Law360 (November 23, 2020, 10:25 PM EST) -- A logistics and distribution company on Friday hit a supplier with a breach of contract suit in Georgia federal court seeking to recoup $5.44 million for money spent on sanitizing wipes that don't comply with U.S. Food and Drug Administration standards and can't be sold legally in the U.S.
Accelerate 360 LLC said that at the start of the pandemic, it contracted with Aura Accessories LLC to supply sanitizing wipes to Accelerate that would be resold to businesses and consumers worried about COVID-19. Initially, Aura provided safety data sheets about the wipes that identified the active and inactive ingredients and the Chinese company that would be making the wipes, according to the suit.
Months later, after Accelerate had spent millions of dollars on wipes, Aura produced new documentation showing that the wipes had been made by another company that Accelerate hadn't approved, according to the suit.
"Worse still, the new SDS and related regulatory documents Defendants provided contained a host of previously undisclosed active and purportedly inactive ingredients in the product – ingredients that the FDA has declared cannot be included in disinfectant wipes under existing regulations, either as inactive ingredients or in any manner at all," Accelerate said.
The companies' business relationship began in April, when there was a severe shortage of personal protective equipment and other personal sanitizing products, according to the suit.
Aura claimed to have substantial experience with Chinese manufacturers and the compliance issues related to importing personal protection equipment and sanitizing products, Accelerate said.
It also knew that Accelerate was acquiring the wipes for the specific purpose of distribution and re-sale to customers, which include governmental institutions, health care facilities and retailers, according to the suit.
"As a result, it was 'mission critical' that the product comply with all applicable federal and state laws and regulations, including the [Food, Drug and Cosmetic Act]," Accelerate said.
In September, Accelerate learned that the the wipes may not comply with the FDCA; aura claimed that any potential FDCA issues could be resolve by simply sticking new labels on the product, according to the suit.
"Unfortunately for Accelerate, its ongoing evaluation of Aura's … product has discovered that the FD&C Act compliance issues cannot be resolved through a mere 'stickering' protocol to change the labels of the product," Accelerate said.
The wipes violate the FDCA for multiple reasons, including that the new stickers proposed by Aura appear to declare traditionally recognized active ingredients as inactive, without clearly describing their role as such, the company said.
"This suggests that Aura's labeling of these compounds as 'inactive' is simply sleight of hand intended to circumvent the FDCA," Accelerate said.
In early November, the FDA also told Accelerate that it had concluded that the wipes did not meet its standards, according to the suit.
"In sum, Accelerate was duped by Aura," the complaint said.
The suit alleges breach of contract, fraud and breach of warranty claims against Aura.
Representatives for the parties didn't immediately respond to requests for comment on Monday.
Accelerate is represented by Steven R. Press of Baker Donelson Bearman Caldwell & Berkowitz PC; and Cameron A. Welch of Cole Schotz PC.
Counself information for Aura was not immediately available on Monday.
The case is Accelerate360 LLC v. Aura Accessories LLC, case number 1:20-mi-99999 in the U.S. District Court for the Northern District of Georgia.
--Editing by Peter Rozovsky.
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