MARYELLEN NOREIKA, District Judge.
Before the Court is the motion of Defendants Method Pharmaceuticals, LLC ("Method") and Matthew Scott Tucker ("Tucker") (collectively "Defendants") to "Dismiss Under Federal Rule of Civil Procedure 12(b)(2) Or, In the Alternative, Transfer Venue" to the United States District Court for the Northern District of Texas pursuant to 28 U.S.C. § 1404(a). (D.I. 11). Plaintiff ANI Pharmaceuticals, Inc. ("Plaintiff' or "ANI") opposes both dismissal and transfer, but requests that, should the Court deem transfer proper, the case be transferred to the United States District Court for the District of Minnesota. (D.I. 13).
Plaintiff filed its Complaint against Defendants on August 7, 2017 alleging violations of §§ 43(a) and 43(a)(1)(B) of the Lanham Act, 15 U.S.C. § 1125(a), as well as a Delaware state law claim for deceptive trade practices, under 6 Del. C. § 2532, and a common law tortious interference claim. (D.I. 1 at ¶¶ 43-72). The Complaint states "[t]his Court has personal jurisdiction over Defendants because the Defendants have solicited sourcing contracts with McKesson Corp. [("McKesson")], a Delaware Corporation that distributes pharmaceuticals at a retail sale level throughout the District." (Id. at ¶ 11). Further, the Complaint alleges that "Defendant Tucker, directed, sanctioned, actively participated in, and voluntarily and intentionally caused the above-mentioned unlawful conduct by the corporate Defendants." (Id. at ¶ 42). Based upon these actions, Plaintiff alleges that "Defendants have caused harm to Plaintiff in this District." (Id. at ¶ 11).
In the present motion, Defendants argue that they "have no connection with Delaware" and thus "lack sufficient `minimum contacts' with this district to permit the exercise of specific or general jurisdiction." (D.I. 12 at 2). In support of this, Defendants have submitted two declarations from Tucker, one on behalf of Method Pharmaceuticals, LLC ("Method Declaration"), (D.I. 12, Ex. A), and one on behalf of Tucker, himself ("Tucker Declaration"). (D.I. 12, Ex. B). The Method Declaration attests that Tucker is the President of Method "a Texas limited liability company, whose sole member is Matthew Scott Tucker" and whose "corporate headquarters are located at 7333 Jack Newell Blvd. N., Suite 300, Fort Worth, Texas 76118." (Id. at ¶¶ 2-4). The Method Declaration states the following with respect to Method (D.I. 12, Ex. A at ¶¶ 5-7):
Regarding McKesson, the Method Declaration avers that "Method is not affiliated with McKesson in any capacity and the two companies are entirely independent of one another." (Id. at ¶ 10). It explains (id. at ¶¶ 8-9):
Moreover, while Method listed its EEMT drug on national pharmaceutical databases — including Medi-Span and First DataBank Method asserts that "[p]harmaceuticals cannot be purchased from, or sold by Method through these listing databases and entities and persons cannot directly contact Method through these databases." (Id. at ¶¶ 10-12).
The Tucker Declaration attests that Mr. Tucker resides in Ft. Worth, Texas. (D.I. 12, Ex. Bat ¶ 3). He has never resided, been employed, transacted business, paid taxes, held bank accounts or assets, owned or leased property, or commenced litigation in Delaware. (Id. at ¶¶ 4-8). He states that he has "never traveled to the State of Delaware." (Id. at ¶ 9).
Plaintiff responds that "Method's sales activities establish personal jurisdiction pursuant to 10 Del. C. § 3104(c)(1), (2), and (4)," because Method
(D.I. 13 at 1-2 (internal citations omitted)). Plaintiff adds that Method is also a pharmaceutical vendor for the Minnesota Multistate Contracting Alliance for Pharmacy ("MMCAP") purchasing collective for pharmaceutical products which Delaware has contracted to be a part of. (Id. at 1, 8).
With respect to Mr. Tucker, Plaintiff asserts that "Mr. Tucker and Method are one and the same."
(Id. at 12-13).
Pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure, the Court may dismiss a suit for lack of jurisdiction over a person. When a defendant challenges a court's exercise of personal jurisdiction under Rule 12(b)(2), "the plaintiff bears the burden of establishing personal jurisdiction by a preponderance of the evidence and must do so by `establishing with reasonable particularity sufficient contacts between the defendant and the forum state.'" Turner v. Prince Georges County Public Schools, 694 Fed. App'x 64, 66 (3d Cir. 2017) (quoting Mellon Bank (East) PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992)). "To meet this burden, the plaintiff must produce `sworn affidavits or other competent evidence,' since a Rule 12(b)(2) motion `requires resolution of factual issues outside of the pleadings.'" Brasure's Pest Control, Inc. v. Air Cleaning Equip., Inc., C.A. No. 17-323-RGA-MPT, 2018 WL 337747, at *1 (D.Del. Jan. 9, 2018) (quoting Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 67 n.9 (3d Cir. 1984)). "[W]hen the court does not hold an evidentiary hearing on the motion to dismiss, [however], the plaintiff need only establish a prima facie case of personal jurisdiction and the plaintiff is entitled to have its allegations taken as true and all factual disputes drawn in its favor." Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004) (citing Pinker v. Roche Holdings, Ltd., 292 F.3d 361 (3d Cir. 2002)).
Two requirements, one statutory and one constitutional, must be satisfied for personal jurisdiction to exist over a defendant. Bell Helicopter Textron, Inc. v. C & C Helicopter Sales, Inc., 295 F.Supp.2d 400, 403 (D. Del. 2002). "First, a federal district court may assert personal jurisdiction over a nonresident of the state in which the court sits to the extent authorized by the law of that state." Id. (citing Fed. R. Civ. P. 4(e)). The Court must, therefore, "determine whether there is a statutory basis for jurisdiction under the Delaware long-arm statute." Id. (citing 10 Del. Code § 3104(c)). "Second, because the exercise of jurisdiction must also comport with the Due Process Clause of the United States Constitution, the Court must determine if an exercise of. jurisdiction violates [defendants'] constitutional right to due process." Id. (citing International Shoe Co. v. Washington, 326 U.S. 310 (1945)); see also IMO Industries, Inc. v. Kiekert AG, 155 F.3d 254, 259 (3d Cir. 1998).
Delaware's long arm statute, 10 Del. C. § 3104, provides in pertinent part:
Subsections (c)(1) and (c)(2) provide for specific jurisdiction where the cause of action arises from the defendant's contacts with the forum. Shoemaker v. McConnell, 556 F.Supp.2d 351, 354-55 (D. Del. 2008). "Subsection (c)(4) provides for general jurisdiction, which requires a greater extent of contacts, but which provides jurisdiction even when the claim is unrelated to the forum contacts." Applied Biosystems, Inc. v. Cruachem, Ltd., 772 F.Supp. 1458, 1466 (D. Del. 1991) (citing LaNuova D & B, S.p.A. v. Bowe Co., 513 A.2d 764, 768 (Del. 1986)).
As for the second prong, the Due Process Clause "requires that a non-resident defendant have certain minimum contacts with a forum state — contacts that would provide the defendant `fair warning' that he might be sued there — before a federal court in that forum can constitutionally exercise personal jurisdiction over that defendant." Turner, 694 Fed. App'x at 65-66 (quoting Kehm Oil Co. v. Texaco, Inc., 537 F.3d 290, 299-300 (3d Cir. 2008)). General jurisdiction over a foreign entity only exists where that entity's "affiliations with the State are so `continuous and systematic' as to render them essentially at home in the forum state." Goodyear Dunlop Tires Operations, S.A v. Brown, 564 U.S. 915, 919 (2011) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 317 (1945)).
