PAUL A. ENGELMAYER, District Judge:
Plaintiff Bristol-Myers Squibb Company ("BMS") brings this breach of contract action against defendant Matrix Laboratories Limited ("Matrix"). Matrix moves to dismiss the Amended Complaint under Federal Rule of Civil Procedure 12(b)(2) and 12(b)(6), arguing that this Court lacks personal jurisdiction over Matrix and that the Amended Complaint fails to state a claim for breach of contract. BMS opposes the motion and seeks leave to take jurisdictional discovery in the event the Court finds personal jurisdiction lacking. For the reasons that follow, the Court finds that BMS has made a prima facie showing of personal jurisdiction. However, Matrix's motion to dismiss is granted because the Amended Complaint fails to state a claim. BMS's request to take jurisdictional discovery is denied as moot.
BMS is a Delaware corporation with its principal place of business in New York. Am. Compl. ¶ 15. It sells the well-known HIVS/AIDS drug atazanavir under the brand name Reyataz. It has patents or pending patent applications related to atazanavir
On April 17, 2011, BMS and Matrix entered into an "immunity from suit" agreement (the "Agreement"), which is at the heart of this litigation. The Agreement granted Matrix the right to manufacture, distribute, and sell generic atazanavir in certain underdeveloped countries without fear of patent litigation by BMS. Id. ¶¶ 2, 30. BMS agreed to forego any royalties or profits associated with Matrix's sale of generic atazanavir under the Agreement, and BMS provided the manufacturing technology necessary to allow Matrix to produce the drug on its own. Id. ¶¶ 3-4. The purpose of the Agreement was to facilitate broad low-cost distribution of generic atazanavir to areas in dire need of HIV/AIDS treatment and prevention. Id. ¶ 2.
Significant here, the Agreement immunizes Matrix's sale of generic atazanavir only in the "Territory," which is defined to include India and 48 countries in sub-Saharan Africa. See Agreement § 1.10 & App. C. The Territory does not include Venezuela. Id.; Am. Compl. ¶¶ 29, 31. In November 2011, Matrix asked BMS to consent to Matrix's selling generic atazanavir in Venezuala. BMS did not consent, however, because BMS had supplied Reyataz to Venezuela for several years and had two patent applications pending in Venezuela at the time of Matrix's request. Id. ¶¶ 5, 31-32. Twice more in early 2012, Matrix sought BMS's consent to Matrix's engaging in such sales, but BMS again declined. Id. ¶¶ 6-8.
Nevertheless, in February 2012, Matrix sold a significant amount of generic atazanavir, estimated as a one-year's supply, to the Pan American Health Organization ("PAHO"), allegedly knowing that PAHO would then distribute it in Venezuela. Id. ¶¶ 9, 33. This product later was shipped to the Venezuelan Ministry of Health and sold throughout Venezuela. Id. ¶¶ 9, 12, 35. BMS alleges that Matrix's sale to PAHO was in breach of the Agreement. BMS alleges that PAHO's ensuing sales within Venezuela caused BMS to lose a year's worth of sales of branded Reyataz to Venezuela, causing estimated damages of $15 million. Id. ¶¶ 14, 36.
On July 30, 2012, BMS filed the original Complaint. Dkt. 1. On March 4, 2013, after the parties stipulated to several extensions of Matrix's time to answer or otherwise respond to the Complaint, see Dkt. 4-6, Matrix filed a motion to dismiss, arguing that this Court lacks personal jurisdiction over Matrix and that the Complaint fails to state a claim for breach of contract. Dkt. 11. On April 16, 2013, BMS filed an Amended Complaint. Dkt. 17.
On May 15, 2013, Matrix filed the pending motion to dismiss, Dkt. 18; a memorandum of law in support of that motion, Dkt. 19 ("Matrix Br."); and two declarations in support of that motion, Dkt. 20, 21 (Declaration of Rajeev Mukundun ("Mukundun Decl.")). In that motion, Matrix again argues that the Court lacks personal jurisdiction, see Matrix Br. 8-21, and that the Amended Complaint fails to state a claim for breach of contract, see id. at 21-25. On June 10, 2013, BMS filed a cross-motion for jurisdictional discovery, Dkt. 23; a memorandum of law in opposition to Matrix's motion and in support of BMS's request for jurisdictional discovery, Dkt.
