BY JURY OF TWELVE DEMANDED
Submitted: October 11, 2017
Michael P. Kelly, Esq., Andrew S. Dupre, Esq. (Argued), J.
Wylie Donald, Esq. (Argued), David A. Schlier, Esq., McCarter
& English, LLP, Attorneys for Plaintiff Incyte
Jonathan A. Patchen, Esq. (Argued), Max B. Twine, Esq.,
Taylor & Patchen, LLP, Attorneys for Defendants Terry
Rosen and Juan Jaen
F. Hurst, Esq., Patricia A. Carson, Esq. (Argued), Daniel
Forchheimer, Esq., Ashley Borom, Esq., Kirkland & Ellis
LLP, Attorneys for Defendant Flexus Biosciences, Inc.
Gregory V. Varallo, Esq., C. Malcolm Cochran, IV, Esq.,
Katharine Lester Mowery, Esq., Richards, Layton & Finger,
P.A., Attorneys for All Defendants.
HONORABLE MARY M. JOHNSTON JUDGE.
AND PROCEDURAL CONTEXT
a trade secret misappropriation case. Plaintiff Incyte
Corporation ("Incyte") and Defendant Flexus
Biosciences, Inc. ("Flexus"), are competing
biopharmaceutical companies specializing in the development
and production of cancer treatment drugs. At the time of the
alleged misconduct, Defendant Terry Rosen ("Dr.
Rosen") was Flexus's CEO, and Defendant Juan Jaen
("Dr. Jaen"), was Flexus's President and Head
of Research and Development. Incyte alleges that the
Defendants induced a former Incyte employee, Jordan Fridman
("Dr. Fridman"), to divulge Incyte's
confidential clinical data that showed that the inhibition of
the IDO-1 enzyme could form the basis of an effective, safe
cancer treatment. Incyte alleges this misappropriation of
Incyte's clinical data directly led to Bristol-Meyers
Squibb's ("BMS") subsequent $1.25 billion
acquisition of Flexus.
original complaint, filed September, 42015, Incyte alleged
misappropriation of trade secrets, tortious interference with
contract, unjust enrichment, conspiracy, and aiding and
abetting. By Memorandum Opinion, dated April 19, 2016, this
Court dismissed the tortious interference with contract and
aiding and abetting claims because of lack of subject matter
jurisdiction. This Court held the two claims arose out
of and related directly to a confidentiality agreement
between Incyte and Dr. Fridman that contained an arbitration
clause.The remaining claims did not relate to the
confidentiality agreement and were not dismissed. The Court
also held Dr. Fridman was neither a necessary nor
indispensable party to the remaining claims, and allowed the
case to proceed in his absence.
ruling, however, was not the final word on the claims that
will be brought to trial. In the two motions now pending
before the Court, the Defendants seek dismissal of two more
causes of action, while Incyte seeks to supplement its
existing claims and add a new one. The Defendants request a
partial judgment on the pleadings, arguing that the Delaware
Uniform Trade Secrets Act ("DUTSA"), displaces
Incyte's unjust enrichment and conspiracy claims. In a
cross motion to amend its complaint, Incyte requests leave to
add to the factual bases for its misappropriation of trade
secrets, unjust enrichment, and civil conspiracy claims. It
also seeks to add trade libel, a new claim, to its complaint.
Motion for Partial Judgment on the Pleadings
Court Civil Rule 12(c) permits the Court to grant judgment on
the pleadings "[a]fter the pleadings are closed but
within such time as not to delay the
trial." In circumstances where the moving party
seeks to dismiss portions of the plaintiffs claims via Rule
12(c), the appropriate standard of review is that of a Rule
12(b)(6) motion to dismiss.
the Court must determine whether the claimant "may
recover under any reasonably conceivable set of circumstances
susceptible of proof." The Court must accept as true all
non-conclusory, well-plead allegations. Every reasonable
factual inference will be drawn in favor of the non-moving
party. If the claimant may recover under that
standard of review, the Court must deny the motion to
Displacement Under DUTSA
"displaces conflicting tort, restitutionary and other
law of this State providing civil remedies for
misappropriation of a trade secret." DUTSA does
not, however, displace contractual or criminal
remedies. DUTSA also does not have any effect on
"[o]ther civil remedies that are not based upon
misappropriation of a trade secret." DUTSA
displaces common law causes of action arising under
"other law" when the claims are "based on the
same alleged wrongful conduct as the trade secret
resolution of Defendants' motion turns on whether
Incyte's Count III (Unjust Enrichment) and Count IV
(Conspiracy) are "based on the same alleged wrongful
conduct" as Incyte's trade secret claims.
argues that it pleaded its unjust enrichment and conspiracy
claims "based in part on conduct different than that
which forms the trade secret claim."However, the
original complaint contradicts Incyte's position. For its
unjust enrichment claim, Incyte pleaded facts explicitly
concerning trade secret misappropriation. It stated:
"Defendants have enriched themselves by acquiring and
using Incyte's trade secrets and confidential information
about IDO-1 inhibitors." Incyte similarly invoked trade
secrets as the basis of its conspiracy claim when it pleaded
"Defendants and Dr. Fridman agreed to work together to
misappropriate, and then use for their own benefit,
Incyte's valuable trade secrets and confidential
information in breach of Dr. Fridman's contractual
obligations."The only specific allegation Incyte
plausibly points to as having its basis in something other
than trade secret misappropriation is its charge that
Defendants worked with Dr. Fridman before he left Incyte.
