BABUL v. RELMADA THERAPEUTICS, INC. et al

Filing 34

ORDER THAT THE MOTION TO DISMISS COUNT I OF PLAINTIFF'S COMPLAINT FILED BY DEFENDANTS ROBINSON BROG LEINWAND GREENE GENOVESE & GLUCK P.C., DAVID C. BURGER AND DAVID E. DANOVICH IS DENIED; ETC.. SIGNED BY HONORABLE GERALD A. MCHUGH ON 1/20/16. 1/20/16 ENTERED AND E-MAILED.(jl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

NAJIB BABUL,
Plaintiff,
v.
RELMADA THERAPEUTICS, INC. et al.,
Defendants.

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CIVIL ACTION
No. 15-2937

MEMORANDUM ORDER
This 20th day of January, 2016, upon consideration of the Motion to Dismiss Count I of
Plaintiff’s Complaint filed by Defendants Robinson Brog Leinwand Greene Genovese & Gluck
P.C., David C. Burger, and David E. Danovich (collectively, the “Lawyer Defendants”),
Plaintiff’s Opposition thereto, and the parties’ presentations during the October 19, 2015 oral
argument in this matter, it is hereby ORDERED that Defendants’ Motion is DENIED for the
reasons set forth below.
The Lawyer Defendants have moved to dismiss Count I of Plaintiff’s Complaint, which
alleges a violation of Pennsylvania’s Dragonetti Act, 42 Pa.C.S. § 8351 et seq. for wrongful use
of civil proceedings. The Lawyer Defendants argue that the underlying action was resolved via
agreement of the parties, which precludes Plaintiff from pleading a plausible Dragonetti claim
under Pennsylvania law. Specifically, the Lawyer Defendants argue that Dr. Babul’s Complaint
unequivocally asserts that the parties negotiated and ultimately agreed to the terms of the
Stipulated Judgment, essentially compromising in order to end the matter without further
litigation. Compl. at ¶¶ 238–47. The Relmada v. Babul Stipulated Judgment begins,
“STIPULATED AND AGREED by and between [Relmada and Babul].” Similarly, in exchange
for judgment in his favor on Relmada’s claims, Dr. Babul only received half of the exercise
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rights he was seeking in his counterclaims, and none of the damages. Finally, the Lawyer
Defendants maintain that even if the word “settlement” did not appear in the Stipulated
Judgment, it is considered a settlement as a matter of law.
In opposing Defendants’ position, Plaintiff’s most compelling argument is that at this
stage, the Court must accept all factual allegations as true, and as pleaded, the Stipulated
Judgment Order was not an agreement or compromise but “an order granting Dr. Babul all of the
relief to which he would be entitled if the case went all the way through trial and he won on
everything.” Id. at ¶ 238. In addition, Plaintiff relies on the following language from the
Stipulated Judgment: “Judgment is hereby entered in favor of Babul and against Relmada on all
claims in Relmada’s Complaint, with costs taxed against Relmada.” Relmada Therapuetics, Inc.
v. Najib Babul, No. 14-0104-GAM, Stipulated Judgment Order at ¶ 1. Dr. Babul also argues that
if the Stipulated Judgment Order did not constitute a “favorable termination,” then Relmada—
the other party to the agreement—would have surely asserted this argument in its Motion to
Dismiss, but it did not. Rather, Relmada conceded in the first sentence of its brief that Dr. Babul
emerged victorious in Relmada v. Babul (“This case is an attempted continuation of a battle
between Plaintiff, Najib Babul, and the company that he founded, a battle which he has already
won once.”). Finally, Plaintiff contends that Dr. Babul’s counterclaims are irrelevant when
assessing the favorable termination element of Dragonetti, because the critical question is
whether he prevailed on the claims brought against him.
After extensive review of the parties’ pleadings and argument in this matter, I agree with
Plaintiff that the Complaint plausibly avers that Dr. Babul emerged victorious in the underlying
litigation. Moreover, while Defendants offer persuasive arguments, a factual question remains
regarding whether the Stipulated Judgment Order is properly interpreted as a “favorable

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termination” for purposes of Plaintiff’s Dragonetti claim, and at this preliminary stage, all factual
allegations and inferences drawn therefrom must be interpreted in the light most favorable to
Plaintiff. Accordingly, Plaintiff has a right to proceed to discovery in an effort to prove the facts
alleged.

/s/ Gerald Austin McHugh
United States District Court Judge

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