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Errant Gene Therapeutics, LLC v. Sloan-Kettering Inst. for Cancer Research

Supreme Court, Appellate Division, First Department, New York.
Jul 23, 2019
174 A.D.3d 473 (N.Y. App. Div. 2019)

Opinion

8638–8639–8640–8641 Index 150856/17

07-23-2019

ERRANT GENE THERAPEUTICS, LLC, Plaintiff–Respondent, v. SLOAN–KETTERING INSTITUTE FOR CANCER RESEARCH, et al., Defendants–Appellants.

Holland & Knight LLP, New York (Charles A. Weiss of counsel), for Sloan–Kettering Institute for Cancer Research, appellant. Schlam Stone & Dolan, LLP, New York (Jeffrey M. Eilender of counsel), for Bluebird Bio Inc., appellant. McCue, Sussmane, Zapfel, Cohen & Youbi, P.C., New York (Kenneth Sussmane of counsel), for respondent.


Holland & Knight LLP, New York (Charles A. Weiss of counsel), for Sloan–Kettering Institute for Cancer Research, appellant.

Schlam Stone & Dolan, LLP, New York (Jeffrey M. Eilender of counsel), for Bluebird Bio Inc., appellant.

McCue, Sussmane, Zapfel, Cohen & Youbi, P.C., New York (Kenneth Sussmane of counsel), for respondent.

Friedman, J.P., Sweeny, Richter, Oing, Moulton, JJ.

Order, Supreme Court, New York County (Barry R. Ostrager, J.), entered on or about December 27, 2017, which, to the extent appealed from, granted plaintiff's motion for leave to file a second amended complaint, unanimously affirmed, without costs. Order, same court and Justice, entered June 12, 2018, which denied defendants Bluebird Bio, Inc.'s and Sloan–Kettering Institute for Cancer Research's motions to dismiss the second amended complaint as against them, unanimously modified, on the law, to grant the motions as to the civil conspiracy cause of action, the unjust enrichment cause of action and the demand for punitive damages, and otherwise affirmed, without costs.

This action arises from a failed partnership to develop a cure for rare genetic blood disorders.

The complaint states a cause of action for fraud by alleging that Sloan–Kettering knowingly misrepresented or omitted a material fact for the purpose of inducing plaintiff to rely upon it, that plaintiff justifiably relied on the misrepresentation or omission, and that plaintiff sustained injury (see Loreley Fin. [Jersey] No. 3 Ltd. v. Citigroup Global Mkts. Inc. , 119 A.D.3d 136, 139, 987 N.Y.S.2d 299 [1st Dept 2014] ). The fraud cause of action is sufficiently pleaded based on the reasonable inferences that can be drawn from the evidence including email correspondence, meeting minutes and contractual agreements (see Pludeman v. Northern Leasing Sys., Inc. , 10 N.Y.3d 486, 491–494, 860 N.Y.S.2d 422, 890 N.E.2d 184 [2008] ). Whether it was reasonable for plaintiff to rely on Sloan–Kettering's principals' statements about Sloan–Kettering's readiness to proceed to the clinical trial stage, and its intentions with respect to its commitment to the research, is an issue that requires fact-finding (see Braddock v. Braddock , 60 A.D.3d 84, 89, 871 N.Y.S.2d 68 [1st Dept. 2009], appeal withdrawn 12 N.Y.3d 780, 879 N.Y.S.2d 55, 906 N.E.2d 1089 [2009] ).

We dismiss the civil conspiracy cause of action because "civil conspiracy is not recognized as an independent tort in this State" ( Mamoon v. Dot Net Inc. , 135 A.D.3d 656, 658, 25 N.Y.S.3d 85 [1st Dept. 2016] [internal quotation marks and alterations omitted] ). Rather, the "allegations in the complaint herein charging conspiracy are deemed part of the remaining causes of action to which they are relevant" ( Hoag v. Chancellor, Inc. , 246 A.D.2d 224, 230, 677 N.Y.S.2d 531 [1st Dept. 1998] ). Here, the conspiracy charge remains as part of the fraud cause of action.

While plaintiff has not pointed to any evidence demonstrating that Bluebird told, caused, or helped Sloan–Kettering to make the alleged misrepresentations and omissions, or caused Sloan–Kettering to abandon plaintiff's gene therapy treatment, at this stage of the litigation the facts are sufficient to permit a reasonable inference regarding Bluebird's involvement in the alleged fraudulent scheme (see Pludeman , 10 N.Y.3d at 491–494, 860 N.Y.S.2d 422, 890 N.E.2d 184 ). Notably "liability for fraud may be premised on knowing participation in a scheme to defraud, even if that participation does not by itself suffice to constitute the fraud" ( Kuo Feng Corp. v. Ma , 248 A.D.2d 168, 168–169, 669 N.Y.S.2d 575 [1st Dept. 1998], lv denied 92 N.Y.2d 809, 678 N.Y.S.2d 594, 700 N.E.2d 1230 [1998] ). Allegations of conspiracy "serve to enable a plaintiff to connect a defendant with the acts of his co-conspirators where without it he could not be implicated" ( Hoag , 246 A.D.2d at 230, 677 N.Y.S.2d 531 [internal citations omitted]; see also CPC Intl v. McKesson Corp. , 70 N.Y.2d 268, 286, 519 N.Y.S.2d 804, 514 N.E.2d 116 [1987] ).

