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ANI Pharmaceuticals, Inc. v. Method Pharmaceuticals, LLC

United States District Court, D. Delaware

January 13, 2019


          Geoffrey G. Grivner, Buchanan, Ingersoll & Rooney, P.C., Wilmington, DE; S. Lloyd Smith, James T. Wilcox, Alexandre H. Gapihan, Buchanan, Ingersoll & Rooney, P.C., Alexandria, VA - attorneys for Plaintiff

          J. Clayton Athey, Eric J. Juray, Prickett, Jones & Elliott, P.A., Wilmington, DE; Christopher J. Schwegmann, Jared D. Eisenberg, Lynn Pinker Cox & Hurst, LLP, Dallas, TX - attorneys for Defendants January 11, 2019 Wilmington, Delaware



         Before the Court is the motion of Defendants Method Pharmaceuticals, LLC ("Method") and Matthew Scott Tucker ("Tucker") (collectively "Defendants") to "Dismiss Under Federal Rule of Civil Procedure 12(b)(2) Or, In the Alternative, Transfer Venue" to the United States District Court for the Northern District of Texas pursuant to 28 U.S.C. § 1404(a). (D.I. 11). Plaintiff ANI Pharmaceuticals, Inc. ("Plaintiff or "ANI") opposes both dismissal and transfer, but requests that, should the Court deem transfer proper, the case be transferred to the United States District Court for the District of Minnesota. (D.I. 13).[1] For the reasons set forth below, Defendants' motion to transfer is granted, and this case will be transferred to the Northern District of Texas.

         I. BACKGROUND

         Plaintiff filed its Complaint against Defendants on August 7, 2017 alleging violations of §§ 43(a) and 43(a)(1)(B) of the Lanham Act, 15 U.S.C. § 1125(a), as well as a Delaware state law claim for deceptive trade practices, under 6 Del. C. § 2532, and a common law tortious interference claim. (D.I. 1 at ¶¶ 43-72). The Complaint states "[t]his Court has personal jurisdiction over Defendants because the Defendants have solicited sourcing contracts with McKesson Corp. [("McKesson")], a Delaware Corporation that distributes pharmaceuticals at a retail sale level throughout the District." (Id. at ¶ 11). Further, the Complaint alleges that "Defendant Tucker, directed, sanctioned, actively participated in, and voluntarily and intentionally caused the above- mentioned unlawful conduct by the corporate Defendants." (Id. at¶42). Based upon these actions, Plaintiff alleges that "Defendants have caused harm to Plaintiff in this District." (Id. at ¶ 11).

         In the present motion, Defendants argue that they "have no connection with Delaware" and thus "lack sufficient 'minimum contacts' with this district to permit the exercise of specific or general jurisdiction." (D.I. 12 at 2). In support of this, Defendants have submitted two declarations from Tucker, one on behalf of Method Pharmaceuticals, LLC ("Method Declaration"), (D.I. 12, Ex. A), and one on behalf of Tucker, himself ("Tucker Declaration"). (D.I. 12, Ex. B). The Method Declaration attests that Tucker is the President of Method "a Texas limited liability company, whose sole member is Matthew Scott Tucker" and whose "corporate headquarters are located at 7333 Jack Newell Blvd. N., Suite 300, Fort Worth, Texas 76118." (Id. at ¶¶ 2-4). The Method Declaration states the following with respect to Method (D.I. 12, Ex. A at ¶¶ 5-7):

5. Method is a small company, having less than 10 employees. All of Method's employees reside in or, if they reside elsewhere, are employed out of Texas. None of Method's employees reside in Delaware, travel to Delaware for work, or otherwise perform any of their job duties in Delaware. Method also does not have any representatives or agents in the State of Delaware, including any registered agents.
6. Method does not own or lease any offices or other facilities in Delaware, does not have a Delaware telephone number or mailing address, does not have any bank accounts in Delaware, does not hold assets of any other kind in Delaware, is not licensed to do business in Delaware, has never paid any taxes of any kind to the State of Delaware, and has never commenced any litigation in Delaware.
7. Method does not solicit business in Delaware, does not advertise or market in Delaware, has never directly shipped any pharmaceutical product to Delaware, and does not derive substantial revenue from Delaware.

         Regarding McKesson, the Method Declaration avers that "Method is not affiliated with McKesson in any capacity and the two companies are entirely independent of one another." (Id. at ¶ 10). It explains (id. at ¶¶ 8-9):

8. On July 25, 2017, Method sent a bid to McKesson Corporation ("McKesson"), through McKesson's sourcing joint-venture ClarusOne Sourcing Services ("ClarusOne"), for the supply of certain estrogens-methyltestosterone ("EEMT") pharmaceutical drug product. McKesson subsequently awarded the bid to Method. On August 9, 2017, McKesson sent the subject contract to Method for acceptance by email from McKesson's Irving, Texas offices. None of the EEMT product Method shipped to McKesson pursuant to this contract was delivered by Method to McKesson in Delaware.
9. The communications between Method and McKesson relating to this bid award involved, other than Method employees, individuals located in Irving, Texas and London, United Kingdom. These non-party individuals include Cristi Mahoney and Nicholas Richardson located in Irving, and Elme Albertse located in London. None of these communications involved individuals located in Delaware, and none of these communications occurred in Delaware.

         Moreover, while Method listed its EEMT drug on national pharmaceutical databases -including Medi-Span and First DataBank Method asserts that "[pharmaceuticals cannot be purchased from, or sold by Method through these listing databases and entities and persons cannot directly contact Method through these databases." (Id. at ¶¶ 10-12).

