AntiOp , Inc. v. Reckitt Benckiser Pharm., Inc.

• Decision Date: 27 July 2016
• Docket Number: Civil Case No. 16-cv-00051-JMH
• Citation: 198 F.Supp.3d 777
• Parties: ANTIOP, INC., Plaintiff, v. RECKITT BENCKISER PHARMACEUTICALS, INC., et al., Defendants.
• Court: U.S. District Court — Eastern District of Kentucky

198 F.Supp.3d 777

ANTIOP, INC., Plaintiff,

v.RECKITT BENCKISER PHARMACEUTICALS, INC., et al., Defendants.

Civil Case No. 16-cv-00051-JMH

United States District Court, E.D. Kentucky, Central Division at Lexington.

Signed July 27, 2016

Mark T. Hayden, Taft, Stettinius & Hollister, LLP, Cincinnati, OH, for Plaintiff.

Dana Rashay Howard, P. Douglas Barr, Shannon A. Singleton, Stoll Keenon Ogden, PLLC, Lexington, KY, for Defendants.

MEMORANDUM OPINION & ORDER

Joseph M. Hood, Senior United States District Judge

This matter is before the Court upon Defendants Reickitt Benckiser Pharmaceuticals, Inc., Indivior, PLC, and Indivior, Inc.'s Motion to Dismiss the Complaint [DE 13] pursuant to Fed. R. Civ. P. 12(b)(6) because the contract at issue contains a forum selection clause permitting Plaintiff AntiOp, Inc. ("AntiOp") to file this lawsuit in the state of New York. Plaintiff has filed a Response [DE 19], and Defendants have filed a Reply in further support of their Motion [DE 22].¹

I.

AntiOp, a Kentucky corporation, is actively developing a naloxone

nasal spray to treat heroin and opioid overdoses. Defendant Indivior, Inc., is the operating subsidiary of Defendant Indivior, PLC, a pharmaceutical company that specializes in the development, marketing, and sale of addiction treatment drug products. Indivior, PLC and Indivior, Inc. (collectively, "Indivior"), are subsidiaries of Defendant Reckitt Benckiser Pharmaceuticals, Inc. ("Reckitt").

In 2014, Reckitt, Indivior, and AntiOp entered into a development and asset purchase agreement ("Development Agreement") regarding a naloxone

nasal spray. The parties subsequently amended the agreement in January and May of 2015. Pursuant to the Development Agreement, AntiOp granted Reckitt and Indivior the exclusive rights to AntiOp's naloxone nasal spray formulation. In return, Reckitt was to pay AntiOp once specific events outlined in the Development Agreement occurred. In particular, Section 2.07 called for a "Formulation Patent Milestone Payment," due once (1) AntiOp filed a Track 1 U.S. non-provisional patent application; (2) the Track 1 U.S. non-provisional patent application was issued with claims that ensure the Granted patent is listable in the FDA Orange Book (resource listing approved drug products with therapeutic qualities); (3) AntiOp filed an International PCT Patent; and (4) AntiOp delivered the executed Intellectual Property Assignment documents to Reckitt and Indivior.

The Development Agreement also included a choice of law provision and a forum selection clause. Section 9.11 provides that the Development Agreement "shall be governed by and construed in accordance with the internal laws of the State if New York..." Section 9.12 provides as follows:

Section 9.12 Submission to Jurisdiction. Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the federal courts located in the Southern District of New York, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.

AntiOp filed both a Track 1 U.S. non-provisional patent application and an International PCT patent application for the naloxone

nasal spray in November of 2014. On November 24, 2015, the United States Patent and Trademark Office issued a patent with claims directed to AntiOp's naloxone nasal spray formulation. However, on the previous day, November 23, 2015, the FDA sent notice to Indivior that the New Drug Application ("NDA") would not be approved as filed. The FDA provided Indivior with a list of actions necessary in order for its NDA to gain approval.

In its Complaint, AntiOp avers that Defendants breached the Development Agreement because AntiOp completed the conditions listed in Section 2.07 and is entitled to a payment of $3,000,000. Indivior contends that the second condition was incomplete because the Formulation Patent obtained by AntiOp does not contain claims that are listable in the Orange Book because the FDA did not approve AntiOp's nasal spray formulation.

In their Motion to Dismiss for lack of jurisdiction, pursuant to Fed. R. Civ. P. 12(b)(2), Defendants argue that Section 9.12 of the Development Agreement requires Plaintiff to bring the action within the Southern District of New York and, thus, precludes AntiOp from bringing suit in this district. AntiOp argues that the forum selection clause is permissive, not mandatory, and the matter may be adjudicated before this Court. For the reasons set forth below, Defendants' Motion to Dismiss will be denied.

II.

