Georgia Judge Finds No Federal Jurisdiction in Case Alleging Medical Product Company Misled Public

On Monday, a Northern District of Georgia judge ruled to remand a case alleging that Elite Integrated Medical LLC and Justin C. Paulk misrepresented their regenerative medicine products to the public based on lack of federal jurisdiction.

Relator Christopher M. Carr, replaced as plaintiff by the state of Georgia, originally filed suit in Fulton County State Court against the defendants, who had allegedly been advertising and offering regenerative medicine products that use stem cells in attempts to treat various health conditions; however, the court noted, the products Elite was advertising “were not ones it manufactured or produced” and were actually produced by third parties. None of the products — which were made from placental tissue and umbilical cords — have been approved by the United States Food and Drug Administration (FDA).

Through information disseminated on their website, in “testimonials,” on social media platforms, and through other forums, according to the complaint, the defendants falsely represented the safety and efficacy of their products to consumers.

“Defendants represented, expressly or by implication, that their products were safe and effective by citing to studies and reports for other, different stem cell therapies and products,” the court explained, recounting the complaint’s allegations. “These other stem cell products are derived from different sources (such as bone marrow), do not contain the same ingredients, and are not processed or manufactured using the same processes.”

Joined by other allegations regarding how the defendants advertised their products, the state of Georgia asserted claims pursuant to the Georgia Fair Businesses Practice Act (GFBPA) in the county court. The defendants removed the case to the district court and shortly after filed a motion to dismiss, which the state followed with its motion to remand.

The question of which forum in which the case should continue begged the additional question of whether the FDA regulates regenerative medicine products. If the answer is yes, then federal jurisdiction would exist; if no, remanding is appropriate, the court explained — unless the defendants could show that the suit itself simply “implicates the federal question” of whether regenerative medicine products are FDA-regulated.

Judge Amy Totenberg followed this logic in the decision to remand the matter to the state, finding that the defendants did not sufficiently establish that the case arises under or implicates federal law. Additionally, the court rejected the defendants’ argument that the claims by the state preempt state law, as the defendants invoked “defensive preemption,” which “cannot furnish subject matter jurisdiction.”

The state of Georgia is represented by its own counsel. The defendants are represented by Chilivis Grubman Dalbey & Warner and Freeman Mathis & Gary LLP.