Sucampo Pharmaceuticals v. Astellas Pharma

• Citation: 471 F.3d 544
• Decision Date: 22 December 2006
• Docket Number: No. 06-1036.,06-1036.
• Parties: SUCAMPO PHARMACEUTICALS, INCORPORATED, a Delaware corporation, Plaintiff-Appellant, v. ASTELLAS PHARMA, INCORPORATED, formerly known as Fujisawa Pharmaceutical Company, Limited, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

471 F.3d 544

SUCAMPO PHARMACEUTICALS, INCORPORATED, a Delaware corporation, Plaintiff-Appellant, v. ASTELLAS PHARMA, INCORPORATED, formerly known as Fujisawa Pharmaceutical Company, Limited, Defendant-Appellee.

No. 06-1036.

United States Court of Appeals, Fourth Circuit.

Argued October 24, 2006.

Decided December 22, 2006.

ARGUED: James D. Dasso, Foley & Lardner, L.L.P., Chicago, Illinois, for Appellant. Karen L. Hagberg, Morrison & Foerster, L.L.P., New York, New York, for Appellee. ON BRIEF: Derek L. Wright, Foley & Lardner, L.L.P., Chicago, Illinois; Vineeta A. Bathia, Foley & Lardner, L.L.P., Washington, D.C., for Appellant. Kyle W.K. Mooney, Morrison & Foerster, L.L.P., New York, New York, for Appellee.

Before WILKINS, Chief Judge, GREGORY, Circuit Judge, and JAMES R. SPENCER, Chief United States District Judge for the Eastern District of Virginia, sitting by designation.

Affirmed by published opinion. Judge GREGORY wrote the opinion, in which Chief Judge WILKINS and Judge Spencer joined.

OPINION

GREGORY, Circuit Judge.

Sucampo Pharmaceuticals, Inc. ("Appellant" or "Sucampo") appeals the dismissal of its breach of contract claims against Astellas Pharma, Inc. ("Appellee" or "Astellas") on the basis of a forum-selection clause contained in the parties' licensing agreement. Because we find that the safety agreement under which Sucampo sued was at least "incidental to" the licensing agreement, and thus governed by the forum-selection clause requiring Sucampo to bring suit in Japan, we affirm the decision of the district court.

I.

The immediate relationship between the parties dates back to 1998, when a corporate predecessor to Sucampo signed an agreement ("Development Agreement") with a corporate predecessor of Astellas. The Development Agreement concerned Sucampo's development and testing of a drug based on Astellas's compound, FK506 ("FK506"). The Development Agreement was written in Japanese and executed in Japan, but did not contain a forum-selection clause. The Development Agreement contained a provision mandating that the parties agree to guidelines for the exchange of safety information relating to FK506. Later in 1998, the parties executed an agreement relating to the exchange of safety information. This agreement was "executed under" the Development Agreement (J.A. 164), contained detailed terms dictating the exchange of information relating to FK506, and was effective until the termination of the Development Agreement, unless otherwise agreed.

In 1999, the parties executed another agreement ("Basic Agreement") with respect to the continued development and commercialization of FK506. Like the Development Agreement, the Basic Agreement contained a provision mandating that the parties develop guidelines for the exchange of safety information. In addition, the Basic Agreement provided that "[a]s for each item to be developed and commercialized in accordance with this Agreement, [the parties] shall separately enter into an individual agreement pursuant to the provisions hereof as a basis."¹ (J.A. 39.) The Basic Agreement contained a Japanese choice-of-law provision and a forum-selection provision governing "[t]his Agreement" and specifying the exclusive jurisdiction of the Japanese courts. (J.A. 43, 190.)

Following the execution of the Basic Agreement, the parties executed a new agreement concerning the exchange of safety information ("Safety Agreement"). The Safety Agreement provided that it was executed "[u]nder the basic agreement," and was intended to "provide a general guide for the safety information exchange on [the compound] between [the parties.]" (J.A. 24.) The term of the Safety Agreement "unless otherwise agreed upon between [the parties]" was "until the termination for whatever reason of the Basic Agreement." (J.A. 31.) The Safety Agreement did not contain either a choice-of-law or forum-selection provision.

In 2002, the parties executed a license agreement ("Basic License Agreement") and "agreed that the total legal relationship between [them] with respect to this compound shall be governed by this agreement."² (J.A. 282.) The Basic License Agreement contained a provision regarding the exchange of safety information, which provided that "[the parties] shall enter into an agreement concerning the exchange of such safety information through separate discussion." (J.A. 289.) Following the execution of the Basic License Agreement, the parties continued to exchange safety information under the protocols specified by the Safety Agreement. The Basic License Agreement contained a choice-of-law provision specifying Japanese law and a forum-selection clause specifying that "[a]ny dispute in relation to this agreement or any agreement incidental hereto" be brought in Osaka, Japan. (J.A. 314.)

