POP TEST CORTISOL LLC v. THE UNIVERSITY OF CHICAGO et al
Filing
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OPINION. Signed by Judge William J. Martini on 6/18/15. (gh, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
Docket No.: 14-cv-7174
POP TEST CORTISOL, LLC,
Plaintiff,
OPINION
v.
THE UNIVERSITY OF CHICAGO,
SUZANNE D. CONZEN, THE CONZEN
RESEARCH LABORATORY, DENG
PAN, MASHA KOCHERGINSKY, C. RIK
BROEKKAMP, BERNARD PEETERS,
TRACIE CAREY, MARTY HUBER, JR.,
BEATA VAN ROSMALEN, HENKJAN
GELLEKINK, CHARDON PHARMA, a
Foreign Jural Entity, and CORPORATE
DOES 1 through 100 and JOHN and JANE
DOES 1 through 100,
Defendants.
WILLIAM J. MARTINI, U.S.D.J.:
This is a RICO and patent infringement case. Plaintiff Pop Test Cortisol, LLC
is a small, entrepreneurial pharmaceutical enterprise. It alleges that it purchased
exclusive rights to develop a drug from non-defendant conspirator Merck & Co.
(“Merck”) via a licensing agreement. The Complaint alleges that Merck and other
co-conspirators are continuing to develop the drug, in violation of the licensing
agreement between Merck and Pop Test Cortisol.
Plaintiff originally filed the case in state court. A state court judge granted
Merck’s motion to dismiss and compel arbitration. Plaintiff appealed that order all
the way to the U.S. Supreme Court, where certiorari was denied. Plaintiff did not
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commence arbitration against Merck, but it did file this second iteration of the
lawsuit against Merck’s alleged co-conspirators.
Defendant The University of Chicago filed a motion to dismiss for lack of
personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2).
Individual Defendants, Suzanne Conzen, Deng Pan, and Masha Kocherginsky, who
are all employees of The University of Chicago, also filed a motion to dismiss for
lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2).1
Plaintiff opposed these motions and filed a motion for jurisdictional discovery. For
the reasons set forth below, the Defendants’ motions are granted, and the Plaintiff’s
motion is denied.
I.
FACTUAL BACKGROUND
The drug at the center of this case is called ORG 34517. The Complaint
alleges that Defendants Deng Pan and Masha Kocherginsky are the inventors of the
drug, which functions as a cortisol-blocker. Through channels not specified in the
Complaint, ORG 34517 became the property of a Netherlands pharmaceutical called
N.V. Organon (“Organon”). Organon merged with Schering-Plough Corp., and then,
on November 3, 2009, Schering-Plough merged with Merck, making Merck the
owner of ORG 34517.
The Complaint alleges that, during the merger process, Merck composed a list
of patents that it deemed “destined to fail” and endeavored to sell them. Merck
believed that unloading low-value patents would alleviate regulatory “clogging”
problems, which were delaying the finalization of the merger. Merck placed ORG
34517 on that list in what could best be described as an act of corporate absentmindedness. ORG 34517 was not destined to fail, but on the contrary, showed
promise in treating psychotic depression, breast cancer, and Cushing’s Disease.
Pop Test Cortisol’s entire business purpose was the purchase and development
of ORG 34517. Plaintiff alleges that it became the owner of ORG 34517 via a
licensing agreement with Merck dated December 7, 2010. The Complaint alleges
that Merck realized it had made a terrible mistake when it sold ORG 34517 to Pop
Test Cortisol and that Merck conspired to continue developing ORG 34517 in
violation of the licensing agreement.
The Complaint alleges that two Merck employees in the Netherlands,
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Collectively, this Opinion will refer to all moving Defendants as the “Chicago Defendants.”
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Defendants Bernard Peeters and Rik Broekkamp, realized the value of ORG 34517
and created a new entity, Chardon Pharma, to continue exploiting ORG 34517 even
after Merck sold it to Pop Test Cortisol. Peeters and Broekkamp sent samples of
ORG 34517 to Suzanne Conzen, a scientist at The University of Chicago, to test its
therapeutic qualities in the treatment of breast cancer.
