Opinion
Civil Action No. 00-0957 Section "K"(5).
October 24, 2000.
ORDER AND REASONS
Before the Court are the following motions:
a) Motion of Biocompatibles International PLC ("Biocompatibles")and Crispin Simon ("Simon") to Dismiss for Lack of Standing.
b) Motion of Biocompatibles to Dismiss on Grounds of (1) Forum Non Conveniens or, in the Alternative for (2) Failure to State a Claim; and
c) Motion of Simon to Dismiss for (1) Lack of Personal Jurisdiction or (2) Forum Non Conveniens or (3) Failure to State a Claim.
The Court held oral argument on these matters on August 16, 2000. Having reviewed the memoranda, pleadings and the applicable law, the Court finds as follows.
BACKGROUND
Plaintiff Endotech U.S.A. is an unincorporated joint venture between the other two named plaintiffs, Dr. Joseph Galichia ("Galichia") and Warren Ball ("Ball"). Galichia is a domiciliary of Kansas and Ball is a domiciliary of Louisiana. They have filed suit against Biocompatibles, a corporation organized under the laws of the United Kingdom and Simon, a domiciliary of the U.K. who is allegedly the chief executive officer of Biocompatibles. The Complaint refers to the plaintiffs collectively as "Endotech" and for purposes of this motion, the Court will do so as well.
Biocompatibles develops, manufactures and sells eye care and cardiovascular products through its wholly owned subsidiaries. Biocompatibles developed a cardiovascular stent referred to as the BiodivYsio ("the stent"); the distribution rights for that product in the United States are at the core of this lawsuit. As alleged in the Complaint, in December of 1997, the stent received European regulatory approval allowing it to be marketed in Europe. In March of 1998, Endotech srl (an Italian corporation) and Biocompatibles entered into an exclusive distributorship agreement in Italy. Dr. Galichia had participated in the European clinical trials for the stent. He became a major investor in the Italian joint venture and established a relationship with Biocompatibles as a result.
In December of 1998, the United Stated Food and Drug Administration approved the device for clinical trials in the United States. In January of 1999, Simon and Galichia allegedly began to discuss by phone the possibilities of creating a United States distributorship for this device. The Complaint is silent as to who initiated these calls and where the calls were made.
Endotech alleges that Galichia then "invited" Ball, a distributor of medical devices in the southeastern United States, to participate in a joint venture to market and distribute the device throughout the United States. Galichia and Ball "agreed that they would market and distribute the cardiovascular medical devices through a company to be incorporated at a later date." (Complaint). Endotech USA was thus allegedly "created" although it is undisputed that the joint venture has never been formally incorporated.
On March 18, 1999, Simon and the CEO of Biocompatibles allegedly went to Kansas to discuss with Galichia an exclusive United States distributorship for the device. Endotech contends that negotiations continued through the spring and into the summer of that same year. Endotech maintains that Biocompatibles agreed to negotiate exclusively with Endotech concerning the marketing and distribution of the devices in the United States. Thus, Endotech alleges that it detrimentally relied on this agreement as Endotech invested "substantial" resources toward the development of a business plan, the securing of adequate financing, and the recruitment of executives and distributors.
In the summer of 1999, Endotech contends that it prepared a confidential written business plan for the marketing and distribution of the device which included marketing, distribution and financial information and incorporated Galichia's and Ball's knowledge and experience in the relevant market. Endotech maintains that it preserved the commercial value of the information by taking steps to maintain the secrecy and confidentiality thereof. In the course of these negotiations, Endotech contends that it provided this plan to Biocompatibles through Simon "based on the previously mentioned exclusivity agreement." (Complaint). Endotech alleges that defendants "agreed to and understood that they had an obligation to maintain the secrecy and confidentially of the plan." (Complaint).
Simon traveled to New Orleans and met on August 18 and 19 of 1999, with Galichia, Ball and a team of potential Endotech USA executives and sub-distributors there. It is at this meeting that Endotech maintains that an exclusive oral distributorship agreement was consummated because the material terms of the exclusive distributorship agreement were agreed to prior to the conclusion of the New Orleans meeting. Plaintiffs contend that the oral agreement is binding even though the parties intended to memorialize the agreement in writing at a later date.
On August 20, 1999, Bloomberg News Agency reported that rumors had been circulating since first week of August that Biocompatibles had completed a deal with an American company to distribute the device. Plaintiffs contend that Biocompatibles leaked the information about the deal to boost their stock prices.
Plaintiffs allege that on September 3, 1999, a draft of the written distribution agreement was sent by Biocompatibles to Endotech for review. Endotech responded with written comments on the draft. Then in October of 1999, plaintiffs contend that Simon contacted Galichia by phone to discuss those comments and indicated that all of the suggested revisions were acceptable to Biocompatibles. Its legal counsel was to contact Endotech's to finalize the wording of the written agreement.
