn’t stated a claim and that its demand letters were protected pre-litigation petitioning conduct.
But in a 20-page order issued March 14, Curiel denied Outlaw’s request to dismiss the countersuit.
“Outlaw instead invites the court to file away its demand letters and focus instead on the claims asserted by Outlaw in litigation,” wrote Curiel. “But Outlaw’s attempted misdirection cannot distract the court from the operative inquiry – i.e., whether the claims Outlaw articulated in its very concrete and non-hypothetical draft complaint constituted sham pre-litigation conduct.”
While Outlaw continued to rely on First Amendment immunity with regard to the letters it sent, Curiel found the markets had beefed up their claims enough.
“Because Outlaw’s demand letters lack probable cause due to mistakes of both law and fact, the court concludes that counterclaimants have properly pleaded that Outlaw’s pre-litigation conduct was a sham,” he wrote.
In addition to denying Outlaw’s motion to dismiss the counterclaims, Curiel also ordered Outlaw to show cause as to why its complaint should not be dismissed as the gas stations and markets that have not yet been served.
Mark Poe from Gaw Poe, lead attorney for several of the California-based markets, said Outlaw has filed complaints across multiple states, including New York, the South District of Texas and North District of Georgia.
“Our plan is to proceed full speed ahead to hold the perpetrators of this shakedown liable, and to have the ill-gotten gains disgorged to the victims who have already succumbed to the scheme,” Poe said.
An email to the Outlaw’s attorney at Los Angeles-based law firm Tauler Smith seeking comment was not returned by press time.