PHARMERICA CORPORATION v. STURGEON et al

Filing 67

MEMORANDUM OPINION & ORDER granting 27 Motion to Dismiss for Lack of Jurisdiction filed by ELLIOT GOTTLIEB, ADAM SHIMODA. PharMerica's complaint is dismissed as to Defendants Elliot Gottlieb and Adam Shimoda. Signed by Judge David S. Cercone on 4/4/17. (jmc)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
PHARMERICA CORPORATION,
Plaintiff,
v.
LENA STURGEON, ELLIOT
GOTTLIEB, ADAM SHIMODA, and
CONTINUARX LLC,
Defendants.

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2:16cv1481
Electronic Filing

MEMORANDUM OPINION
April 4, 2017
I.

INTRODUCTION
Plaintiff, PharMerica Corporation (“PharMerica”) initiated this action by Complaint

alleging various claims against Defendants, Elliot Gottlieb (“Gottlieb”), and Adam Shimoda
(“Shimoda”) (collectively “Defendants”), arising out of their employment with PharMerica.
Gottlieb and Shimoda have moved to dismiss PharMerica’s Complaint based upon: (1) lack of
personal jurisdiction; (2) failure to state a claim upon which relief may be granted; and (3) failure
of service of process. PharMerica has responded and the motion is now before the Court.

II.

STATEMENT OF THE CASE
PharMerica is a Delaware corporation headquartered in Louisville, Kentucky, and it

provides institutional and hospital pharmacy services throughout the United States. Cmplnt. ¶ 1.
Shimoda is a resident of Maryland and resides at 1491 Dockside Court, Frederick, Maryland
21701, and is a former employee of PharMerica and Millennium Pharmacy Services, Inc.
(“Millennium”). Cmplnt. ¶ 3. Gottlieb (“Gottlieb”) is a resident of Maryland and resides at
11309 Hollowstone Drive, North Bethesda, Maryland 20852, and is a former employee of

PharMerica and Millennium. Cmplnt. ¶ 4. ContinuaRx LLC (“ContinuaRx”) is a start-up longterm care pharmacy organized in Delaware, with its principal place of business located at 7085
Samuel Morse Drive, Columbia, Maryland 21046. Cmplnt. ¶ 4.
Gottlieb was hired by Millennium as a Regional Manager Consulting Pharmacist on
December 10, 2010. As part of his employment, and/or continuation of employment with
additional compensation and/or benefits, with Millennium, Gottlieb executed certain
employment agreements including: (1) Confidentiality, Copyright and other Intellectual Property
Assignment, and Restrictive Covenant Agreement dated April 1, 2013; and (2) Protection of
Interest and Non-Disclosure Agreement, dated June 5, 2013. Court’s Findings of Fact and
Conclusions of Law, December 7, 2016, (“Findings & Conclusions”) ¶ 5.
Shimoda was hired by Millennium as a Pharmacy Technician on April 20, 2011.
On August 19, 2014, Shimoda was promoted to an Assistant General Manager, responsible for
day-to-day operations and workflow of Millennium's Columbia, Maryland pharmacy,
management and supervision of other pharmacists and pharmacy technicians, customer service,
and reviewing and ensuring compliance with the standard operating procedures. Findings &
Conclusions ¶ 7. Shimoda never signed an employment agreement with Millennium. Findings &
Conclusions ¶ 8.
Millennium, a former competitor of PharMerica, was acquired by PharMerica on
September 26, 2014, by Stock Purchase Agreement. Findings & Conclusions ¶ 2. Following
PharMerica’s purchase of Millennium, Lena Sturgeon (“Sturgeon”), one of the founders of
Millennium, continued to service Millennium customers as an employee of PharMerica. Findings
& Conclusions ¶ 3. Shimoda and Gottlieb also accepted employment with PharMerica and
continued in the same roles they had previously held with Millennium prior to the acquisition.
Findings & Conclusions ¶ 9. As part of his employment, Gottlieb executed a Nondisclosure and
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Non-Solicitation Agreement with PharMerica on December 11, 2014. Findings & Conclusions ¶
10. Shimoda also executed a Nondisclosure and Non-Solicitation Agreement as part of his
employment with PharMerica on December 15, 2014. Findings & Conclusions ¶ 13.
Sturgeon ended her employment with PharMerica on May 15, 2015, and became Chief
Operating Officer of ContinuaRx, a start-up long-term care pharmacy that will compete directly
with PharMerica for customers throughout Pennsylvania, Maryland, Virginia, and Washington,
D.C. Findings & Conclusions ¶¶ 3, 17 & 18. Sturgeon contacted Gottlieb in or around June 2016
and asked him to join ContinuaRx as the head Consultant Pharmacist. Gottlieb accepted the
position, resigned from PharMerica on August 4, 2016 and joined ContinuaRx on September 12,
2016. Findings & Conclusions ¶ 19. When he began working for ContinuaRx, Gottlieb worked
from his home in Maryland. P-I Hearing Transcript, ECF 46 (“ECF 46”) p. 13.
Shimoda was solicited by Sturgeon in early July, 2016 to join ContinuaRx. Shimoda
resigned from PharMerica on July 29, 2016 and joined ContinuaRx on August 1, 2016 as the
Director of Pharmacy Operations. Findings & Conclusions ¶ 25. Shimoda will work from the
pharmacy ContuaRx will build in Maryland. ECF 46, p. 15. Gottlieb’s and Shimoda’s roles at
ContinuaRx are to be substantially similar to the roles they held at PharMerica and Millennium.
Findings & Conclusions ¶¶ 19 & 26.
PharMerica alleges that Gottlieb and Shimoda “agreed, or will agree” to assist
Sturgeon in forming ContinuaRX using former Millennium or PharMerica employees, soliciting
former Millennium or PharMerica customers, and using confidential/trade secret information of
Millennium or PharMerica. Cmplnt. ¶¶ 63 & 64.

