AntiOp Inc. v. Reckitt Benckiser Pharmaceuticals Inc. et al
Filing
23
MEMORANDUM OPINION & ORDER: DENYING dfts' 13 MOTION to Dismiss for failure to state a claim. Signed by Judge Joseph M. Hood on 7/27/16.(KJR)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
ANTIOP, INC.,
)
)
)
)
)
)
)
)
)
)
)
Plaintiff,
v.
RECKITT BENCKISER
PHARMACEUTICALS, INC., et
al.,
Defendants.
Civil Case No.
16-cv-00051-JMH
MEMORANDUM OPINION & ORDER
***
This matter is before the Court upon Defendants Reickitt
Benckiser Pharmaceuticals, Inc., Indivior, PLC, and Indivior,
Inc.’s Motion to Dismiss the Complaint [DE 13] pursuant to Fed.
R. Civ. P. 12(b)(6) because the contract at issue contains a
forum
selection
(“AntiOp”)
to
clause
file
this
permitting
Plaintiff
AntiOp,
lawsuit
the
of
in
state
New
Inc.
York.
Plaintiff has filed a Response [DE 19], and Defendants have
filed a Reply in further support of their Motion [DE 22].1
I.
AntiOp, a Kentucky corporation, is actively developing a
naloxone
Defendant
Defendant
1
nasal
spray
Indivior,
Indivior,
to
treat
Inc.,
is
PLC,
a
heroin
the
and
opioid
operating
pharmaceutical
overdoses.
subsidiary
company
of
that
Defendants have also filed a Motion for Leave to File a Surreply [DE 11], to
which there is no objection.
This motion is granted, and the tendered
surreply shall be filed in the record of this matter.
specializes in the development, marketing, and sale of addiction
treatment
drug
(collectively,
products.
Indivior,
“Indivior”),
are
PLC
and
Indivior,
subsidiaries
of
Inc.
Defendant
Reckitt Benckiser Pharmaceuticals, Inc. (“Reckitt").
In
2014,
development
Reckitt,
and
Agreement”)
Indivior,
asset
regarding
a
and
purchase
naloxone
AntiOp
entered
agreement
nasal
spray.
into
a
(“Development
The
parties
subsequently amended the agreement in January and May of 2015.
Pursuant to the Development Agreement, AntiOp granted Reckitt
and Indivior the exclusive rights to AntiOp’s naloxone nasal
spray formulation. In return, Reckitt was to pay AntiOp once
specific events outlined in the Development Agreement occurred.
In particular, Section 2.07 called for a “Formulation Patent
Milestone Payment,” due once (1) AntiOp filed a Track 1 U.S.
non-provisional patent application; (2) the Track 1 U.S. nonprovisional
patent
application
was
issued
with
claims
that
ensure the Granted patent is listable in the FDA Orange Book
(resource
listing
approved
drug
products
with
therapeutic
qualities); (3) AntiOp filed an International PCT Patent; and
(4)
AntiOp
delivered
the
executed
Intellectual
Property
Assignment documents to Reckitt and Indivior.
The Development Agreement also included a choice of law
provision and a forum selection clause.
Section 9.11 provides
that
be
the
Development
Agreement
2
“shall
governed
by
and
construed in accordance with the internal laws of the State if
New York. . .” Section 9.12 provides as follows:
Section 9.12 Submission to Jurisdiction. Any
legal suit, action or proceeding arising out
of or based upon this Agreement or the
transactions contemplated hereby may be
instituted in the federal courts located in
the Southern District of New York, and each
party irrevocably submits to the exclusive
jurisdiction of such courts in any such
suit, action or proceeding.
AntiOp filed both a Track 1 U.S. non-provisional patent
application and an International PCT patent application for the
naloxone nasal spray in November of 2014. On November 24, 2015,
the United States Patent and Trademark Office issued a patent
with
claims
directed
to
AntiOp’s
naloxone
nasal
spray
formulation. However, on the previous day, November 23, 2015,
the FDA sent notice to Indivior that the New Drug Application
(“NDA”)
would
not
be
approved
as
filed.