In 2004, wishing to make certain changes with respect to the manufacture of any codeveloped drugs, the parties executed a successor agreement to the Basic License Agreement ("Amended Basic License Agreement"), which was identical in all relevant respects, but was drafted in English and changed the exclusive forum for suit to Tokyo, Japan.

On February 14, 2005, the United States Food and Drug Administration ("FDA") issued two alerts regarding a link between cancer and the use of Protopic, a drug marketed by Astellas, and containing FK506. The following day, the FDA Pediatric Advisory Committee ("Advisory Committee") recommended that Protopic carry a so-called "black box warning" about the potential cancer risk. Prior to the February 15 meeting of the Advisory Committee, Astellas sent a background document regarding Protopic to the Committee. There is no indication in the record that Astellas informed Sucampo about the document sent to the Advisory Committee. On March 10, the FDA adopted the Advisory Committee's recommendation and required that Protopic carry a black box warning. The FDA also issued a public health advisory concerning Protopic's potential cancer link. Sucampo subsequently suspended development of its ophthalmologic product containing FK506.

On March 11, Sucampo brought a breach of contract action against Astellas, alleging that Astellas had breached the Safety Agreement by failing to disclose the FDA's concerns over Protopic and, as a result of such failure, Sucampo suffered serious damages relating to the development of products based on FK506. Astellas filed a motion to dismiss on the basis of Federal Rule of Civil Procedure 12(b)(1),(2), and (3). Astellas based its 12(b)(1) and (3) objections on the forum-selection clause contained in the Amended Basic License Agreement. Astellas argued that the Safety Agreement was at the very least considered incidental to the Amended Basic License Agreement, therefore Sucampo's claims were subject to the exclusive jurisdiction of the courts of Tokyo, Japan, and the district court either lacked subject matter jurisdiction or was an improper venue. In addition, Astellas argued that the district court lacked personal jurisdiction over Astellas.

On November 28, 2005, without ruling on the personal jurisdiction objection, the district court held that the Safety Agreement was incidental to the Amended Basic License Agreement and granted Astellas's motion to dismiss on the basis of the forum-selection clause in the Amended Basic License Agreement. This appeal followed.

II.

This Circuit has not decided the appropriate treatment of a motion to dismiss based on a forum-selection clause. See, e.g., In re Millennium Studios, Inc., 286 B.R. 300, 306 (D.Md.2002) ("There is currently no procedural mechanism specifically tailored to handle a motion to dismiss based on a forum-selection clause. The Fourth Circuit has not decided the issue of what approach to take and which subsection of Rule 12(b) is most appropriate for the situation."). Other circuits have characterized such motions as motions under Fed.R.Civ.P. 12(b)(1), (3), or (6). See, e.g., Silva v. Encyclopedia Britannica Inc., 239 F.3d 385 (1st Cir.2001) (treating motion to dismiss based on forum-selection clause as a Rule 12(b)(6) motion to dismiss); Lipcon v. Underwriters at Lloyd's, London, 148 F.3d 1285 (11th Cir.1998) (holding that motions to dismiss based on forum-selection clause should be analyzed under Rule 12(b)(3)); AVC Nederland B.V. v. Atrium Inv. P'ship 740 F.2d 148 (2d Cir.1984) (affirming dismissal of action under Rule 12(b)(1) on basis of forum-selection clause).

A.

The district court dismissed Sucampo's complaint on the basis of the forum-selection clause contained in the Amended Basic License Agreement before resolving Appellee's motion to dismiss for lack of personal jurisdiction. Accordingly, we must resolve whether a dismissal based on a forum-selection agreement is under Rule 12(b)(6), because the dismissal of a case on an issue relating to the merits of the dispute, such as failure to state a claim, is improper without resolving threshold issues of jurisdiction, including personal jurisdiction. See Ruhrgas AG v. Marathon Oil, 526 U.S. 574, 583, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) ("Personal jurisdiction . . . is `an essential element of the jurisdiction of a district . . . court,' without which the court is `powerless to proceed to an adjudication.'" (quoting Employers Reinsurance Corp. v. Bryant, 299 U.S. 374, 382, 57 S.Ct. 273, 81 L.Ed. 289 (1937))); Constantine v. Rectors & Visitors of George Mason Univ., 411 F.3d 474, 480 (4th Cir.2005) ("The validity of an order of a federal court depends upon that court's having jurisdiction over both the subject matter and the parties." (internal quotation marks omitted)).

B.

To analyze a motion to dismiss based on a forum-selection clause under Rule 12(b)(1), a court must engage the legal fiction that the clause affects the power of the court to adjudicate the dispute. See M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 13, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) ("The argument that [forum-selection] clauses are improper...