Reynolds v. InVivo Therapeutics Holdings Corp. et al
///ORDER granting 2 Motion to Dismiss for Failure to State a Claim and for Lack of Personal Jurisdiction. Motion to dismiss granted without prejudice to plaintiff asserting his claims in another forum. So Ordered by Chief Judge Joseph N. Laplante.(jb)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Francis M. Reynolds
Civil No. 16-cv-384-JL
Opinion No. 2016 DNH 214
InVivo Therapeutics Holdings
Corp., et al.
This defamation action turns on whether this court has
specific personal jurisdiction over several Massachusetts
citizens and a Nevada corporation that has its principal place
of business in Massachusetts.
Plaintiff Francis Reynolds, a New
Hampshire businessman, brings claims of defamation, conspiracy,
and tortious interference with prospective contractual relations
against his former corporation, InVivo Therapeutics Corp., and
several of its officers.
This court has subject-matter
jurisdiction under 28 U.S.C. § 1332(a) (diversity).
Moving to dismiss this action, the defendants challenge
this court’s personal jurisdiction over them.
See Fed. R. Civ.
They also move to dismiss for failure to state a
claim for relief.
See Fed. R. Civ. P. 12(b)(6).
oral argument, the court grants the defendants’ motion.
plaintiff has failed to establish that defendants have the
minimum contacts with New Hampshire required for this court to
exercise personal jurisdiction over them in this action
consistent with the Fourteenth Amendment’s Due Process Clause.
Specifically, the plaintiff has not demonstrated relatedness
between his claims and the defendants’ forum-based activities or
that the defendants engaged in purposeful contact with the forum
such that they could expect to be haled into court to answer for
their actions here.
Applicable legal standard
“Personal jurisdiction implicates the power of a court over
a defendant . . . . [B]oth its source and its outer limits are
defined exclusively by the Constitution,” namely, the due
process clause of the Fourteenth Amendment.
v. Babcock & Wilcox Can., 46 F.3d 138, 143–44 (1st Cir. 1995)
(citing Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de
Guinee, 456 U.S. 694, 702 (1982)); U.S. Const. Am. XIV.
establish personal jurisdiction in a diversity case, a plaintiff
must satisfy both the forum state’s long-arm statute and the Due
Process Clause of the Fourteenth Amendment.”
C.W. Downer & Co.
v. Bioriginal Food & Sci. Corp., 771 F.3d 59, 65 (1st Cir.
Where, as here, the applicable long-arm statute is
coextensive with federal due process limitations, the court
proceeds directly to the due process inquiry.
Exeter Acad. v. Howard Phillips Fund, 196 F.3d 284, 287 (1st
Due process requires that a defendant have sufficient
“minimum contacts” with the forum “such that the maintenance of
the suit does not offend traditional notions of fair play and
Int’l Shoe Co. v. Washington, 326 U.S.
310, 316 (1945) (internal quotations omitted).
those requirements, a court may exercise either general or
specific jurisdiction over the defendants.
only this court’s specific jurisdiction over the defendants.1
Specific jurisdiction “is confined to adjudication of issues
deriving from, or connected with, the very controversy that
Goodyear, 131 S. Ct. at 2851
(internal quotations omitted).
“[T]he constitutional test for
determining specific jurisdiction . . . has three distinct
components, namely, relatedness, purposeful availment (sometimes
Appropriately so. The criteria for general jurisdiction over
the defendants are not satisfied here. “For an individual, the
paradigm forum for the exercise of general jurisdiction is the
individual’s domicile; for a corporation, it is an equivalent
place, one in which the corporation is fairly regarded as at
home.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564
U.S. 915, 924 (2011). A corporation is “fairly regarded at
home” for general jurisdiction purposes in its “place of
incorporation and principal place of business.” Daimler AG v.
Bauman, 134 S. Ct. 746, 760 (2014). The defendants -- three
Massachusetts residents and a Nevada corporation headquartered
in the Commonwealth -- have no such ties to New Hampshire.
called ‘minimum contacts’), and reasonableness.”