Conzen’s experiments with ORG 34517 had promising results. The
University thereafter applied for a patent. In this Complaint, Plaintiff alleges RICO,
fraud, misappropriation of trade secrets, and patent infringement against the Chicago
Defendants.
II.
SUBJECT MATTER JURISDICTION
This is a civil action arising under the Racketeer Influenced and Corrupt
Organizations Act, 18 U.S.C. § 1961 et seq. (“RICO”), the patent laws of the United
States, 35 U.S.C. § 101 et seq., and various provisions of the common and statutory
laws of the State of New Jersey. This Court has subject matter jurisdiction over this
matter pursuant to 18 U.S.C. § 1964(a) and 28 U.S.C. §§ 1331, 1367, and 1338.
III.
LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(2) provides for the dismissal of a complaint for lack of personal jurisdiction. “[T]o exercise personal jurisdiction over a
defendant, a federal court sitting in diversity must undertake a two-step inquiry.”
IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 258-59 (3d Cir. 1998). First, the court
applies the relevant statute to determine if it permits the exercise of jurisdiction. Id.
at 259. The relevant statute is normally the long-arm statute of the forum state, but
in this case, it could also be the RICO statute, 18 U.S.C. § 1965(d). Id.; see also
Rolo v. City Investing Co. Liquidating Trust, 845 F. Supp. 182, 214 (D.N.J. 1993).
Second, the court applies the principles of the Due Process Clause of the Constitution. IMO v. Kiekert, 155 F.3d at 259. In the case where the court sits in diversity,
personal jurisdiction must comport with the Due Process Clause of the Fourteenth
Amendment, see Isaacs v. Arizona Bd. of Regents, No. 14-3985, 2015 WL 1534362,
at *3 (3d Cir. Apr. 7, 2015), but where jurisdiction is based on a federal question,
the Due Process Clause of the Fifth Amendment limits the exercise of personal jurisdiction, DeJames v. Magnificence Carriers, Inc., 491 F. Supp. 1276, 1278 (D.N.J.
1980) aff’d, 654 F.2d 280 (3d Cir. 1981) (citing Fraley v. Chesapeake and Ohio
Railway Company, 397 F.2d 1, 3-4 (3d Cir. 1968)). In this case, the difference has
a distinction because, to comport with Fourteenth Amendment Due Process, the
Plaintiff must prove that the Defendant has “minimum contacts” with the forum
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state, but because the RICO statute provides for national service of process, the Fifth
Amendment Due Process analysis is less geographically stringent with regards to
minimum contacts. United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st
Cir. 2001); see also DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 283 (3d
Cir. 1981); Holland v. King Knob Coal Co., 87 F. Supp. 2d 433, 434 (W.D. Pa. 2000);
Estate of Carvel ex rel. Carvel v. Ross, 566 F. Supp. 2d 342, 351 (D. Del. 2008)
(internal citations omitted).
IV.
DISCUSSION
A. Minimum Contacts Under the Long-Arm Statute
The New Jersey long-arm statute permits the exercise of personal jurisdiction
to the fullest limits of the Fourteenth Amendment’s Due Process clause. See N.J.
Court. R. 4:4-4(c); DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d
Cir. 1981). “The due process limit to the exercise of personal jurisdiction is defined
by a two-prong test. First, the defendant must have made constitutionally sufficient
‘minimum contacts’ with the forum.” Vetrotex Certainteed Corp. v. Consol. Fiber
Glass Products Co., 75 F.3d 147, 150 (3d Cir. 1996) (citing Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 474 (1985)). “Second, if ‘minimum contacts’ are shown,
jurisdiction may be exercised where the court determines, in its discretion, that to do
so would comport with ‘traditional notions of fair play and substantial justice.’” Id.
at 150-51 (citing International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
“Minimum contacts” over a non-resident defendant can be established in one
of two ways: general jurisdiction or specific jurisdiction. Metcalfe v. Renaissance
Marine, Inc., 566 F.3d 324, 334 (3d Cir. 2009). General jurisdiction exists where
the non-resident defendant has general contacts with the forum state that are
“continuous and systematic.” Arlington Indus., Inc. v. Elec. Custom Distributors,
Inc., 817 F. Supp. 2d 473, 477 (M.D. Pa. 2011) (citing Helicopteros Nacionales de
Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984)). Contacts with a forum are
“continuous and systematic” where the Defendant is “essentially at home in the
forum state.” Daimler AG v. Bauman, 134 S. Ct. 746, 761 (U.S. 2014). Specific
jurisdiction is established when a non-resident defendant has “purposefully directed”
his activities at a resident of the forum, and the injury arises from or is related to
those activities. Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 150 (3d Cir. 2001) (citing
Burger King, 471 U.S. at 472).
