Gottesfeld v. RepliGen Corporation
Filing
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ORDER Re Motion to Dismiss. Signed by Judge Cathy Ann Bencivengo on 7/14/2017. (jjg)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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JOEL GOTTESFELD,
Case No.: 3:17-CV-0249-CAB-AGS
Plaintiff,
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ORDER RE MOTION TO DISMISS
v.
REPLIGEN CORPORATION, a
Delaware Corporation,
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[Doc. No. 9]
Defendant.
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This matter is before the Court on Defendant Repligen Corporation’s motion to
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dismiss. The motions have been fully briefed and the Court deems them suitable for
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submission without oral argument.1 For the reasons set forth below, the motion to dismiss
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is GRANTED.
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I.
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Plaintiff Joel Gottesfeld is a professor of cell and molecular biology and chemistry
FACTUAL BACKGROUND
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employed by The Scripps Research Institute.
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publicly-traded life sciences company which focuses on the development, production, and
Defendant Repligen Corporation is a
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Accordingly, Plaintiff’s request for oral argument is denied.
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commercialization of products used in the processing of biologic drugs. On or about March
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31, 2007, Gottesfeld and Repligen entered into a consulting agreement. Under the
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agreement, Gottesfeld would assist Repligen in its efforts to develop treatments for
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Friedreich’s Ataxia (“FA”) using the compounds invented by Gottesfeld.
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In addition to the consulting agreement, Gottesfeld and Repligen entered into a
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Common Stock Purchase Warrant (the “Warrant”). The Warrant granted Gottesfeld the
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right to purchase 150,000 shares of Repligen stock, at a cost of $0.01 per share, in three
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tranches of 50,000 shares. [Doc. No. 1 at 3-4.]2 The options to purchase each of the three
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tranches were to be executable upon the occurrence of three separately defined milestones
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in the Warrant. [Id.] The first milestone in the Warrant is entitled “First Patient Dosing,”
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which means “the first patient dosed in a US clinical study sponsored by the [Defendant]
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with a pharmaceutical for the treatment of Friedrich’s Ataxia.” [sic] [Id. at 4]. The
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complaint does not allege that any patient in a clinical study in the United States was ever
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dosed by Repligen with a drug for the treatment of FA, and Gottesfeld does not contend in
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his opposition that any such study occurred. However, the complaint does allege that in
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2012, Repligen conducted a clinical study with a drug for the treatment of FA in Italy.
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[Doc. No. 1 at 4-6.]
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On January 27, 2014, Gottesfeld sent a letter and a check for $500 to Repligen
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attempting to exercise his option to purchase the first tranche of 50,000 shares—executable
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upon the “First Patient Dosing”—under the Common Stock Purchase Warrant. [Doc. No.
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1 at 7]. Repligen returned Gottesfeld’s $500 check because “no patient was ever dosed in
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a U.S. clinical study.” [Id.; Doc. No. 9-1 at 11]. After additional unsuccessful efforts to
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exercise his first option under the Warrant, Plaintiff filed this lawsuit.
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Document numbers and page references are to those assigned by CM/ECF for the docket entry.
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II.
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To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain
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sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
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face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v.
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Twombly, 550 U.S. 544, 570 (2007)). Thus, the Court “accept[s] factual allegations in the
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complaint as true and construe[s] the pleadings in the light most favorable to the
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nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031
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(9th Cir. 2008). On the other hand, the Court is “not bound to accept as true a legal
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conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678; see also Lee v. City of
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Los Angeles, 250 F.3d 668, 679 (9th Cir. 2001) (“Conclusory allegations of law are
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insufficient to defeat a motion to dismiss”). Nor is the Court “required to accept as true
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allegations that contradict exhibits attached to the Complaint or . . . allegations that are
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merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Daniels-
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Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). “In sum, for a complaint to
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survive a [12(b)(6)] motion to dismiss, the non-conclusory factual content, and reasonable
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inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff
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to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotations
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omitted).
LEGAL STANDARD
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III.
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Both parties concede that the only issue before the Court is whether the phrase “US
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clinical study,” as used within the definition of “First Patient Dosing” in the Warrant, is
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ambiguous.3 Repligen argues that the phrase is unambiguous and means a clinical study
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conducted in the United States. Because no clinical study was ever conducted in the United
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States, Repligen asserts that the first milestone in the Warrant was not met and Gottesfeld
DISCUSSION
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Because the relevant language from the Warrant was alleged in the complaint, the Court did not review
any of the documents included by Repligen with its motion. Accordingly, Gottesfeld’s evidentiary
objections are denied as moot.
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has no right to exercise his option to purchase the first tranche of 50,000 shares of Repligen
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stock.
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For his part, Gottesfeld points out that the Warrant does not define the phrase “US
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clinical study and argues that the study conducted in Italy was a “US clinical study”
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because the phrase “includes any study in which it is contemplated that said study will be
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submitted to the FDA for approval of the drug for use in the United States in accordance
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with 21 CFR § 312.120.” [Id. at 4-5]. At the very least, Gottesfeld argues that the phrase
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“US clinical study” is ambiguous and open to more than one reasonable interpretation.