Prior to execution of that document, Simon allegedly contacted Galichia by telephone and informed him that Biocompatibles had entered into an exclusive U.S. distributorship with Abbott Laboratories. Simon allegedly indicated that Biocompatibles would not honor its agreements with Endotech and "recognizing its unilateral breach," offered to reimburse Endotech for expenses. It subsequently offered to pay Endotech $100,000 and to grant Galichia a credit of $75,000 credit for the doctor's future use of device. (Complaint).
BIOCOMPATIBLES AND SIMON'S MOTION TO DISMISS FOR LACK OF STANDING
Defendants contend that the claims lodged against them by Galichia and Ball individually should be dismissed for lack of standing because "not a single one of the nine causes of action asserted in the Complaint implicates Galichia or Ball as a real party in interest." Defendants opine that the Complaint neither alleges contractual privity between the individuals and the defendants nor alleges any of the trade secrets allegedly misappropriated by Biocompatibles belongs to Galichia or Ball individually or that they suffered any damages or other financial injury. Based on these "deficiencies," defendants contend that Galichia and Ball cannot demonstrate the constitutional requirement of injury in fact and that Endotech U.S.A. alone may sue to protect the rights and interests of the unincorporated joint venture.
However, the defendants fail to recognize that plaintiffs have taken advantage of the alternative pleading provisions in Fed.R.Civ.Pro. 8(e). "Endotech" in the Complaint refers to the two individual plaintiffs and the joint venture "Endotech, U.S.A." As it is contested whether Endotech U.S.A. exists as a joint venture, plaintiffs have alleged that the various wrongs committed by the defendants were alternatively committed against them individually. As a result, there is no merit in this motion, and it will be denied.
BIOCOMPATIBLE'S MOTION TO DISMISS
In Biocompatible's Motion to Dismiss (Doc. 7), Biocompatible moves the Court to dismiss the claims against it based on the doctrine of forum non conveniens or, in the alternative failure to state a claim with respect to the breach of contract (Count 1), declaratory judgment (Count 4), trade secret misappropriation (Count Seven) and conversion (Count 8). The Court will first take up the issue of forum non conveniens.
Forum Non Conveniens
As succinctly noted by United States Court of Appeals for the Fifth Circuit:
The doctrine of forum non conveniens was "crystallized" in Gulf Oil Corporation v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947) and its companion case Koster v. (American) Lumbermens Mutual Casualty Company, 330 U.S. 518, 67 S.Ct. 828, 91 L.Ed. 1067 (1947). . . . The general principle of the doctrine "is simply that a court may resist imposition upon its jurisdiction even when jurisdiction is authorized." Gilbert 330 U.S. at 507, 67 S.Ct. at 842. The doctrine of forum non conveniens presupposes at least two forums where the defendant is amendable to process and simply furnishes criteria for choice between them. Id., 330 U.S. at 506-07, 67 S.Ct. at 842. Therefore, once an adequate and available alternate forum is identified, several "private" and "public" interest factors must be balanced in order to determine if dismissal is warranted Id., 330 U.S. at 508, 67 S.Ct. at 843.Dickson Marine Inc. v. Panalpina, Inc., 179 F.3d 331, 341-42 (5th Cir. 1999). An alternate forum is adequate and available when the entire case and all of the parties come within the jurisdiction of that forum. Dickson, citing Syndicate 420 at Lloyd's London v. Early American Ins. Co., 796 F.2d 821 (5th Cir. 1986).
The factors to be balanced where an alternative forum is available include:
Private Factors
(1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; (4) all other practical problems that make trial of a case easy, expeditious and inexpensive.
Public Factors
(1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized controversies decided at home; (3) the familiarity of the forum with the law that will govern the case; (4) the avoidance of unnecessary problems of conflict of laws or the application of foreign law.Syndicate 420 at Lloyd's London v. Early Amer. Ins. Co., 796 F.2d 821, 831 (5th Cir. 1986).
A defendant bears the burden of persuasion as to all the elements of the forum non conveniens analysis. Thus, a moving defendant must establish that there is an adequate and available forum as to all defendants. Furthermore, "[i]f the moving defendant carries this initial burden, it must also establish that the private and public interests weigh heavily on the side of trial in the foreign forum." In re Air Crash Disaster Near New Orleans, La., 821 F.2d 1147, 1164 (5th Cir. 1987) (en banc)vacated on other grounds sub nom., Pan Am. World Airways, Inc. v. Lopez, 490 U.S. 1032 (1989), opinion reinstated on other ground, 883 F.2d 17 (5th Cir. 1989) (en banc). That burden includes a requirement that the moving party provide enough information to enable the district court to balance the parties interest." Id.
Alternate and Adequate Forum
The Court recognizes that there is a viable, alternative forum — that being England. First, the defendants have consented to the jurisdiction of an English court and are subject to service in England. Thus, all parties could appear before an English court.