Hananel, 652 F.3d 75, 80–81 (1st Cir. 2011) (internal quotations
and citations omitted).
The plaintiff bears the burden of demonstrating that these
three components are satisfied by “proffer[ing] evidence which,
if credited, is sufficient to support findings of all facts
essential to personal jurisdiction.”2
A Corp. v. All Am.
Plumbing, Inc., 812 F.3d 54, 58 (1st Cir. 2016) (quoting
Phillips v. Prairie Eye Ctr., 530 F.3d 22, 26 (1st Cir. 2008)).
“To satisfy the prima facie standard in a specific jurisdiction
case, a plaintiff may not rest on mere allegations but, rather,
must submit competent evidence showing sufficient disputerelated contacts between the defendant and the forum.”
v. PMG Collins, LLC, 660 F.3d 549, 552 (1st Cir. 2011).
court “view[s] this evidence, together with any evidence
proffered by the defendant[s], in the light most favorable to
The First Circuit Court of Appeals has recognized three
standards under which a district court may evaluate personal
jurisdiction. See A Corp., 812 F.3d at 58 & n.5. Where, as
here, the parties agree that the prima facie standard is
appropriate and the defendants have not requested an evidentiary
hearing, the court may -- and does -- require the plaintiff only
to make a prima facie showing that defendants are subject to
personal jurisdiction. This is “the least taxing of these
standards from a plaintiff’s standpoint, and the one most
commonly employed in the early stages of litigation.” Id.
(quoting Rodriguez v. Fullerton Tires Corp., 115 F.3d 81, 83–84
the plaintiff and draw[s] all reasonable inferences therefrom in
the plaintiff’s favor,” albeit without “credit[ing] bald
allegations or unsupported conclusions.”
factual summary takes this approach.
Reynolds founded InVivo, a medical device company, in
He served as the company’s CEO, CFO, CSO,
President, and Chairman of the Board of Directors from that time
until August 22, 2013.3
Though InVivo established its
headquarters in Cambridge, Massachusetts, in 2012, Reynolds
largely worked out of his home in Salem, New Hampshire, between
October 2012 and his departure from the company in August 2013.
That August, Reynolds resigned from his position as Chairman,
CEO, and CFO of InVivo.4
One week after resigning from InVivo, Reynolds formed a new
company, PixarBio, which focused on developing non-opioid pain
PixarBio operated out of Reynolds’ Salem home
Reynolds Aff’t (doc. no. 9-2) ¶¶ 4-5.
Reynolds contends that he did not voluntarily resign, but was
forced to do so after “the Defendants made false allegations
that [he] misappropriated corporate funds” -- a charge that he
denies. Id. ¶ 16.
until it moved to Medford, Massachusetts, in early 2014.5
March 2016, it obtained additional office facilities in Salem.6
Following Reynolds’ resignation from InVivo, Reynolds
alleges, the defendants made several allegedly defamatory
statements about his work at that company.
issued two press releases.
First, the company
In one, dated August 22, 2013,
InVivo announced that Reynolds had resigned from the company due
to his medical condition.7
The next press release, issued
August 27, 2013, announced “an update on the clinical timeline
for its biopolymer scaffolding to treat acute [spinal cord
The Company now expects that, based on the judgment
of new management, it will enroll the first patient during the
first quarter of 2014.”8
Following the press releases, Reynolds
alleges that defendant Luque made certain statements to
Specifically, in September 2013, defendant Luque
allegedly told an InVivo investor that Reynolds “had been forced
to resign because the NeuroScaffold clinical studies were
‘bogus’ and their result had been ‘fudged’ by [Reynolds],” and
that “Plaintiff misrepresented the timeline for InVivo to obtain
Reynolds Aff’t (doc. no. 9-2) ¶ 18; Reynolds Aff’t Ex. E (doc.
no. 9-7) at 1.
Reynolds Aff’t (doc. no. 9-2) ¶ 19.
Reynolds Aff’t, Ex. F (doc. no. 9-8) at 1.