The
FDA
provided
Indivior with a list of actions necessary in order for its NDA
to gain approval.
In its Complaint, AntiOp avers that Defendants breached the
Development Agreement because AntiOp completed the conditions
listed
in
$3,000,000.
incomplete
Section
2.07
Indivior
because
and
contends
the
is
that
Formulation
entitled
the
to
second
Patent
a
payment
condition
obtained
by
of
was
AntiOp
does not contain claims that are listable in the Orange Book
3
because
the
FDA
did
not
approve
AntiOp’s
nasal
spray
lack
jurisdiction,
formulation.
In
their
Motion
to
Dismiss
for
of
pursuant to Fed. R. Civ. P. 12(b)(2), Defendants argue that
Section 9.12 of the Development Agreement requires Plaintiff to
bring the action within the Southern District of New York and,
thus,
precludes
AntiOp
from
bringing
suit
in
this
district.
AntiOp argues that the forum selection clause is permissive, not
mandatory, and the matter may be adjudicated before this Court.
For the reasons set forth below, Defendants’ Motion to Dismiss
will be denied.
II.
Defendant seeks dismissal of the action before this Court
under Fed. R. Civ. P. 12(b)(6), citing Langley v. Prudential
Mortg. Capital Co., LLC, 546 F.3d 365, 369 (6th Cir. 2008) (per
curiam) (citing Security Watch, Inc. v. Sentinel Sys., Inc., 176
F.3d 369 (6th Cir. 1999)) (remanding matter to district court
for
consideration
either
motion
to
of
relief
dismiss
under
under
transfer under 28 U.S.C. § 1404).
forum
Rule
selection
12(b)(6)
or
clause
on
motion
to
A party bringing a motion
under Rule 12(b)(6) asserts that the plaintiff has “failed to
state
a
claim
upon
which
relief
can
be
granted”
and
tests
whether, as a matter of law, the plaintiff is entitled to legal
relief.
Dismissal is appropriate if the plaintiff fails to
4
provide
“enough
facts
to
state
a
claim
to
relief
that
is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). The Court construes the complaint in the light
most
favorable
to
the
plaintiff
and
accept
all
factual
allegations as true, but the factual allegations must “raise a
right to relief above the speculative level.” Id. at 555. The
complaint must “contain either direct or inferential allegations
respecting all material elements necessary for recovery under a
viable legal theory.” D'Ambrosio v. Marino, 747 F.3d 378, 383
(6th Cir. 2014) (internal quotation marks omitted).
The Court is not entirely persuaded that prevailing law in
this
Circuit
12(b)(6).2
demands
resolution
of
the
matter
under
Rule
In a case decided two years prior to Langley, the
Court of Appeals for the Sixth Circuit addressed the impact of a
forum selection clause on the proceedings under Fed. R. Civ. P.
12(b)(2),
concluding
that
dismissal
is
appropriate
where
the
facts, taken together and including the language of a forum
selection
clause,
fail
to
establish
2
a
prima
facie
case
for
The Court does not particularly wish to interject itself into something that
would be the bane of first year civil procedure students but observes that
motions under Rule 12(b) may not provide the proper procedure for enforcing
forum selection clauses. The case law suggests that motions under Rule 12(b)
are a poor fit at best.
From a structural perspective, a party seeking to
enforce a forum selection clause would appear to raise a counterclaim under
Fed. R. Civ P. 13 seeking enforcement of the forum selection clause and could
seek dismissal of the entire action on a motion for judgment on the pleadings
or a motion for summary judgment under Fed. R. Civ. P. 12(c) or 56.
The
Court appreciates that this would impose a burden on the parties who wish to
quickly resolve the issue of where a matter should be litigated as a
threshold matter but would provide a more workable framework for enforcing
(or declining to enforce, as the case may be) forum selection clauses.
