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Law360 (August 31, 2020, 10:49 PM EDT) -- Vivera Pharmaceuticals Inc. dismissed its federal defamation lawsuit Friday against Gannett, several executives and four USA Today reporters alleging it has suffered $500 million in damages because of a story that criticized its COVID-19 antibody tests, saying it has plans to refile its claims in state court.
Vivera's attorney, Albert T. Liou of LKP Global Law LLP, told Law360 on Monday that they are not dropping the claims filed on June 30 in California federal court, but will be refiling them in state court. The suit claimed that the USA Today article was an attempt by a publication with a waning subscriber base to manufacture a story to "cash in" on the global pandemic.
Counsel for Gannett did not immediately respond to a request for comment.
The article published on June 2 was titled "'You could see the train wreck coming': Inexperienced, dubious companies, among many aiming to cash in on coronavirus antibody tests."
The story details the purported results of a USA Today investigation team's review of the more than 150 companies that were approved by the U.S. Food and Drug Administration to sell coronavirus antibody tests during the first nine weeks of the pandemic. The story says reporters found "a nascent industry with inexperienced or dubious companies jockeying to cash in," and it featured Vivera and its CEO Paul Edalat, among other companies, with allegedly dubious histories.
The USA Today story recalls that the FDA had sued Edalat and his dietary supplement business, SciLabs Nutraceuticals Inc., which has since gone bankrupt, alleging the products had not been tested to ensure they contained only dietary ingredients.
But Vivera's lawsuit claimed that USA Today's article "attacked" the company by repeating false, years-old allegations against Edalat that were initially made by his former business partner in connection with unrelated litigation.
Vivera argued that its antibody tests are "highly accurate and validated," but the newspaper's repeated refusal to retract or correct the story has cost the company more than $500 million in losses.
"By doing so, defendants acted more like opposing parties in litigation with Edalat, instead of investigative reporters," Vivera said.
The suit named as defendants USA Today reporters David Heath, Kevin McCoy and Donovan Slack, who wrote the story together, as well as USA Today health reporter Ken Alltucker, Gannett CEO Michael Reed, Gannett Media CEO Paul Bascobert, USA Today publisher Maribel Wadsworth and Gannett general counsel Thomas Curley.
Vivera asserted claims of defamation, trade libel and intentional and negligent interference with prospective economic advantage, and it seeks compensatory damages, which is "believed to be in excess of $500 million," plus punitive damages and interest.
Edalat founded Vivera in April 2018 and the company has since worked with contract research organization Parexel to conduct its clinical trials, according to the suit. In response to the pandemic, the company began selling two antibody screening tests that aim to detect the body's immune response to infection.
Between March and June, Vivera filed two emergency use authorization packages with the FDA for approval of its German-sourced COVID-19 test kits as well as two patent applications with the U.S. Patent and Trademark Office for its line of antibody tests.
Throughout the process, Vivera argues in its suit, it has worked closely with the FDA to ensure it is in compliance with federal regulations, and it delivers its test kits to laboratories certified under the federal Clinical Laboratory Improvement Amendments requirements.
Vivera also says it has voluntarily submitted both of its products for validation studies backed by the National Cancer Institute, and the results of those studies are posted publicly.
Vivera is represented by Albert T. Liou and Shane W. Tseng of LKP Global Law LLP.
Gannett, its executives and reporters are represented by Robert S. Gutierrez and Elizabeth L. Schilken of Ballard Spahr LLP.
The case is Vivera Pharmaceuticals Inc. v. Gannett Co. et al., case number 2:20-cv-05838, in the U.S. District Court for the Central District of California.
--Additional reporting by Dorothy Atkins and Emily Field. Editing by Jay Jackson Jr.
For a reprint of this article, please contact reprints@law360.com.