Matrix first moves to dismiss the Amended Complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2). See Matrix Br. 8-21; Matrix Reply Br. 4-22. BMS opposes that motion. It requests leave to take jurisdictional discovery in the event the Court finds personal jurisdiction lacking. See BMS Br. 4-21; BMS Reply Br. 1-10.
"[T]he plaintiff bears the burden of establishing that the court has jurisdiction over the defendant." DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir.2001) (citation omitted); accord In re Terrorist Attacks on Sept. 11, 2001, 714 F.3d 659, 673 (2d Cir.2013). "[T]he showing a plaintiff must make to defeat a defendant's claim that the court lacks personal jurisdiction over it `varies depending on the procedural posture of the litigation.'" Dorchester Fin. Secs, Inc. v. Banco BRJ, S.A., No. 12-770-cv, 2013 WL 3335784, at *3 (2d Cir. July 3, 2013) (per curiam) (quoting Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990)). "Prior to discovery, a plaintiff challenged by a jurisdiction testing motion may defeat the motion by pleading in good faith, legally sufficient allegations of jurisdiction. At that preliminary stage, the plaintiff's prima facie showing may be established solely by allegations." Id. (quoting Ball, 902 F.2d at 197); accord In re Terrorist Attacks, 714 F.3d at 673 ("In order to survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must make a prima facie showing that jurisdiction exists." (citation omitted)).
"This showing may be made through the plaintiff's `own affidavits and supporting materials, containing an averment of facts that, if credited, would suffice to establish jurisdiction over the defendant.'" S. New Eng. Tel. Co. v. Global NAPs Inc., 624 F.3d 123, 138 (2d Cir.2010) (quoting Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2d Cir.2001)). The Court "construe[s] the pleadings and affidavits in the light most favorable to plaintiffs, resolving all doubts in their favor." Dorchester, supra, at 85 (quoting S. New Eng. Tel., 624 F.3d at 138); accord A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir.1993) ("[W]here the issue is addressed on affidavits, all allegations are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor, notwithstanding a controverting presentation by the moving party." (citation omitted)). Nevertheless, the Court "will not draw argumentative inferences in the plaintiff's favor" and need not "accept as true a legal conclusion couched as a factual allegation." In re Terrorist Attacks, 714 F.3d at 673 (citations omitted); accord Licci ex rel. Licci v. Lebanese Canadian Bank, 673 F.3d 50, 59 (2d Cir. 2012).
The amenability of a foreign corporation, such as Matrix, to suit in federal court in a diversity action is determined in accordance with the law of the forum state — here, New York. See Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 124 (2d Cir.2002); Metro.
Under New York C.P.L.R. § 301, a foreign corporation is subject to general jurisdiction in New York courts "if it has engaged in such a continuous and systematic course of `doing business' here that a finding of its `presence' in this jurisdiction is warranted." Landoil Res. Corp. v. Alexander & Alexander Servs., Inc., 77 N.Y.2d 28, 33, 563 N.Y.S.2d 739, 565 N.E.2d 488 (1990) (citation omitted); accord Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir.1998) ("New York courts may exercise personal jurisdiction over a foreign corporation that is engaged in such a continuous and systematic course of `doing business' in New York as to warrant a finding of its `presence' in the state, even if the cause of action is unrelated to the defendant's New York activities." (citations and alterations omitted)). "The test for `doing business' is a simple and pragmatic one, which varies in its application depending on the particular facts of each case. The court must be able to say from the facts that the corporation is `present' in the State not occasionally or casually, but with a fair measure of permanence and continuity." Landoil Res. Corp., 77 N.Y.2d at 33-34, 563 N.Y.S.2d 739, 565 N.E.2d 488 (citations and alterations omitted); accord Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 95 (2d Cir.2000).