Reynolds Aff’t, Ex. G (doc. no. 9-9) at 1.
regulatory approval for the NeuroScaffold.”9
alleges that Luque made similar statements during an August 2014
telephone conference with a second InVivo investor, to the
effect that Reynolds had “misled people” about clinical trial
results and “deliberately manipulated the release of test
results to distort the beneficial effects of the
These allegations, Reynolds contends, were
then circulated in the biotechnology community via, among other
media, “a crowd-sourced service for financial markets” called
On July 22, 2016, Reynolds filed this action in
Hillsborough County Superior Court, asserting claims for
defamation, conspiracy, and tortious interference with
prospective contractual relations against all defendants, and a
claim based in the doctrine of respondeat superior against
Defendants subsequently removed the case to this court
in light of the parties’ diversity of citizenship.
U.S.C. § 1332(c).
Compl. (doc. no. 1-1) ¶ 29.
Id. ¶ 30.
Id. ¶ 33-37.
As discussed supra, “the constitutional test for
determining specific jurisdiction . . . has three distinct
components, namely, relatedness, purposeful availment (sometimes
called ‘minimum contacts’), and reasonableness.”
F.3d at 80–81 (internal quotations and citations omitted).
court addresses these components in that order, see United
States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 621 (1st Cir.
2001) (quoting Phillips Exeter Acad., 196 F.3d at 288), and
concludes that the plaintiff has not established this court’s
personal jurisdiction over the defendants.12
“To satisfy the relatedness prong, the plaintiff must show
a nexus between [his] claims and the defendants’ forum-based
Although this is a ‘relaxed standard,’ it
nevertheless requires [the court] to hone in ‘on the
relationship between the defendant and the forum.’”
812 F.3d 54, 59 (1st Cir. 2016).
“[A] defendant need not be
physically present in the forum state” for such a nexus to
The defendants also argue that the complaint fails to state a
claim for relief. See Fed. R. Civ. P. 12(b)(6). Because the
court concludes that it lacks personal jurisdiction over the
defendants and dismisses this action on that basis, it need not
-- and therefore does not -- address the defendants’
Rule 12(b)(6) arguments.
exist, N. Laminate Sales, Inc. v. Davis, 403 F.3d 14, 25 (1st
Cir. 2005) (citing Calder, 465 U.S. at 789), and when he is not,
the court “looks for some other indication that the defendant
reached into the forum, such as mail or telephone contacts,”
Swiss Am. Bank, 274 F.3d at 622.
In arguing that a nexus exists between the defendants’
activities and the forum, the plaintiff invokes only his
allegations that he was injured in New Hampshire by the effects
of the defendants’ conduct.13
It is, however, the defendants,
and not the plaintiff or any third parties, who must create the
contacts with the forum state.
Walden v. Fiore, 134 S. Ct.
1115, 1122 (2014) (minimum contacts analysis “looks to
defendant’s contacts with forum State itself, not the
defendant’s contacts with persons who reside there”).
plaintiff felt the effects of the defendants’ activities in the
forum does not, alone, qualify as related contacts.
Bank, 274 F.3d at 622-23.
In fact, the First Circuit Court of Appeals has
specifically cautioned against conflating the relatedness
requirement with the effects test for purposeful availment,
Obj. to Mot. to Dismiss (doc. no. 9-1) at 12-13 (“Plaintiff
has alleged facts demonstrating that Plaintiff suffered
reputational injury in New Hampshire as a result of Defendants’
defamatory statements. These allegations satisfy the
discussed infra Part III.B, which is what the plaintiff invites
the court to do here.
Swiss Am. Bank, 274 F.3d at 622-25.
court must, accordingly, decline that invitation.
None of the
other cases relied upon by the plaintiffs convince it to do
In each of those cases, the defendant acted within
the forum; the plaintiff’s injuries did not constitute the sole
relationship between the forum and the defendants.
See R & R
Auction Co., LLC v. Johnson, 2016 DNH 40, 20-21 (Barbadoro, J.)