District courts have the authority to transfer venue "[f]or the convenience of parties and witnesses, in the interests of justice, . . . to any other district or division where it might have been brought." 28 U.S.C. § 1404(a). However, "[a] plaintiff, as the injured party, generally ha[s] been `accorded [the] privilege of bringing an action where he chooses," Helicos Biosciences Corp. v. lllumina, Inc., 858 F.Supp.2d 367 (D. Del. 2012) (quoting Norwood v. Kirkpatrick, 349 U.S. 29, 31 (1955)), and this choice "should not be lightly disturbed," Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir.1995). The Third Circuit has recognized that:
Id. (citation omitted). The Jumara court went on to describe twelve (12) "private and public interests protected by the language of§ 1404(a). Id. The private right included:
Id. at 879-80 (citations omitted). The public interests include:
Id. Though the Jumara court notes that courts have "broad discretion to determine, on an individualized, case-by-case, whether convenience and fairness considerations weigh in favor of transfer," Id. at 883, the Third Circuit has previously held that "unless the balance of convenience of the parties is strongly in favor of [the] defendant, the plaintiff's choice of forum should prevail." Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970).
As noted above, Plaintiff's assertion of personal jurisdiction with respect to Tucker is that "Mr. Tucker and Method are one and the same" and thus "jurisdiction over Mr. Tucker is proper for the reasons discussed with respect to Method." (D.I. 13 at 12-13). There does not appear to be any dispute that, aside from Tucker's role and acts as the Founder and President of Method, the Court cannot exercise jurisdiction over Mr. Tucker.
As to his role at Method, the fiduciary shield doctrine "prohibit[s] acts performed by an individual in the individual's capacity as a corporate employee from serving as the basis for personal jurisdiction over that individual." TriStrata Tech., Inc. v. Neoteric Cosmetics, Inc., 961 F.Supp. 686, 690 (D. Del. 1997); Brasure's, 2017 WL 3269082, at *4 (internal citation and quotation marks omitted); Ruggiero v. FuturaGene, plc, 948 A.2d 1124, 1134 (Del. Ch. 2008) ("[A] corporate director or officer of a corporation cannot be haled into a Delaware court for an act of the corporation simply because the officer or director has directed the corporation to take that act.) It is an equitable doctrine that should be applied with a "sound exercise of discretion." Plummer & Co. Realtors v. Crisafi, 533 A.2d 1242, 1246 (Del. Super. Ct. 1987).
Courts have recognized "an exception to the fiduciary shield doctrine where the corporation is a mere shell for its owner" such that the "employee-owner's actions may be viewed as having been taken on his own behalf and it would not be fair to allow the owner to hide behind the fiduciary shield." Plummer, 533 A.2d at 1246. In its papers, Plaintiff argues that the fiduciary shield doctrine does not apply to Tucker because he "directly designed, facilitated, and negotiated a distribution contract with McKesson," "directed the listing of Method's EEMT product on drug databases," "has a clear personal financial interest in the misconduct alleged" and "his actions were for his own individual pecuniary interest." (Id. at 13-14). In its Complaint, Plaintiff alleged that Tucker "directed, sanctioned, actively participated in, and voluntarily and intentionally caused" Method's purported "unlawful conduct." (D.I. 1 at ¶ 42). Plaintiff's conclusory allegations, however, are insufficient to confer jurisdiction.
Plaintiff has failed to establish that Tucker took any acts as a fiduciary for Method in Delaware. See Tristrata, 961 F. Supp. at 690 ("the employee's acts as a fiduciary must still occur in Delaware"). In Tristrata, the Court was asked to find personal jurisdiction over an individual defendant who was the president, 100% stockholder, and researcher for a company, and had participated in the national advertisement of the company's products. Id. The Court found that it lacked the authority to exert personal jurisdiction, noting that national advertising "is insufficient to qualify as transacting business . . . in Delaware . . . unless it is shown that the advertising is part of a `sustained promotion campaign directed at Delaware,'" and his "position as president, stockholder and researcher . . . would be insufficient to establish jurisdiction." Id.
