Hempel et al v. Cydan Development, Inc. et al

Filing 52

ORDER that Defendants' motion to dismiss for lack of personal jurisdiction (ECF No. 11 ) is granted; this case is transferred to the District of Maryland. Signed by Judge Miranda M. Du on 11/2/2018. (Copies have been distributed pursuant to the NEF - LH)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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ADDISON HEMPEL, CASSIDY HEMPEL,
CHRISTINE HEMPEL, HUGH HEMPEL,
and SOLUTION THERAPEUTICS,

Case No. 3:18-cv-00008-MMD-CBC
ORDER

Plaintiffs,

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v.
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CYDAN DEVELOPMENT, INC., CYDAN
II, INC., VTESSE, INC., and SUCAMPO
PHARMACEUTICALS, INC.,

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Defendants.
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I.

SUMMARY

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The more things change, the more they stay the same. The Court’s minimum

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contacts inquiry in this case sounding in contract and tort, assessing relationships between

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the parties and the State of Nevada that developed largely through contacts via the

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internet, is a prime example of that refrain. Out-of-state Defendants Cydan Development,

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Inc., Cydan II, Inc., Vtesse. Inc., and Sucampo Pharmaceuticals, Inc. (collectively,

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“Defendants”) move to have the case dismissed for (1) lack of personal jurisdiction and

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(2) failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). (ECF Nos. 11,

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12.) 1 Because the Court’s minimum contacts inquiry must focus on the Defendants’

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relationships with the state, and the Court finds such relationships to be tenuous and thus

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addition to Defendants’ motion to dismiss for lack of personal jurisdiction (ECF
No. 11), the Court has considered Plaintiffs’ opposition (ECF No. 29) and Defendants’
reply (ECF No. 33).

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fall short of the connection needed to haul Defendants into this forum, the Court will

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dismiss the case for lack of personal jurisdiction over Defendants. The Court therefore

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does not address Defendants’ 12(b)(6) motion (ECF No. 12), the opposition to that motion

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(ECF No. 28), or the reply (ECF No. 32).

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II.

RELVANT BACKGROUND

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The following facts are taken from the Complaint (ECF No. 1).

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A.

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Plaintiffs Addison Hempel, Cassidy Hempel, Christine Hempel, and Hugh Hempel

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(collectively, “the Hempels”) are Nevada residents. Addison and Cassidy are Christine and

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Hugh’s (“Mr. and Mrs. Hempel”) daughters. Solution Therapeutics is an entity wholly

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owned by the Hempels and headquartered in Reno, Nevada. 2

The Parties

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All Defendants are Delaware corporations, and none is alleged to have an office or

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place of business located in Nevada or to have engaged in business with any person(s)

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or entity in Nevada aside from Plaintiffs. Defendant Cydan Development, Inc. (“Cydan”)

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has its principal place of business in Cambridge, Massachusetts. Defendant Cydan II, Inc.

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(“Cydan II”) also has its principal place of business in Cambridge, Massachusetts. Vtesse,

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which is wholly owned by Sucampo Pharmaceuticals, Inc. (“Sucampo”), has its principal

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place of business in Maryland. Sucampo’s principal place of business is likewise in

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Maryland.

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B.

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Mr. and Mrs. Hempel developed proprietary information, which they characterize

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as “trade secrets” during the course of caring for their daughters who were diagnosed in

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2007 with Niemann-Pick disease, Type C (“NPC”). The proprietary information includes

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medical research, clinical data and business plans concerning the use of the chemical

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compound 2-hyrdoxypropyl-β-cyclodextrin (“cyclodextrin”) to treat NPC. Specifically, the

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information Mr. and Mrs. Hempel obtained and/or developed includes: the protocols for

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Underlying Facts and the Parties’ Dispute

2Solution

Therapeutics and the Hempels are collectively referred to as Plaintiffs.
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administering cyclodextrin through multiple routes of administration; the data they

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collected regarding the effects of treatment and potential indications for cyclodextrin to

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treat other diagnoses; patient data; relationships with researchers; technology and

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intellectual property dealing with the formulations of administered cyclodextrin, study

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design elements, and other high proprietary data developed with Johnson & Johnson and

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its subsidiary Janssen Pharmaceuticals; and a detailed business plan to commercialized

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the Hempels’ research and development.