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III.

LEGAL STANDARD FOR MOTION TO DISMISS
A.

Rule 12(b)(2)

Where a defendant challenges the exercise of personal jurisdiction under Rule 12(b)(2) of
the Federal Rules of Civil Procedure, “plaintiff bears the burden of proving the facts necessary to
establish the minimum contacts the Constitution requires.” Grand Entm't Group, LTD. v. Star
Media Sales, Inc., 988 F.2d 476, 482 (3d Cir. 1993). Moreover, the plaintiff must prove, by a
preponderance of the evidence, that jurisdiction is proper. IMO Industries, Inc. v. Kiekert AG,
155 F.3d 254, 257 (3d. Cir. 1998). In deciding a motion to dismiss for lack of personal
jurisdiction, the allegations of the complaint are taken as true, Dayhoff Inc. v. H.J. Heinz Co., 86
F.3d 1287, 1302 (3d Cir. 1996), and disputed facts are construed in favor of the plaintiff. Pinker
v. Roche Holdings, Ltd., 292 F.3d 361, 368 (3d Cir. 2002). A plaintiff, however, may not rest
solely on the pleadings to satisfy its burden. Time Share Vacation Club v. Atlantic Resorts, Ltd.,
735 F.2d 61, 66 (3d Cir. 1984). Instead, a plaintiff must sustain its burden of proof with sworn
affidavits or other competent evidence that demonstrates with reasonable particularity a
sufficient nexus between the defendant and forum state in order to support jurisdiction. See
Provident Nat'l Bank v. California Federal Sav. & Loan Assoc., 819 F.2d 434, 437 (3d Cir.
1987); Stranahan Gear Co. v. NL Indus., 800 F.2d 53, 58 (3d Cir. 1986); Orazi v. Hilton Hotels
Corp., 2010 U.S. Dist. LEXIS 123472, at *4 (E.D. Pa. Nov. 22, 2010).
B.