Similarly, in Brasure's, this Court found no personal jurisdiction over the defendant-corporate employees, because "[a]ny contacts the individual defendants may have had with Delaware occurred solely in connection with [the corporate defendant]." Brasure's, 2017 WL 3269082, at *4-5. Because the defendants "as individuals, ha[d] not engaged in any conduct in Delaware," there was no basis for the Court's exercise of jurisdiction over them. Id. at *5. Here, too, Plaintiff's Complaint is devoid of facts demonstrating that Tucker performed any acts in Delaware, whether in his fiduciary capacity or otherwise. Thus, Plaintiff's claims against Tucker must be dismissed. See id. at *4-5; Quantum Loyalty Sys., Inc. v. TPG Rewards, Inc. et al., C.A. No. 09-22-SLR-MPT, 2009 WL 5184350, at *5 (D. Del. Dec. 23, 2009) (M.J., Thynge), adopted as modified by 2010 WL 1337621 (D. Del. Mar. 31, 2010) (fiduciary shield doctrine applied, where "[b]eyond mere conclusory statements, there is nothing to corroborate that Galinos personally and knowingly sold or offered to sell any material part of an allegedly infringing product in Delaware").
Moreover, a finding that the Court could assert personal jurisdiction over Tucker based on the facts above would not comport with traditional notions of fair play and substantial justice. The constitutional requirements of the Due Process Clause require minimum contacts such that a defendant would have "fair warning" that suit might be brought against him in the district. See Turner, 694 Fed. App'x at 65-66. Plaintiff fails to explain how Mr. Tucker's signature on a distribution contract between his company and McKesson would provide the individual defendant with fair warning that suit might be brought against him in his personal capacity in Delaware. For these reasons, Plaintiff has failed to meet its burden of showing that personal jurisdiction is proper over Mr. Tucker. Rather than dismiss the case against Mr. Tucker, however, the Court will exercise its discretion to transfer the case to a forum where there is jurisdiction. Gehling v. St. George's Sch. of Med, Ltd, 773 F.2d 539, 544 (3d Cir. 1985) ("We have previously held, however, that a district court lacking personal jurisdiction can transfer a case to a district in which the case could have been brought originally." (citations omitted)).
After reviewing the papers, it appears that the question of personal jurisdiction over Method presents a closer call. Having found, however, that the Court lacks jurisdiction over one of the defendants, Tucker, in the interests of justice, and to avoid potential inequities from bifurcating this case, the Court turns to whether it should exercise its discretion to transfer the case to the United States District Court for the Northern District of Texas regardless of the existence of its jurisdiction over Method.
The Court considers the private and public factors set forth in Jumara in connection with its transfer inquiry.
This factor normally does not favor transfer. "It is black letter law that a plaintiff's choice of a proper forum is a paramount consideration in any determination of a transfer request," — one that "should not be lightly disturbed." Shutte, 431 F.2d at 25 (internal quotations and citation omitted). "Assuming jurisdiction and proper venue, weight is given to plaintiff's choice because it is plaintiff's choice and a strong showing under the statutory criteria in favor of another forum is then required as a prerequisite to transfer." Burroughs Wellcome Co. v. Giant Food, Inc., 392 F.Supp. 761, 763 n.4 (D. Del. 1975).
Defendants nevertheless argue that Plaintiff's choice "should not be accorded deference" because "Plaintiff's `nerve center' and corporate operations are also located outside of Delaware," and Plaintiff has "no `rational and legitimate reason' for bringing suit in Delaware." (D.I. 12 at 15). As another court in this district has found, however, it is "difficult to understand why the plaintiff's forum choice in and of itself merits less weight when the plaintiff has no ties to the selected forum or when the facts underlying the controversy occurred elsewhere." VLSI Tech. LLC, v. Intel Corp., C.A. No. 18-966-CFC, 2018 WL 5342650 at *5-6 (D. Del. Oct. 29, 2018) (concluding that the plaintiff, a company registered in Delaware, was entitled to "paramount consideration" in its choice of forum). Indeed, "[n]either Shutte nor Jumara hold or even intimate that a plaintiff's motive in selecting its forum choice is relevant for § 1404(a) purposes." VLSI Tech, 2018 WL 5342650 at *2. The Court, thus, does not find that Plaintiff's motives or reasoning for bringing this case in Delaware to be relevant to the inquiry of whether Plaintiff's forum preference favors transfer.
The issue, here, however, relates to the parenthetical in Burroughs — "[a]ssuming jurisdiction and proper venue." 392 F. Supp. at 763 n.4. The Court has found that it lacks personal jurisdiction over at least one of the named Defendants. Thus, "jurisdiction and proper venue" cannot be assumed as to both defendants. The Court finds that judicial economy favors the prosecution of a case in its entirety, and that that weighs in favor of transferring the case to the Northern District of Texas where there is no question of jurisdiction.