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As noted, the Complaint seeks relief under contract and tort theories. Plaintiffs
assert eight claims for relief.

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The first and second claims are for breach of contract and breach of fiduciary duty.

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(Id. at 18, 19.) Plaintiffs assert these claims only against Cydan. Plaintiffs claim Cydan

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breached the Agreement For Mutual Exchange of Confidential Information (“the

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Confidentiality Agreement” or “the Agreement”) Cydan entered into with the Plaintiffs, and

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violated fiduciary duties when it allegedly used the Hempels’ confidential information for

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its own profits to the Hempels’ detriment and without their permission.

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The third, fourth and fifth claims are unjust enrichment, tortious interference with

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contractual rights, and conversion against Vtesse and Sucampo. (Id. at 20–22.) These

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claims stem from Plaintiffs allegations that Vtesse interfered with Plaintiffs’ relationship

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with Cydan. Plaintiffs further allege that Vtesse was incorporated as Cydan’s affiliate by a

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business model and focused on research that Vtesse, through Cydan or directly through

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researchers who had access to the Hempels’ research, misappropriated from Plaintiffs.

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(Id. at 12–13.)

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Plaintiffs assert the three remaining claims against all Defendants. (Id. at 22–24.)

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The sixth claim is brought under NRS § 600A.010 et seq. for Defendants’ alleged

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misappropriation and exploitation of Plaintiffs’ claimed trade secret information. The

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seventh claim involves the same allegations as the sixth, but is brought under 18 U.S.C.

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§ 1836. The eighth claim is for civil conspiracy whereby Plaintiffs allege that Defendants

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conspired to deprive the Hempels of the value of their efforts by misappropriating
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confidential information and trade secrets for Defendants’ profit and benefit. It appears

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Cydan II is included in the case merely by being “an affiliate or successor of [Cydan.]” (Id.

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at ¶ 6.)

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III.

LEGAL STANDARD

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In opposing a defendant’s motion to dismiss for lack of personal jurisdiction, a

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plaintiff bears the burden of establishing that jurisdiction is proper. Boschetto v. Hansin,

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539 F.3d 1011, 1015 (9th Cir. 2008). Where a defendant’s motion to dismiss is based on

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written materials rather than an evidentiary hearing, “the plaintiff need only make a prima

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facie showing of jurisdictional facts to withstand the motion to dismiss.” Brayton Purcell

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LLP v. Recordon & Recordon, 606 F.3d 1124, 1127 (9th Cir. 2010) (internal quotation

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marks omitted). The plaintiff cannot “simply rest on the bare allegations of its complaint,”

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but uncontroverted allegations in the complaint must be taken as true. Schwarzenegger

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v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004) (quoting Amba Mktg. Sys.,

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Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir. 1977)). The court “may not assume the

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truth of allegations in a pleading which are contradicted by affidavit,” Data Disc, Inc. v.

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Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1284 (9th Cir. 1977), but it may resolve factual

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disputes in the plaintiff’s favor, Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir.

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2006).

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IV.

DISCUSSION

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“Personal jurisdiction must exist for each claim asserted against a defendant.”

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Action Embroidery Corp. v. Atl. Embroidery, Inc., 368 F.3d 1174, 1190 (9th Cir. 2004). A

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two-part analysis governs whether a court retains personal jurisdiction over a nonresident

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defendant. “First, the exercise of jurisdiction must satisfy the requirements of the

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applicable state long-arm statute.” Chan v. Soc’y Expeditions, 39 F.3d 1398, 1404 (9th

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Cir. 1994). Since “Nevada’s long-arm statute, NRS § 14.065, reaches the limits of due

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process set by the United States Constitution,” the Court moves on to the second part of

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the analysis. See Baker v. Eighth Judicial Dist. Ct. ex rel. Cty. of Clark, 999 P.2d 1020,

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1023 (Nev. 2000). “Second, the exercise of jurisdiction must comport with federal due
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process.” Chan, 39 F.3d at 1404–05. “Due process requires that nonresident defendants

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have certain minimum contacts with the forum state so that the exercise of jurisdiction

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does not offend traditional notions of fair play and substantial justice.” Id. (citing Int’l Shoe

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v. Washington, 326 U.S. 310, 316 (1945)). Courts analyze this constitutional question with

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reference to two forms of jurisdiction: general and specific jurisdiction.