Rule 12(b)(6)

A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure
tests the legal sufficiency of a complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993).
Under Rule 8 of the Federal Rules of Civil Procedure, a complaint must contain a “short and
plain statement of the claim showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2).
A complaint must be dismissed for failure to state a claim if it does not allege “enough facts to
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state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
556 (2007); Ashcroft v. Iqbal, 129 S.Ct. 1937, 1960, 173 L. Ed. 2d 868 (May 18, 2009); see also
Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). The Supreme Court explained
that although a court must accept as true all of the factual allegations contained in a complaint,
that requirement does not apply to legal conclusions; therefore, the pleadings must include
factual allegations to support the legal claims asserted. Ashcroft v. Iqbal, 129 S. Ct. at 1949,
1953. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id. at 1949 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. at 555).
Further, although the focus in assessing a motion to dismiss is on the allegations set forth in the
pleadings, “matters of public record, orders [and] exhibits attached to the complaint” also may be
considered. Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n.2 (3d Cir. 1994)
(citing 5A WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE, § 1357).
The United States Court of Appeals for the Third Circuit expounded on this standard
stating:
After Iqbal, it is clear that conclusory or “bare-bones” allegations
will no longer survive a motion to dismiss: “threadbare recitals of
the elements of a cause of action, supported by mere conclusory
statements, do not suffice. To prevent dismissal, all civil
complaints must now set out “sufficient factual matter” to show
that the claim is facially plausible. This then “allows the court to
draw the reasonable inference that the defendant is liable for the
misconduct alleged.” The Supreme Court’s ruling in Iqbal
emphasizes that a plaintiff must show that the allegations of his or
her complaints are plausible.
Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (citations omitted). In light of
Iqbal, the Fowler court then set forth a two-prong test to be applied by the district courts in
deciding motions to dismiss for failure to state a claim. First, the district court must accept all
well-pleaded facts as true and discard any legal conclusions contained in the complaint. Fowler
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v. UPMC Shadyside, 578 F.3d at 210-211. Next, the court must consider whether the facts
alleged in the Complaint sufficiently demonstrate that the plaintiff has a “plausible claim for
relief.” Id. at 211. To survive a motion to dismiss, a complaint must show an entitlement to relief
through its facts. Id. (citing Phillips v. County of Allegheny, 515 F.3d 224, 234-35 (3d Cir. 2008).
Finally, in applying this plausibility standard, the reviewing court must make a context-specific
inquiry, drawing on its judicial experience and common sense. Id.

IV.

DISCUSSION
A.