5
personal jurisdiction.
Preferred Capital, Inc. v. Assoc. in
Urology,
721
453
F.3d
718,
(6th
Cir.
2006)
(evaluating
the
motion to dismiss under Fed. R. Civ. P. 12(b)(2) and explaining
that “the requirement that a court have personal jurisdiction
over a party is a waivable right and there are a variety of
legal arrangements whereby litigants may consent to the personal
jurisdiction of a particular court system” and that “[t]he use
of a forum selection clause is one way in which contracting
parties may agree in advance to submit to the jurisdiction of a
particular court.”) (citing M/S Bremen v. Zapata Off-Shore Co.,
407 U.S. 1 (1972); Kennecorp Mortgage Brokers, Inc. v. Country
Club
Convalescent
1993));
see
also
Hospital,
Ferris
v.
Inc.,
610
Salter,
N.E.2d
P.C.
v.
987,
988
Thomson
(Ohio
Reuters
Corp., 819 F.Supp.2d 667, 672-73 (E.D. Mich. 2011) (discussing
and listing caselaw addressing proper procedural mechanism to
address
clause).
and
resolve
a
motion
to
enforce
a
forum
selection
Under Rule 12(b)(2), if the court does not conduct an
evidentiary hearing, it considers the pleadings and affidavits
in a light most favorable to the plaintiff; and the plaintiff
need only make a prima facie showing of jurisdiction to defeat
the
motion
under
12(b)(2).
Id.
(citing
Dean
v.
Operating, L.P., 134 F.3d 1269, 1272 (6th Cir. 1998)).
result is the same in the matter before the Court.
6
Motel
6
The end
III.
The question before the Court is not whether the forum
selection clause applies or is enforceable – everyone agrees
that it does and it is – but what it means. Does Plaintiff have
an obligation or an option to bring this suit in the Southern
District
of
New
York
under
Section
9.12
of
the
Development
Agreement?
As a general matter, “[t]he construction of forum selection
clauses by federal courts is a matter of federal common law, not
state law of the state in which the federal court sits”, are
interpreted by reference to ordinary contract principles, and
should be upheld unless there is a strong showing that it should
be set aside.”
Crown Labs., Inc. v. Se. Commercial Fin., LLC,
No. 2:11-CV-185, 2012 WL 2126945, at *2 (E.D. Tenn. Apr. 30,
2012) (quoting Wong v. Partygaming, Ltd., 589 F.3d 821, 828 (6th
Cir. 2009); citing Carnival Cruise Lines, Inc. v. Shute, 499
U.S. 585, 595 (1991); In re Delta America Re Ins. Co., 900 F.2d
890,
892
(6th
Cir.
1990)).
Applying
ordinary
contract
principles, the Court looks first at the language of 9.12 of the
Development Agreement to determine whether it is “mandatory” or
“permissive”
in
nature.
See
id.
at
*2
(citing
Cornett
v.
Carrithers, 2012 WL 687011 at *2 (11th Cir. March 2, 2012);
Global Seafood Inc. v. Bantry Bay Mussels Ltd., 659 F.3d 221,
224 (2d Cir.2011); IntraComm, Inc. v. Bajaj, 492 F.3d 285, 290
7
(4th Cir.2007); Excell, Inc. v. Sterling Boiler & Mechanical,
Inc., 106 F.3d 318, 321 (10th Cir. 1997)); Griffin v. Baker &
Taylor, Inc., Case No. 5:12-cv-00103, 2013 WL 610957, at *7
(W.D.Ky. Feb. 19, 2013) (quoting
Rivera v. Centro Medico de
Turabo, 575 F.3d 10, 17 (1st Cir. 2009). “A mandatory clause
prescribes a specific forum in which litigation regarding the
contracted-to
subject
matter
must
be
brought;
a
permissive
clause, by contrast, identifies a forum in which such litigation
permissibly
may
be
brought,
but
on
a
non-exclusive
basis.”
