Nova Oculus Partners, LLC v. U.S. Food & Drug Admin.

NOVA OCULUS PARTNERS, LLC, f/k/a THE EYE MACHINE, LLC, Plaintiff, v. UNITED STATES FOOD AND DRUG ADMINISTRATION, et al., Defendants.

Civil Action No. 20-cv-1174 (DLF)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

November 18, 2020

MEMORANDUM OPINION

Nova Oculus brings various claims against the Food and Drug Administration (FDA) after it denied Nova Oculus's request for Breakthrough Device Designation. Before the Court is the FDA's Motion to Dismiss, Dkt 12. For the reasons that follow, the Court will grant the motion.

I. BACKGROUND

The Court takes the well-pleaded factual allegations in the Complaint, Dkt. 1, as true. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). The Federal Food, Drug, and Cosmetic Act permits the FDA to grant expedited and prioritized review for certain "breakthrough" medical devices. See 21 U.S.C. § 360e-3. The statute provides specific criteria that a device must satisfy in order to receive breakthrough device designation. Id. § 360e-3(b). Nova Oculus first applied for breakthrough status on January 25, 2019. Compl. ¶ 7, Dkt. 1. Its device was the Nova Oculus III System, which was made to treat the symptoms of geographic atrophy, a "dry age-related macular degeneration that is associated with central vision loss and gradual progression without regression." Id. After requesting additional information from Nova Oculus, id. ¶ 8, the FDA's Center for Devices and Radiological Health denied the application and explained why Nova Oculus's device failed to meet the statutory criteria. Id. ¶ 10. On June 4, 2019, the agency participated in a conference call with Nova Oculus to further discuss the denial. Id. ¶ 11. Nova Oculus then submitted a "slightly revised" application. Id. ¶ 12. On October 4, 2019, the agency again denied the application, explaining that Nova Oculus had not satisfied the statutory criteria. Id. ¶ 13. The parties then held two more conference calls, during which the agency again reiterated that Nova Oculus had not met the statutory criteria and recommended that Nova Oculus pursue a different program, the Early Feasibility Study process. Id. ¶ 14.

The FDA submitted a letter explaining the denial to Nova Oculus. See Mot. to Dismiss Ex. F, Dkt. 12-7 (sealed) ("Denial Letter").¹ The letter contained detailed scientific analyses explaining why Nova Oculus's submission did not satisfy the statutory criteria. Id. The FDA concluded that [Redacted]Id.; Mot. to Dismiss at 7 n.4 (sealed). [Redacted] See Denial Letter at 2. [Redacted] . Id. Further, the FDA noted several issues with the scientific literature that Nova Oculus cited. Id. [Redacted] The letter [Redacted] Id. at 4; Mot. to Dismiss at 2. And it concluded by informing Nova Oculus of its right to seek supervisory review of the FDA's denial decision, which Nova Oculus did not pursue. Denial Letter at 4; Mot. to Dismiss at 2; see generally Compl.

In a separate legal action, Nova Oculus sued the FDA under the Freedom of Information Act (FOIA). See Nova Oculus Partners, LLC f/k/a The Eye Machine, LLC, et al. v. FDA, No. 19-cv-2950 (D.D.C. October 1, 2019). In the course of that litigation, the FDA released an instant message chain between two Center for Devices and Radiological Health employees. Compl. ¶ 17. In that chain, one employee mentioned that a different employee in the agency thought they "should grant [Nova Oculus's application] at this point . . . as long as they fix their IFU regarding the intended population." Id. The employee later sent the other employee a link to an SEC press release announcing an enforcement action against Nova Oculus and asks: "did you read this?"; the other responds: "yes, i read this, leonid has lot of stories about it." Id. ¶ 18.They continued: "oh" "so this is same company?"; "it seems that way. may i call you in a few mins, after i finish with gene?" Id. Nova Oculus does not allege that the employees discussed the SEC matter further in the instant message chain or that anyone else specifically mentioned it elsewhere. Id.; see generally Compl.

Nova Oculus now argues that, based on this instant message exchange, the FDA violated several provisions of the Administrative Procedure Act in denying its breakthrough application. It also argues that the FDA violated its constitutional right to procedural due process by not providing Nova Oculus a hearing, although it has not alleged that it requested one.

