Texas lawsuit against PetMed Express resumes

POMPANO BEACH, FLA. —As PetMed Express announces the dismissal of shareholder litigation against the company, government filings reveal a Texas lawsuit against the mail-order/Internet pet pharmacy is moving forward.

For more than a year, Texas State Board of Pharmacy and State Board of Veterinary Medical Examiners vs. PetMed Express Inc. lingered in a discovery phase. The lawsuit, filed in August 2002 in Texas state district court, seeks injunctive and monetary relief relating to allegations the company sold prescription drugs illegally to Texas consumers. It also alleges at least two criminal acts — federal and misdemeanor crimes involving the unlawful drugs sales.

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The SEC filing conflicts with a report by Christopher Copeland, the Texas Veterinary Medical Association's general counsel and governmental relations director, that states there's been no movement on the PetMed Express case. In previous interviews with DVM Newsmagazine, he's acknowledged receiving hundreds of calls from Texas veterinarians alleging PetMed Express sells prescription drugs to their clients without proper authorization.

Company officials deny all allegations.

PetMed Express is "confident of its compliance with the applicable law and finds wrong-on-the-facts the vast majority of the allegations," according to a recent company filing with the Securities and Exchange Commission.

"We intend to vigorously defend, but cannot comment further since it is an ongoing matter," PetMed Express attorney Alison Berges adds.

Lawsuit dismissal

The rift between veterinarians and PetMed Express was highlighted late last year in the filing of six class-action lawsuits against the company and its top executives. While the lawsuits now are dismissed, shareholders who filed them alleged PetMed Express deceived investors by failing to disclose longtime veterinarian dissension, which purportedly impacted the company's performance.

According to the lawsuits, investors were unaware that PetMed Express' business depends largely on prescription authorizations by veterinarians, who are the online pet pharmacy's biggest competitors. Company officials denied all allegations of wrongdoing.

"PetMed Express has maintained from the inception of the suits that they were clearly without merit," Berges says. "With this dismissal, it is apparent that the plaintiffs now agree."