(plaintiff met relatedness requirement because defendant made
allegedly false statements to “someone he knew to be a New
Hampshire-based reporter”); New Eng. Coll. v. Drew Univ., 2009
DNH 158, 14 (Laplante, J.) (defendant university’s agent acted
within New Hampshire to interfere with plaintiff’s business
relations); Sindi v. El-Moslimany, No. 13–cv–10798–IT, 2014 WL
6893537, at *8 (D. Mass. Dec. 5, 2014), 2014 WL 6893537, at *8
(finding relatedness where defendant “came to Needham,
Massachusetts and . . . allegedly followed [the plaintiff]
around” and defendant’s conduct “affected [plaintiff's]
relationship with Massachusetts organizations”).
Even had the plaintiff satisfied the relatedness
requirement, the court would still be unable to exercise
specific personal jurisdiction over the defendants because the
plaintiff has not shown purposeful availment.
The Supreme Court
has adopted, and the First Circuit Court of Appeals has
employed, “an effects test for determining purposeful availment
in the context of defamation cases.”
Noonan v. Winston Co., 135
F.3d 85, 90 (1st Cir. 1998) (citing Calder v. Jones, 465 U.S.
783, 789 (1984)).
This test, unlike that for relatedness,
focuses on the location at which the effects of the alleged
defamation are directed and where they are felt.
ordinarily “to be applied only after the relatedness prong has
already been satisfied.”
Swiss Am. Bank, 274 F.3d at 623.
In Calder, two Florida reporters for the National Enquirer
wrote a libelous article about a California entertainer.
Supreme Court found that the California court could exercise
jurisdiction over the reporters because they “had aimed an act
at the forum state, knew the act would likely have a devastating
effect, and knew the injury would be felt in the forum state,
where Jones lived and worked ‘and in which the National Enquirer
[had] its largest circulation.’”
Noonan, 135 F.3d at 90
(quoting Calder, 465 U.S. at 790).
“The knowledge that the
major impact of the injury would be felt in the forum State
constitutes a purposeful contact or substantial connection
whereby the intentional tortfeasor could reasonably expect to be
haled into the forum State’s courts to defend his actions.”
Hugel v. McNell, 886 F.2d 1, 4 (1st Cir. 1989), cert. denied,
494 U.S. 1079 (1990).
“The crux of Calder was that the
reputation-based ‘effects’ of the alleged libel connected the
defendants to California, not just to the plaintiff.”
134 S. Ct. at 1123–24.
Applying this test in Noonan, the First Circuit Court of
Appeals found that the District Court for the District of
Massachusetts could not exercise personal jurisdiction over a
French advertising agency because the agency “did not direct
[its] actions toward Massachusetts” when its advertisement was
aimed at the French consumer market.
Noonan, 135 F.3d at 90-91.
The fact that some magazines containing the advertisement
circulated in Massachusetts did not satisfy this element; their
small number indicated, instead, a lack of purposeful contact.
Id. at 91.
The plaintiff’s lack of injury in Massachusetts also
supported a finding that he failed to satisfy this element.
Looking at this case under the lens of Calder and Noonan,
it resembles the latter more than the former.
It does not
appear to the court that the defendants purposefully directed
the allegedly injurious statements at New Hampshire or that
Reynolds suffered any injury in New Hampshire.
The plaintiff alleges that the defendants injured him, and
his new company, by circulating a series of “false and
defamatory statements . . . to discredit [him] in the
biotechnology community and financial marketplace.”14
unspecified statements concerning alleged
misappropriation of funds by Reynolds that the
defendants made within InVivo, including to company
a September 2013 conversation between defendant Luque
and an investor, in which Luque allegedly informed the
investor that the plaintiff had “fudged” the results
of the NeuroScaffold clinical studies, that the
studies were “bogus,” and that the plaintiff had
misrepresented the timeline to obtain regulatory
an August 5, 2014 telephone conference between
defendant Luque and a second investor, in which Luque
allegedly made the same or similar representations,
Compl. (doc. no. 1-1) ¶ 26.
