United States District Court, D. Delaware
PATH TO RICHES, LLC, directly and derivatively on behalf of M.M.T. DIAGNOSTICS 2014, LTD., Plaintiff,
CARDIOLYNC, INC., GAMLIEL KAGAN a/k/a/ GAM KAGAN, and DR. JACOB LEVY, Defendants, and M.M.T. DIAGNOSTICS 2014, LTD. a/k/a GAM KAGAN, and DR. JACOB LEVY, Nominal Defendant.
Austin McHugh United States District Judge.
a dispute over whether one Israel-based company improperly
obtained confidential and proprietary information from
another. Plaintiff Path to Riches purports to bring direct
and derivative claims on behalf of MMT, an Israeli company in
which it holds a majority share, against Defendants
CardioLync and its owners. Defendants now move to dismiss
based on lack of personal jurisdiction, lack of subject
matter jurisdiction, and forum non conveniens.
Without deciding either jurisdictional issue, I find that
Israel is an adequate alternative forum for this dispute, and
that the deference owed to Plaintiff's choice of forum is
outweighed by the substantial private and public interests in
holding this proceeding in Israel. Specifically, all of the
parties and essential non-party witnesses are either Israeli
residents or have significant ties to Israel; two of the
three companies are based there; and Israeli law likely
governs most of Plaintiff's claims. Accordingly,
Defendants' motion to dismiss will be granted on FNC
case arises from Plaintiff Path to Riches, LLC's
(PTR's) allegation that Defendants Gamliel Kagan (Gam)
and Jacob Levy (Dr. Levy), through their company, Defendant
CardioLync, misappropriated proprietary information belonging
to M.M.T. Diagnostics (2014), Ltd., by inducing MMT's CEO
to breach his contractual and fiduciary duties. Because I
ultimately decide this motion on FNC grounds, the location of
and relationship among the parties and witnesses are of
a limited liability company organized under the laws of
Delaware and based in New York state. It is wholly owned by
Dr. and Ms. Minkowitz, non-parties whose primary residence is
in New York. The Minkowitzes have a second home in Israel,
where they visit each year for extended periods and where
their children attend school. Their neighbor in Israel is
Jeremy Kagan, an Israeli who is not a party but around whom
this dispute centers. Jeremy's brother is Defendant Gam,
who also resides in Israel.
2013, Jeremy and Dr. Minkowitz entered into a telemedicine
business venture, which the pair would eventually incorporate
under the laws of Israel as MMT. (MMT is named as both a
plaintiff and a nominal defendant in this action.) MMT
initially focused on pathology, but according to PTR, hoped
to expand into other fields, including cardiology. Jeremy
owns 40 percent of MMT, and PTR (the Minkowitzes'
company) owns the remaining 60 percent. Although MMT's
incorporation documents provide for a five-member board of
directors-three to be appointed by Dr. Minkowitz and two by
Jeremy-Jeremy is the sole board member. Schreiber Decl.
¶ 22, ECF No. 14. In 2014, Jeremy also became the CEO of
MMT via an employment agreement created under the laws of
Israel. He remained in that post through 2015.
MMT is based in Israel, PTR alleges that Jeremy and Dr.
Minkowitz agreed in August 2015 to hire two people to work on
MMT's product in New York. Jeremy allegedly refused to
cooperate with these employees or speak with them by phone,
and “never traveled to the United States to
visit” them. Compl. ¶ 44. PTR alleges that in
November 2015, “as a result of Gam's funding,
” a cease and desist letter was served upon Dr.
Minkowitz and the New York employees claiming they were
misappropriating MMT's confidential information. Then, on
January 26, 2016, Jeremy filed a lawsuit individually and on
behalf of MMT in New York state court alleging that Dr.