As to whether there are adequate remedies available, defendant Biocompatibles has met its burden of proof considering the affidavit of John Turnbull as well as case law reviewed by the Court. Federal courts have determined that England provides adequate causes of action for breach of contract, tortious interference, unjust enrichment, and trade secret misappropriation. Capital Currency Exch. N.y. v. National Westminster Bank PLC 155 F.3d 603, 610-11 (2d Cir. 1998); Thomson Information Serv. v. British Telecommunications, PLC, 940 F. Supp. 20, 22-23 (D. Mass. 1996); see, e.g., Nolan v. Boeing Co., 919 F.2d 1058, 1068 (5th Cir. 1990). While plaintiffs may lose claims for breach of the covenant of good faith and detrimental reliance, relief for these allegations is generally available under English law. (Turnbull Aff. ¶¶ 8, 9). Thus, the forum is "adequate" because "the parties will not be deprived of all remedies or treated unfairly, even though they may not enjoy the same benefits as they might receive in an American Court." In re Air Crash, 821 F.2d at 1165. As such, the Court must now examine the private and public factors listed above.
Private Factors
As a general matter, the Court would note that the focal point of this litigation is the United States; the alleged contracts concerned ultimately concerned the distribution of a product in United States to United States citizens which product would be used in the United States. From the factual basis presented to the Court for the contractual claims, the majority of the witnesses who were to have been involved in the distributorship are United States citizens. As such, the defendant has failed to meet its burden; the private factors appear to militate this case remaining in this Court. Dickson Marine Inc. v. Panalpina, Inc., 179 F.3d 331, 342 (5th Cir. 1999). It should also be noted that the defendant corporation has a presence in the United States and is not unduly burdened by its being hailed into Court in the United States. The Court is unpersuaded by Biocompatibles' arguments. Biocompatibles was the company attempting to take advantage of the United States' economy and market strength; it was United States consumers that it was pursuing. Nonetheless, the Court will examine the private factors individually.
The persons attending the relevant meeting in New Orleans for Endotech were Dr. Galichia, Gerry Morton, Ted Jeansonne, Charles Spatch; Warren Ball, Jr., Patrick Chuinard, Ralph Ovieta, Mike Moore, John Mullen, Felicia DeSpain, and Roberto Villani. Other than Mr. Villani, all of these individuals are residents of the United States and Mr. Villani apparently visits Houston, Texas frequently.
(1) Relative Ease of Access to Sources of Proof
From the information presented to the Court, it appears that as to the confection of the contracts at issue, this matter is not a "paper" case, as both contracts are alleged to be oral in nature. Thus, as between England and the United States with respect to paper proof, this factor is neutral. This case does not present an instance where the locus of an accident need be seen. However, when one adds to the equation that Abbott Laboratories, an American corporation, will be an important witness in this matter as to the breach of the exclusive dealing contract, as well as the proper measure of damages, this factor balances in favor of the United States.
(2) Availability of Compulsory Process
As to witnesses, those persons attending the meeting in New Orleans wherein the distributorship agreement was allegedly reached are for the most part Americans as footnoted above which balances in favor of this forum. Biocompatibles opines that the following are the witnesses that have knowledge about the allegations in the Complaint that are located outside Louisiana and the United States:
(1) Julian Steadman, Chief Financial Officer of Biocompatibles who is a resident of the United Kingdom. As he is an employee of the defendant, the defendant would have control over him.
(2) Nigel Edwards, a former employee who held the title of Director of Business Development of Biocompatibles and assisted Endotech with its initial entry strategy, who is a resident of the United Kingdom. Considering he was involved in the "initial" strategy, it is unclear to the Court what he would have to add concerning the confection of the contracts at issue herein.
(3) Jeremy Curnock Cook, the Chairman of Biocompatibles' Board of Directors, who is a resident of the United Kingdom. Again, he is under the control of the company.
(4) Roberto Villani, who was the initial contact between Biocompatibles and Dr. Galichia. Considering the plaintiffs have listed him as someone available to them, this person does not appear to present a real difficulty. In addition, he was an "initial" contact which would not bear on the ultimate issue of the formation of the contracts at issue.
(5) Aldo Pagani, who was also involved in the initial contacts with Dr. Galichia and who is a resident of Italy. Likewise, his testimony would appear to have only marginal value.
As such, this factor balances in favor of this matter remaining in this Court.
(3) Cost of Attendance for Willing Witnesses
The same analysis as above applies and tips in favor of plaintiffs' choice of forum.
(4) All Other Practical Problems that Make Trial of a Case Easy, Expeditious and Inexpensive
As no particular information was adduced with respect to this specific element, the defendant did not meet its burden with respect to this specific. The Court will now turn to the specific public factors.
Public Factors
(1) Administrative Difficulties Flowing from Court Congestion;
Defendant has presented no evidence with respect to this factor, thus it has failed to prove that this element balances in its favor. Furthermore, the Court would note that it docket is not congested.
(2) Local Interest in Having Localized Controversies Decided at Home
As the case and controversy centers in the United States, as explained above, the Court finds that this factor weighs in favor of the Court retaining jurisdiction.