Jurisdiction

Under Rule 4(k) of the Federal Rules of Civil Procedure, a District Court typically
exercises personal jurisdiction according to the law of the state where it sits. See Fed. R. Civ. P.
4(k)(1)(A”). Accordingly, we apply the Pennsylvania long-arm statute which provides for
jurisdiction “based on the most minimum contact with th[e] Commonwealth allowed under the
Constitution of the United States.” 42 PA. CONS. STAT. ANN. § 5322(b); see Mellon Bank (East)
PSFS, Nat’l Ass’n v. Farino, 960 F.2d 1217, 1221 (3d Cir. 1992). In determining whether
personal jurisdiction exists, then, we must determine whether, under the Due Process Clause, the
defendant has “certain minimum contacts with . . . [Pennsylvania] such that the maintenance of
the suit does not offend traditional notions of fair play and substantial justice.” See Int'l Shoe Co.
v. Washington, 326 U.S. 310, 316 (1945) (internal quotation omitted).
Personal jurisdiction may be exercised under either a defendant’s general or claimspecific contacts with the forum. Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001). General
jurisdiction is based upon the defendant’s “continuous and systematic” contacts with the forum
and exists regardless of whether a plaintiff’s cause of action arises from the defendant’s nonforum related activities. See Vetrotex CertainTeed Corp. v. Consol. Fiber Glass Prod. Co., 75
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F.3d 147, 151 n.3 (3d Cir. 1996). If the claim pursued arises from non-forum related activities,
the plaintiff must demonstrate that in other respects the defendant has maintained “continuous
and substantial” forum affiliations. International Shoe v. Washington, 326 U.S. at 316; Dollar
Sav. Bank v. First Sec. Bank of Utah, 746 F.2d 208, 212 (3d Cir. 1984); Compagnie des Bauxites
de Guinea v. Ins. Co. of North America, 651 F.2d 877 (3rd Cir. 1981). Obviously this is a high
threshold to meet, as the facts required to assert general jurisdiction must be “extensive and
persuasive.” Compagnie des Bauxites de Guinea v. Ins. Co. of North America, 651 F.2d at 890
(Gibbons, J., dissenting).
Specific jurisdiction “is invoked when the cause of action arises from the defendant’s
forum related activities,” and, in such a case, the focus is on the minimum contacts between the
non-resident defendant and the forum. Dollar Sav. Bank v. First Sec. Bank of Utah, 746 F.2d at
211-212. The inquiry as to whether specific jurisdiction exists has three parts. First, the
defendant must have “purposefully directed his activities” at the forum. Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472 (1985) (quotation marks omitted). Second, the litigation must
“arise out of or relate to” at least one of those activities. Helicopteros Nacionales De Colombia v.
Hall, 466 U.S. 408, 418 n.13 (U.S. 1984); Grimes v. Vitalink Communications Corp., 17 F.3d
1553, 1559 (3d Cir. 1994). Third, if the prior two requirements are met, a court may consider
whether the exercise of jurisdiction otherwise “comport[s] with ‘fair play and substantial
justice.’” Burger King, 471 U.S. at 476 (quoting Int'l Shoe, 326 U.S. at 320 n2).
PharMerica argues that personal jurisdiction is proper because: (1) Gottlieb and Shimoda
have caused harm to PharMerica in Pennsylvania by participating in the indirect solicitation
and/or diversion of PharMerica’s Pennsylvania customers: (2) Gottlieb and Shimoda are
benefitting from, or will benefit from, the threatened disclosure of PharMerica’s confidential and
trade secret information to cause harm to PharMerica in Pennsylvania; and (3) Shimoda and
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Gottlieb executed multiple employment agreements governed by Pennsylvania law. PharMerica,
therefore, argues that this Court has personal jurisdiction over Gottlieb and Shimoda based on
Pennsylvania’s long-arm statute, which provides, inter alia, that “[a] tribunal of this
Commonwealth may exercise personal jurisdiction over a person . . . as to a cause of action or
other matter arising from such person:
(1)(iv) . . . engaging in any business or profession within this Commonwealth,
whether or not such business requires license or approval by any government unit
of this Commonwealth. . .
(3) Causing harm or tortious injury by an act or omission in this
Commonwealth.
(4) Causing harm or tortious injury in this Commonwealth by an act or omission
outside this Commonwealth.”
See 42 PA. CONS. STAT. ANN. § 5322(a).
In support of its contentions, PharMerica directs this Court to the following: (1)
ContinuaRx is currently targeting PharMerica customers, some of which are located in
Pennsylvania, in an effort to divert that business to ContinuaRx; (2) Sturgeon refers to Gottlieb
and Shimoda and the positions they hold with ContinuaRx in her presentations to potential
customers; (3) ContinuaRx’s Organizational Chart lists Gottlieb as the head Consultant
Pharmacist and Shimoda as the head Pharmacy Manager; (4) Sturgeon is a resident of
Pennsylvania who will be working from ContinuaRx’s Pennsylvania location; and (5) Gottlieb
and Shimoda “will unavoidably” engage in business within Pennsylvania by assisting Sturgeon
with ContinuaRx’s Pennsylvania operations.
As an initial matter, this Court has ruled that the employment agreements Gottlieb and
Shimoda signed with PharMerica (the “PharMerica Agreements”) are the agreements controlling
in this instance. The PharMerica Agreements have a choice of law provision that states: “This
Agreement shall be construed in accordance with the laws of the State of Kentucky . . .” The
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PharMerica Agreements, therefore, cannot be asserted as a basis for personal jurisdiction over
either Gottlieb or Shimoda in this forum.
With regard to general jurisdiction, PharMerica has failed to demonstrate that either
Gottlieb or Shimoda had “continuous and systematic” contacts with Pennsylvania. As set forth
above, the facts required to assert general jurisdiction must be “extensive and persuasive.”
Compagnie des Bauxites de Guinea v. Ins. Co. of North America, 651 F.2d at 890. PharMerica
has provided no evidence of the Defendants’ “continuous and substantial” affiliations with this
forum. To the contrary, PharMerica emphasizes Sturgeon’s conduct in Pennsylvania, i.e.
mentioning their names and positions, and/or passing out ContinuaRx’s Organizational Charts,
during presentations to potential customers. Such conduct does not rise to the level of a
substantial contact with Pennsylvania made by Gottlieb or Shimoda. It is the Defendants’
conduct that must form the necessary connection with the forum that forms the basis for
jurisdiction. Walden v. Fiore, 134 S. Ct. 1115, 1122 (U.S. 2014) (citing Burger King Corp. v.
Rudzewicz, 471 U. S. 462, 478 (1985)). Due process requires that a defendant be haled into court
in a forum State based on his own affiliation with the State, not based on the “random, fortuitous,
or attenuated” contacts he makes by interacting with other persons affiliated with the State.
Burger King Corp. v. Rudzewicz, 471 U. S. at 475.
Nor is this Court able to find that it can exercise specific jurisdiction over the Defendants.
This Court has found no evidence of record that either Gottlieb or Shimoda solicited customers
in Pennsylvania for ContinuaRx or directly or indirectly diverted any Pennsylvania business
from PharMerica. Further, PharMerica has directed this Court to no evidence that either Gottlieb
or Shimoda has used PharMerica trade secrets or confidential information in business
development in Pennsylvania or in its solicitation of potential customers in Pennsylvania