"The New York courts, in applying the pragmatic test for section 301 jurisdiction, have focused upon factors including: the existence of an office in New York; the solicitation of business in the state; the presence of bank accounts and other property in the state; and the presence of employees of the foreign defendant in the state." Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 58 (2d Cir.1985); accord Wiwa, 226 F.3d at 98. Although "[s]olicitation of business alone will not justify a finding of corporate presence in New York with respect to a foreign manufacturer or purveyor of services, ... when there are activities of substance in addition to solicitation there is presence and, therefore, jurisdiction." Laufer v. Ostrow, 55 N.Y.2d 305, 310, 449 N.Y.S.2d 456, 434 N.E.2d 692 (1982); see Landoil Res. Corp. v. Alexander & Alexander Servs., Inc., 918 F.2d 1039, 1044 (2d Cir.1990) ("Under this `solicitation-plus' rule, once solicitation is found in any substantial degree very little more is necessary to a conclusion of `doing business.'" (citation omitted)).
Here, BMS alleges that Matrix markets and sells generic pharmaceutical products throughout the United States, including in New York, see Am. Compl. ¶ 16, and that Matrix derives substantial revenues from its sales in New York, see id. ¶ 19. Although the extent of Matrix's sales is unclear, Matrix is alleged to be one of the world's largest generic drug manufacturers, see id. ¶ 16, and Matrix's business activities in New York allegedly include the sale of generic versions of Lipitor and other products, see id. ¶ 21. BMS further alleges that Matrix regularly conducts business with at least one New York corporation, BMS, and entered into a contract with BMS governed by New York law. Id. ¶ 20.
To be sure, the Amended Complaint contains its fair share of legal conclusions,
Matrix argues that "BMS's speculation and conclusory assertions regarding [Matrix]'s supposed New York contacts are contradicted by the facts set forth" in the declaration of Matrix's General Counsel, Rajeev Mukundun. Matrix Br. 13. Mukundun asserts that Matrix is not licensed in New York, and has no offices, factories, or employees in New York. Mukundun Decl. ¶ 3. These are highly relevant factors, see Hoffritz, 763 F.2d at 58, and BMS does not appear to dispute those assertions. However, many of Mukundun's other assertions are directly contrary to the allegations in the Amended Complaint that establish a prima facie showing of personal jurisdiction. For instance, Mukundun states that Matrix does not actively solicit business in New York and that Matrix does not sell the generic version of Lipitor in New York. Mukundun Decl. ¶¶ 3, 7. He represents that Matrix does not sell any drugs in their finished dose form to New York customers, and that of the approximately 75 active pharmaceutical ingredients sold by Matrix, only one was sold to a New York-based company, and one was
At this initial stage of the proceedings, however, Mukundun's declaration does not defeat BMS's prima facie showing of jurisdiction. Matrix cites Schenker v. Assicurazioni Generali S.p.A., Consol., No. 98 Civ. 9186(MBM), 2002 WL 1560788, at *3 (S.D.N.Y. July 15, 2002), for the proposition that "where ... defendant rebuts plaintiffs' unsupported allegations with direct, highly specific, testimonial evidence regarding a fact essential to jurisdiction — and plaintiffs do not counter that evidence — the allegation may be deemed refuted." See Matrix Reply Br. 5 n. 3, 20 (citing Schenker and cases standing for similar propositions); see also Matrix Br. 13. But in a case decided while briefing in this case was underway, the Second Circuit expressly disavowed Schenker and that proposition. See Dorchester, supra, at 86 ("[T]his Court has never adopted that standard ..., and we decline to do so now as it is inconsistent with the framework set forth in Ball [v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.1990)]"). In Dorchester, the plaintiff had submitted documents which, if credited as authentic, would have sufficed to establish personal jurisdiction. Id. In response, defendant submitted sworn declarations and supporting documentation that tended to show that the documents relied on by plaintiff were forgeries. Id. The district court concluded that defendant's submission was direct, highly specific, and that it had not been refuted by plaintiff; it therefore dismissed the complaint pursuant to Rule 12(b)(2). Id. at 83-84. The Second Circuit reversed. Although it agreed that there was "plainly reason to question the authenticity" of plaintiff's documents, the Second Circuit held that the district court erred by resolving that factual dispute, "rather than evaluating, whether [plaintiff] had, through its pleadings and affidavits, made a prima facie showing of personal jurisdiction notwithstanding any controverting presentation by [defendant]." Id. at 86 (citation omitted).