II. LEGAL STANDARDS

Rule 12(b)(6) of the Federal Rules of Civil Procedure allows a defendant to move to dismiss the complaint for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion, a complaint must contain factual matter sufficient to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A facially plausible claim is one that "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. This standard does not amount to a specific probability requirement, but it does require "more than a sheer possibility that a defendant has acted unlawfully." Id.; see also Twombly, 550 U.S. at 557 ("Factual allegations must be enough to raise a right to relief above the speculative level."). A complaint need not contain "detailed factual allegations," but alleging facts that are "merely consistent with a defendant's liability . . . stops short of the line between possibility and plausibility." Iqbal, 556 U.S. at 678 (internal quotation marks omitted).

Well-pleaded factual allegations are "entitled to [an] assumption of truth," id. at 679, and the Court construes the complaint "in favor of the plaintiff, who must be granted the benefit ofall inferences that can be derived from the facts alleged," Hettinga v. United States, 677 F.3d 471, 476 (D.C. Cir. 2012) (internal quotation marks omitted). The assumption of truth does not apply, however, to a "legal conclusion couched as a factual allegation." Iqbal, 556 U.S. at 678 (internal quotation marks omitted). An "unadorned, the defendant-unlawfully-harmed-me accusation" is not credited; likewise, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Ultimately, "[d]etermining whether a complaint states a plausible claim for relief [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

When deciding a Rule 12(b)(6) motion, the Court may consider only the complaint itself, documents attached to the complaint, documents incorporated by reference in the complaint, and judicially noticeable materials. EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997). A Rule 12(b)(6) dismissal "is a resolution on the merits and is ordinarily prejudicial." Okusami v. Psychiatric Inst. of Wash., Inc., 959 F.2d 1062, 1066 (D.C. Cir. 1992).

III. ANALYSIS

Nova Oculus brings five claims: count I: arbitrary and capricious agency action in violation of the APA; count II: agency action in excess of statutory authority in violation of the APA; count III: nonstatutory review of ultra vires agency action; count IV: agency action without observance of procedure required by law in violation of the APA; and count V: agency action contrary to a constitutional right in violation of the APA. See 5 U.S. Code § 706(2).

As an initial matter, nonstatutory review of an ultra vires agency action (count III) is applicable "if a plaintiff is unable to bring his case predicated on either a specific or a general statutory review provision . . . ." Chamber of Commerce of U.S. v. Reich, 74 F.3d 1322, 1327 (D.C. Cir. 1996) (emphasis added); see also Adamski v. McHugh, 304 F. Supp. 3d 227, 236-37(D.D.C. 2015). Here, Nova Oculus is able and indeed does bring its case based on specific review provisions of the APA. See generally Compl. Thus, the doctrine of nonstatutory review is inapposite. In any case, Nova Oculus has not pleaded sufficient facts to state a case on nonstatutory review or its four other APA claims.

On counts II, III, and IV, Nova Oculus relies on largely the same allegations for each of the claims. First, Nova Oculus asserts that the "FDA was required under 21 U.S.C. § 360e-3 to determine whether Plaintiff satisfied the statutory criteria for Breakthrough Device Designation. That criteria is clearly established in the statute." Compl. ¶ 32 (agency action in excess of statutory authority), ¶ 41 (nonstatutory review), ¶ 48 (agency action without observance of procedure required by law). Second, Nova Oculus alleges that the "FDA issued its denial of Plaintiff's application after explicitly considering as part of its analysis SEC allegations against Plaintiff, which certainly were not part of the statutory criteria for Breakthrough Device Designation." Id. ¶ 33 (agency action in excess of statutory authority), ¶ 42 (nonstatutory review), ¶ 49 (agency action without observance of procedure required by law). And third, Nova Oculus claims that the FDA's decision was "based on a pre-determination by FDA." Id. ¶ 34 (agency action in excess of statutory authority), ¶ 43 (nonstatutory review), ¶ 50 (agency action without observance of procedure required by law). These allegations are not sufficient to state a claim that the FDA violated the APA or otherwise acted outside of its lawful authority.

The statute that governs the FDA grants the agency the authority to administer the breakthrough program and sets forth the statutory criteria for administering the program. See 21 U.S.C. § 360e-3. It states that: "[t]he Secretary shall establish a program to expedite the development of, and provide for the priority review for, devices, as determined by the Secretary—(1) that provide for more effective treatment or diagnosis of life-threatening orirreversibly debilitating human disease or conditions; and (2)(A) that represent breakthrough technologies; (B)...