Galena Biopharma, Inc. v. Ioannides et al

Filing 34

Opinion and Order Signed on 2/25/2014 by Judge Ancer L. Haggerty. Defendant's Motion to Dismiss 10 is GRANTED and Motion to Strike 29 is DENIED AS MOOT. (sp)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PORTLAND DIVISION
GALENA BIOPHARLVIA, INC.,
a Delaware corporation,
Plaintiff,

Case No. 13-cv-01745-HA

v.

OPINION AND ORDER

CONSTANTIN IOANNIDES, and
DOES 1-10, inclusive,
Defendants.

HAGGERTY, District Judge:
Plaintiff Galena Biopharma, Inc. (plaintiff or "Galena"), a Delaware corporation with its
principle place of business in Oregon, filed suit against defendant Constantin Ioannides, Ph.D., a
Texas resident, asserting claims for libel per se, trade libel, and declarat01y relief. Defendant moves
to dismiss for lack of personal jurisdiction, or alternatively, moves to strike plaintiff's Complaint
pursuant to Oregon's anti-SLAPP statute. Or. Rev. Stat. 31.150 et seq. Defendant also moves to
strike portions of a declaration offered by plaintiff in opposition to the Motion to Dismiss. Oral
argument was deemed unnecessary for the resolution of these motions. For the following reasons,
defendant's Motion to Dismiss [1 0] is granted and Motion to Strike [29] is denied as moot.

1 - OPINION AND ORDER

BACKGROUND
Defendant is a cancer research scientist who resides in Texas. He was formally affiliated
with the University of Texas M.D. Anderson Cancer Center ("MD Anderson"). While contracting
with MD Anderson, defendant co-invented the experimental breast cancer vaccine "NeuVaxn.'."
Defendant has never been to, or conducted business in, Oregon.
Galena is a publicly traded biopharmaceutical company with its principal place of business in
Oregon. It moved to Oregon in 20 II from Massachusetts where it entered into a loan agreement
with the State of Oregon through the State's Strategic Reserve Fund, which is meant to attract
businesses to start, expand in, or relocate to Oregon. Galena obtained the exclusive license to
develop the NeuVax product candidate from MD Anderson. NeuVax is plaintiffs leading product
candidate.
On May 8, 2013, A vi Greenberg published an article on the New York-based financial news
website, Seeking Alpha. The mticle, titled "Galena Biopharma: Stock First, Science Second?",
criticized plaintiff for allegedly cherrypicking data suggesting that NeuVax works while ignoring
other evidence suggesting it does not. Defendant posted a number of comments below the article,
four of which 1 were allegedly defamatory and form the basis for this lawsuit. In those comments,
defendant, whose use of written English is less than perfect, attempts to convince other posters that
he is in fact Dr. Ioannides, the co-inventor ofNeuVax and also engages in a back and forth
conversation with other posters. The four allegedly defamat01y comments were made on May 14,
2013, and on May 20,2013. First, on May 14,2013, defendant assetted that Dr. Ahn secretly
received shares of Galena as part of a hypothetical reverse merger. The next three allegedly

1

Defendant also wrote letters to plaintiffs CEO, Mat'k Ahn, Ph.D. in Oregon and sent
numerous emails to Dr. Ahn. None of statements in those letters or emails are identified in the
Complaint or are assetted as causing plaintiffs alleged damages.
2 - OPINION AND ORDER

defamatory comments were all made on May 20, 2013. In defendant's second comment he asserted
that Galena's managers had ignored science precluding the opp01iunity to conduct a retrospective
analysis. Third, defendant asse1ied that plaintiff filed misleading and incomplete reports to the
Securities and Exchange Commission regarding its patents. Fourth, defendant asse1ied that Galena
secretly used research funds for improper purposes. Each of the defamatory comments was made to
other posters and readers of Seeking Alpha and included salutations such as "Dear All and Mr.
Dugh56.2" Avi Greenberg wrote a second Seeking Alpha miicle on July 8, 2013, entitled "A Leading
Indicator of Success: Failure and Risk in Biotechnology," in which he references the negative
comments made by defendant and criticizes Galena.

ANALYSIS
1.