(3) Familiarity of the Forum with the Law that Will Govern the Case
The Court must examine the controlling law and the Court's familiarity with that law. Prevision Integral de Servicios Funerarios v. Kraft, 94 F. Supp.2d 771 (W.D.Tex. 2000), citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09, 67 S.Ct. 839, 843, 91 L.Ed. 1055 (1947). The parties do not agree what law will be applicable to this matter. The parties to the contracts are citizens of England and citizens of the United States. As to "Endotech", it maybe a Louisiana or a Kansas joint venture. If it is not a joint venture, then Mr. Ball's Louisiana residency will play a significant role in the analysis.
Under no circumstances will the entire case be decided solely under the laws of England should the matter remain in this forum as plaintiffs have alleged causes of action arising under state law. Therefore, the Court will apply state law at some point, and it may or may not control the entire adjudication.
As to the pertinent contacts of each state to the parties — there are potentially three states involved, England as to Biocompatibles and Louisiana and/or Kansas with respect to Endotech as either a joint venture or as to its individual members — Ball and Galichia. The place of negotiation as to the exclusivity agreement may probably be Kansas; however, as to the predominant matter, the distribution rights contract, that contract was allegedly negotiated in Louisiana. While the product at issue is produced in the United Kingdom, the performance of the contract that being the selling of the product, is in the United States in that the materials were to be distributed here and all profit flowing to the parties would be from United States consumers. Likewise the location of the object of the contract is the United States. These facts also weigh in favor of the application of the laws of the United States as the purpose of the contract was to distribute the product in the United States. Biocompatibles will not be unduly burdened; it came to Louisiana to ostensibly negotiate a distribution contract.
Accordingly, because this Court is familiar with Louisiana law and to some extent the common law of Kansas and the law of those states will predominate, the Court finds that this factor does not weigh in defendant's favor for dismissal.
(4) Avoidance of Unnecessary Problems of Conflict of Laws or in the Application of Foreign Law
In the event that the Court would have to apply English law in resolving some of the issues, this problem is not significant. The Court has reviewed the affidavit of the English barrister produced by the defendant and is confident that should English law be applicable, the Court would not encounter any vast difficulties considering that there is no problem with translation and that the common law of the United States was generally derived from the English law.
Based on the foregoing analysis, the Court finds that the defendant's motion to dismiss based on forum non conveniens must be denied. The Court will now turn to the alternative portion of the motion brought pursuant to Fed.R.Civ.Pro. 12(b)(6).
Standard Under Rule 12(b)(6)
A court may dismiss a claim for "failure to state a claim upon which relief can be granted" pursuant to Fed.R.Civ.Pro. 12(b)(6). in considering a Rule 12(b)(6) motion, the court must accept plaintiffs factual allegations as true and view them in the light most favorable to the plaintiff. Cinel v. Connick, 15 F.3d 1338, 1341 (5th Cir.) cert denied, 513 U.S. 868, 115 S.Ct. 189, 130 L.Ed.2d 122 (1994). Though the court may not look beyond the pleadings, Id., the court may take into account matters of public record, orders, items appearing on the record of the case and exhibits attached to the complaint, 5A Charles A. Wright Arthur R. Miller, Federal Practice and Procedure, § 1356 (2d ed. 1987). A court should not dismiss a complaint pursuant to Rule 12(b)(6) unless it appears "beyond a reasonable doubt that the plaintiff can prove no set of facts in support of his claim which would entitled him to relief." Blackburn v. City of Marshall, 42 F.3d 925 (5th Cir. 1995), citing, Conley v. Gibson, 355 U.S. 41, 44-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).
Failure to State a Claim with respect to the Breach of Contract (Count 1)
The parties have used Louisiana law for the purposes of the analysis under Rule 12(b)(6); however, the defendants specifically reserve their "right to argue that the law of another jurisdiction is to be applied if this case is maintained in Louisiana."
Biocompatibles maintains that all of the elements for a breach of contract claim are not alleged by the plaintiffs with respect to both the exclusivity agreement and the distribution agreement. "A contract is an agreement by two or more parties whereby obligations are created, modified, or extinguished." La. Civ. Code art. 1906. The necessary elements for the existence of a contract are (1) the parties must possess the capacity of the parties; (2) the parties' mutual consent must be freely given; (3) there must be a certain object for the contract and (4) the contract must have a lawful purpose. Wallace v. Shreve Mem'l Library, 79 F.3d 427, 430 n. 4 (5th Cir. 1996), citing Keller v. Sisters of Charity, 597 So.2d 113, 1115 (la. Ct. App. 1992); La. Civ. Code arts. 1918, 1927, 1966, 1977. The Court will address these factors with respect to the each contract.
