Henry Quillian III (left) and David Jaffer. (Courtesy photos)

A Texas-based manufacturer of men's sexual enhancement products is on the defensive after many of the targets of its national litigation barrage against retailers of rival products decided to punch back, calling its settlement offers a “shakedown.”

Outlaw Laboratory seemed to have discovered a winning formula when it teamed up with a California law firm to file dozens of multidefendant lawsuits against convenience stores, gas stations and retailers around the country, asserting claims for false advertising over competing sex-drive products on the stores' shelves. 

Outlaw Laboratory says it is the manufacturer of “lawful male enhancement products” TriSteel and “TriSteel 8hour.” Presuit demand letters claim the recipients have been selling competing products containing adulturants or prescription drugs like Viagra, and threaten damages of $100,000 or more unless the recipients pay several thousand dollars to avoid litigation.

Defense lawyers say hundreds of mom-and-pop operations have ponied up a few grand to make Outlaw and its lawyers go away.

The litigation has apparently been lucrative: In addition to an unknown number of settlements with individual defendants, the National Coalition of Associations of 7-Eleven Franchisees last year circulated a notice saying 354 of its members had been threatened with a lawsuit.

In response, the association negotiated a settlement whereby any member could pay $2,500 to the California firm spearheading the litigation, Los Angeles' Tauler Smith, to avoid being sued. 

Eric Karp, the coalition's general counsel, said he did not know how many store owners opted in, but “there have been a number.”

But a loosely organized posse of lawyers has gone after the Outlaw operation, getting their complaints tossed—one federal judge in Texas termed the litigation a “shakedown”—and filing counterclaims. 

Last month, a federal judge in California refused Outlaw's bid to block class certification for a group of store owners whose claims include racketeering and conspiracy, and among other things is asking that money paid in earlier settlements be returned.

Two multidefendant suits in Texas have been thrown out, and a Nevada judge nixed one in May. 

In the U.S. District Court for the Northern District of Georgia, Judge Timothy Batten dismissed Outlaw's complaint against several defendants last month who refused to settle. His colleague, Judge Amy Totenberg, took a more cautious tack and said Outlaw is “entitled to a chance to prove its case,” allowing discovery to proceed against the remaining defendants after others settled out. 

In Michigan, dozens of defendants have been dismissed from a multidefendant suit after filing counterclaims accusing Outlaw of the same allegations it leveled against its targets.  

As in most of the other cases, even the suits that are ultimately booted usually churn up some settlements from co-defendants who lack the resources to fight. And the losses don't seem to faze the plaintiff's lawyers. On June 28, a new suit naming a half-dozen defendants was filed in state court in North Carolina.

The complaints began in 2017 with a spate of California demand letters accompanied by draft complaints authored by the Tauler firm's Robert Tauler, which have since provided the template for the tide of litigation.

The complaints accuse the defendants of marketing “misbranded” male enhancement products with names like Black Stallion 5000, Grande X 5800, Libigrow XXXtreme, Orgazen, Powerzen, Rhino 12 Titanium, Herb Viagra, Hard Ten Days, Stiff Nights and Black Mamba, among others. 

The complaints allege that the offending products have been tested by the Food and Drug Administration and found to contain “hidden drug ingredients” including sildenafil, the active ingredient in Viagra, and other drugs. 

The product packaging says they're “all natural,” contain “no harmful synthetic chemicals” and cause no side effects, claims the complaints say are “patently false.” In addition to being a health hazard, the competing products are cheaper than Outlaw's American-made products which, they claim, are in fact all natural.  

Although they usually include state law claims, the suits main claim is that the retailers have violated the federal Lanham Act by introducing “false and misleading statements into interstate commerce via marketing and advertising on product packages and labels.”

A representative demand letter sent to California liquor store from Tauler Smith said they “estimate that you are liable for over $100,000 if we prosecute this matter to a jury trial,” but that Outlaw would accept a “one-time settlement agreement of $9,765” and a promise to stop selling the rival products.

Neither Tauler nor the local lawyers leading the Texas and Georgia litigation, Ronald Burns of Frisco, Texas, and Wesley Taulbee of Taulbee, Rushing, Snipes, Marsh and Hodgin in Statesboro, responded to requests for comment.

Outlaw also did not reply to an email query.

In California, District Judge Gonzalo Curiel of the U.S. District Court for the Southern District of California refused to dismiss counterclaims for racketeering and a motion for class certification in two Outlaw cases, a defense team of lawyers is led by Mark Poe and Randy Gaw of San Francisco's Gaw Poe.

“This whole stream of litigation is just a shakedown for nuisance settlements,” said Poe, noting that the majority of defendants are small shopkeepers, usually from other countries and lacking sophistication or any legal background. 

“They've found the most vulnerable victims they can find,” Poe said. 

“We're going after these guys under [Racketeer Influenced and Corrupt Organizations Act claims] as a scheme to defraud under false and deceptive means,” said Poe, whose filings dub the litigation the “Outlaw Enterprise.”

Poe's filings said Tauler was insulting and dismissive in response to a proposal last August that “the Outlaw Enterprise keep what it has extorted so far, but demanding that it cease future stick-ups.”

Tauler changed his tune, once Curiel denied Outlaw's motion to dismiss the counterclaims, Poe said.

“He got in touch and said, 'Oh, how can we work out these differences?' These aren't 'differences,' and we're not going to stop, we're not going to settle,” he said.

Georgia lawyers defending Outlaw's complaints include Taylor English partners Henry Quillian III and LeeAnn Jones, and David Jaffer and Mary Meyer of Tucker's Jaffer Law. 

Quillian said their strategy has been to hold off on filing counterclaims to keep discovery costs down for their clients.

“We've won so far, but we're waiting to see what the plaintiffs do now,” he said.

Quillian said there was no way to know how many retailers may have paid Outlaw's presuit demands.

“This always starts off with waves of letters, and they'll get a certain amount who agree to settle,” Quillian said.

Outlaw's modus operandi usually starts with the recruitment of people to go to stores and take photos of the merchandise and advertising, Jaffer said. 

“They hire people to go grid by grid to take pictures until they've got this massive database with potentially thousands of stores,” he said. 

“Then they send the letters: 'We have pictures, it's going to be north of $100,000, but we're willing to settle for $10,000.'”

The judges dismissing Outlaw's cases have found that Outlaw doesn't have standing to bring a Lanham Act claim against a third-party retailer for claims a manufacturer makes about its product.

In dismissing Outlaws claim in Texas' Northern District Judge Jane Boyle wrote that the “policy concerns stemming from a decision that holds retailers liable for false advertisement created and controlled solely by third-party could be severe.”

The defendants “undoubtedly sell many products,” Boyle wrote, “should they be responsible for scrutinizing and determining the veracity of every claim on every product label in their stores simply because they sell the product?”

Jones said there's also a question as to whether Outlaw's assertions about the offending products are even true.

Most of the supplements are made in China, she said, “and there may be several that have the same name. If it's manufactured in the U.S.,  you can be sure its the same. It's the wild, wild west in China.”

“They've found this gray area that's quite lucrative,” Jaffer said. “I've asked their lawyer, 'what have you tested? If you've found something, what is it?'”

“They've done a great job in terms of scaring the hell out of a lot of people, but their cases are very light on the merits,” he said.