Personal Jurisdiction

Plaintiff bears the burden of establishing that this court has personal jurisdiction over
defendant. See Fireman's Fund Ins. Co. v. Nat'/ Bank of Coops., 103 F.3d 888, 893 (9th Cir. 1996)
(stating that the nonmoving pmiy has the burden of establishing personal jurisdiction). However,
plaintiff need only make a prima facie showing of facts that support exercising jurisdiction over
defendant. Tuazon v. R.J Reynolds Tobacco Co., 433 F.3d 1163, 1168 (9th Cir. 2006).
Personal jurisdiction over a non-resident defendant is tested under a two-prong analysis. The
exercise of jurisdiction must: (1) satisfy the requirements of the long-arm statute of the state in which
the district court sits; and (2) comport with the principles offederal due process. Ziegler v. Indian

River County, 64 F.3d 470, 473 (9th Cir. 1995). Oregon Rule of Civil Procedure (ORCP) 4(B)-(K)
provides specific bases for personal jurisdiction and subsection (L) extends jurisdiction to the limits

2

Dugh56 is another individual who posted on Seeking Alpha and asked defendant
questions regarding Galena.
3 - OPINION AND ORDER

of due process under the United States Constitution. Nike, Inc. v. Spencer, 707 P.2d 589, 591 (Or.
Ct. App. 1985); see ORCP 4.
The Due Process Clause of the U.S. Constitution protects persons from being subject to the
binding judgments of a forum with which they have "established no meaningful 'contacts, ties, or
relations."' Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72 (1985) (citing Jnt'l Shoe Co. v.
Washington, 326 U.S. 310, 319 (1945)). Due process requires that a defendant have "minimum
contacts with the forum state such that the exercise of personal jurisdiction does not offend
traditional notions of fair play and substantial justice." Decker Coal Co. v. Commonwealth Edison
Co., 805 F.2d 834, 839 (9th Cir. 1986) (citing Jnt'l Shoe Co., 326 U.S. at 316). "A court may
exercise either general or specific jurisdiction over a nomesident defendant." Sher v. Johnson, 911
F.2d 1357, 1361 (9th Cir. 1990) (citation omitted).
For a defendant to be subject to general personal jurisdiction, the defendant must have such
"continuous and systematic contacts with the forum that the exercise of jurisdiction does not offend
traditional notions of fair play and substantial justice." Reebok Jnt'l Ltd. v. ,1,;/cLaughlin, 49 F.3d
13 87, 1391 (9th Cir. 1995) (citation omitted). The standard for general jurisdiction is high, requiring
that the contacts in the forum "approximate physical presence." Tuazon, 433 F.3d at 1169 (citation
omitted). Unless the defendant can be deemed "present" within the forum for all purposes, general
jurisdiction is not appropriate. See Menken v. Emm, 503 F.3d 1050, 1057 (9th Cir. 2007). Plaintiff
suggests by way of footnote that the numerous emails and letters defendant sent to Dr. Ahn could
give rise to general personal jurisdiction. This court declines to exercise general personal
jurisdiction over defendant based on such limited contact with Oregon.
In contrast to general personal jurisdiction, specific jurisdiction exists where: (1) the
defendant has perfonned some act or consummated some transaction within the forum or otherwise

4 - OPINION AND ORDER

purposefully availed herself of the privileges of conducting activities in the forum; (2) the claim
arises out of, or results from, the defendant's forum-related activities; and (3) the exercise of
jurisdiction is reasonable. Bancroft & l'vlasters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th
Cir. 2000) (citation omitted). If the plaintiff meets the first and second elements, the burden shifts to
the defendant to present a compelling case that the exercise of jurisdiction would be unreasonable.