         The Tucker Declaration attests that Mr. Tucker resides in Ft. Worth, Texas. (D.I. 12, Ex. B at ¶ 3). He has never resided, been employed, transacted business, paid taxes, held bank accounts or assets, owned or leased property, or commenced litigation in Delaware. (Id. at ¶¶ 4-8). He states that he has "never traveled to the State of Delaware." (Id. at ¶ 9).

         Plaintiff responds that "Method's sales activities establish personal jurisdiction pursuant to 10 Del. C. § 3104(c)(1), (2), and (4)," because Method

entered into a distribution contract with McKesson Corporation ("McKesson"), a Delaware corporation, that distributes pharmaceuticals at a retail sale level throughout this District, and throughout the United States. . . . McKesson is the largest distributor of pharmaceutical drugs and medical devices in the United States, and it ranks 5th on the Fortune 500 ranking of America's largest corporations, with revenues in excess of $190 billion.... Method admits that it has no control over where McKesson distributes its products.... Method is fully aware that McKesson, the largest drug distributor in the United States, distributes drug products nationwide through Walmart and Rite Aid pharmacies. Method understands that McKesson's nationwide distribution includes the state of Delaware, and makes no allegation that its contract with McKesson excludes its products from the Delaware market.
Method also admits that is has listed its EEMT product in the national pharmaceutical databases Medi-Span and First Databank.... These databases have nationwide reach and are an essential advertising tool for drug products. Method promotes its EEMT drug products in those databases so that Delaware pharmacists will order its EEMT drug products, and Delaware insurance companies will list its EEMT drug products in formularies for reimbursement. . . . Method's nationwide advertising of its EEMT drug products in the drug databases along with its distribution contract with McKesson ensures that its EEMT drug products will be dispensed in Delaware and creates personal jurisdiction in Delaware over Defendants Method and Tucker.

         (D.I. 13 at 1-2 (internal citations omitted)). Plaintiff adds that Method is also a pharmaceutical vendor for the Minnesota Multistate Contracting Alliance for Pharmacy ("MMCAP") purchasing collective for pharmaceutical products which Delaware has contracted to be a part of. (Id. at 1, 8).

         With respect to Mr. Tucker, Plaintiff asserts that "Mr. Tucker and Method are one and the same."[2] (D.I. 13 at 12).

Mr. Tucker is the Founder and President of Method, and he does not indicate that anyone else has any ownership interest in the company. ... As such, Mr. Tucker has a clear personal financial interest in the misconduct alleged in the Complaint. The fiduciary shield doctrine does not apply to Mr. Tucker because he was not merely acting at the direction of Method. As Method's owner and President, his actions were for his own individual pecuniary interest. He acted at his own behest, not that of a supervisor, which is the type of situation in which the fiduciary shield doctrine is typically invoked. As Method's owner and President, Mr. Tucker directly designed, facilitated, and negotiated a distribution contract with McKesson. Further, he directed the listing of Method's EEMT product on drug databases.

(Id. at 12-13).


         A. Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(2)

         Pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure, the Court may dismiss a suit for lack of jurisdiction over a person. When a defendant challenges a court's exercise of personal jurisdiction under Rule 12(b)(2), "the plaintiff bears the burden of establishing personal jurisdiction by a preponderance of the evidence and must do so by 'establishing with reasonable particularity sufficient contacts between the defendant and the forum state.'" Turner v. Prince Georges County Public Schools, 694 Fed.Appx. 64, 66 (3d Cir. 2017) (quoting Mellon Bank (East) PSFS, Nat'lAss'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992)). "To meet this burden, the plaintiff must produce 'sworn affidavits or other competent evidence,' since a Rule 12(b)(2) motion 'requires resolution of factual issues outside of the pleadings.'" Brasure's Pest Control, Inc. v. Air Cleaning Equip., Inc., C.A. No. 17-323-RGA-MPT, 2018 WL 337747, at *1 (D. Del. Jan. 9, 2018) (quoting Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 67 n.9 (3d Cir. 1984)). "[W]hen the court does not hold an evidentiary hearing on the motion to dismiss, [however], the plaintiff need only establish a prima facie case of personal jurisdiction and the plaintiff is entitled to have its allegations taken as true and all factual disputes drawn in its favor." Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004) (citing Pinker v. Roche Holdings, Ltd., 292 F.3d 361 (3d Cir. 2002)).

         Two requirements, one statutory and one constitutional, must be satisfied for personal jurisdiction to exist over a defendant. Bell Helicopter Textron, Inc. v. C & C Helicopter Sales, Inc., 295 F.Supp.2d 400, 403 (D. Del. 2002). "First, a federal district court may assert personal jurisdiction over a nonresident of the state in which the court sits to the extent authorized by the law of that state." Id. (citing Fed.R.Civ.P. 4(e)). The Court must, therefore, "determine whether there is a statutory basis for jurisdiction under the Delaware long-arm statute." Id. (citing 10 Del. Code § 3104(c)). "Second, because the exercise of jurisdiction must also comport with the Due Process Clause of the United States Constitution, the Court must determine if an exercise of. jurisdiction violates [defendants'] constitutional right to due process." Id. (citing International Shoe Co. v. Washington, 326 U.S. 310 (1945)); see also IMO Industries, Inc. v. Kiekert AG, 155 F.3d 254, 259 (3d Cir. 1998).

         Delaware's long arm statute, 10 Del. C. § 3104, provides in pertinent part:

(c) As to a cause of action brought by any person arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nonresident, or a personal ...

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