Exclusivity Contract
Defendant maintains that the allegations with respect to the exclusivity agreement fail because the agreement is "nothing more than: 'If you agree not to negotiate, I will agree to negotiate.'" As such, Biocompatibles claims that the allegations fail for lack of mutuality relying on Levinson v. Charbonnet, 977 F.2d 930, 933 (5th Cir. 1992). However, this analysis falls short. In Levinson, the court found the underlying contract, an oral agreement to sell stock, was unenforceable under La. Rev. Stat. Ann. § 10:8-319 (West Supp. 1992). Thus, there could be no "mutuality" as no obligation arose by operation of law. In the instant matter, no such hindrance is apparent. Furthermore, the Complaint alleges that "Endotech invested substantial resources toward the development of a business plan, the securing of adequate financing, and the recruitment of executives and subdistributors" in exchange for Biocompatibles' agreement." (Complaint ¶ 16). Where parties intend to be bound by their original verbal agreement and those parties contemplate a written document, the contract "subsists from that time, and the writing, if executed, is a memorial of that agreement." Riverside/Terra Corp. v. KW Agricultural Serv., Inc., 540 So.2d 456 (La.App. 1st Cir. 1989), citing Segura v. Louisiana Architects Selection Board, 340 So.2d 369, 371 (La.App. 1st Cir. 1976), writ denied, 342 So.2d 676 (La. 1977). Thus, for purposes of this Rule 12(b)(6) motion, there are sufficient allegations of fact to prevent the dismissal of this claim as a matter of law.
Distributorship Agreement
With respect to the distributorship agreement, Biocompatibles claims that because plaintiffs allege that the distributorship agreement was to be reduced to writing, it fails as a cause of action based on La. Code art. 1947. Furthermore, defendant contends that the failure to plead with any specificity the material terms of either agreement presents cause for dismissal.White Properties, Inc. v. LoCoco, 377 So.2d 474, 476 (La.App. 4th Cir. 1979). This analysis is misplaced.
Article 1947 of the Louisiana Code of Civil Procedure provides: When, in the absence of a legal requirement, the parties have contemplated a certain form, it is presumed that they do not intend to be bound until the contact is executed in that form.
As to the first contention, plaintiffs' opining in the Complaint that there was an intention to reduce the contract to writing is not fatal. In Breaux Brothers Constr. Co. v. Associated Contractors, Inc., 226 La. 720, 77 So.2d 17 (La. 1954), the Louisiana Supreme Court stated:
It is elementary in our law, that where the negotiations contemplate and provided that there shall be a contract in writing, neither party is bound until the writing is perfected and signed. The distinction is manifest between those cases in which there is a complete verbal contract, which the law does not require to be reduced to writing, and a subsequent agreement that it shall be reduced to writing, and those in which, as in this case, it is a part of the bargain that the contract shall be reduced to writing. In the first class of cases the original verbal contract is in no manner impaired by the failure to carry out the subsequent agreement to put it in writing. In the second class of cases, the final consent is suspended; the contract is inchoate, incomplete and it can not be enforced until it is signed by all the parties . . . .Id. at 728 20. Thus, "an agreement between parties, where their minds have met upon all essentials, constitutes a contract between them and binds them at once although they may have agreed that they would thereafter execute a form instrument containing the terms of their present agreement." Newport Limited v. Sears, Roebuck Co., 6 F.3d 1058, 1065 (5th Cir. 1993), citing Mermelstein v. Schwab, 64 So.2d 37, 38 (La.Ct.App. 1953) (citations omitted). Obviously, plaintiffs have alleged that the instant contract falls into "the first class of cases" noted inBreaux Brothers. As such, it is inappropriate to grant the Rule 12(b)(6) motion on defendant's argument.
With respect to the claim that the failure to delineate all of the "material terms" of the contract with specificity requires the dismissal of this claim likewise is without merit. Rule 8(a) of the Federal Rules of Civil Procedure mandates only "a short and plain statement of the claim showing that the pleader is entitled to relief." This requirement does not require the specific contract words to be plead in the Complaint. Byers v. Dallas Morning News, Inc., 209 F.3d 419, 425 (5th Cir. 2000);Westside-Marrerro Jeep Eagle, Inc. v. Chrysler Corp, 56 F. Supp. 2 d 694, 704 (E.D.La. 1999).
Count Four-Declaratory Judgment
Defendant seeks dismissal of this claim based on its contention that the contract fails as a matter of law. Because this Court has rejected that argument, this request must be denied as well.
Count Seven Trade Secret Misappropriation
Biocompatibles attempts to have the trade secret misappropriation claim dismissed based on the assertion that the Complaint is overly conclusory. Under the Louisiana Uniform Trade Secrets Act (LUTSA) La. Rev. Stat. Ann. § 51:1431, to recover for misappropriation of trade secrets, a plaintiff must show that he had a legally protectable secret which was misappropriated by a defendant in violation of a confidential relationship. The threshold issue is whether a trade secret or secrets exist. Courts have defined a trade secret as "information that has independent economic value because it is not generally known or readily ascertainable and efforts are taken to maintain the information's secrecy." United Group of Nat'l Paper Distribs., Inc. v. Vinson, 666 So.2d 1338, 1344 (La.App. 2ne Cir. 1996). Biocompatibles contend that plaintiffs fail to allege enough specifics to meet state a claim under this standard.
Again, under Rule 8(a) of the Federal Rules of Civil Procedure, plaintiffs have alleged sufficient facts to withstand a motion to dismiss. Paragraphs 17, 18, 26 and 45 provide adequate allegations to withstand Biocompatibles' motion.
