Quincy Bioscience wins and loses in jury trial over memory supplement Prevagen

Based on sales, Prevagen is a gem among the more than 100,000 dietary supplement products in the U.S. Between 2007 and mid-2015, the supplement promoted to improve memory hauled in $165 million in U.S. sales, minus refunds, according to state and federal regulators.

For the last seven years, in the federal district and appellate courts, the company behind Prevagen has been battling the Federal Trade Commission and the office of the New York attorney general. This month, the clash reached a crescendo as the New York AG and Quincy Bioscience swapped blows before a jury.

At issue: whether Quincy engaged in fraud or illegality, deceptive business practices and false advertising in violation of sections 349 and 350 of New York General Business Law and section § 63(12) of New York Executive Law.

While the recent jury trial focused on proving claims against the Quincy defendants under New York state law, it’s my understanding FTC lawyers participated in the trial, though did not hold themselves out as agents of the federal government. In a 2017 lawsuit against Quincy brought jointly by the New York AG and FTC, the company is also alleged to have engaged in deceptive acts or practices in violation of section 5 of the FTC Act.

Jury’s findings

On Monday, March 11, the New York jury returned its verdict. The eight jurors found all eight challenged statements lacked support by “competent and reliable scientific evidence.”

Related:Quincy’s Prevagen trial was a long time coming

These statements included the following:

“Prevagen improves memory.”

“Prevagen is clinically shown to improve memory.”

“Prevagen improves memory within 90 days.”

“Prevagen is clinically shown to improve memory within 90 days.”

“Prevagen reduces memory problems associated with aging.”

“Prevagen is clinically shown to reduce memory problems associated with aging.”

“Prevagen provides other cognitive benefits, including but not limited to healthy brain function, a sharper mind and clearer thinking.”

“Prevagen is clinically shown to provide other cognitive benefits, including but not limited to healthy brain function, a sharper mind and clearer thinking.”

Without additional context, you might be thinking, “The New York AG’s office landed the knock-out punch.”

Not so fast. When asked on the jury form whether the challenged statements were “materially misleading,” jurors answered “no” concerning six statements and “yes” regarding just two. The two statements that the jury found materially misleading were: “Prevagen reduces memory problems associated with aging,” and “Prevagen is clinically shown to reduce memory problems associated with aging.”

Jurors found the latter two claims were materially misleading under sections 349 and 350 of the New York General Business Law. If we’re using a baseball batter analogy based on the eight challenged claims, the New York AG had a batting average of .250. That’s nothing to write home about.

Since the jury found six of the eight challenged claims were not materially misleading, I calculate that Quincy’s batting average (under sections 349 and 350 of the New York General Business Law) was .750, an otherworldly batting average or the envy of late Red Sox slugger Ted Williams.

At first glance, the state AG pummeled Quincy on the third charge under section 63(12) of the New York Executive Law. Jurors found all eight challenged statements were conveyed by the Quincy defendants, made repeatedly or consistently, and had “the capacity or the tendency to deceive.”

The verdict form on this count reads like an unassailable victory for the New York AG, but rarely is law black and white. Despite the jury’s findings, there may be an argument that the state AG only prevailed on two — not eight — of the challenged statements under section 62(12) of the New York Executive Law.

How can this be?

The argument goes something like this. There can be no decision for the jury to make — and therefore no finding of liability — under the New York Executive Law if the jurors first found in favor of Quincy on the charges brought under sections 349 and 350 of the New York General Business Law.

Recall the jury found only two of the challenged statements (related to memory problems associated with aging) were materially misleading under the latter statute.

The state of New York may conclude otherwise. If there’s one thing lawyers — and pre-teens — are good at, it’s bickering relentlessly from morning until night.

Reconciling competing findings

The jury’s findings are paradoxical in my view. Sure, they found Quincy had no “competent and reliable scientific evidence” for the challenged statements, however they understood that term of art. (We’ll explore this substantiation standard and how it was presented to the jury in a later article).

Yet by finding most of Quincy’s statements were not “materially misleading,” jurors seemed to be concluding the company had a certain amount of convincing evidence to support such claims as “Prevagen improves memory” and “Prevagen is clinically shown to improve memory within 90 days.”

Then in another twist, the jurors found (under New York Executive Law) that all eight statements “had the capacity or the tendency to deceive.” How could most of the statements not be “materially misleading” yet all of them tended to deceive consumers? Tomato-tomato.

Another topic I will explore in this series is the mountain of science presented to the jury and the “battle of the experts.” Based on the evidence presented, it seems the jury was trying its darndest to be fair and reach some type of compromise in its findings.

The fight goes on

The bottom line is nobody in the trial scored a knock-out punch or hit a grand slam to win the game. As one might expect, Quincy painted the outcome as a victory.

“We are pleased that a federal jury in New York concluded … that the New York attorney general failed to prove its deceptive advertising and labeling case against Quincy Bioscience's key advertising claims for Prevagen, including the claim that Prevagen ‘improves memory,’” the company said in a statement. “At great expense to taxpayers, the New York attorney general’s office, aided by the Federal Trade Commission, has pursued this case for more than seven years. With the jury trial now concluded, we plan to refocus our time and resources on continuing to lead the way in brain health with our cutting-edge applications of Prevagen.”

The New York AG’s office didn’t respond to my emailed request for comment. I’m not sure how they’ll spin the decision. And an FTC spokesman had no immediate comment on the verdict.

It remains to be seen what happens next or how precisely the jury’s decision affects the Federal Trade Commission’s case against Quincy under section 5 of the FTC Act. Post-trial motions are likely to be filed in the coming weeks, and the state is expected to seek money damages.

The jury’s findings that most of the challenged claims were not “materially misleading” could damage the federal government’s case against Quincy under section 5 of the FTC Act. One of the elements that FTC must prove is the challenged representation is “material.”

A judge cannot reach a verdict that is inconsistent with a jury “on a claim involving the same essential elements.” At least, that’s what I read in Song v. Ives Lab'ys Inc., 957 F.2d 1041, 1048 (2d Cir. 1992). And during a pre-trial conference in the Quincy case, New York Assistant AG Kathryn Matuschak said, “When the facts are being presented to the fact-finder, that’s going to end up binding both the AG and the FTC.”

At the same conference, an FTC lawyer, Edward Glennon, described the case’s posture as “very unusual” since FTC cases typically involve only the federal government’s claims and therefore do not involve a jury. He made the case for why his agency should be able to participate in the jury trial.

“And, again, from our point of view, it does essentially come down to fairness since we will be bound and affected by the jury's finding,” Glennon told Judge Louis L. Stanton. “We feel we should have a seat and be able to participate fully.”

I’ll bet dollars to doughnuts the federal government won’t give up on its claims under section 5 of the FTC Act. Few pugilists — including the mighty and muscular U.S. government — go 11 rounds in a fight and quit before the final bell rings.

Remember this case

What are the long-term implications of this jury verdict for Quincy and the broader dietary supplement industry? Who knows. The lawyers haven’t left the courtroom, and it seems that Quincy is one of the few supplement brands with the financial resources — and army of lawyers — “to keep fighting the good fight.”

This I can say with no hesitation: Quincy’s continuing 7-year-old battle with the government over Prevagen is a very important case to follow and the supplement industry shouldn’t lose sight of it.

Editor's note: This article initially incorrectly named Quincy president Mark Underwood as a co-defendant. The New York AG's claims were dismissed against him on jurisdictional grounds in 2022. He remains a defendant in FTC's case.