This factor favors transfer. Defendants argue they "have a legitimate and rational reason for preferring to litigate in the Northern District of Texas" because they are located the district, non-party witnesses are in the district, and evidence is in the district. (D.I. 12 at 16). Plaintiff does not challenge that it is Defendants' preference to litigate in the Northern District of Texas.
This factor favors transfer. Defendants argue that "to the extent Plaintiff has any claims at all . . . they arose outside of Delaware." (D.I. 12 at 16). Specifically, Defendants assert that the "alleged `acts' of `false advertising' would have originated from Method's principal place of business in the Northern District of Texas and any purported `solicitation' . . . of McKesson occurred through communications with individuals located in Texas and abroad." (Id. at 16). Plaintiff does not counter Defendants' assertions.
This factor favors transfer. Determining convenience of the parties requires the Court to consider "(l) the parties' physical location; (2) the associated logistical and operational costs to the parties' employees in traveling to Delaware (as opposed to the proposed transferee district) for litigation purposes; and (3) the relative ability of each party to bear these costs in light of its size and financial wherewithal." MEC Resources, LLC v. Apple, Inc., 269 F.Supp.3d 218, 225 (D. Del. 2017) (citing Memory Integrity, LLC v. Intel Corporation, C.A. No. 13-1804-GMS, 2015 WL 632026 at *4 (D. Del. Feb. 13, 2015) (internal quotations omitted). In MEC, the Court found this factor weighed in favor of transfer where "the parties' physical locations are not convenient to Delaware and [plaintiff's] litigation costs will likely remain the same because its. . . employees must travel" regardless of transfer. Id. at 226. Here, neither entity has a principal place of business in Delaware. Defendants are in the Northern District of Texas and Plaintiff is in Minnesota, which is geographically closer to the Northern District of Texas than this district. (D.I. 12, Exs. 4-6).
Plaintiff's only expressed convenience of litigating in Delaware is that "ANI's executives routinely travel to the region encompassing the Northeast Corridor." (D.I. 13 at 16). This has no bearing on the Court's consideration of this factor. As for logistical and operations costs for trial, Plaintiff will have to travel to litigate this case regardless of whether transfer is granted or denied, and thus this subfactor is neutral with respect to ANI. The logistical and operational costs for Method and its employees to travel to Delaware, however, would be more complicated and more expensive than a trial occurring in the Northern District of Texas. Though it appears that Method has fewer than ten employees, no information has been provided with respect to ANI and thus the Court cannot determine the parties' relative ability to bear the costs associated with litigating this case in Delaware as opposed to Texas. Nevertheless, for the same reasons articulated in MEC, the Court finds that this factor favors transfer.
This factor slightly favors transfer. This factor carries weight "only to the extent that the witnesses may actually be unavailable for trial in one of the fora." Jumara, 55 F.3d at 879; see also VLSI, 2018 WL 5342650 at *7 (citing Smart Audio Techs., LLC v. Apple, Inc., 910 F.Supp.2d 718, 732 (D. Del. 2012) (noting that this factor applies only insofar as "a witness actually will refuse to testify absent a subpoena")). Moreover, "witnesses who are employed by a party carry no weight," because "each party is able, indeed, obligated to procure the attendance of its own employees for trial." Affymetrix, Inc. v. Synteni, Inc., 28 F.Supp.2d 192, 203 (D. Del. 1998).
There is no dispute that Defendants' contacts with McKesson occurred solely in Texas and the United Kingdom and "[non-party witnesses] involved in Method's efforts to allegedly improperly `solicit' EEMT `sourcing contracts' are in Texas and the United Kingdom." (D.I. 12 at 17). Each of these locations is outside of the reach Rule 45 of the Federal Rule of Civil Procedure. Moreover, the "Defendants' Unlawful Conduct" section of Plaintiff's Complaint identifies entities with whom Defendants did business, including: Syntho Pharmaceuticals, Inc. ("Syntho"), McKesson, Medi-Span, and First Databank. That Plaintiff has identified these entities in its Complaint means that individuals from each are presumably necessary for the proper adjudication of this matter.