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Whether a contract is clear and unambiguous is a question of law. United States v.
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Sacramento Mun. Util. Dist., 652 F.2d 1341, 1343-45 (9th Cir. 1981). In determining
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whether a contract is ambiguous, the Court looks to the terms of the agreement itself.
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Greco v. Dep’t of the Army, 852 F.2d 558, 560 (Fed. Cir. 1988). “Resolution of contractual
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claims on a motion to dismiss is proper if the terms of the contract are unambiguous.”
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Monaco v. Bear Stearns Residential Mortg. Corp., 554 F.Supp.2d 1034, 1040 (C.D. Cal.
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2008) (quoting Bedrosian v. Tenet Healthcare Corp., 208 F.3d 220 (9th Cir. 2000)).
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The parties agree that the Warrant contains a Delaware choice of law provision and
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that Delaware law controls the interpretation of the Warrant. Under Delaware law, “a
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contract’s construction should be that which would be understood by an objective,
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reasonable third party.” HIFN, Inc. v. Intel Corp., No. 1835-VCS, 2007 WL 1309376, at
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*9 (Del. Ch. May 2, 2007).4 Contracts are to be read “as a whole,” with each provision
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and term given effect “so as not to render any part of the contract mere surplusage.” Osborn
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Even though there is no dispute that Delaware law governs the interpretation of the contract here,
California law on contract interpretation is virtually identical. “‘In interpreting an unambiguous
contractual provision we are bound to give effect to the plain and ordinary meaning of the language used
by the parties.’” People ex rel. Lockyer v. R.J. Reynolds Tobacco Co., 132 Cal. Rptr. 2d 151, 158 (Cal.
Ct. App. 2003) (quoting Coast Plaza Doctors Hosp. v. Blue Cross of California, 99 Cal. Rptr. 2d 809
(Cal. Ct. App. 2000)). “Thus, where ‘contract language is clear and explicit and does not lead to absurd
results, we ascertain intent from the written terms and go no further.’” Id. (quoting Shaw v. Regents of
Univ. of California 67 Cal. Rptr. 2d 850 (Cal. Ct. App. 1997).
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v. Kemp, 991 A.2d 1153, 1159 (Del. 2010) (quoting Kuhn Constr., Inc. v. Diamond State
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Port Corp., 990 A.2d 393 (Del. 2010)). “A court must accept and apply the plain meaning
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of an unambiguous term in the context of the contract language and circumstances, insofar
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as the parties themselves would have agreed ex ante.” Lorillard Tobacco Co. v. Am. Legacy
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Found., 903 A.2d 728, 740 (Del. 2006). The “true test is not what the parties to the contract
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intended it to mean, but what a reasonable person in the position of the parties would have
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thought it meant.” Rhone-Poulenc Basic Chem. Co. v. Am. Motorists Ins. Co., 616 A.2d
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1192, 1196 (Del. 1992) (citing Steigler v. Ins. Co. of N. Am., 384 A.2d 398, 401 (Del.
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1978)).
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“A contract is not ambiguous merely because the parties disagree as to its proper
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construction.” Matria Healthcare, Inc. v. Coral SR LLC, No. 2513-N, 2007 WL 763303,
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at *6 (Del. Ch. Mar 1, 2007). “Ambiguity does not exist where the court can determine
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the meaning of a contract ‘without any other guide than a knowledge of the simple facts on
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which, from the nature of language in general, its meaning depends.’” Rhone-Poulenc
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Basic Chem. Co., 616 A.2d at 1196 (quoting Holland v. Hannan, 456 A.2d 807, 815 (D.C.
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1983)). “When the contract is clear and unambiguous, [the court] will give effect to the
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plain-meaning of the contract’s terms and provisions.” Osborn, 991 A.2d at 1159–60.
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Here, “US clinical study” is not ambiguous. An objective, reasonable third party
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would understand the term “US clinical study” to mean a clinical study conducted in the
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United States, and no reasonable third party would understand the term to include a study
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conducted in Italy. Any alternate definition would render the geographic qualifier “US”
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mere surplusage. Accordingly, the Court need not review any of the evidence or statutes
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that Gottesfeld argues support a different interpretation or render the phrase ambiguous.
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See United Rentals, Inc. v. RAM Holdings, Inc., 937 A.2d 810, 830 (Del. Ch. 2007)
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(“[E]xtrinsic, parol evidence cannot be used to manufacture an ambiguity in a contract that
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facially has only one reasonable meaning.”).
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Using this interpretation of “US clinical study,” the complaint does not state a claim.
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Because the complaint does not allege (and Gottesfeld does not argue) that a clinical study
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was ever conducted by Repligen in the United States, the first milestone in the warrant was
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never satisfied. Therefore, Repligen did not breach the Warrant by refusing to allow
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Gottesfeld to exercise his first option under the Warrant.
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IV.
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For the foregoing reasons, the motion to dismiss is GRANTED and the complaint
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CONCLUSION
is DISMISSED WITH PREJUDICE.
It is SO ORDERED.
Dated: July 14, 2017
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