Nixon Peabody secures dismissal for Leiters, Inc., in a multi-state dispute

November 18, 2020

Director of Media Relations
Nicholas Braude

Chicago, IL. Nixon Peabody successfully secured a dismissal on behalf of drug outsourcing facility Leiters, Inc., related to a dispute spanning multiple states in connection with the sale of the company’s compounded ephedrine sulphate drug product.

“It was a pleasure working with Leiters in overcoming the many different, complex legal and regulatory hurdles to secure this win—the suit was brought by a party that is based in Illinois who elected to file in California, against Leiters, which is headquartered in Colorado, and during a pandemic, no less,” said Ethan Trull, a complex commercial disputes partner in Nixon Peabody’s Chicago office, who co-led the legal team. “No matter the complexity, we look forward to continue working with Leiters against suits like this one that hold no merit.”

Based in Englewood, Colorado, Leiters operates pursuant to section 503B of the Federal Food, Drug, and Cosmetic Act. In August 2020, Lincolnshire, Illinois–based competitor Nexus Pharmaceuticals filed a complaint in the U.S. District Court for the Central District of California seeking to prohibit Leiters’ continued compounding and sale of an ephedrine sulphate drug product on the basis that Nexus recently obtained approval by the U.S. Food and Drug Administration (FDA) to sell what it alleged was a “nearly identical” ephedrine product.

Nexus strategically selected the California venue based on a recent adverse decision in that district against an unrelated and dissimilar drug compounder. Nexus, which also filed similar complaints against six other competitors, contended that the recent FDA approval of its ephedrine product made Leiters’ compounding and sales to be unlawful based on the unfair competition laws of California, Colorado, and Florida.

Nixon Peabody’s legal team determined that the pleadings filed in the recent adverse decision did not raise strong implied preemption arguments that had been applied elsewhere in California federal and state courts. The NP team then briefed these implied preemption arguments, among others, in a motion to dismiss. The court granted the motion to dismiss on implied preemption grounds, which also allowed Leiters to avoid the cost and risk of the preliminary injunction hearing set for December.

“This is a major win for Leiters, and I couldn’t be more proud of the teamwork our attorneys exhibited across our firm’s Chicago and San Francisco offices,” said John Ruskusky, a complex commercial disputes partner in Nixon Peabody’s Chicago office, who co-led the team.

In addition to Ethan and John, Nixon Peabody’s legal team included Chicago partner Lisa Sullivan and associates Bill Kirby and Tina Jonsson, and San Francisco partner Bruce Copeland and counsel Lauren Michals, all of the firm’s Complex Commercial Disputes practice.

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