That logic is controlling here. BMS has alleged that Matrix has substantial business dealings in New York and derives substantial revenue from those activities. In response, Matrix avers facts that, if credited, would suggest that BMS has overstated the extent of Matrix's contacts with New York. But, as Dorchester explained, the showing a plaintiff must make to defeat a defendant's claim that the court lacks personal jurisdiction depends on the procedural posture. Id. at 84-85. At this stage, BMS may survive Matrix's motion by establishing a prima facie showing of personal jurisdiction solely by allegations. Id. BMS has done so here, by alleging facts sufficient to satisfy the "doing business" standard for general jurisdiction under New York law.
To be sure, the declarations and documentary evidence adduced by Matrix are substantial. Were this litigation to move past this initial stage and were the showing required of BMS with respect to personal jurisdiction thereby to be heightened,
As noted, Matrix also moves to dismiss under Rule 12(b)(6), arguing that the Amended Complaint fails to state a claim for breach of contract. The Court agrees.
In resolving a motion to dismiss, the Court must "construe the Complaint liberally, accepting all factual allegations in the Complaint as true, and drawing all reasonable inferences in plaintiff['s] favor." Galiano v. Fid. Nat'l Title Ins. Co., 684 F.3d 309, 311 (2d Cir.2012). Nevertheless, the "[f]actual allegations must be enough to raise a right of relief above the speculative level," and the complaint must plead "enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of [plaintiff's claim]." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Put differently, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955).
"The primary objective of a court in interpreting a contract is to give effect to the intent of the parties as revealed by the language of their agreement." Compagnie Financiere CIC L'Union Europeenne v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 232 F.3d 153, 157 (2d Cir.2000). "Under New York law, which applies here, judgment as a matter of law is appropriate if the contract language is unambiguous." Photopaint Techs., LLC v. Smartlens Corp., 335 F.3d 152, 160 (2d Cir.2003); accord Compagnie Financiere, 232 F.3d at 157. "The question of "whether the language of a contract is clear or ambiguous' is one of law, and therefore must be decided by the court." Fed. Ins. Co. v. Am. Home Assur. Co., 639 F.3d 557, 568 (2d Cir.2011) (quoting Compagnie Financiere, 232 F.3d at 158). "Where the parties dispute the meaning of particular contract clauses, the task of the court `is to determine whether such clauses are ambiguous when read in the context of the entire agreement.'" Law Debenture Trust Co. of N.Y. v. Maverick Tube Co., 595 F.3d 458, 467 (2d Cir.2010) (quoting Sayers v. Rochester Tel. Corp. Supp. Mgmt. Pension Plan, 7 F.3d 1091, 1095 (2d Cir.1993)).
Ambiguity is "defined in terms of whether a reasonably intelligent person viewing the contract objectively could interpret the language in more than one way." Topps Co. v. Cadbury Stani S.A.I.C., 526 F.3d 63, 68 (2d Cir.2008). "An ambiguity exists where the terms of the contract `could suggest more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.'" Law Debenture Trust, 595 F.3d at 466 (quoting Int'l Multifoods Corp. v. Commercial Union Ins. Co., 309 F.3d 76,
"To state a claim in federal court for breach of contract under New York law, a complaint need only allege (1) the existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3) breach of contract by the defendant, and (4) damages." Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir.1996); accord Fischer & Mandell, LLP v. Citibank, N.A., 632 F.3d 793, 799 (2d Cir.2011). Here, the only dispute is whether Matrix's sale of generic atazanavir in Venezuela, as alleged by BMS, constitutes a breach of the Agreement.
The Agreement is titled the "Immunity From Suit Agreement." Its recitals provide that BMS is the owner or licensee of certain patents and patent applications filed in the Territory (defined as India and designated countries in sub-Saharan Africa) relating to certain compounds used in the manufacture of HIV/AIDS drugs, and that Matrix wishes to import such compounds into the Territory for the manufacture and sale of such drugs. See Agreement at 1. The Agreement expressly sets forth its purpose:
Id. § 2.1.
Section 3.1 sets forth the scope of BMS's grant of immunity to Matrix. Matrix is granted immunity for the:
Id. § 3.1(a). The Agreement provides that, "[f]or the avoidance of doubt, the immunity from suit ... shall provide to [Matrix] a defense against a suit or other enforcement of the Intellectual Property on any ground of infringement arising from [Matrix's] exercise of the grant." Id. § 3.1.
