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Hi-Tech Pharmaceuticals, Inc. v. HBS International Corp.

United States Court of Appeals, Eleventh Circuit

December 4, 2018

HI-TECH PHARMACEUTICALS, INC., Plaintiff-Appellant,
v.
HBS INTERNATIONAL CORP., Defendant-Appellee.

          Appeal from the United States District Court No. 1:16-cv-01783-TCB for the Northern District of Georgia

          Before TJOFLAT and WILLIAM PRYOR, Circuit Judges, and MURPHY, [*] District Judge.

          WILLIAM PRYOR, CIRCUIT JUDGE

         This appeal from the dismissal of a complaint raises questions about the relationship between the labeling requirements of the Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq., and state and federal laws against deceptive advertising. Hi-Tech Pharmaceuticals, Inc., filed a complaint that the label of a protein-powder supplement distributed by HBS International Corp. misleads customers about the quantity and quality of protein in each serving, violating both the Georgia Uniform Deceptive Trade Practices Act, O.C.G.A. § 10-1-372(a), and the federal Lanham Act, 15 U.S.C. § 1125(a). The district court dismissed the complaint on the grounds that the state-law claim is preempted by the Food, Drug, and Cosmetic Act and that the complaint fails to state a claim under the Lanham Act because it is not plausible that the label is misleading. We agree that the state-law claim is preempted, but we disagree that the label is not plausibly misleading. And we reject HBS's arguments that the Food, Drug, and Cosmetic Act bars the claim under the Lanham Act. We affirm in part, reverse in part, and remand.

         I. BACKGROUND

         Hi-Tech Pharmaceuticals, Inc., is a Georgia-based firm that manufactures, markets, distributes, and sells dietary-supplement products. HBS International Corp. is a Canadian firm that distributes throughout the United States and Canada bodybuilding and sports-nutrition supplements supplied by its wholly owned subsidiary, Allmax Nutrition, Inc. One of the Allmax products HBS distributes, the "Ultra-Premium 6-Protein Blend Hexa[P]ro," is a protein-powder drink mix marketed as a bodybuilding and workout-recovery aid.

         Because this appeal arises from the dismissal of a complaint, "we accept as true the facts alleged in the complaint, drawing all reasonable inferences in [the] plaintiff's favor." Bailey v. Wheeler, 843 F.3d 473, 480 (11th Cir. 2016). Under the doctrine of incorporation by reference, we may also consider documents attached to the motion to dismiss if they are referred to in the complaint, central to the plaintiff's claim, and of undisputed authenticity. See Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002); Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir. 1997). In particular, we consider the undisputed HexaPro marketing label attached to the motion to dismiss by HBS.

         Hi-Tech filed a complaint against HBS and other defendants not involved in this appeal. As relevant here, the complaint alleges that the following HexaPro marketing label violates the Georgia Uniform Deceptive Trade Practices Act, O.C.G.A. § 10-1-372(a), and the Lanham Act, 15 U.S.C. § 1125(a):

         (Image Omitted)

         For ease of inspection, we provide close-up images of the three sections of the label. The front of the panel identifies the product as an "Ultra-Premium 6-Protein Blend" with "25 G[rams] Protein Per Serving," and it touts the product's "6 Ultra-High Quality Proteins" and "5 Amino Acid Blend with BCAAs [Branch-Chain Amino Acids]":

         The left side of the label again identifies HexaPro as "an Ultra-Premium, Ultra-Satisfying Blend of 6 High-Quality Proteins." It elaborates on that claim by identifying the six whole-protein sources that HexaPro contains: whey protein concentrate, milk protein concentrate, whey protein isolate, micellar casein, egg albumin, and hydrolyzed whey. And it states that the product "is also fortified with 5 Amino Acids to enhance recovery":

         (Image Omitted)

         Finally, the right side of the label features the nutrition-facts table, which states that HexaPro contains 25 grams of protein per serving, and the list of ingredients. This side also provides a table labeled "Amino Acid Profile." Although the heading of the table indicates that HexaPro contains 44 grams of amino acids per serving, the table itemizes only 25, 000 milligrams, or 25 grams:

         (Image Omitted)

         In its complaint, Hi-Tech alleges that HexaPro's label misleads consumers in three distinct but related ways. The first concerns the quantity of protein in a serving of HexaPro. Although HexaPro contains whole proteins, it also contains free-form amino acids and other non-protein ingredients. Hi-Tech alleges that that an analysis that excludes these "spiking agents" and counts only "total bonded amino acids"-which alone are molecularly complete proteins-yields an "actual protein content" of "17.914 grams per serving," not 25 grams per serving. But HiTech does not allege that the HexaPro label is inconsistent with the applicable regulation of the Food and Drug Administration, which permits "[p]rotein content [to] be calculated on the basis of the factor 6.25 times the nitrogen content of the food," 21 C.F.R. § 101.9(c)(7), even if not all of a product's nitrogen content derives from whole-protein sources.

         Second, Hi-Tech alleges that the label is misleading about the source of the protein content. In Hi-Tech's view, the label suggests that the product's entire stated protein content derives from the whole-protein sources identified on the left side of the panel. Observing that the front label identifies HexaPro as an "Ultra-Premium 6-Protein Blend," Hi-Tech alleges that this "statement of identity is intended to lead consumers to ...


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