17-3745-cv(L)
FTC v. Quincy Bioscience Holding Co.

                               UNITED STATES COURT OF APPEALS
                                   FOR THE SECOND CIRCUIT

                                         SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.



        At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the
21st day of February, two thousand nineteen.

Present:         ROSEMARY S. POOLER,
                 RAYMOND J. LOHIER, JR.,
                 SUSAN L. CARNEY,
                            Circuit Judges.

_____________________________________________________

FEDERAL TRADE COMMISSION, PEOPLE OF THE STATE OF NEW YORK,
BY LETITIA JAMES, ATTORNEY GENERAL OF THE STATE OF NEW YORK,

                                  Plaintiffs-Appellants,

                         v.                                                17-3745-cv (L)
                                                                           17-3791-cv (CON)

QUINCY BIOSCIENCE HOLDING COMPANY, INC., a corporation, QUINCY
BIOSCIENCE, LLC, a limited liability company, PREVAGEN, INC., a corporation DBA
SUGAR RIVER SUPPLEMENTS, QUINCY BIOSCIENCE MANUFACTURING, LLC, a
limited liability company, MARK UNDERWOOD, individually and as an officer of Quincy
Bioscience Holding Company, Inc., Quincy Bioscience, LLC, and Prevagen, Inc., MICHAEL
BEAMAN, individually and as an officer of Quincy Bioscience Holding Company, Inc., Quincy
Bioscience, LLC, and Prevagen, Inc.,

                        Defendants-Appellees.
_____________________________________________________
Appearing for Appellant   Bradley D. Grossman, Federal Trade Commission (Joel Marcus,
Federal Trade Commission: Deputy General Counsel, Michelle K. Rusk, Annette Soberats, of
                          Counsel, on the brief), for David C. Shonka, Acting General
                          Counsel, Federal Trade Commission, Washington, D.C.

Appearing for Appellant       Scott A. Eisman, Assistant Solicitor General (Barbara D.
New York:                     Underwood, Solicitor General, Steven C. Wu, Deputy Solicitor
                              General, on the brief), for Letitia James, Attorney General of the
                              State of New York, New York, N.Y.

Appearing for Appellees       Jeffrey S. Jacobson, Kelley Drye & Warren LLP (John E.
Quincy Bioscience Holding     Villafranco, Glenn T. Graham, Kelley Drye & Warren LLP, J.
Company, Inc., Quincy         Kathleen Bond, Amin Talati Upadhye, LLP, on the brief), New
Bioscience, LLC, Prevagen,    York, N.Y.
Inc., and Quincy Bioscience
Manufacturing, LLC:

Appearing for Appellees       Michael B. de Leeuw, Cozen O’Connor (Tamar S. Wise, JB Kelly,
Underwood and Beaman:         on the brief), New York, N.Y.

Amici Curiae Truth in         Sean M. Fisher, Brenner Saltzman & Wallman LLP,
Advertising, Inc., AARP,      New Haven, CT.
AARP Foundation,
Advertising Law
Academics, and National
Consumers League in
support of Appellants:

Amici Curiae Council for      Benjamin M. Mundel, Sidley Austin LLP, Washington, D.C.
Responsible Nutrition and
Consumer Healthcare
Products Association in
support of Appellees:

Amicus Curiae Natural         Richard J. Oparil, Porzio, Bromberg & Newman, P.C. (Scott A.M.
Products Association in       Chambers, Kevin M. Bell, Carolina M. Wirth, on the brief),
support of Appellees:         Washington, D.C.

Amicus Curiae Alliance        Peter A. Arhangelsky, Emord & Associates, P.C., Gilbert, AZ.
for Natural Health-USA
in support of Appellees:

Appeal from a judgment of the United States District Court for the Southern District of New
York (Stanton, J.).




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        ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of said District Court be and it hereby is VACATED, and
the case is REMANDED for further proceedings consistent with this order.

        Appellants FTC and the State of New York appeal from the September 29, 2017,
judgment of the United States District Court for the Southern District of New York (Stanton, J.)
dismissing the FTC’s and the State of New York’s claims that Defendants-Appellees’ marketing
campaign for the dietary supplement Prevagen was deceptive. We assume the parties’ familiarity
with the underlying facts, procedural history, and specification of issues for review.

         Defendants-Appellees (collectively, “Quincy”) developed and marketed a suite of dietary
supplements under the brand Prevagen (“Prevagen”) and claimed in advertisements and
marketing materials (1) that the supplements improve memory and provide other cognitive
benefits, (2) that these effects are clinically proven, and (3) that the products’ active ingredient
“supplements” brain proteins that are lost with age. App’x at JA-23, ¶ 27A. The FTC and the
State of New York (unless otherwise indicated, referred to collectively as the “FTC”) allege that
Quincy conducted a randomized, double-blind, placebo-controlled study that contradicted these
representations. The study showed no statistically significant improvement in the memory and
cognition of participants taking Prevagen over participants taking a placebo. According to the
FTC’s Complaint, Quincy subsequently “conducted more than 30 post hoc analyses of the
results” of the study, and “the vast majority of these post hoc comparisons failed to show
statistical significance.” App’x at JA-37, ¶ 29. The FTC further alleges that while the study
showed a “few positive findings on isolated tasks for small groups of the study population,”
these findings did not “provide reliable evidence of a treatment effect.” App’x at JA-37, ¶ 29.