Count Eight-Conversion
Biocompatible contends that this claim should be dismissed because one cannot convert intangible property. Dual Drilling Co. v. Mills Equip. Inves. Inc. 721 So.2d 853, 856 (La. 1998). However, there were physical documents — that is the business plan alleged in Paragraph 17 and 18 — that were allegedly taken. Endotech alleges that Biocompatibles used and distributed those documents without authority.
Conversion under Louisiana law "consists of an act in derogation of the plaintiffs possessory rights, and any wrongful exercise or assumption of authority over another's goods, depriving him of the possession, permanently or for an indefinite time." Quealy v. Paine, Webber, Jackson Curtis, Inc., 475 So.2d 756, 760 (La. 1985). Thus, this claim will also survive the motion to dismiss.
The Court will now turn to Crispin Simon's Motion to Dismiss for Lack of Personal Jurisdiction or, in the Alternative, on ground of Forum Non Conveniens or, in the Alternative, for Failure to State a Claim.
MOTION OF CRISPIN SIMON TO DISMISS
Crispin Simon ("Simon") moves the Court to dismiss the Complaint as to him based on numerous grounds. First, he contends that this Court lacks personal jurisdiction over Simon because he has insufficient contacts with Louisiana. Next, he urges the case be dismissed based on the doctrine of forum non conveniens. Finally, he contends that plaintiffs have failed to state a claim against him with respect to (1) intentional interference with contract (Count Five); (2) tortious interference with business relations (Count Six); (3) trade secret misappropriation (Count Seven); (4) conversion (Count Eight); and (5) unjust enrichment (Count Nine). The Court will first discuss its personal jurisdiction over Simon.
Lack of Personal Jurisdiction
Simon opines that he has insufficient contacts with Louisiana to support general jurisdiction or specific jurisdiction. He claims that the Fiduciary Shield Doctrine precludes jurisdiction and that "notions of fair play and substantial justice" cut against exercising personal jurisdiction. Defendant Simon maintains that there is no personal jurisdiction over him because he was acting in his official capacity as a corporate representative and in no manner in his personal capacity. As such, due process would prevent the Court from exercising jurisdiction over Simon since he had no contact with the forum state in his personal capacity. Furthermore Simon maintains that there is "no allegation that the claims against Simon for interference and misappropriation of trade secrets arose in Louisiana." Simon contends further that the silence with respect to where the exclusivity contract arose belays the claim that Simon would have contacts sufficient to exercise jurisdiction over him in Louisiana.
It is beyond cavil that a federal district court sitting in diversity may exercise personal jurisdiction only to the extent permitted a state court under applicable state law. Allred v. Moore Peterson, 117 F.3d 278, 281 (5th Cir. 1997). The Louisiana long-arm statute extends personal jurisdiction to the maximum limits permitted by due process. Pedelahore v. Astropark, Inc., 745 F.2d 346, 348 (5th Cir.), reh. denied en banc, 751 F.2d 1258 (5th Cir. 1984). Due process advances a two-pronged test in order for the Court to exercise jurisdiction: (1) the nonresident must have minimal contacts with the forum state and (2) subjecting the nonresident to jurisdiction must be consistent with traditional notions of fair play. Id. at 348; International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154 (1945).
Minimum contacts with the forum state can arise incident to either "specific jurisdiction" or "general jurisdiction." "Specific jurisdiction is appropriate when the nonresident defendant's contacts with the forum state arise from, or are directly related to, the cause of action." Felch v. Tranportes Lar-Mex Sa Da CV, 92 F.3d 320, 324 (5th Cir. 1996), citing Wilson v. Belin, 20 F.3d 644, 647 (5th Cir.), cert. denied, 513 U.S. 930 (1994). Indeed, "[a] single act, by the defendant directed at the forum state, therefore, can be enough to confer personal jurisdiction if that act gives rise to the claim being asserted."Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 417 (5th Cir. 1993). Where there is intentional and allegedly tortious actions expressly aimed at Louisiana, the tortfeasor must "'reasonably anticipate being haled in court there.'" Calder v. Jones, 465 U.S. 783, 790, 104 S.Ct. 1482, 1487 (1984) (citations omitted).
The Court concurs with Simon's appreciation that it does not have general personal jurisdiction over him; however, the Court finds that it can exercise specific jurisdiction over Simon.
"To meet a challenge to in personam jurisdiction prior to trial, plaintiff need only make a prima facie showing of jurisdiction, so that the allegations of the complaint are taken as true except as controverted by the defendant's affidavits and conflicts in the affidavits are resolved in plaintiffs favor."Asarco. Inc. v. Glenara, Ltd., 912 F.2d 784 (5th Cir. 1990), citing Travelers Indemnity Co. v. Calvert Fire Ins. Co., 798 F.2d 826, 831 (5th Cir. 1986), modified on other grounds, 836 F.2d 850 (1988).