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Here, Plaintiffs rely only on specific jurisdiction. (ECF No. 29 at 14.). In examining

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whether specific jurisdiction exists, the minimum contacts inquiry is “defendant-focused”—

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the relationship to be examined is that between the defendant and the forum state, and

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that relationship must arise out of the defendant’s own contacts “with the forum state itself,

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not . . . with persons who reside there.” Walden v. Fiore, 571 U.S. 277, 284-85 (2014).

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Specifically, a court may exercise specific jurisdiction over a defendant only where “the

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defendant’s suit-related conduct” “create a substantial connection with the forum [s]tate.”

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Williams v. Yamaha Motor Co. Ltd., 851 F.3d 1015, 1022–23 (9th Cir. 2017) (quoting

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Walden, 571 U.S. at 284–85) (emphasis added). To be clear, a plaintiff’s contacts with the

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defendant and the forum state cannot drive the jurisdictional analysis, even though “a

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defendant’s contacts with the forum [s]tate may be intertwined with [its] transactions or

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interactions with the plaintiff or other parties.” Walden, 571 U.S. at 286, 289. Further,

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courts cannot rely on the “unilateral activity” of a plaintiff to find specific jurisdiction. Burger

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King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)

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Incorporating these overarching considerations, the Ninth Circuit provides a three-

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prong test for analyzing an assertion of specific jurisdiction: “(1) The non-resident

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defendant must purposefully direct his activities or consummate some transaction with the

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forum or resident thereof; or perform some act by which he purposefully avails himself of

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the privilege of conducting activities in the forum, thereby invoking the benefits and

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protections of its laws; (2) the claim must be one which arises out of or relates to the

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defendant’s forum-related activities; and (3) the exercise of jurisdiction must comport with

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fair play and substantial justice, i.e., it must be reasonable.” CollegeSource, Inc. v.

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AcademyOne, Inc., 653 F.3d 1066, 1076 (9th Cir. 2011) (quoting Schwarzenegger, 374
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F.3d at 802) (emphasis added)). “Purposeful availment” and “purposeful direction” call for

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distinct analyses. A court considers whether there is purposeful direction for suits sounding

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in tort. See Yahoo! Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199,

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1206 (9th Cir. 2006). The purposeful availment inquiry is for suits sounding in contract. Id.

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Pertinent to the Court’s specific jurisdiction inquiry, Plaintiffs generally assert that

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the District of Nevada is the proper forum for hearing this case because “substantial part

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of the events or omissions giving rise to the claim occurred in the [d]istrict and the Hempels

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reside, or are headquartered in this district, and “the situs of the confidential material

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misappropriated by Defendants is with the Hempels, who are domiciled in this [d]istrict.”

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(ECF No. 1 at § 21; see also generally ECF No. 29.) The Court finds contrary to Plaintiffs’

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position because Defendants’ challenged conduct had nothing to do with its own contacts

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with the State of Nevada itself—the challenged conduct centers on Plaintiffs’ unilateral

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activity and activities outside of this state.

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C.

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The Court will first examine the issue of specific jurisdiction over Cydan.

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Specific Jurisdiction as to Cydan and Cydan II

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Contract Claim for Relief/Purposeful Availment

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Plaintiffs bring a single contract-based claim against Cydan, alleging it breached

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the Confidentiality Agreement. As noted, for claims sounding in contract, the first prong for

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establishing specific jurisdiction concerns whether defendant has purposefully availed

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itself of the privilege of conducting activities in the forum. Burger King, 471 U.S. at 476. A

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defendant so avails itself where the defendant deliberately engages in “significant

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activities within a [s]tate” or creates “continuing obligations between himself and residents

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of the forum. Id. at 475–76. Relevantly, in Burger King, the defendant “entered into a

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carefully structures 20-year relationship that envisioned continuing and wide-reaching

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contacts with the [plaintiff in the forum state].” Id. at 480.

