Nutrition Distribution v. Ironmag Labs ( 2018 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JAN 24 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
NUTRITION DISTRIBUTION, LLC, an No. 16-55632
Arizona Limited Liability Company,
D.C. No. 2:15-cv-08233-R-JC
Plaintiff-Appellant,
v.
IRONMAG LABS, LLC, a Nevada Limited
Liability Company; ROBERT DIMAGGIO, MEMORANDUM*
an individual; IRON MAG RESEARCH, a
Nevada Limited Liability Company,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Manuel L. Real, Presiding Judge
Argued and Submitted December 6, 2017
Pasadena, California
Before: KELLY,** CALLAHAN, and BEA, Circuit Judges.
Plaintiff-Appellant Nutrition Distribution LLC appeals from the dismissal of
its complaint against Defendants-Appellees IronMag Labs, LLC, IronMag
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Paul J. Kelly, Jr., United States Circuit Judge for the
U.S. Court of Appeals for the Tenth Circuit, sitting by designation.
Research, LLC, and Robert DiMaggio (collectively, “IronMag”). The district
court dismissed Nutrition Distribution’s Lanham Act and California state law
claims for false advertising and unfair competition, determining that they fell under
the primary jurisdiction of the Food and Drug Administration (FDA). The district
court also dismissed Nutrition Distribution’s Racketeer Influenced and Corrupt
Organizations Act (RICO) claim against IronMag, even though the court had
previously denied Nutrition Distribution’s motion to add the RICO claim in an
amended complaint. Exercising jurisdiction under 28 U.S.C. § 1291, we reverse
and remand with instructions that the district court reconsider its application of the
primary jurisdiction doctrine in a manner consistent with this memorandum
disposition.
A. Primary Jurisdiction
A district court’s application of the primary jurisdiction doctrine is reviewed
de novo, but its decision whether to exercise jurisdiction is reviewed for abuse of
discretion. Reid v. Johnson & Johnson, 780 F.3d 952, 958 (9th Cir. 2015). Under
the primary jurisdiction doctrine, a court “may stay the case and retain jurisdiction
or, ‘if the parties would not be unfairly disadvantaged, . . . dismiss the case without
prejudice.’” Davel Commc’ns, Inc. v. Qwest Corp., 460 F.3d 1075, 1091 (9th Cir.
2006) (alteration in original) (quoting Reiter v. Cooper, 507 U.S. 258, 268–69
(1993)). Here, the district court granted IronMag’s motion to dismiss Nutrition
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Distribution’s complaint but did not specify whether the dismissal was with
prejudice. Federal Rule of Civil Procedure 41(b) provides that a dismissal operates
as an adjudication on the merits unless the order states otherwise (or is a dismissal
for lack of jurisdiction, improper venue, or failure to join a party). Because the
district court did not state otherwise (and because a dismissal under the primary
jurisdiction doctrine is not a dismissal for lack of jurisdiction, see Clark v. Time
Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008)), we interpret the dismissal as
an adjudication on the merits that was therefore with prejudice. As noted, a court
applying the primary jurisdiction doctrine has discretion either to stay proceedings
or dismiss the case without prejudice; dismissing with prejudice is a misapplication
of the law and an abuse of discretion. See Pauma Band of Mission Indians v.
California, 813 F.3d 1155, 1163 (9th Cir. 2015) (“A misapplication of the correct
legal rule constitutes an abuse of discretion.”).
In exercising its discretion on remand, the district court must consider
whether the parties would be unfairly disadvantaged by dismissal. See Davel
Commc’ns, 460 F.3d at 1091. A factor in determining unfair disadvantage is
“whether there is a risk that the statute of limitations may run on the claims
pending agency resolution of threshold issues.” Id. It is also advised that “where
the court suspends proceedings to give preliminary deference to an administrative
agency but further judicial proceedings are contemplated, then jurisdiction should
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ordinarily be retained via a stay of proceedings, not relinquished via a dismissal.”
Id. The district court should further consider whether, during the pendency of this
appeal, the FDA has provided sufficient “expert advice that would be useful to the
court in considering this lawsuit,” Astiana v. Hain Celestial Grp., Inc., 783 F.3d
753, 762 (9th Cir. 2015), obviating the need for further guidance from the FDA. In
contrast to other contexts where a “final” agency determination is necessary, see,
e.g., Dietary Supplemental Coal., Inc. v. Sullivan, 978 F.2d 560, 563 (9th Cir.
1992) (holding that a party may challenge an agency’s classification of a dietary
supplement only where there has been a final agency determination on the issue),
under the primary jurisdiction doctrine, the agency’s guidance need not be given in
connection with formal proceedings or as part of a final determination, see Reid,
780 F.3d at 966 (recognizing that guidance from the FDA may come in the form of
warning letters). If the FDA is aware of but expresses no further interest in the
subject matter of the lawsuit, the court should not invoke the primary jurisdiction
doctrine. Astiana, 783 F.3d at 761.
B. RICO Claim
Nutrition Distribution also appeals from the dismissal of its RICO claim
against IronMag. But the district court had previously denied Nutrition
Distribution leave to amend its complaint to add the RICO claim. The court
nevertheless discussed the RICO claim, as it did not affect the outcome of its
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ruling. Because the claim was never properly before the district court, the
dismissal of Nutrition Distribution’s RICO claim is not reviewable on appeal. See
California v. Rooney, 483 U.S. 307, 311 (1987) (“This Court ‘reviews judgments,
not statements in opinions.’” (quoting Black v. Cutter Labs., 351 U.S. 292, 297
(1956))).
C. Pending Motions
Also pending are Nutrition Distribution’s motion to take judicial notice of
two district court decisions and GTx, Inc.’s motion to file an amicus brief. We
DENY Nutrition Distribution’s motion to take judicial notice and GRANT GTx’s
motion to file an amicus brief.
REVERSED AND REMANDED.
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