Under Louisiana law, an individual may be held personally liable for a fraudulent act committed in his capacity as a corporate officer. See Lone Star Indus. Inc. v. American Chem., Inc., 461 So.2d 1063, 1067 (La.App. 4th Cir. 1984). Indeed, such personal liability is independent from and does not require the disregard of the corporate entity under the alter ego doctrine.Lone Star, 461 So.2d at 1066. Defendants have alleged that (1) Simon intentionally interfered with its contracts; (2) he tortiously interfered with business relations; (3) he misappropriated trade secrets; (4) he committed conversion with respect to those trade secrets; and (5) he unjustly enriched himself. Thus, the Court must determine whether these allegations of tortious behavior are sufficient to find personal jurisdiction over Simon in light of specific jurisdiction.
This circuit has long held that when officers or agents direct purposeful, tortious activity towards a particular forum, they should anticipate being haled into court in that forum. Intermed Laboratories, Inc. v. Perbadanan Geta Felda, 898 F. Supp. 417, 420 (E.D.Tex. 1995) citing D.J. Investments v. Metzeler Motorcycle Tire Agent Gregg, Inc., 754 F.2d 542, 547. For instance, in Union Carbide Corp. v. UGI Corp., 731 F.2d 1186, 1189-90 (5th Cir. 1984), the corporate shield doctrine was found to be inapplicable and personal jurisdiction was found to exist over a defendant who allegedly tortiously interfered with a contract. See Credit Cheque Corp. v. Zerman, 1997 WL 786251 (N.D.Tex. Dec. 11, 1997). Thus, considering the allegations of tortious activity leveled at Simon, this Court is authorized to exercise specific jurisdiction over him provided that the exercise comports with due process.
To determine whether exercising jurisdiction comports with "fair play and substantial justice" the Court must look at the following factors:
(1) the defendant's burden; (2) the forum state's interests; (3) the plaintiff's interest in convenient and effective relief; (4) the judicial system's interest in efficient resolution of controversies; and (5) the shared interest of the several states in furthering fundamental substantive social policies.Gundle Linina Const. Corp. v. Adams County Asphalt, Inc., 85 F.3d 201, 207 (5th Cir. 1996) (citation omitted).
As Simon is being represented by the same counsel as the corporation and as he is alleged to be the main actor for those tortious action taken by the corporation, it would appear to the Court that his presence at trial will be necessary regardless of whether he is personally sued. As Ball, a Louisiana resident has been injured, Louisiana has an immediate interest. This action should provide plaintiffs with convenient and effective relief. As individuals, the burden of bringing suit for plaintiffs in the United Kingdom would likely be overwhelming. This action also provides the judicial system with an efficient resolution of this controversy because all matters may be settled here. Considering the tortious conduct alleged to have been done by Simon, it appears to the Court that the shared interest of the several states in furthering fundamental substantive social policies would be served in entertaining jurisdiction over him. Based on all of the foregoing then, the Court must find that it has personal jurisdiction over Simon.
Forum Non Conveniens
Simon adopted without distinction Biocompatibles' analysis with respect to forum, non conveniens. As that argument has failed as explained in great detail above, the motion fails here as well. The Court will now discuss the Rule 12(b)(6) portion of Simon's motion.
Failure to State a Claim
As previously noted, Simon seeks to dismiss defendants' claims with respect to intentional interference with contract (Count Five); tortious interference with business relations (Count Six); trade secret misappropriation (Count Seven); conversion (Count Eight); and unjust enrichment (Count Nine).
Count Five Intentional Interference with Contract
A cause of action for intentional interference with contractual relations was recognized in a limited fashion by the Supreme Court of Louisiana in 9 to 5 Fashions, Inc. v. Spurney, 538 So.2d 228 (La. 1989) and to date the holding has been "restricted to the precise cause of action it explicates: that is a situation involving a corporation, an officer of the corporation, and a contract between the corporation and a third party." Egorov, Pughinsky, Afanasiev Juriny v. Terriberry, Carroll Yancey, 1998 WL 483483, *3 (E.D.La. Aug. 14, 1998), citing Great Southwest Fire Ins. Co. v. CNA Ins. Cos., 557 So.2d 966 (La. 1990); Kite v. Gus Kaplan, Inc., 708 So.2d 473 (La.App. 3d Cir. 1998); Colbert v. B.F. Carvin Const. Co., 600 So.2d 719 (La.App. 5th Cir. 1992); Durand v. McGaw, 635 So.2d 409 (La.App. 4th Cir. 1994).
To recover under this cause of action, a plaintiff must allege and prove:
(1) the existence of a contract or a legally protected interest between the plaintiff and the corporation;
(2) the corporate officer's knowledge of the contract;
(3) the officer's intentional inducement or causation of the corporation to breach the contract or his intentional rendition of its performance impossible or more burdensome;
(4) absence of justification on the part of the officer;
(5) causation of damages to the plaintiff by the breach of contract or difficulty of its performance brought about by the officer.Spurney, 538 So.2d at 234.