Defendant seeks dismissal of the action before this Court under Fed. R. Civ. P. 12(b)(6), citing Langley v. Prudential Mortg. Capital Co., LLC , 546 F.3d 365, 369 (6th Cir. 2008) (per curiam ) (citing Security Watch, Inc. v. Sentinel Sys., Inc. , 176 F.3d 369 (6th Cir. 1999) ) (remanding matter to district court for consideration of relief under forum selection clause on either motion to dismiss under Rule 12(b)(6) or motion to transfer under 28 U.S.C. § 1404 ). A party bringing a motion under Rule 12(b)(6) asserts that the plaintiff has "failed to state a claim upon which relief can be granted" and tests whether, as a matter of law, the plaintiff is entitled to legal relief. Dismissal is appropriate if the plaintiff fails to provide "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The Court construes the complaint in the light most favorable to the plaintiff and accept all factual allegations as true, but the factual allegations must "raise a right to relief above the speculative level." Id. at 555, 127 S.Ct. 1955. The complaint must "contain either direct or inferential allegations respecting all material elements necessary for recovery under a viable legal theory." D'Ambrosio v. Marino , 747 F.3d 378, 383 (6th Cir. 2014) (internal quotation marks omitted).

The Court is not entirely persuaded that prevailing law in this Circuit demands resolution of the matter under Rule 12(b)(6).² In a case decided two years prior to Langley , the Court of Appeals for the Sixth Circuit addressed the impact of a forum selection clause on the proceedings under Fed. R. Civ. P. 12(b)(2), concluding that dismissal is appropriate where the facts, taken together and including the language of a forum selection clause, fail to establish a prima facie case for personal jurisdiction. Preferred Capital, Inc. v. Assoc. in Urology , 453 F.3d 718, 721 (6th Cir. 2006) (evaluating the motion to dismiss under Fed. R. Civ. P. 12(b)(2) and explaining that "the requirement that a court have personal jurisdiction over a party is a waivable right and there are a variety of legal arrangements whereby litigants may consent to the personal jurisdiction of a particular court system" and that "[t]he use of a forum selection clause is one way in which contracting parties may agree in advance to submit to the jurisdiction of a particular court.") (citing M/S Bremen v. Zapata Off–Shore Co. , 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) ; Kennecorp Mortgage Brokers, Inc. v. Country Club Convalescent Hospital, Inc. , 66 Ohio St.3d 173, 610 N.E.2d 987, 988 (1993) ); see also Ferris v. Salter, P.C. v. Thomson Reuters Corp. , 819 F.Supp.2d 667, 672–73 (E.D. Mich. 2011) (discussing and listing caselaw addressing proper procedural mechanism to address and resolve a motion to enforce a forum selection clause). Under Rule 12(b)(2), if the court does not conduct an evidentiary hearing, it considers the pleadings and affidavits in a light most favorable to the plaintiff; and the plaintiff need only make a prima facie showing of jurisdiction to defeat the motion under 12(b)(2). Id. (citing Dean v. Motel 6 Operating, L.P. , 134 F.3d 1269, 1272 (6th Cir. 1998) ). The end result is the same in the matter before the Court.

III.

The question before the Court is not whether the forum selection clause applies or is enforceable – everyone agrees that it does and it is – but what it means. Does Plaintiff have an obligation or an option to bring this suit in the Southern District of New York under Section 9.12 of the Development Agreement?

As a general matter, "[t]he construction of forum selection clauses by federal courts is a matter of federal common law, not state law of the state in which the federal court sits", are interpreted by reference to ordinary contract principles, and should be upheld unless there is a strong showing that it should be set aside." Crown Labs., Inc. v. Se. Commercial Fin., LLC , No. 2:11–CV–185, 2012 WL 2126945, at *2 (E.D. Tenn. Apr. 30, 2012) (quoting Wong v. Partyaming, Ltd., 589 F.3d 821, 828 (6th Cir. 2009) ; citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991) ; In re Delta America Re Ins. Co., 900 F.2d 890, 892 (6th Cir. 1990) ). Applying ordinary contract principles, the Court looks first at the language of 9.12 of the Development Agreement to determine whether it is "mandatory" or "permissive" in nature. See id. at *2 (citing Cornett v. Carrithers, 465 Fed.Appx. 841, 844 (11th Cir. 2012) ; Global Seafood Inc. v. Bantry Bay Mussels Ltd., 659 F.3d 221, 224 (2d Cir. 2011) ; IntraComm, Inc. v. Bajaj, 492 F.3d 285, 290 (4th Cir. 2007) ; Excell, Inc. v. Sterling Boiler & Mechanical, Inc., 106 F.3d 318, 321 (10th Cir. 1997) ); Griffin v. Baker & Taylor, Inc. , Case No. 5:12–cv–00103, 2013 WL 610957, at *7 (W.D. Ky. Feb. 19, 2013) (quoting Rivera v. Centro Medico de Turabo , 575 F.3d 10, 17 (1st Cir. 2009) ) "A mandatory clause prescribes a specific forum in which litigation regarding the contracted-to subject matter must be brought; a permissive clause, by contrast, identifies a forum in which such litigation permissibly may be brought, but on a non-exclusive basis." Crown Labs., Inc. , 2012 WL 2126945 at * 2 (citing Cornett, 465 Fed.Appx. at 844 ); English Mountain Spring...