Schwarzenegger v. Fred J'vlartin 1Vlotor Co., 374 F.3d 797, 802 (9th Cir. 2004) (citation omitted).
However, if the plaintiff fails at the first step, then the jurisdictional inquity ends and the defendant
must be dismissed from the case. Boschetto v. Hansing, 539 F.3d 1011, 1016 (9th Cir. 2008).
To establish the first prong (purposeful availment or direction) for specific jurisdiction, the
defendant must have perfmmed some affitmative conduct within the forum state. Roth v. Garcia

l'vlarquez, 942 F.2d 617, 621 (9th Cir. 1991) (citation omitted). In some cases, a foreign act aimed at
the forum state can satisfY the first prong. Where suit is filed for a tort caused by a foreign
defendant, the Ninth Ciruit analyzes the purposeful availment prong under the "Calder effects test."

l'vlavrix Photo, Inc. v. Brand Tech., Inc., 647 F.3d 1218, 1228 (9th Cir. 2011); Calder v. Jones, 465
U.S. 783 (1984). To satisfY the effects test, "the defendant allegedly must have (I) committed an
intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is
likely to be suffered in the fmum state." Yahoo! Inc. v. La Ligue Contre Le Racisme Et

L 'Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2006) (quoting Schwarzenegger, 374 F.3d at 802).
The Ninth Circuit has "wamed courts not to focus too narrowly on the test's third prong -the
effects prong - holding that 'something more' is needed in addition to a mere foreseeable effect."

Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1156 (9th Cir. 2006) (quoting Bancroft & lvlasters, Inc.
v Augusta Nat. Inc., 223 F.3d 1082, 1087 (9th Cir. 2000). Calder does not "stand for the broad
proposition that a foreign act with forseeable effects in the forum state will always give rise to

5 - OPINION AND ORDER

specific jurisdiction." Bancroft, 223 at 1087. Rather, there must be "something more" and that
"something more" is '"express aiming' at the forum state." Id. In some cases, the use of "a passive
website in conjunction with 'something more'- conduct directly targeting the forum- is sufficient"
to satisfY the express aiming prong. lvfavrix Photo, 647 F.3d at 1229 (quoting Rio Props., Inc. v. Rio
lnt'llnterlink, 284 F.3d 1007, 1020 (9th Cir. 2002)).
In this case, defendant does not contend that his acts were unintentional or that any hmm3
would be unlikely to be felt in Oregon, but that his comments were not expressly aimed at Oregon
and are insufficient to give rise to personal jurisdiction. This court agrees. Defendant made a
number of allegedly defamatmy comments about Galena, and although all of the comments concem
Galena, each is expressly directed to other posters on Seeking Alpha, none of whom has been shown
to be based in Oregon. Additionally, while some of his comments were not positive, it does not
appear they were written for the purpose of causing harm to Galena. In Or. Nerve Ctr., LLC, v.
Ochoa, No. 3:11-cv-01433-HA, 2013 WL 504324, *7 (D. Or. Feb. 7, 2013), this court held that the
posting of a defamatmy Youtube video on a Florida law firm's Youtube channel was sufficient to
give rise to personal jurisdiction in Oregon because "the act of posting the video was performed with
the purpose of having its consequences felt by plaintiffs in Oregon." This malicious intent provided
the "something more" necessary to trigger personal jurisdiction because is demonstrated express
aiming. Here, while it is clear that defendant knew Galena to be an Oregon corporation, it does not
appear that his comments were made with the intent of causing hmm to Galena. Some of his
comments conceming NeuVax were in fact positive and could have benefitted Galena. It is unclear
why the comments were made, other than it is obvious defendant has a deep concem regarding

3

Defendant appears to acknowledge that any harm from his actions was likely to be
suffered in Oregon. However, in light of the fact that Galena's stock price increased in the period
following his comments, defendant argues that there was no harm.·
6 - OPINION AND ORDER

Galena's activities. Without "something more" the use of Seeking Alpha's passive website to post
the allegedly defamatory comments does not satisfY the "express aiming" prong of the Calder effects
test. lvfavrix Photo, 647 F.3d at 1229. Accordingly, the court concludes that it lacks personal
jurisdiction over defendant in Oregon.
Because this comt lacks jurisdiction over defendant, it does not reach the alternative request
for relief under the Oregon anti-SLAPP statute or the Motion to Strike.

CONCLUSION
For the foregoing reasons, defendant's Motion to Dismiss [10) is GRAL\fTED and Motion to
Strike [29) is DENIED AS MOOT.
IT IS SO ORDERED.
Dated this_JSday of February, 2014.

~aa~ ;(Jkd~~
ANCER L. BAGGER
United States District Judge

7 - OPINION AND ORDER