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Plaintiffs contend that Cydan purposefully availed itself of doing business in Nevada

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by: intentionally initiating and soliciting a business relationship with the Hempels for the

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purposes of investing in an asset developed “in Nevada by Nevada residents;” by reaching
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out to Mr. Hempel who was located “in Nevada” and enticing him to visit Cydan “from

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Nevada,” “knowing the effects of its efforts would be felt in Nevada (and only Nevada);” by

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the Hempels presenting Cydan with “the Business Plan, which established an implied

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contract relation to Solution Therapeutics, the proposed Nevada Corp;” and by

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materializing their “ongoing” confidential relationship with the Confidentiality Agreement,

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which was “governed by Nevada law.” (ECF No. 29 at 21.)

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It does not appear that Plaintiffs allege that Cydan took any action in Nevada or

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have any physical ties to Nevada. Cydan has no office or real property, no employees, no

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agents in Nevada, nor has anyone from Cydan traveled to Nevada to meet the Hempels.

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(ECF No. 11-1 at ¶¶ 6, 7 (Adams Decl.).) But, most important for the purposeful availment

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inquiry is that the alleged contractual document—the Confidentiality Agreement—does not

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appear to have been entered in Nevada, nor is there any indication that the Agreement

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contemplated a “substantial connection” between Cydan and Nevada itself. Walden, 571

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U.S. at 284 (“For a [s]tate to exercise jurisdiction consistent with due process, the

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defendant’ suit-related conduct must create a substantial connection with the forum

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[s]tate[,]” based on contact the defendant itself creates); see also Burger King, 471 U.S.

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at 478–79 (indicating that a contract between a plaintiff and an out-of-state- defendant is

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not sufficient in and of itself to establish specific jurisdiction over the defendant in the forum

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state); id. at 479 (providing that what “must be evaluated in determining whether the

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defendant purposefully established minimum contacts with the forum” are “prior

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negotiations and contemplated future consequences, along with the terms of the contract

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and the parties’ actual course of dealing”); Andes Indus. Inc. v. Cheng Sun Lan, No. 2:14-

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cv-00400, 2015 WL 1397727, at *3–4 (D. Nev. Mar. 25, 2015) (finding no personal

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jurisdiction where contract negotiation, terms, and performance did not involve Nevada).

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Here, it appears that before signing the Confidentiality Agreement Mr. Hempel had

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a single “in person meeting” with Cydan at Cydan’s office in Cambridge Massachusetts.

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(ECF No. 1 at ¶¶ 8, 49; ECF No. 11-1 at ¶ 7 (Adams Decl.).) Besides this meeting, Plaintiffs

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indicate that Cydan initiated contact with Mr. Hempel (or solicited a business relationship
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with the Hempels) through LinkedIn. (ECF No. 1 at ¶ 43.) Plaintiffs allege they otherwise

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communicated with Cydan through emails ((ECF No. 1 at ¶¶ 45–48, 50–51, 65.) The

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Confidentiality Agreement itself is signed by electronic signature, dated the same day Mr.

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Hempel met with Cydan in Massachusetts (ECF No. 1 at ¶¶ 8, 49; ECF No. 11-1 at ¶ 7

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(Adams Decl.); id. at 9) and the Complaint appears to confirm that the Agreement was

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returned fully executed by Cydan via email. (ECF No. 1 at ¶ 56.) Cydan and Plaintiffs had

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other contact by phone (Id. at ¶ 66.)

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Further, the only mention of Nevada in the Confidentiality Agreement is the

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agreement’s choice-of-law provision stating that the Confidentiality Agreement was to “be

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construed and interpreted under and in accordance with” Nevada law. But see, e.g.,

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Burger King, 471 U.S. at (noting that a choice-of-law provision standing alone cannot

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confer jurisdiction). The Agreement otherwise provides that it was entered into based on

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the parties’ “desire to enter into discussions . . . in order to determine the feasibility of

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entering into a business relationship between the parties (the ‘State Purpose’).” Thus, the

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Agreement itself indicates that the Agreement bounded the parties to a mere potential of

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a business relationship. As such, it created a frail relationship between Cydan and

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Plaintiffs juxtaposed the “20-year interdependent relationship” established between the

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parties in Burger King. 471 U.S. at 482. Such frailty and lack of an actual business

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relationship cannot support a conclusion that Cydan was contemplated to have the kind

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of contacts with Nevada sufficient to support this forum’s exercise of jurisdiction over

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Cydan. Additionally, the Court cannot find, and Plaintiffs provide no basis for it to conclude,

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that Plaintiffs’ presentation of their business plan to Cydan established an implied contract

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between them. (See ECF No. 29 at 21 (appearing to make such argument).)