Simon contends that with respect to this claim the Complaint fails to allege that he either acted against the best interest of the company or outside the scope of his authority. As such he contends that the claim must be dismissed. The Court agrees with Simon's characterization of the deficiencies in pleading. The allegations are conclusory with no factual underpinnings. However, at this stage of the proceedings, the Court finds that it should give leave to plaintiffs to amend to state with specificity how Simon's action were against the interest of Biocompatibles. "If a complaint is ambiguous or does not contain sufficient information to allow a responsive pleading to be framed, the proper remedy is a motion for a more definite statement under Rule 12(e). 5 Wright Miller, Fed. Practice Procedure: Civil § 1356 at 590-591." Beanal v. Freeport McMoran, Inc., 197 F.3d 161, 164 (5th Cir. 1999).
Count Six Tortious Interference with Business Relations
Louisiana courts have long recognized a cause of action for tortious interference with business. Junior Money Bags, Ltd. v. Segal, 970 F.2d 1 (5th Cir. 1992), citing Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594 (5th Cir. 1981), citing Graham v. St. Charles St. Railroad Co., 47 La. Ann. 1656, 18 So. 707 (1895). This claim is distinct from that of tortious interference with a contract. Louisiana law protects the business man from malicious and wanton interference, "permitting only interferences designed to protect a legitimate interest of the actor." Dussouy, 660 F.2d at 601. "Thus, the plaintiff in a tortious interference with business suit must show by a preponderance of the evidence that the defendant improperly influenced others not to deal with the plaintiff." [citations omitted]. Junior Money Bags, 970 F.2d at 10. Furthermore, this cause of action unlike the contractual interference cause of action, is not restricted to officers of corporations. Medx, Inc. of Florida v. Ranger, 1993 WL 21250 (E.D.La. Jan. 25, 1993).
Simon maintains that because plaintiffs did not incant the word "malice" in the Complaint, the claim must fail. At paragraph 43 of the Complaint which sets forth this claim, plaintiffs alleged that Simon "interfered in bad faith and with wanton and reckless disregard for Endotech's rights under its agreements with Biocompatibles." Webster's Ninth Collegiate Dictionary at 1327 (1985) provides as a definition for wanton, the word "malicious". As these words are synonymous and wanton is included in theDussouy case noted above, the Court rejects this invitation to dismiss this claim.
Count Seven Trade Secret Misappropriation and Count Eight Conversion
Simon makes the identical argument made by Biocompatibles with respect to these two claims. For the reasons previously stated with respect to these claims as to Biocompatibles, the Court denies the motion with respect to Simon as to these two counts.
Count Nine Unjust Enrichment
Under Louisiana law, the elements of unjust enrichment are: 1) an enrichment; 2) an impoverishment; 3) a connection between the enrichment and resulting impoverishment; 4) an absence of justification or cause for the enrichment and impoverishment; and 5) no other remedy at law available to plaintiff. Stewart Title Guaranty Co. v. Kiefer, 1997 WL 626074 (E.D.La. Oct. 8 1997), citing Baker v. Maclay Properties Co., 648 So.2d 888, 897 (La. 1995). Cause is not in this instance assigned the meaning commonly associated with contracts, but, rather, it means that the enrichment is justified if it is the result of, or finds its explanation in, the terms of a valid juridical act between the impoverishee and the enrichee or between a third party and the enrichee." Id. (citations omitted).
Plaintiffs' allegations with respect to this claim is as follows:
Alternatively, if there is no other remedy at law for the damages suffered by Endotech, Endotech alleges that Biocompatibles and Mr. Simon have been enriched as a direct and proximate result of their dealings with Endotech and at the expense and impoverishment of Endotech. Further, the enrichment of Biocompatibles and Mr. Simon is without legal cause or justification. Endotech is entitled to recover damages in an amount equal to the extent of the enrichment of Biocompatibles and Mr. Simon or, alternatively, to the extent of its impoverishment.
Complaint, ¶ 50.
Simon maintains that this count should be dismissed because it does not plead how he was personally enriched by any activity alleged in the Complaint. Plaintiffs have responded that the enrichment would be as a result of a rise in Biocompatibles' stock price. It would appear to the Court that plaintiffs have alleged a cause of action, it is a question of fact as to whether Simon was enriched. While the claim may be tenuous, a motion to dismiss it is not the proper vehicle for the Court dispose of this claim. Thus, the motion in this regard shall be denied as well. Accordingly,
IT IS ORDERED that:
(a) that the Motion of Defendants Biocompatibles International PLC and Crispin Simon to Dismiss Plaintiffs Dr. Joseph P. Galichia and Warren H. Ball for Lack of Standing (Doc. 15) is DENIED.
b) that the Motion of Biocompatibles to Dismiss on Grounds of (1) Forum Non Conveniens or, in the Alternative for (2) Failure to State a Claim is DENIED.
c) that the Motion of Simon to Dismiss for (1) Lack of Personal Jurisdiction or (2) Forum Non Conveniens or (3) Failure to State a Claim is DENIED except as to the Intentional Interference with a Contract Claim. Plaintiffs shall have 45 days to amend the Complaint to state with specificity how Simon acted against the best interest of Biocompatibles. Failure to amend shall result in the dismissal of this claim.