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PharMerica must direct this Court to specific activity indicating that either Defendant expressly
aimed his tortious conduct at this forum. IMO Indus. v. Kiekert AG, 155 F.3d 254, 266 (3d Cir.
1998). Because the Court is unable to find that either Gottlieb or Shimoda “purposefully
directed his activities” at this forum, or that the instant litigation arose out of or related to at least
one of those activities, the Court cannot exercise specific personal jurisdiction over the
Defendants.
Because the Court finds that it lacks personal jurisdiction in this matter, there is no reason
to address Defendants’ arguments under Rule 12(b)(6) or the arguments with regard to the
service of process.

V.

CONCLUSION
Based on the foregoing, the motion to dismiss based upon the lack of personal

jurisdiction filed on behalf of Defendants Elliot Gottlieb and Adam Shimoda shall be granted.
An appropriate Order follows.

Cercone, J.

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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
PHARMERICA CORPORATION,
Plaintiff,
v.
LENA STURGEON, ELLIOT
GOTTLIEB, ADAM SHIMODA, and
CONTINUARX LLC,
Defendants.

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2:16cv1481
Electronic Filing

ORDER OF COURT
AND NOW, this 4th day of April, 2017, upon consideration of the Motion to Dismiss for
Lack of Jurisdiction (Document No. 27) Defendants Elliot Gottlieb and Adam Shimoda, the
response thereto, in accordance with the Memorandum Opinion filed herewith,
IT IS HEREBY ORDERED that the Motion to Dismiss GRANTED. PharMerica’s
complaint is dismissed as to Defendants Elliot Gottlieb and Adam Shimoda.
s/ DAVID STEWART CERCONE
David Stewart Cercone
United States District Judge
cc:

David J. Porter, Esquire
Deborah S. Brenneman, Esquire
George B. Musekamp, Esquire
Tiffany A. Jenca, Esquire
Manning J. O’Connor, II, Esquire
Katherine J. McLay, Esquire
Mark Stadler, Esquire
Douglas Michael Grimsley, Esquire
Steven W. Zoffer, Esquire
John R. O'Keefe , Jr., Esquire
Kenneth S. Kornacki, Esquire
(Via CM/ECF Electronic Mail)

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