However, the paragraph of the original complaint Incyte cites
in support of this contention alleged that "Defendants
worked with Dr. Fridman to acquire additional confidential
information." The Court is unable to ascertain how Dr.
Fridman's work product is substantively different from
divulging trade secrets. This alleged misconduct does not
appear to the Court to differ in any way from that underlying
the misappropriation of trade secret claim.
the "factual predicate of Incyte's unjust enrichment
and the civil conspiracy claims "mirror the facts
alleged to have constituted a misappropriation of trade
secrets, " DUTSA displaces both claims as alleged
in the original complaint. As a practical matter, unjust
enrichment may be considered as part of damages if liability
is found, but it does not survive as a standalone claim.
to the extent Incyte's unjust enrichment and civil
conspiracy claims are based upon misappropriation of trade
secrets, the motion to dismiss those claims is granted on the
basis of DUTSA displacement.
Cross-Motion to Amend the Complaint
motion to amend its complaint must overcome two obstacles.
First, because this Court issued a Case Management Order that
stated "[n]o amendment to the pleadings shall be
permitted, except upon leave of Court on a showing of good
cause, " Incyte must show good cause for the
Court to permit the amendment. "[G]ood cause is likely
to be found when the moving party has been generally
diligent, the need for more time was neither foreseeable nor
its fault, and refusing to grant the continuance would create
a substantial risk of unfairness to that
the amendment must be permitted under Rule 15. Under Rule
15(a), "[a] party may amend its pleading after a
responsive pleading is served by leave of the
Court." "[L]eave shall be freely given when
justice so requires, " but "should be denied when
the proposed amendment would be futile." "A
motion for leave to amend a complaint is futile where the
amended complaint would be subject to dismissal under Rule
12(b)(6) for failure to state a claim." "Motions
to amend are normally granted by the Court unless there is
serious prejudice to the opposing party."
Request to Supplement its Trade Secret Claim
seeks to amend its complaint to add further factual bases for
its misappropriation of trade secret claim. Specifically, it
seeks to include alleged facts regarding Defendants'
access to a "confidential Investigator's
has good cause for amending the claim to include these
allegations- it did not discover the facts regarding the
brochure until April 24, 2017. Given that Defendants raised
no explicit arguments in opposition to this amendment, the
motion to amend the complaint to include the information
related to the confidential brochure is granted.
Request to Supplement its Unjust Enrichment Claim
also seeks to amend its complaint to supply further factual
bases for its unjust enrichment claim. As discussed above,
DUTSA displaces the unjust enrichment claim as alleged in the
original complaint insofar as any factual allegations have
the same factual basis as the trade secret misappropriation
claim. However, Incyte may allege unjust enrichment if its
proposed amendments put forth new facts, unrelated to trade
wishes to incorporate allegations that Dr. Fridman worked for
Flexus during his employment at Incyte, claiming damages for
"the value of the salary paid by Incyte to Dr. Fridman
from the time Dr. Fridman began performing work for Flexus
and the value of the bonus paid by Incyte after Dr. Fridman
began performing work for Flexus."
DUTSA may not the displace the unjust enrichment claim as
alleged in the proposed amended complaint, the Court
nonetheless finds that adding this claim would be futile.
These "moonlighting" allegations directly relate to
the terms of a contract Dr. Fridman signed with Incyte that
is subject to mandatory arbitration.
reference to "Conflicting Employment and Financial
Interests, " Dr. Fridman's contract with Incyte
states: "During my employment by the Company, I will
devote my best efforts to the interests of the Company. I
will inform the Company before: . . . Engaging in other
employment, occupation, consulting or other business activity
. . . that is in direct competition with the
Company." Dr. Fridman's contract also contains
an arbitration clause, which states: "I agree that any
dispute arising out of, related to or resulting from the
employment relationship between me and the Company . . .
shall be resolved by final and binding arbitration, except
where the law specifically prohibits the use of arbitration
as a final and binding remedy."
Court previously has dismissed claims in this case that are
subject to mandatory arbitration under this contract, because
those claims arose "out of and relate[d] directly to the
Confidentiality Agreement." The same is true of this
claim. Delaware law defines unjust enrichment as "the
unjust retention of a benefit to the loss of another, or the
retention of money or property of another against the
fundamental principles of justice or equity and good
conscience." Determining whether Dr. Fridman's
alleged moonlighting defied "the fundamental principles
of justice, " necessarily would require an examination
of his contract with Incyte, which is ...