Thus, the Agreement expressly allows Matrix to manufacture and sell generic atazanavir in the Territory without fear of
BMS argues that § 3.1(d) of the Agreement supplies that prohibition. See BMS Br. 22. That subsection provides:
Agreement § 3.1(d). BMS argues that because "Matrix's product originates in India, sales that result in the distribution of the product in Venezuela plainly involve export of the product outside the Territory." BMS Br. 22.
But BMS's argument selectively reads § 3.1(d). BMS overlooks the phrase in the Agreement "to any third parties [Matrix] reasonably believes may export the Products outside the Territory." Agreement § 3.1(d) (emphasis added). That phrase makes Matrix's presence in the Territory beside the point. Under § 3.1(d), the entity that must be present in the Territory, and therefore in position to export the product "outside the territory," is the third party to whom Matrix distributed or sold the product. Here, as alleged, that entity is the Pan American Health Organization. But BMS's Amended Complaint does not anywhere allege that PAHO was located in the Territory and thereafter exported the products outside the Territory. (And PAHO's very name is in tension with the premise that it was located in India or sub-Saharan Africa.)
BMS's interpretation, by focusing on Matrix's presence in the Territory, would wrongly conflate Matrix with the third party whose export is a required condition for § 3.1(d) to apply. And it would transform § 3.1(d) into a provision creating a broad contractual duty not to sell a covered Product in any country outside the Territory where the defined Patents exist. But that is not what the text of § 3.1(d) provides. And the context of § 3.1(d) makes that clear. Section 3.1(d) is a subsection of the provision defining the scope of the immunity grant. Its reference to "Products manufactured hereunder" — i.e., under the contractual grant of immunity — underscores that § 3.1(d) is concerned with preventing Matrix from expanding the scope of the immunity granted by selling generic atazanavir indirectly through third parties in the covered Territory. In other words, § 3.1(d) provides that Matrix cannot claim immunity under the Agreement were it, for example, to use a third-party intermediary in India to enable it to sell generic atazanavir in Pakistan. Section 3.1(d) does not, however, prevent Matrix itself from selling generic atazanavir in Pakistan, or, relevant here, Venezuela.
To be sure, Matrix's sales of generic atazanavir may be actionable on other grounds. BMS may have a cause of action against Matrix for its sales in Venezuela under relevant patent or other laws. But BMS's claim here is for breach of contract, based on the Agreement. Under the plain
BMS also argues that the parties' conflicting interpretations of the Agreement create a genuine issue of material fact that cannot be resolved on this motion. See BMS Br. 23. But "[t]he mere assertion of an ambiguity does not suffice to make an issue of fact." Palmieri v. Allstate Ins. Co., 445 F.3d 179, 187 (2d Cir. 2006) (quoting Thompson v. Gjivoje, 896 F.2d 716, 721 (2d Cir.1990)). "Parties to a contract may not create an ambiguity merely by urging conflicting interpretations of their agreement." Sayers, 7 F.3d at 1095. "Thus, the court should not find the contract ambiguous where the interpretation urged by one party would `strain[] the contract language beyond its reasonable and ordinary meaning.'" Law Debenture Trust, 595 F.3d at 467 (quoting Bethlehem Steel Co. v. Turner Constr. Co., 2 N.Y.2d 456, 459, 161 N.Y.S.2d 90, 141 N.E.2d 590 (1957)). Here, BMS's interpretation is contrary to the Agreement's plain language. It would transform the immunity of suit agreement, expressly intended to facilitate the provision of HIV/AIDS drugs to populations in need, see Agreement § 2.1, to a farther-reaching prohibition on sales by Matrix outside the affected Territories. The Agreement does not so state, however, and any remedy by BMS for such sales must derive from sources other than the Agreement, e.g., applicable patent laws, if any. Because the Agreement is not ambiguous, and because BMS has not alleged a breach of its terms, dismissal now is warranted.
For the foregoing reasons, Matrix's motion to dismiss pursuant to Rule 12(b)(6) is granted. BMS's motion for jurisdictional discovery is denied as moot. The Clerk of Court is directed to terminate the motions pending at docket numbers 10, 18, and 23, and to close this case.
SO ORDERED.