Plaintiff concedes that general jurisdiction does not apply (Plaintiff’s Brief
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(ECF No. 37-1) at 15) (“[S]pecific not general personal jurisdiction is at issue.”).
Plaintiff argues that the minimal contacts giving rise to specific jurisdiction over the
Chicago Defendants include the following:
Two University employees (Suzanne Conzen and Katie Gut)
communicated with Merck regarding ORG 34517.
The University of Chicago received millions of dollars in grant money
from Merck and other pharmaceutical corporations based in New Jersey.
The University maintains a Gift Annuity Program in the State of New
Jersey, which is a financial program that the State of New Jersey
regulates.
The University provides general liability insurance for its alumni clubs
in New Jersey.
The University of Chicago’s contacts with New Jersey via the Gift Annuity
Program, the alumni clubs’ insurance, and New Jersey pharmaceuticals are irrelevant.
As Plaintiff concedes, these are not “continuous and systematic contacts” necessary
for general jurisdiction. Daimler AG v. Bauman, 134 S. Ct. 746, 761 (U.S. 2014).
Additionally, the district courts of the Third Circuit have repeatedly held, based on
the seminal case Gehling v. St. George’s School of Medicine, Ltd., 773 F.2d 539 (3d
Cir. 1985), that a district court does not have general jurisdiction over a non-resident
university based on typical university-type activities in a forum, such as fundraising
and recruiting. See, e.g., Watiti v. Walden Univ., No. 07-4782, 2008 WL 2280932
(D.N.J. May 30, 2008); Kendall v. Trustees of Amherst Coll., No. 06-4983, 2007 WL
172396 (E.D. Pa. Jan. 18, 2007).
Most critically, the University of Chicago’s contacts with New Jersey do not
support a finding of specific jurisdiction because Plaintiff’s claims do not “arise from”
or “relate to” any of its contacts with New Jersey. O’Connor v. Sandy Lane Hotel
Co., Ltd., 496 F.3d 312, 317 (3d Cir. 2007).
On the whole, these contacts are too attenuated for personal jurisdiction to
comport with “traditional notions of fair play and substantial justice,” International
Shoe Co. v. Washington, 326 U.S. 310, 316 (1945), as no factual allegation in the
Complaint would have reasonably put the Chicago Defendants on notice that they
might be “haled into court” in New Jersey to answer for the violation of Pop Test
Cortisol’s rights, Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985). The
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allegations linking the Chicago Defendants to both New Jersey and to Pop Test Cortisol are so weak as to be uncolorable. See U.S. v. Swiss Am. Bank, Ltd., 274 F.3d
610, 626 (1st Cir. 2001). The Complaint does not even allege that Pan or Kocherginsky sent any communications about ORG 34517 to New Jersey or knew about
Pop Test Cortisol. Although Plaintiff produced some documents showing that Conzen and Gut communicated with Merck employees regarding ORG 34517, none of
those Merck employees were located in New Jersey, and more crucially, none of the
communications mention Pop Test Cortisol. Conzen, Kocherginsky, and Pan have
submitted unchallenged affidavits affirming that they have no personal contacts with
New Jersey and had never heard of Pop Test Cortisol before service of the Complaint.
On the face of the Complaint, there is no plausible theory of the Chicago
Defendants’ knowledge of Pop Test Cortisol’s rights to ORG 34517. The only
plausible way that the Chicago Defendants would have found out about Pop Test
Cortisol’s rights was through Merck, and Merck has no plausible motive for sharing
the fact of Pop Test Cortisol’s exclusive rights to ORG 34517 with anyone. Merck
wanted The University of Chicago’s scientists to help it understand the therapeutic
properties of ORG 34517 so that Merck could enrich itself. Letting people at the
University of Chicago know that their experimentation might constitute an illegal
act could have only made the road to that goal bumpier. While the Complaint makes
a conclusory conspiracy allegation, it lacks facts demonstrating that the Chicago
Defendants had any knowledge of Pop Test Cortisol’s exclusive rights to ORG
34517. Without so much as a plausible allegation that Defendants knew about Pop
Test Cortisol’s rights, it would not be fair to subject the Chicago Defendants to the
in personam jurisdiction of the courts in this district.