Compl. (doc. no. 1-1) ¶ 28; Reynolds Aff’t (doc. no. 9-2)
Compl. (doc. no. 1-1) ¶ 29; Reynolds Aff’t (doc. no. 9-2)
including that Reynolds had “misled people” about the
results of the clinical trials17;
statements made by defendants DiPietro, Roberts,
and/or McCarthy at a September 2013 meeting of the
company’s employees announcing the plaintiff’s
allegedly defamatory press releases concerning
projected timeline for obtaining FDA approval.19
These statements can be grouped into three categories:
made internally to InVivo employees, those made to investors,
and those published by InVivo.
The court concludes that the
defendants did not aim any of these statements at New Hampshire.
The first category of statements includes those made to
InVivo maintains its principal place of
business is Cambridge, Massachusetts, and for a time during
Reynolds’s employment, maintained an office in Salem, New
Compl. (doc. no. 1-1) ¶ 30; Reynolds Aff’t (doc. no. 9-2)
Compl. (doc. no. 1-1) ¶ 31. Reynolds does not address these
alleged statements in his affidavit.
Compl. (doc. no. 1-1) ¶ 32; Reynolds Aff’t (doc. no. 9-2)
¶¶ 20-22. Though not accompanying the complaint, copies of the
purportedly offending press releases are attached to the
defendants’ motion to dismiss and the plaintiff’s objection
thereto. See Defendants’ Exs. A, B (doc. nos. 2-7, 2-8);
Reynolds Aff’t Exs. F, G (doc. nos. 9-8, 9-9).
There is no allegation or evidence that any
employee besides Reynolds himself worked out of InVivo’s Salem,
New Hampshire office.
There is therefore no indication that any
of the defendants directed the statements made to InVivo
employees toward New Hampshire.
The second category of statements contains those made by
Luque to investors.
The plaintiff does not indicate the
location of those investors.
Plaintiff does allege that these
statements were disseminated “throughout the biotechnology
community and among investors” via an August 23, 2013 article in
“Seeking Alpha,” a “crowd-sourced service for financial
While the plaintiff “believe[s] the Defendants were
the source of these allegations,”22 the plaintiff has offered no
Id. ¶¶ 8. InVivo disputes whether Reynolds’s home office
constituted an InVivo office in New Hampshire. The evidence
favors Reynolds’s interpretation. InVivo informed him that his
“principal place of work [was] at [his] office in Salem New
Hampshire.” Reynolds Aff’t Ex. A (doc. no. 9-3). InVivo also
furnished and equipped that office and, after Reynolds left
InVivo, the company offered to sell that equipment to Reynolds.
Reynolds Aff’t Ex. D (doc. no. 9-6). Reynolds also avers that
InVivo’s primary data center for research and development was
installed in his New Hampshire office. Reynolds Aff’t (doc.
no. 9-2) ¶ 9. This evidence, taken in the light most favorable
to Reynolds, see Carreras, 660 F.3d at 552, suggests that InVivo
considered Reynolds’ New Hampshire office as its own during the
term of his employment.
Id. ¶¶ 34-36. The parties have also submitted a copy of this
article. See Defendants’ Ex. C (doc. no. 2-9); Plaintiff’s
Ex. K (doc. no. 9-13).
Id. ¶ 32.
evidence beyond his subjective belief that would connect the
defendants to Seeking Alpha or the author of the offending
posts, “Biotech Sage.”
Nor does the plaintiff suggest that
Seeking Alpha is a publication or service that directs
information specifically at New Hampshire in any manner.
Accordingly, there is no indication that the defendants directed
these statements toward New Hampshire, either.
The allegedly defamatory press releases comprise the final
As with the others, there is no indication that the
defendants directed the statements at New Hampshire.
releases indicate they were made in Massachusetts and appear to
have been posted on the company’s website.23
to the internet at large, even if read by non-plaintiff
residents of the forum state, do not appear to this court to
have been specifically directed at the forum absent some
indication that they were directed at those residents.
Corp., 812 F.3d at 60-61 (use of passive website “accessible
from everywhere in the world,” absent any specific direction to
the forum, “is not enough to show purposeful availment.”); cf.