Minkowitz had formed a new company and was misappropriating
MMT's intellectual property.
lawsuit, PTR alleges the opposite. On the same day that
Jeremy sued Dr. Minkowitz, Gam and Dr. Levy (a cardiologist
who is Jeremy's brother-in-law), incorporated CardioLync
in Delaware-Gam and Dr. Levy are its shareholders and
directors. CardioLync is a cardiology telemedicine company
based in Israel, and PTR alleges that it targets the same
market as MMT. PTR claims that Gam and Dr. Levy, through
CardioLync, misappropriated MMT's proprietary information
by inducing Jeremy to breach his fiduciary duties and
employment agreement with MMT. PTR brings one federal and
nine state claims “directly and derivatively” on
behalf of MMT.
now move to dismiss for lack of subject-matter jurisdiction,
lack of personal jurisdiction over Gam and Dr. Levy, and on
the basis of FNC, arguing that Israel is the more appropriate
forum. Central to Defendants' subject matter jurisdiction
argument is their claim that PTR lacks standing because it
has not complied with Israeli requirements for bringing a
shareholder's derivative action on behalf of MMT. The
parties have provided dueling affidavits as to what Israeli
law requires and whether PTR should be exempted from
Israel's pre-suit demand requirement. Schreiber Decl. ECF
No. 14; Stein Decl. ECF No. 22.
Defendants raise multiple grounds for dismissal, this case
calls for resolution of only one: forum non
conveniens (FNC). The FNC doctrine empowers federal
courts to dismiss an action when “a foreign tribunal is
plainly the more suitable arbiter of the merits of the
case.” Sinochem Int'l Co. v. Malaysia Int'l
Shipping Corp., 549 U.S. 422, 425 (2007). When deciding
a motion to dismiss that is based on FNC and other grounds,
courts have “discretion to respond at once to a
defendant's [FNC] plea, and need not take up first any
other threshold objection.” Id. Thus, where
“considerations of convenience, fairness, and judicial
economy so warrant, ” courts may exercise their
discretion to dismiss on FNC grounds without deciding any
jurisdictional questions. Id. In this case, FNC
considerations “weigh heavily in favor of
dismissal”-as explained below-and the existence of
subject-matter and personal jurisdiction is “difficult
to determine.”See Sinochem, 549 U.S. at 436. I
therefore “take the less burdensome course” and
dismiss on FNC grounds alone. See id.
a discretionary tool that empowers a district court “to
dismiss an action on the ground that a court abroad is the
more appropriate and convenient forum for adjudicating the
controversy.” Id. at 425. The doctrine arises
from a concern that plaintiffs sometimes attempt to force a
trial at a “most inconvenient place for an adversary,
even at some inconvenience to [the plaintiff], ” in
order to inflict upon an adversary “expense or trouble
not necessary to [the plaintiff's] own right to pursue
his remedy.” Lony v. E.I. Du Pont de Nemours &
Co., 935 F.2d 604, 615 (3d Cir. 1991) (citing Gulf
Oil Corp. v. Gilbert, 330 U.S. 501, 507 (1947)).
decide whether FNC is appropriate, district courts engage in
a three-step analysis. First, the court must determine
“whether an adequate alternate forum” exists to
entertain the case. Eurofins Pharma U.S. Holdings v.
BioAlliance Pharma SA, 623 F.3d 147, 160 (3d Cir. 2010).
If so, the court must next determine “the appropriate
amount of deference to be given the plaintiff's choice of
forum.” Id. Finally, the court must weigh
“the relevant public and private interest
factors”-discussed below-to determine whether, on
balance, “trial in the chosen forum would result in
oppression or vexation to the defendant out of all proportion
to the plaintiff's convenience.” Id. If
so, or if the chosen forum is “inappropriate” in
light of the court's own “administrative and legal
problems, ” the court “may, in its discretion,
” dismiss the case. Windt v. Qwest Commc'ns
Int'l, Inc., 529 F.3d 183, 189 (3d Cir. 2008)
(citing Koster v. (Am.) Lumbermens Mut. Cas. Co.,
330 U.S. 518, 524 (1947)).
defendants seeking dismissal on the basis of FNC, Gam, Dr.
