By Dorothy Atkins

Law360 (July 1, 2020, 7:20 PM EDT) -- Vivera Pharmaceuticals Inc. has hit Gannett, several executives and four USA Today reporters with a defamation lawsuit in California federal court, alleging it has suffered over $500 million in damages because of a story that criticized its COVID-19 antibody tests and detailed its CEO's past troubles with the U.S. Food and Drug Administration.

In a complaint on Tuesday, Los Angeles-based Vivera argues 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.

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 FDA 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. It also detailed allegations lobbed by investors against Edalat in other litigation and cast doubt over whether Vivera has the authority to seek FDA approval of the German-made antibody tests it sells.

But Vivera's lawsuit claims that USA Today's article "attacked" the company by repeating years-old, false allegations against Edalat that were initially made by Edalat's former business partner in connection with unrelated litigation.

Vivera argues 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," the suit says.

The suit names 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 asserts 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 said government agencies and tribal nations have expressed interest in its test products, particularly because they are U.S.-made and the company has the ability to make millions of tests per week. But the alleged false statements published in the USA Today story has caused it massive losses, the suit claims.

The lawsuit takes issue with multiple sections of the article that recall allegations by investors who purportedly accused Edalat of being a "fraud" and of allegedly deceiving them by driving a Rolls-Royce and wearing a gold Rolex to hide his bankruptcy, among other things. The suit says the claims have nothing to do with the antibody tests and that they were part of his former partner Bruce Cahill's "public disparagement campaign" against Edalat.

Since the USA Today story was published, Edalat has posted multiple times on Twitter calling one of the reporters, Heath, a "#racistreporter." Edalat also wrote on Twitter that Gannett's bankruptcy is in its "near future," and that Heath should "start looking for another job and change of careeer. [SIC] #moppingfloors where trash belongs."

Edalat said in a statement on Tuesday that it is unfortunate that Gannett, and USA Today, chose to "knowingly print false, misleading and disparaging comments about myself and Vivera."

"We provided USA Today an opportunity to retract this article, which they refused," Edalat said. "This article has nothing to do with the quality of Vivera's antibody tests and was a coordinated attack on me in an effort to disparage Vivera."

Heath declined to comment on Wednesday. The other reporters and representatives for Gannett didn't immediately respond to requests for comment. The executives' direct contact information wasn't immediately available.

Vivera is represented by Albert T. Liou and Shane W. Tseng of LKP Global Law LLP.

Counsel information for Gannett and the defendants wasn't immediately available.

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.

--Editing by Nicole Bleier.

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