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Schulman Bhattacharya Secures Summary Judgment Dismissing $160,000,000 Lawsuit Against Clients ExeGi Pharma, LLC and Professor Claudio De Simone

Aug 31

Just three weeks after obtaining a finding of contempt against Alfasigma USA, Inc. in the United States District Court for the District of Maryland, Schulman Bhattacharya secured another significant win against Alfasigma for its clients ExeGi Pharma, LLC and Professor Claudio De Simone.  On August 20, 2020, Judge Ronald B. Rubin of the Circuit Court for Montgomery County, Maryland granted the Firm’s motion for summary judgment, dismissing all of Alfasigma’s claims against ExeGi Pharma and Professor De Simone “with prejudice, and without leave to amend.”

Alfasigma’s latest claims focused on events following Schulman Bhattacharya’s November 2018 trial victory against Alfasigma (and its cohorts) on behalf of ExeGi Pharma and Professor De Simone, when a federal jury found Alfasigma liable for false advertising of its VSL#3® product and awarded ExeGi Pharma $15 million dollars in damages on that claim.  When Alfasigma failed to correct its advertising for VSL#3® despite the jury’s verdict, Schulman Bhattacharya, on behalf of its clients, sent a series of “cease and desist” letters to various distributors and retailers that were still selling VSL#3® and “demand[ed] that they stop selling ‘all VSL#3 product containing or otherwise associated with false advertising equating the product with the De Simone formulation or otherwise falsely indicating that VSL#3 consists of 8 strains of bacteria and is supported by clinical studies on the product.’”  Numerous distributors and retailers complied with this request, and, according to Alfasigma, sales of VSL#3® declined by tens of millions of dollars.  Alfasigma proceeded to file a complaint in the Circuit Court for Montgomery County, Maryland against ExeGi and Professor De Simone based on the Firm’s letters, asserting claims for tortious interference with business relations, tortious interference with contract, injurious falsehood, libel per se, and unfair competition.  Subsequent to submitting its complaint, Alfasigma filed a statement with the Court indicating that it was seeking, among other things, “at least $30,000,0000 in compensatory economic damages,” “at least $40,000,000 in compensatory reputational damages,” and “punitive damages in an amount not less than $90,000,000.”

Believing these claims to be completely meritless, Schulman Bhattacharya vigorously opposed them.  Early in the proceeding, the Firm sought and obtained a stay of all discovery in the case, successfully arguing that the case could and should be decided without burdening ExeGi Pharma or Professor De Simone with unnecessary discovery.  Then, the Firm moved for summary judgment, arguing that Alfasigma’s case should be immediately dismissed with prejudice on a variety of grounds.  After lengthy briefing and oral argument, Judge Rubin granted the Firm’s motion, holding that (1) “ExeGi and Prof. De Simone were plainly looking to enforce their rights, established after the federal jury’s verdict”; (2) “[t]he letters were properly targeted to the distributors and sellers of VSL#3”; and (3) “[t]here is a strong public interest in ‘true’ advertising of products.”  Based on these determinations, Judge Rubin held that the absolute litigation privilege applied to the cease and desist letters and, therefore, all of Alfasigma’s claims must be dismissed in their entirety.

Schulman Bhattacharya’s managing member, Jeremy W. Schulman, stated: “We are proud to have achieved yet another excellent result for ExeGi Pharma and Professor De Simone in the ongoing battle against Alfasigma.  This victory was particularly gratifying, as we were able to obtain it early in the case, thus avoiding costly discovery.  And we are pleased that the Court reaffirmed the important principle that when litigators in Maryland send legitimate cease and desist letters standing up for the legal rights of their clients, those letters are privileged and may not form the basis for later litigation.  We will continue to push hard to protect and enforce our clients’ legal rights using the tools available to us, and we will not be inappropriately silenced by disaffected counterparties.”

The Schulman Bhattacharya team handling this matter was led by partners Jeremy Schulman and Jeffrey Gavenman, with significant assistance from associate Sabina Schiller.

A copy of Judge Rubin’s decision granting summary judgment can be found by clicking here.