Abiomed, Inc. v. Turnbull, 379 F. Supp. 2d 90, 94 (D. Mass.
2005) (purposeful availment when defendant specifically directed
internet postings to known Massachusetts residents).
Reynolds Aff’t Exs. F, G (doc. nos. 9-8, 9-9).
Even had the defendants aimed these statements at New
Hampshire, taking the evidence in the light most favorable to
the plaintiff, Reynolds has not established that the effects of
defendants’ conduct were felt in New Hampshire.
F.3d at 90-91.
See Noonan, 135
The plaintiff raises as his damage the fact that
potential investors have declined to fund his new company,
PixarBio, “due to allegations concerning mismanagement and
misconduct while [he] was at InVivo.”24
failures to obtain funding.
He cites two specific
First, he attempted to obtain
funding through the New Hampshire Department of Resources and
Economic Development, but did not succeed.
Reynolds avers that
he “believe[s]” that “[t]hese efforts have been unsuccessful due
in part . . . to the reputational harm [he] suffered as a result
of Defendants’ defamatory statements,”25 but he offers no
evidence beyond his subjective belief.
As a second instance of
failed funding, he outlines his inability to obtain a second
round of funding from the Massachusetts Center for Life
Sciences, which specifically “commented on [his] reputation for
Reynolds asserts that this was a
reference to the defendants’ allegations that he “misled
Reynolds Aff’t (doc. no. 9-2) ¶ 24.
Id. ¶ 25.
Id. ¶ 26.
investors by misstating the resulting [sic] of clinical trials
and the FDA timeline for the NeuroScaffold.”27
allegations as true, these allegations support a conclusion that
Reynolds suffered reputational damage in Massachusetts, but not
that he did so in New Hampshire.
In assessing reasonableness, the court takes into account
the following considerations:
(1) the defendant’s burden of appearing [in the forum
state], (2) the forum state’s interest in adjudicating
the dispute, (3) the plaintiff’s interest in obtaining
convenient and effective relief, (4) the judicial
system’s interest in obtaining the most effective
resolution of the controversy, and (5) the common
interests of all sovereigns in promoting substantive
A Corp., 812 F.3d at 61 (quoting Downer, 771 F.3d at 69).
the plaintiff fails to satisfy the first two elements of the due
process inquiry -- relatedness and purposeful availment -- the
court “need not dwell on these so-called ‘gestalt’ factors.”
Id.; see also Ticketmaster-N.Y., Inc. v. Alioto, 26 F.3d 201,
210 (1st Cir. 1994) (“[T]he reasonableness prong of the due
process inquiry evokes a sliding scale:
the weaker the
plaintiff's showing on the first two prongs (relatedness and
purposeful availment), the less a defendant need show in terms
of unreasonableness to defeat jurisdiction.”).
While the defendants’ burden of appearing in New Hampshire
may not be overly heavy, all parties have standing connections
to Massachusetts -- the defendants are Massachusetts citizens,
InVivo is headquartered in Massachusetts, and the plaintiff’s
new corporation, PixarBio, is also located in Massachusetts.
The parties are already engaged in a lawsuit in Massachusetts,28
which arose out of the same business relationship.
parties conceded at oral argument, the claims asserted in the
Massachusetts action, to a certain extent, overlap the claims
raised in this action; and the defendants’ counsel would not
object to late joinder of these claims as counterclaims in the
In light of these connections to Massachusetts,
and the dearth of connections to New Hampshire beyond the
plaintiff’s residency in this State, these factors weigh against
finding personal jurisdiction in this court.
Because the plaintiff has failed to demonstrate that this
court may exercise personal jurisdiction over the defendants,
Compl. (doc. no. 1-1) ¶ 28 n.2; Reynolds Aff’t (doc. no. 9-2)
the defendants’ motion to dismiss the complaint29 is GRANTED,
albeit without prejudice to plaintiff asserting his claims in
Joseph N. Laplante
United States District Judge
November 30, 2016
Christopher H.M. Carter, Esq.
Gary R. Greenberg, Esq.
Cliff Anderson, Esq.
Doc. no. 2.
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