Levy, and CardioLync bear the burden of persuasion as to all
elements of the FNC analysis, see Lacey v. Cessna
Aircraft Co., 862 F.2d 38, 43-44 (3d Cir. 1988)
(Lacey I), and there is generally a “strong
presumption” in favor of the plaintiff's choice of
forum, ” Piper, 454 U.S. at 255. That
presumption, however, “applies with less force when the
plaintiff or real parties in interest are foreign.”
performing this FNC analysis, the court “generally
becomes entangled in the merits” to the extent required
to “scrutinize the substance of the dispute.”
Van Cauwenberghe v. Biard, 486 U.S. 517, 528 (1988).
However, this “does not call for a detailed development
of the entire case” or “require extensive
investigation”-instead, the court may rely on the
parties' affidavits. Lony, 935 F.2d at 614
(citations omitted). In fact, motions to dismiss based on FNC
should be decided “at an early stage in the litigation,
so that the parties will not waste resources on discovery and
trial preparation in a forum that will later decline to
exercise its jurisdiction over the case.” See
Lony, 935 F.2d at 614. Accordingly, Defendants'
motion is appropriately decided now, before discovery has
taken place and when relatively limited resources have been
several rounds of briefing containing undisputed facts and
numerous affidavits, Defendants have satisfied their burden
to show that an adequate alternative forum exists, and that
the relevant private and public interests outweigh the
deference owed to PTR's forum choice.
Adequate Alternative Forum
have met their burden to show that an adequate alternative
forum exists because all of them are or soon will be Israeli
residents and, moreover, have consented to personal
jurisdiction there. In Piper, the Supreme Court
explained that “[o]rdinarily, [the alternative forum]
requirement will be satisfied when the defendant is amenable
to process in the other jurisdiction.” 454 U.S. at 255
n.22. Here, Gam's residence and CardioLync's
principal place of business is Israel. Compl. ¶¶
6-7, Defs.' MTD 20. (MMT-not a party but a nominal
defendant and the real party in interest to Plaintiff-is also
an Israeli company incorporated and based there.) Dr. Levy
currently resides in the state of Georgia but plans to
relocate to Israel permanently to join his family there
within the month. Levy Suppl. Decl. 1, ECF No. 36. Moreover,
all of the Defendants “would consent to the exercise of
in personam jurisdiction over them by Israeli courts
as a condition for dismissal of this proceeding under
FNC.” Defs.' Reply 3, ECF No. 25. The parties'
undisputed residence in and consent to jurisdiction in Israel
satisfies their duty to show that an alternative forum
exists. See Eurofins, 623 F.3d at 154 n.9.
(affirming that France was an adequate alternative forum
where “each of the defendants [was] amenable to service
of process . . . [and] none of the defendants [would] contest
personal jurisdiction there”); Dahl v. United
Techs. Corp., 632 F.2d 1027, 1029 (3d Cir. 1980)
(affirming FNC dismissal where defendant had consented to
personal jurisdiction in Norway, despite plaintiffs'
objection that defendant was “not really present
there”); see also Kisano Trade & Invest Ltd. v.
Lemster, 737 F.3d 869, 873 n.1 (3d Cir. 2013) (stating
in dicta that Israel was an adequate alternative forum,
despite plaintiff's contention that defendants would not
be amenable to suit there, where defendants consented to
argues that Defendants must do more to meet their burden.
Plaintiff asserts that Defendants, in order to show that an
adequate alternative forum exists, must prove not only that
they are amenable to process in Israel, but also that there
is an adequate cause of action under Israeli law that
provides redress for Plaintiff's injury. Pl.'s Resp.
23; Pl.'s Sur-Reply 6-7, ECF No. 30. It is possible,
albeit rare, for a plaintiff to show that an alternative
forum is inadequate, despite defendants' amenability to
service there-but there is nothing in the record to suggest
that is the case here. In Piper's often-cited
footnote 22, the Supreme Court explained that in “rare
circumstances . . . where the remedy offered by the other
forum is clearly unsatisfactory, the other forum may not be
an adequate alternative.” 454 U.S. at 254 n.22. This
burden is not a light one. For example, the fact that the
alternative forum provides for only limited discovery
relative to that available in United States is not by itself