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It is therefore evident that to find purposeful availment in Nevada based on what

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Plaintiffs allege, as noted above, would be to allow Plaintiffs’ contacts with Defendants

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and Nevada to drive the Court’s minimum contact analysis, which Walden makes clear is

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impermissible. Id. at 289. The Court concludes that Cydan’s suit-related contacts with

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Nevada is insufficient to support a finding that Cydan has purposefully availed itself of

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doing business in Nevada.

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2.

Tort Based Claims for Relief/Purposeful Direction

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Plaintiffs next allege tort claims against Cydan: for breach of fiduciary duty; and

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including all Defendants—for violation of the Nevada Trade Secrets Act, NRS § 600A.010,

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violation of the “Defense of Trade Secrets Act, 18 U.S.C. § 1836, and civil conspiracy.

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Here, the inquiry is “whether a defendant purposefully directs his activities at the

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forum state, applying an effects test that focuses on the forum in which the defendant’s

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actions were felt, whether or not the actions themselves occurred within the forum.” Id.

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(internal quotations, bracket, and citations omitted) (emphasis added). The “effects test”

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imposes three requirements: “the defendant allegedly must have (1) committed an

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intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant

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[knew was] likely to be suffered in the forum state.” Menken v. Emm, 503 F.3d 1050, 1058

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(9th Cir. 2007) (quoting Yahoo! Inc., 433 F.3d at 1206). But, even in the tort context, it is

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“insufficient to rely on a defendant’s “random, fortuitous, or attenuated contacts or on the

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unilateral activity of [the] plaintiff[s].” Walden, 571 U.S. at 286 (citing Burger King, 471 U.S.

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at 475). The court must still “consider the extent of the defendant’s contacts with the forum

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and the degree to which plaintiff’s suit is related to those contacts.” Menken, 503 F.3d at

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1058; see also Picot v. Weston, 780 F.3d 1206, 1214 (9th Cir. 2015) (“Thus, a mere injury

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to a forum resident is not a sufficient connection to the forum. Rather, an injury is

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jurisdictionally relevant only insofar as it shows that the defendant has formed a contact

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with the forum [s]tate.”) (internal quotations and citations omitted). Where the cause of

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action arises out of a defendant’s purposeful contact with the forum state, a single forum

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state contact can support specific jurisdiction. Id.

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Plaintiffs’ tort claims suffer from the same jurisdictional defects as their contract

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claim, as asserted against Cydan, because again there is insufficient suit-related contacts

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with Nevada to support a finding of purposeful direction. First, to support their claim of

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purposeful direction, Plaintiffs essentially cite to the same actions previously discussed.
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(ECF No. 29.) However in the tort context they particularly focus on Cydan’s LinkedIn

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solicitation or contact initiation with Mr. Hempel, premised on forming a joint venture. (Id.

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at 15–18.) Plaintiffs argue that this is a basis for finding purposeful direction aimed at

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Nevada because Plaintiffs are Nevada residents who compiled and maintain their

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protected information in Nevada which Cydan requested and obtained access. (Id. at 16.)

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As an initial matter, Cydan’s solicitation or initial contact via LinkedIn does not

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appear to itself be the challenged conduct, and the Confidentiality Agreement that

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ultimately resulted from such contact—given the joint venture did not materialize—was not

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executed in Nevada. See Picot, 780 F.3d at 1214 (finding no specific personal jurisdiction

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where plaintiff alleged the tort of interference with a contract, albeit the contract was

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executed in California, because “none of [the defendant’s] challenged conduct had

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anything to do with [California] itself”); see also Overholt v. Airista Flow Inc., No. 17-cv-

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1337, 2018 WL 355231, at * 13 (S.D. Cal. Jan. 10, 2018) (citing Walden, 571 U.S. at 290)

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(“[I]n light of Walden and Picot, the express aiming prong is not met where a defendant

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merely targets a [forum] resident.”)