Crown Labs., Inc., 2012 WL 2126945 at * 2 (citing Cornett, 2012
WL 687011 at *2); English Mountain Spring Water Co., Inc. v.
AIDCO Intern., Inc., Case No. 3:07-cv-324, 2007 WL 3378344, at
*2
(E.D.Tenn.
Nov.
13,
2007)
(explaining
that
permissive
language simply prevent a would-be defendant from objecting to
the designated forum should the plaintiff choose it);
Gen.
Elec. Co. v. Siempelkamp GmbH & Co., 29 F.3d 1095, 1099 (6th
Cir. 1994) (explaining that mandatory forum selection clauses
contain clear language stating that jurisdiction and venue are
appropriate only in certain designated forums and are typically
accompanied with the words “must” and “shall”).
“‘[A]n agreement conferring jurisdiction in one forum will
not be interpreted as excluding jurisdiction elsewhere unless it
contains specific language of exclusion.’” Intracomm, Inc. v.
Bajaj, 492 F.3d 285. 290 (4th Cir. 2007) (holding that clause
8
reading that “In the event that ... good faith negotiations do
not result in a resolution of a dispute, either party shall be
free
to
pursue
competent
its
rights
jurisdiction
at
in
law
or
Fairfax
equity
County,
in
a
court
of
Virginia”
was
permissive) (quoting John Boutari & Son, Wines & Spirits, S.A.
v.
Attiki
Imp.
and
Distrib.
Inc.,
22
F.3d
51,
53
(2d
Cir.
1994)); Crown Labs., Inc., 2012 WL 2126945 at *3 (holding that
“may”
in
exclusion
a
form
but
particular
jurisdiction
selection
“simply
court
clause
serves
“without
elsewhere,”
to
is
clearly
permit
excluding
making
a
not
a
word
jurisdiction
the
forum
in”
possibility
selection
of
a
of
clause
permissive rather than mandatory).
Section 9.12 does not clearly limit actions to the courts
of a specified locale, as Defendants argue.
Rather, matters
arising out of the agreement “may be instituted in the federal
courts located in the Southern District of New York.”
This
language does not foreclose the possibility that a suit might be
brought elsewhere, nor does the Court believe that the option
granted by Section 9.12 is transformed into an obligation as
Defendants argue because of the latter portion of the section:
“each party irrevocably submits to the exclusive jurisdiction of
such courts in any such suit, action or proceeding.”
Ultimately,
the
Court
agrees
with
Plaintiff
that
the
language in the section is most similar to those cases in which
9
forum selection clauses were determined to be permissive rather
than
mandatory
because
they
indicated
brought in a particular jurisdiction.
that
actions
“may”
be
See Siteworks Solutions,
LLC v. Oracle Corp., Case No. 08-2130, 2008 WL 4415075, at *2-3
(W.D. Tenn. Sept. 22, 2008) (holding that forum selection clause
providing that “any [p]roceeding relating to the Agreement or
the enforcement of this Agreement may be brought or otherwise
commenced in any state or federal court located in the County of
San Mateo, California or in the County of San Francisco” was
permissive rather than mandatory); Residential Finance Corp. v.
Jacobs, Case No. 2:13-cv-1167, 2014 WL 1233089, at *2 (S.D. Oh.
March 25, 2014) (holding forum selection clause providing that a
party “may” file suit in a certain jurisdiction is permissive
rather
than
mandatory);
Florida
State
Bd.
of
Admin.
v.
Law
Engineering and Envir. Servs. Inc., 262 F.Supp.2d 1004 (D. Minn.
2003) (holding forum selection clause stating that that legal
action “may be brought” in Florida was permissive rather than
mandatory); Crown Labs., Inc., 2012 WL 2126945 at *3 (holding
that
forum
permissive
selection
stating
clause
“[t]he
containing
word
‘may’
as
the
used
word
in
“may”
the
is
forum
selection clause in the instant case, is clearly not a word of
exclusion . . . Rather the word ‘may’ as used in the clause at
issue in this case, simply serves to permit jurisdiction . . .