This factor slightly favors transfer. Jumara instructs the Court to give weight to the location of books and records necessary to the case only "to the extent that the files [and other evidence] could not be produced in the alternative forum." 55 F.3d at 879. Although Defendants argue that "the bulk of the evidence is likely to come from Defendants," (D.I. 12 at 18), they have not identified any evidence that could not be produced in this, or any, district. Nor have Defendants provided any indication that any "documentary evidence relevant to this action is found exclusively or even primarily" in the Northern District of Texas. See VLSI, 2018 WL 5342650 at *7. Because, however, records have been identified as being available in the Northern District of Texas, albeit not exclusively, and no records have been identified as available in this district, the Court finds this factor to weigh slightly in favor of transfer to the Northern District of Texas.
Neither Plaintiff nor Defendants address any disparity between the enforceability of the judgment between the District of Delaware and the Northern District of Texas in their papers and thus the Court finds this factor to be neutral.
This factor favors transfer. The Court must consider "practical considerations that could make the trial easy, expeditious, or inexpensive." Jumara, 55 F.3d at 879. Here, Defendants argues that "the Northern District of Texas imposes no more of a burden for Plaintiff than litigating in Delaware and is much less burdensome for defendants" who are in Texas, along with pertinent witnesses and evidence related hereto. (D.I. 18-19). Plaintiff simply responds that "transportation through and from the District of Delaware is convenient, inexpensive, and unburdensome." (D.I. 13 at 18). Though the Wilmington, Delaware area is serviced by the Philadelphia International Airport and relatively accessible to the parties, the Court cannot avoid the reality that trial in this district would require all parties, witnesses, experts, and evidence to be transported to Delaware. In contrast, whereas Method and Mr. Tucker are located within the Northern District of Texas, and significant evidence is also located therein, only Plaintiff will be required to travel to litigate its case should it be transferred, which would be necessary regardless. The Court concludes that trial in this matter would be easier and greatly less expensive if transferred to the Northern District of Texas.
This factor is neutral. The Court takes judicial notice of the most recent Judicial Caseload Profiles
This factor slightly favors transfer. Other than Plaintiff's selection of this district, the controversy has no significant connection to Delaware. Plaintiff correctly asserts that "the local interest factor is typically neutral in a case that asserts claims under Federal law as they raise controversies that are more properly viewed as national, not local, in scope." (D.I. 13 at 18) (citing Graphics Properties Holding Inc. v. Asus Computer Int'l, Inc., 964 F.Supp. 2320, 330 (D. Del. 2013)). Method is a small, Texas company with fewer than ten employees, and is alleged to have contracted with a distributor in Texas to sell a non-approved EEMT drug and has contracted to list that drug on a database accessible in Texas and nationally. The Court finds that Texas may have a local interest in adjudicating this case. Though the main cause of action arises from Federal law, the underlying action and its potential results have a direct connection to the Northern District of Texas.
Neither Plaintiff nor Defendants address the relative public policies of hearing the case in District of Delaware versus the Northern District of Texas, and thus the Court finds this factor to be neutral.
Neither Plaintiff nor Defendants address this factor. Two counts in Plaintiff's Complaint arise under the federal Lanham Act, and thus the familiarity of the respective districts with state law is unnecessary with respect to these claims. The remaining two counts allege basic claims of tortious interference and deceptive trade practices. The Court finds this factor to be neutral.
A review of the twelve Jumara factors counsels the Court that a transfer of this case to the Northern District of Texas is proper. Eight factors weigh at least somewhat in favor in transferring the case, while the remaining four are neutral. Though a plaintiff's choice of venue is generally provided paramount consideration under Jumara, the Court's inability to assert personal jurisdiction over one of the defendants undermines that deference here. Transfer to the Northern District of Texas would allow for this case to be heard in its entirety, and thus, the Court finds that transfer is appropriate.
For the foregoing reasons, the Court denies Defendants' motion to dismiss, but grants their motion to transfer the case to the United States District Court for the Northern District of Texas pursuant to 28 U.S.C. § 1404(a). An appropriate order will issue.