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Under Walden, “[t]he proper question . . . is whether the defendant’s conduct

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connects [it] to the forum in a meaningful way.” Walden, 571 U.S. at 290 (emphasis

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added). Here, the three tort claims alleged against Cydan—beyond the fiduciary duty claim

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pertaining to the contract itself—implicate the intentional conduct of misappropriation of

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“trade secrets” or proprietary information (including the alleged conspiracy to do so). (ECF

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No. 1 at 22–24; ECF No. 29 at 18.) But, neither the Complaint nor Plaintiffs’ opposition

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allege that any misappropriation occurred in Nevada. In fact, both the Complaint and the

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opposition is silent as to where such misappropriation took place. Plaintiffs however

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suggest that the Court should focus on the fact that Plaintiffs had compiled and maintained

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the information in Nevada, but the Complaint indicates that Plaintiffs shared much of this

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information with Cydan via the internet. (ECF No. 1 at ¶¶ 50, 51.) Moreover, to focus on

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assertions that Plaintiffs compiled, maintained, and shared the alleged misappropriated

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information with Cydan is surely not a defendant-focused examination and would again
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allow Plaintiffs’ unilateral activity to drive the minimum contacts inquiry. The Court

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concludes it lacks sufficient basis upon which to find that Cydan purposefully directed

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meaningful contacts at Nevada based on the challenged conduct.

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In sum, the Court concludes it lacks jurisdiction over Cydan. Accordingly Cydan is

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dismissed from this action. Cydan II is likewise dismissed because, as the Court noted,

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Cydan II appears to be joined as a defendant in this case merely by being “an affiliate or

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successor of [Cydan.]” (ECF No. 1 at ¶ 6; see also ECF No. 29 at 23 (“Cydan II . . . should

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also be deemed subject to the Court’s jurisdiction under principles of successor liability,

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agency, and alter ego status.”).)
D.

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Specific Jurisdiction as to Vtesse and Sucampo
1.

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Purposeful Availment

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Plaintiffs appear to argue that the Court should find purposeful availment subjecting

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Vtesse, and Sucampo as Vtesse’s successor in interest, alter ego or agent, to this Court’s

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exercise of jurisdiction over them “for the same reasons” as with Cydan. (ECF No. 29 at

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21–26.) Plaintiffs’ position is that “Vtesse ratified Cydan’s Confidentiality Agreement and

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implied contract regarding the Business Plan by accepting the benefits[,] and therefore

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“assumed Cydan’s jurisdictional contacts.” (Id. at 21.) Thus, because the Court found

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supra that Cydan did not create sufficient suit-related contact with Nevada to find it had

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purposefully availed itself of doing business in Nevada, the Court extends that conclusion

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to Vtesse, and to Sucampo.

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2.

Purposeful Direction

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In addition to the misappropriation conduct alleged in the three tort claims against

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all Defendants and which the Court concludes is insufficient for a finding of purposeful

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direction, Plaintiffs otherwise allege unjust enrichment, tortious interference with

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contractual rights, and conversion against Vtesse and Sucampo. (ECF No. 1 at 20–22.)

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But these claims are grounded in the use of, or benefits from, the alleged misappropriated

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information, or interference (with an agreement not executed in Nevada) that is not alleged

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to have occurred in Nevada. (Id.)

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The Court acknowledges that, unlike with Cydan, Plaintiffs contend that Vtesse

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made physical contact with Nevada by visiting the “Hempels in their home [in Nevada] to

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lull the Hempels into complacency.” (ECF No. 29 at 18.) But, while Vtesse’s momentary

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presence in Nevada is relevant, it is insufficient to support jurisdiction. See Walden, 571

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U.S. at 285 (noting that physicial presence in various forms is “not a prerequisite to

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jurisdiction,” but is “certainly a relevant contact”). More relevant is that Vtesse’s visit to the

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Hempels’ home is not challenged conduct nor is it integral to any of Plaintiffs’ claims

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against Vtesse. Therefore, there is nothing to support a finding of purposeful direction by

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Vtesse, and likewise Sucampo. Consequently, the Court cannot exercise specific

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jurisdiction over them.

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Cumulatively, the Court finds it lacks personal jurisdiction over all Defendants.