        We review a district court’s decision on a motion to dismiss de novo. In re Actos End-
Payor Antitrust Litig., 848 F.3d 89, 97 (2d Cir. 2017). “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face”—that is, the facts in the Complaint must “allow[] the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (internal quotation marks omitted). To state a claim of deceptive
advertising under the FTC Act, the Complaint must allege: “[1] a representation, omission, or
practice, that [2] is likely to mislead consumers acting reasonably under the circumstances, and
[3], the representation, omission, or practice is material.” FTC v. Verity Int’l, Ltd., 443 F.3d 48,
63 (2d Cir. 2006) (alterations in original) (internal quotation marks omitted). Similarly, “[t]o
successfully assert a claim under General Business Law § 349(h) or § 350, a plaintiff must allege
that a defendant has engaged in (1) consumer-oriented conduct that is (2) materially misleading
and that (3) plaintiff suffered injury as a result of the allegedly deceptive act or practice.” Koch v.
Acker, Merrall & Condit Co., 18 N.Y.3d 940, 941 (2012) (internal quotation marks omitted).

        The FTC has stated a plausible claim that Quincy’s representations about Prevagen are
contradicted by the results of Quincy’s clinical trial and are thus materially deceptive in violation
of the FTC Act and New York General Business Law. 15 U.S.C. §§ 45(a), 52; N.Y. GBL §§
349-350. For example, the FTC’s Complaint quotes Quincy’s broad claim that in a clinical study
“Prevagen improved memory for most subjects within 90 days.” App’x at JA-27, ¶ 27C. Yet the
Complaint alleges that Quincy’s clinical study of Prevagen “failed to show a statistically



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significant improvement in the treatment group over the placebo group on any of the nine
computerized cognitive tasks.” App’x at JA-37, ¶ 28. Taking these allegations as true, not only
has the FTC adequately alleged that Quincy’s study undermines its representations that “the
majority of people” experience cognitive improvement from taking Prevagen, App’x at JA-164,
but the FTC has also stated a claim that Quincy’s representations that this cognitive improvement
is clinically supported are deceptive. See In the Matter of Bristol-Meyers Co., 102 F.T.C. 21, 220
(1983) (requiring advertisers to “possess the level of proof claimed in the ad” where “an
advertisement represents that a particular claim has been scientifically established”), aff’d,
Bristol Myers Co. v. FTC, 738 F.2d 554 (2d Cir. 1984).

        Lastly, the FTC alleges that Quincy’s claim that the active ingredient in Prevagen,
apoaequorin, “enters the human brain to supplement endogenous proteins that are lost during the
natural process of aging” is false. App’x at JA-38, ¶ 31. The FTC alleges that, in fact, Quincy’s
“safety studies show that apoaequorin is rapidly digested in the stomach and broken down into
amino acids and small peptides like any other dietary protein.” App’x at JA-39, ¶ 31. Drawing
reasonable inferences in favor of the FTC, as we must, the FTC plausibly alleged that Quincy’s
representations about Prevagen’s active ingredient entering the brain are false.

        The FTC and New York have made plausible allegations that Quincy’s marketing
campaign for Prevagen contained deceptive representations, and the district court erred in
dismissing the Complaint in its entirety and refusing to exercise supplemental jurisdiction over
New York’s claims. We note that Defendants-Appellees have raised several grounds for
affirmance that the district court did not consider. We express no opinion on these arguments,
and the district court may consider them in the first instance on remand. See Guippone v. BH
S&B Holdings LLC, 737 F.3d 221, 228 (2d Cir. 2013) (reversing the district court and declining
to reach alternate grounds for affirmance where the district court had not previously considered
the issues).

         After this case was heard, Defendants-Appellees Quincy Bioscience Holding Company,
Inc., Quincy Bioscience, LLC, Prevagen, Inc., and Quincy Bioscience Manufacturing, LLC
moved for the recusal of the panel member whose potential conflict with an amicus associated
with the Public Citizen amicus curiae brief prompted the panel to strike the brief. No. 17-
3745(L), ECF Nos. 242, 246. Federal Rule of Appellate Procedure 29(a)(2) permits a panel to
strike an amicus brief after it has already been filed, thus allowing a panel to reject the brief at
any point at which a panel member discovers a potential conflict. The rule does not in text or
spirit require an amicus brief to be stricken prior to oral argument, and the Public Citizen amicus
brief has not been and will not be considered in the resolution of this case. Defendants-
Appellees’ motion for recusal is hereby DENIED.




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        The judgment of the district court hereby is VACATED, and the case is REMANDED
for further proceedings consistent with this order.


                                                FOR THE COURT:
                                                Catherine O’Hagan Wolfe, Clerk




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