10
without excluding the possibility of jurisdiction elsewhere. . .
.”).
Defendants’ reliance on Caperton v. A.T. Massey Coal Co.,
690
S.E.2d
322,
337-40
(W.Va.
2009),
is
inapposite
as
the
language in the forum selection in this case is nothing like
that
in
Caperton.
Id.
(holding
that,
because
the
forum
selection clause provided that “all” actions “shall be filed in
and
decided
provision
by
was
the
Circuit
mandatory).
Court
Nor
of
is
Buchanan
the
County”
language
in
the
the
Development Agreement similar to that in Fred Montesi’s, Inc. v.
Centimark Corp., No. 04-2957 Ma/A, 2006 WL 1164480 (W.D. Tenn.
May
2,
2006),
upon
which
Defendants
also
rely.
Id.
at
*5
(holding that forum selection clause was mandatory where it read
that “[j]urisdiction and venue of any action or proceeding . . .
shall be vested in the state or federal courts in Washington
County, Pennsylvania” and “[p]urchaser irrevocably waives any
objections it now has or may hereafter have to the convenience
or propriety of this venue.”).
Ultimately, Defendants ask this Court to conclude that “any
such
suit,
Section
action
9.12
is
or
the
proceeding”
same
as
in
“any
the
legal
latter
suit,
portion
of
action
or
proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby” in the first portion of the
section, but Defendants’ reading does not give effect to all of
11
the words in Section 9.12 and disregards the choice of the word
“may.”
Rather, reading the entire sentence and giving effect to
all of the language agreed upon by the parties, it is clear that
“any such suit, action or proceeding” is defined by the subset
of actions “instituted in the federal courts located in the
Southern District of New York.”
The Court rejects Defendants’
argument that this reading overemphasizes the impact of the word
“may” and ignores the mandatory language from the second part of
Section 9.12.
The two sections are not inconsistent when they
are read together, as they must be.
whole,
is
not
subject
to
Section 9.12, read as a
opposing,
yet
reasonable,
interpretations and is not, thus, ambiguous as Defendants urge.
Further, even if they could be understood to be inconsistent,
the
Court’s
them.
reading
is
the
only
plausible
reconciliation
of
See Poundstone v. Patriot Coal Co. Ltd., 485 F.3d 891,
902 (6th Cir. 2007) (citing North Star Co. v. Howard, 341 S.W.2d
251,
255
under
(Ky.
1960))
Kentucky
law
contains
.
and
inconsistent
possible
(construing
Millennium,
.
.
Inc.,
.”);
598
payment
concluding
clauses,
see
they
clause
of
contract
“[i]f
a
contract
that,
should
be
also
Bank
of
New
F.Supp.2d
550,
556-57
reconciled
York
if
v.
First
(S.D.N.Y.
2009)
(same, under New York law).
The Court concludes that Section 9.12 permits but does not
mandate
jurisdiction
in
the
federal
12
courts
of
the
Southern
District of New York by virtue of the word “may.”
Giving the
language of Section 9.12 its ordinary and normal meaning and
giving
meaning
to
every
word
in
Section
9.12,
the
section
clearly anticipates that the parties are not to challenge the
exclusive jurisdiction of the courts in the Southern District of
New York if a plaintiff elects to bring “any such suit, action,
or pleading.” “[S]uch suit, action, or pleading” is defined and
limited by the situation where a party elects to file suit in
the Southern District of New York.
its
right
under
the
contract
to
Plaintiff has not exercised
bring
suit
in
the
Southern
District of New York, so the latter aspect of the provision
simply does not come into play.
Accordingly,
Defendants’
Motion
DENIED.
This the 27th day of July, 2016.
13
to
Dismiss
[DE
13]
is
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