Contrary to Bluebird's argument, plaintiff sufficiently alleges overt acts by Bluebird (see e.g. Abacus Fed. Sav. Bank v. Lim , 75 A.D.3d 472, 474, 905 N.Y.S.2d 585 [1st Dept. 2010] ). Plaintiff alleges that Bluebird attended secret meetings with Sloan–Kettering around that time that Sloan–Kettering hired a new CEO who had business ties to Bluebird to discuss surreptitiously obtaining plaintiff's research for Bluebird's use and obtaining the research for Sloan–Kettering's use after plaintiff refused to sell it to Bluebird. In any event, the liability of a defendant as a conspirator for co-conspirators' wrongful acts "does not necessarily depend upon his active participation in the particular overt acts" ( Nederlandsche Handel–Maatschappij N.V. v. Schreiber , 17 A.D.2d 783, 232 N.Y.S.2d 644 [1st Dept. 1962] ). Moreover, once a conspiracy is established, all defendants are liable for each other's acts in furtherance of the conspiracy (see Keller v. Levy , 265 A.D. 723, 724, 40 N.Y.S.2d 580 [1943] ).

The cause of action for breach of contract is adequately pleaded by allegations that Sloan–Kettering did not, and never intended to, use its best efforts to create and commercialize the gene therapy the Vector that was created in part by plaintiff. The allegation that Bluebird used plaintiff's confidential information about the Vector as part of its scheme with Sloan–Kettering to market a gene therapy before plaintiff did is sufficient to state a cause of action for unfair competition (see Front, Inc. v. Khalil , 103 A.D.3d 481, 483, 960 N.Y.S.2d 79 [1st Dept. 2013], affd 24 N.Y.3d 713, 4 N.Y.S.3d 581, 28 N.E.3d 15 [2015] ). The cause of action for unjust enrichment, however, fails for lack of a close relationship between plaintiff and Bluebird (see e.g. Sperry v. Crompton Corp. , 8 N.Y.3d 204, 215–216, 831 N.Y.S.2d 760, 863 N.E.2d 1012 [2007] ; Mandarin Trading Ltd. v. Wildenstein , 16 N.Y.3d 173, 182–183, 919 N.Y.S.2d 465, 944 N.E.2d 1104 [2011] ).

The measure of plaintiff's damages, as alleged, is not speculative as a matter of law (see Campbell v. Rogers & Wells , 218 A.D.2d 576, 580, 631 N.Y.S.2d 6 [1st Dept. 1995] ). However, the complaint fails to establish that plaintiff is entitled to punitive damages, as it does not allege that defendants' actions were aimed at the public or showed the requisite moral turpitude (see New York Univ. v. Continental Ins. Co. , 87 N.Y.2d 308, 315–316, 639 N.Y.S.2d 283, 662 N.E.2d 763 [1995] ; see also Giblin v. Murphy , 73 N.Y.2d 769, 771–772, 536 N.Y.S.2d 54, 532 N.E.2d 1282 [1988] ). The cause of action for a permanent injunction is sufficiently pleaded, as the injury to plaintiff resulting from Bluebird's alleged continued use of its research and product is not the type of injury that can be fully compensated for by money damages (see Mini Mint Inc. v. Citigroup, Inc. , 83 A.D.3d 596, 597, 922 N.Y.S.2d 313 [1st Dept. 2011] ).

We have considered defendants' remaining contentions and find them unavailing.


Summaries of

Errant Gene Therapeutics, LLC v. Sloan-Kettering Inst. for Cancer Research

Supreme Court, Appellate Division, First Department, New York.
Jul 23, 2019
174 A.D.3d 473 (N.Y. App. Div. 2019)
Case details for

Errant Gene Therapeutics, LLC v. Sloan-Kettering Inst. for Cancer Research

Case Details

Full title:Errant Gene Therapeutics, LLC, Plaintiff-Respondent, v. Sloan-Kettering…

Court:Supreme Court, Appellate Division, First Department, New York.

Date published: Jul 23, 2019

Citations

174 A.D.3d 473 (N.Y. App. Div. 2019)
106 N.Y.S.3d 302
2019 N.Y. Slip Op. 5754

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