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Enzo Life Sciences, Inc. v. Adipogen Corporation

United States District Court, D. Delaware

August 6, 2014

ENZO LIFE SCIENCES, INC., a New York corporation, Plaintiff,
v.
ADIPOGEN CORPORATION, a California corporation, ADIPOGEN INTERNATIONAL, INC., a Delaware corporation, BIOAXXESS, INC., a Delaware corporation, GEORGES CHAPPUIS, an individual, TAMARA SALES, an individual, SILVIA DETTWILER, an individual, and DOES 1 through 50 Defendants.

MEMORANDUM ORDER

RICHARD G. ANDREWS, District Judge.

Before the Court is Defendants' Motion for Partial Summary Judgment. (D.I. 149). At the pretrial conference on June 20, 2014, the Court denied the majority of Defendants' motion except for three of Defendants' contentions, including Defendant's claim that Defendant Silvia Dettwiler was released from all claims against her. (D.I. 159 (hereafter "Tr.") at 4; D.I. 151 at 12). The Court ordered Plaintiff to respond to the portion of the Defendants' motion addressing whether Dettwiler had been released from all claims against her. (Tr. at 4; D.I. 156 at 2). On July 25, 2014, the Court ordered Defendants to submit a letter clarifying the impact of Swiss law on the release. (D.I. 160). Plaintiff was permitted, but not required, to respond. Id. This matter has now been fully briefed. (DJ. 151; D.I. 157; D.I. 163; D.I. 170). For the reasons set forth, the portion of Defendants' Motion for Partial Summary Judgment regarding the claims against Dettwiler is DENIED.

I. Background

Plaintiff Enzo Life Sciences, Inc. ("Enzo") brought this action in January 2011 against Defendants Adipogen Corporation, Adipogen International, Inc., and Bioaxxess, Inc., Georges Chappuis, Tamara Sales, and Silvia Dettwiler (collectively "Defendants") (D.I. 1). Enzo is a New York corporation in the business of producing, marketing, and selling research and diagnostic technologies and products. (DJ. 1 at 5; D.I. 155, Ex. A at 2). In a stock purchase agreement signed on May 29, 2007 (the "Stock Purchase Agreement"), Enzo acquired Axxora Life Sciences, Inc., a manufacturer and marketer of research products, and its five subsidiary companies. (D.I. 155, Ex. A at 5; D.I. 1 at 11). Included in the acquisition was Alexis Corporation, a Swiss subsidiary later renamed Enzo Life Sciences AG ("ELS AG"). (D.I. 155, Ex. A at 5; D.I. 1 at 2). Enzo alleges that sometime shortly after the acquisition, Sales, Chappuis, and Dettwiler, officers of Axxora and Alexis, and their co-conspirators established a competing company, Bioaxxess, Inc. (D.I. 1 at 26-27). Enzo alleges that the Defendants breached the non-compete clause contained in the Stock Purchase Agreement and committed other tortious acts. Id. at 40-55.

Ms. Dettwiler, a Swiss citizen, was the Deputy President and Vice President of Operations Europe at ELS AG, a member of its Board of Directors, and a selling shareholder under the Stock Purchase Agreement. (D.I. 155, Ex. A at 4-5; D.I. 1 at 8). Enzo has brought claims against Dettwiler for breach of contract, aiding and abetting Chappuis's breach of fiduciary duty, misappropriation of trade secrets, conversion, unfair competition, tortious interference with contract and business relations, unjust enrichment, and civil conspiracy. (D.I. 1 at 40-41, 45-55).

Enzo alleges that, in the Stock Purchase Agreement, Dettwiler agreed that she would not compete with Enzo, solicit customers, nor use Enzo's confidential information for her own benefit for a period of two years. Id. at 2. On July 1, 2007, Dettwiler entered into an employment agreement with Alexis (the "Employment Agreement"). (D.I. 158, Ex. A at 2). The Employment Agreement also contained a non-compete provision that prohibited Dettwiler from competing with Enzo or any affiliate. Id. at 6-7. On July 29, 2010, Dettwiler terminated her employment with ELS AG. (D.I. 155, Ex. A at 5). On October 7, 2010, Dettwiler and ELS AG entered into an Agreement Regarding Dissolution of Employment Relationship (the "Dissolution Agreement"). (D.I. 152, Ex. C). The Dissolution Agreement released Dettwiler from the non-competition clause in the Employment Agreement. Id. at 5.

II. Legal Standard

A. Summary Judgment

"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. Cry. P. 56(a). The moving party has the initial burden of proving the absence of a genuinely disputed material fact relative to the claims in question. Ce otex Corp. v. Catrett, 477 U.S. 317, 330 (1986). The burden then shifts to the non-movant to demonstrate the existence of a genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Williams v. Borough of West Chester, Pa., 891 F.2d 458, 460-61 (3d Cir. 1989). "A party asserting that a fact cannot be or is genuinely disputed must support such an assertion by: (A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations..., admissions, interrogatory answers, or other materials; or (B) showing that the materials cited [by the opposing party] do not establish the absence... of a genuine dispute...." FED. R. Civ. P. 56(c)(1).

When determining whether a genuine issue of material fact exists, the court must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Scott v. Harris, 550 U.S. 372, 3:0 (2007); Wishkin v. Potter, 476 F.3d 180, 184 (3d Cir. 2007). Material facts are those "that could affect the outcome" of the proceeding, and "a dispute about a material fact is genuine' if the evidence is sufficient to permit a reasonable [fact finder] to return a verdict for the nonmoving party. Lamont v. New Jersey, 637 F.3d 177, 181 (3d Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). If the non-moving party fails to make a sufficient showi on an essential element of its case with respect to which it has the burden of proof, the moving party is entitled to judgment as a matter of law. See Celotex Corp., 477 U.S. at 322.

B. Contract Construction

The construction of a contract is a question of law for the court to decide. Haft v. Dart Grp. Corp., 841 F.Supp. 549, 565 (D. Del. 1993) (citing Klair v. Reese, 531 A.2d 219, 222 (Del. 1987)). In a diversity action, a federal court must apply the conflicts of law principles of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). "In Delaware, when there is no reference to the choice of law in a contract, courts apply the most significant relationship' test articulated in [§188] of the RESTATEMENT (SECOND) OF CONFLICT OF LAWS to resolve conflict issues arising out of the interpretation and validity of contracts." Cohen v. Formula Plus, Inc., 750 F.Supp.2d 495, 501 (D. Del. 2010); see also Travelers Indem. Co. v. Lake, 594 A.2d 38, 41 (Del. 1991). To determine the forum with the most significant relationship, the court must consider: the place of contracting; the place of negotiation; the place of performance; the location of the subject matter of the contract; and the domicile, residence, nationality, place of incorporation and place of business of the parties. Cohen, 750 F.Supp.2d at 501 (quoting RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 188(2) (1971)).

III. Discussion

The initial burden is on Defendants to demonstrate that as a matter of law the Dissolution Agreement released Dettwiler from the claims asserted against her by ...


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