B. Personal Jurisdiction Under the RICO Statute
Plaintiff also argues that the Court has personal jurisdiction over all the Chicago Defendants via the national service of process provision of the RICO statute,
18 U.S.C. § 1965(d). (See Plaintiff’s Brief (ECF No. 37-1) at 24-28 (and cases cited
therein)). Pursuant to this statute, where a district court has personal jurisdiction
over one RICO defendant, it can exert personal jurisdiction over all RICO defendants who have minimum contacts with the United States. See Holland v. King Knob
Coal Co., 87 F. Supp. 2d 433, 434 (W.D. Pa. 2000); Estate of Carvel ex rel. Carvel
v. Ross, 566 F. Supp. 2d 342, 351 (D. Del. 2008) (internal citations omitted).
Plaintiff, however, does not plausibly allege a RICO claim. The elements of
a RICO claim are: (1) conduct (2) of an enterprise (3) through a pattern (4) of
racketeering activity. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985). The
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Complaint does not allege a pattern of racketeering or explain what predicate acts of
racketeering each defendant supposedly committed. Without a plausible RICO
claim, 18 U.S.C. § 1965(d) cannot rightly form a basis for asserting personal
jurisdiction over defendants not otherwise subject to the jurisdiction of the courts in
this district.2
V.
JURISDICTIONAL DISCOVERY
“The plaintiff bears the burden to prove, by a preponderance of the evidence,
facts sufficient to establish personal jurisdiction.” Carteret Sav. Bank, FA v. Shushan,
954 F.2d 141, 146 (3d Cir. 1992). Upon an attack on personal jurisdiction, the Court
must accept as true the allegations in the complaint, and resolve disputed issues of
fact in favor of the plaintiff. Id. at 142 n. 1. Where the factual allegations suggest
with “reasonable particularity” the possible existence of requisite contacts, the court
should grant jurisdictional discovery before dismissing the case for lack of personal
jurisdiction. Toys “R” Us, Inc. v. Step Two, S.A., 318 F.3d 446 (3d Cir. 2003).
Plaintiff’s factual allegations do not suggest with “reasonable particularity”
the possible existence of minimal contacts. The minimal contacts necessary here
would be communications, exchanged between Merck employees in New Jersey and
the Chicago Defendants, which mention Pop Test Cortisol’s rights to ORG 34517.
Plaintiff’s list of proposed discovery demands is long, but nothing on that list would
reveal that the Chicago Defendants knew about Pop Test Cortisol or its rights to
ORG 34517. 3
VI.
CONCLUSION
For the reasons set forth above, Defendants’ motions to dismiss for lack of
personal jurisdiction are GRANTED. Plaintiff’s motion for jurisdictional discovery
is DENIED. Because dismissal extends from deficiencies in the facts pleaded rather
than deficiencies of evidence, dismissal will be without prejudice. Cf. Grohs v.
Hayman, No. 09-5273, 2010 WL 2346617, at *8 (D.N.J. June 8, 2010). An
The Court has also considered whether personal jurisdiction might be established under the patent statutes. Because
the patent statutes do not provide for nationwide service of process, personal jurisdiction in a patent cause of action is
analyzed pursuant to the long-arm statute. Max Daetwyler Corp. v. R. Meyer, 762 F.2d 290, 297 (3d Cir. 1985). For
the reasons stated in Part IV.A above, the long-arm statute does not create as a basis for personal jurisdiction in this
case.
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Defendants also argued that Plaintiff’s motion for jurisdictional discovery is untimely. The Court has assumed,
without finding, that the motion was timely and denies the motion on its merits.
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appropriate order follows.
/s/ William J. Martini
_______________________________
WILLIAM J. MARTINI, U.S.D.J.
Date: June 18, 2015
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