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E.

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Defendants argue for the case to be transferred to Maryland as an alternative to

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dismissal. (ECF Nos. 11, 33.) Although Defendants reference the relevant transfer statute

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as 28 U.S.C. § 1406 (see, e.g., ECF No. 11 at 13; ECF No. 33 at 14), the proper transfer

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statute is § 1631 because § 1406(a) “only allows transfer where the first court has subject

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matter jurisdiction over the action.” Hernandez v. Campbell, 204 F.3d 861, 865 (9th Cir.

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2000).

Venue Transfer

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“Under a provision of the Federal Courts Improvement Act, 28 U.S.C. § 1631, if a

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court finds that there is a want of jurisdiction the court shall transfer the action to any other

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such court in which the action could have been brought ‘if it is in the interest of justice.’”

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Miller v. Hambrick, 905 F.2d 259, 262 (9th Cir. 1990) (quoting In re McCauley, 814 F.2d

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1350, 1351–52 (9th Cir. 1987)). Transfer is normally in the interest of justice because

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dismissal of an action that could have been brought elsewhere is “time-consuming and

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justice-defeating.” Id. (internal quotation and citation omitted). “When determining

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whether transfer is in the interest of justice, courts have considered whether the failure
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to transfer would prejudice the litigant, whether the litigant filed the original action in good

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faith, and other equitable factors.” Cruz–Aguilera v. I.N.S., 245 F.3d 1070, 1074 (9th Cir.

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2001). All three factors are met here.

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First, failure to transfer the case in lieu of dismissal would likely be prejudicial to all

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parties, but particularly Plaintiffs who maintain the right to seek redress for their alleged

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injuries. And, there is no indication that any party would be meaningfully prejudiced by

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having the case transferred from Nevada to the District of Maryland. Defendants do

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contend that transfer to the District of Maryland is appropriate because Defendants Vtesse

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and Sucampo are headquartered there. (ECF No. 11 at 13.) But this reason suggests that

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the District of Massachusetts would also be appropriate because Cydan and Cydan II are

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headquartered there. The appropriate place of transfer also appears to be a toss-up

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between Maryland and Massachusetts, to the extent that Plaintiffs’ claims are largely

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grounded in their claims of misappropriation of trade secrets and proprietary information

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concerning all Defendants. Nonetheless, neither Defendants nor Plaintiffs argue that

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transfer as between Maryland and Massachusetts would be prejudicial. To be clear,

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Plaintiffs argue against transfer to Maryland chiefly because Plaintiffs believe the District

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of Nevada is the most appropriate forum, an argument with which this Court disagrees.

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(ECF No. 29 at 26–28.)

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Second, there is no indication that Plaintiffs acted in bad faith by bringing the case

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in this district. But this consideration again would only support maintaining the action in

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Nevada as Plaintiffs desire, or dismissal, and therefore speaks not to transfer in Maryland

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or Massachusetts.

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Third, as to other equitable considerations, the Court finds it would be in the interest

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of justice to transfer the case to Maryland. There is no indication that venue would be any

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less proper in Maryland than in Massachusetts where some Defendants are

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headquartered. Further, Defendants collectively agree for the case to transfer to Maryland,

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and Plaintiffs only oppose to such transfer relative to Nevada. Moreover, Plaintiffs admit

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that their researchers are located in California and that “discovery is likely to be almost
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entirely electronic.” (ECF No. 29 at 27.) At the same time, Defendants contend that

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research information is located in Maryland and that clinical trials were managed there.

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(ECF No. 11 at 13.)

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Accordingly, having found the District of Nevada lacks jurisdiction over Defendants

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and not finding transfer to Maryland to be improper, the Court will transfer this case to the

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District of Maryland in the interest of justice.

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V.

CONCLUSION

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The Court notes that the parties made several arguments and cited to several cases

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not discussed above. The Court has reviewed these arguments and cases and determines

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that they do not warrant discussion as they do not affect the outcome of the motions before

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the Court.

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It is therefore ordered that Defendants’ motion to dismiss for lack of personal
jurisdiction (ECF No. 11) is granted.

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It is further ordered that this case be transferred to the District of Maryland.

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DATED THIS 2nd day of November 2018.

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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE

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