Resolution Of Outlaw Laboratory Claims

ERIC H. KARP, ESQ., General Counsel to NCASEF

Over the last several months, a large number of franchisees—354 to be exact—have received demand letters from the California-based law firm, Tauler Smith, LLP, stating that it represents Outlaw Laboratory, LP, the manufacturer, distributor and retailer of sexual enhancement products commonly known as Tri-Steel and TriSteel 8 Hour. Outlaw Laboratory claims, without ever having produced any evidence to us, that these products are all natural and do not have any hidden drugs or ingredients.

The demand letters allege that sexual enhancement products manufactured by many other companies do contain hidden drugs or ingredients, which in some cases may actually be harmful to consumers. The demand letters claimed that the franchisees that sold these products had engaged in false advertising in violation of a federal statute. Attached to these demand  letters were photographs of the stores that have been shopped by representatives of Outlaw Laboratory, receipts for sexual enhancement products apparently purchased at the stores and a draft complaint in which Tauler Smith threatened to file in federal court against the franchisee unless he or she settled the claim. That is to say, the claim was that the packaging for these products did not disclose the hidden ingredient, which in many cases was the active ingredient in Viagra. However, there was no way for the franchisee to know if the packaging for these products, or any other products of any kind sold in the store, were not accurate. That packaging is designed, manufactured and affixed to the product by the seller and never by the franchisee.

On behalf of these franchisees we had stated the following uncontested facts: the franchisees did not know and had no reason to know that any of the enhancement products in question contained
hidden or undisclosed ingredients, that the packaging was in any way misleading or incomplete, or that any of the products in question were the subject of any Public Notification by the United
States Food and Drug Administration. In addition, to the extent that any franchisee sold any such product, the franchisee did not create, review or approve the packaging that accompanied the products and thus they did not engage in any advertising at all. In addition, to the extent that any of these products were the subject of a Public Notification, this was not an action by a government
agency to ban the sale of products, only to advise consumers not to buy them. In short, none of the franchisees who sold any of these products did anything wrong.

In most cases, the demand letters received by franchisees offered to settle the claims for a one-time payment of $14,000. Over a period of several months, we were able to negotiate a global resolution of these claims, which is strictly voluntary to any franchisee that received a demand letter. If the franchisee wishes to resolve this matter, the franchisee must do the following:

1. Complete and sign a form of Global Agreement of Compromise, Settlement and Mutual General Release (the Settlement Agreement);

2. Pay to Tauler Smith, LLP the sum of $2,500; and

3. Submit to Tauler Smith, LLP copies of invoices or statements reflecting their purchase of sexual enhancement products within the previous 12 months.

In the Settlement Agreement, the franchisee is not admitting to any wrongdoing or liability with respect to the sexual enhancement products and facts on which the franchisee would rely in defending any such claim, are also recited in the Settlement Agreement.

As part of the resolution, we agreed to provide to Tauler Smith a list of all the product distributors that have been identified by franchisees. We did not disclose which franchisees purchased what products from which distributors.

An explanatory email and a copy of the Settlement Agreement was sent last month to all FOA presidents and all franchisees who provided to us a copy of the demand letter they had received from
Tauler Smith. If you have received a demand letter, but you have not yet been given an opportunity to review the Settlement Agreement, please email me at and I’ll be happy to send you a copy.

Any franchisee considering the execution of the Settlement Agreement is encouraged to seek advice counsel from their own attorney.

Please understand that this settlement is strictly on an opt-in basis and is therefore completely voluntary to the franchisee. We do know that Tauler Smith has filed at least 5 Federal Court lawsuits
against sellers of sexual enhancement products that they say contain hidden ingredients. But as far as we can determine, as of the date of this writing, none of these lawsuits so far have been filed against a 7- Eleven franchisee.

What the franchisee receives in return for entering into this settlement is a certainty of result, the expenditure of far less money than you would spend defending a lawsuit, and an assurance that Outlaw Laboratory will not pursue them in the future, unless there are future sales of sexual enhancement products that are on the FDA Public Notification List. You can access that
list here:

We are pleased that we were able to negotiate what we think is a common sense resolution of these claims. If you have any questions regarding the Settlement Agreement, you can direct those
to your FOA president or to me.