Aphena Pharma Solutions-Md. LLC v. Biozone Labs., Inc.

• Decision Date: 11 December 2012
• Docket Number: Civil No. WDQ–12–0852.
• Citation: 912 F.Supp.2d 309
• Court: U.S. District Court — District of Maryland
• Parties: APHENA PHARMA SOLUTIONS–MARYLAND LLC, Plaintiff, v. BIOZONE LABORATORIES, INC., et al., Defendants.

912 F.Supp.2d 309

APHENA PHARMA SOLUTIONS–MARYLAND LLC, Plaintiff,

v.BIOZONE LABORATORIES, INC., et al., Defendants.

Civil No. WDQ–12–0852.

United States District Court,

D. Maryland,

Northern Division.

Dec. 11, 2012.

Brian D. Frey, Kelley Connolly Barnaby, Andrew B. Kay, Alston and Bird LLP, Washington, DC, for Plaintiff.

Kevin Patrick Farrell, Mary Barbara Kubicz, Robert Bruce Wallace, Wilson Elser Moskowitz Edelman and Dicker LLP, Washington, DC, David Gregg Trachtenberg, Stephen Arena, Trachtenberg Rodes and Friedberg LLP, New York, NY, James A. Johnson, Teresa Marie Kelly, Semmes Bowen and Semmes PC, Baltimore, MD, for Defendants.

MEMORANDUM OPINION

WILLIAM D. QUARLES, JR., District Judge.

Aphena Pharma Solutions–Maryland LLC (“Aphena”) sued BioZone Laboratories, Inc. (“BioZone”), BioZone Pharmaceuticals, Inc. (“BioZone Pharmaceuticals”), and Daniel Fisher (collectively “defendants”) for contract and fraud claims. Pending are Fisher's motion to dismiss for lack of personal jurisdiction and the defendants' motion to transfer the case to the U.S. District Court for the Northern District of California. Also pending is Aphena's motion for leave to file a surreply to the motion to dismiss. For the following reasons the defendants' motion to transfer will be granted, and Fisher's motion to dismiss for lack of personal jurisdiction will be denied as moot. Leave will not be granted to Aphena to file a surreply.

I. Background ¹

Aphena, a Delaware LLC formerly known as Celeste Packaging LLC,² has its sole production facility in Easton, Maryland, where it employs 176 people. ECF No. 39–1 at 2 ¶ 2–3. The sole member of Aphena is Aphena Pharma Solutions Holdings, Inc., formerly known as Prepak Holdings, Inc. (“Prepak”), a Delaware corporation with a principal place of business in Tennessee.³ Aphena is managed by George Galagno in Maryland. See ECF Nos. 39–1 at 1 ¶ 1, 39–2 ¶ 14.

BioZone is a California corporation, with its principal place of business in California, founded by Fisher and Dr. Brian Keller in 1989. ECF No. 28–6 ¶ 3. Fisher served as BioZone's president until early 2012. Id. ¶ 4. BioZone Pharmaceuticals, a Nevada corporation with its principal place of business in Florida, agreed to purchase BioZone on June 30, 2011. ECF No. 39–3 at 9, 11. Fisher has lived in California for over 60 years. ECF No. 28–6 ¶ 2. His only physical presence in Maryland was two, two-day vacations. Id. ¶ 21.

The transaction that gave rise to this case began when Russ Haines in New Jersey called Fisher on behalf of Prepak ⁴ to express Prepak's interest in purchasing BioZone. See id. ¶ 5; ECF No. 36 ¶ 6. The final transaction was Aphena's purchase of formulations for private label cough and cold products from BioZone.⁵See ECF No. 1 ¶ 6.

In negotiating the deal with Aphena, Fisher participated in several phone calls involving Bob Patel, John Allen, and Safee Chaudhri, all in Maryland; Brett Fliegler in New York; Dan Huggins in New Jersey or Tennessee; and Bob Allen in Tennessee. See ECF No. 36 ¶¶ 8, 10. Fisher also sent to and received from Fliegler and Huggins emails on which Patel and Allen were copied. Id. ¶¶ 5, 9. The price quotations for the transactions were sent to Dan Huggins at Prepak in New Jersey. Id. ¶ 4; ECF No. 28–6 ¶ 14. Fisher also communicated directly with Allen about the logistics of the transaction. ECF No. 28–6 ¶ 17–18.

In April 2010, Fisher sent an email directly to Huggins, Patel, Safee, and Taylor about Aphena personnel's upcoming trip to California, arranged by Haines, to meet with Fisher and other BioZone representatives. ECF No. 36 ¶ 7. There were three meetings in California. ECF No. 28–6 ¶¶ 7–9.

During the negotiations, Fisher was informed that Aphena was in Maryland, the agreement was to be delivered to Maryland, only the Maryland facility could manufacture the formulations, and the project would be managed by Aphena's Maryland employees. ECF No. 39–2 ¶ 9. Formulations and related materials provided by BioZone were delivered to Maryland. Id. at 3 ¶ 7.

After the negotiations, all was not well between Aphena and BioZone. In late summer and early fall 2010, Fisher contacted Patel directly about Aphena's failure to pay. ECF No. 28–6 ¶ 20. Aphena alleges that BioZone failed to deliver the formulations on time; when delivered, they did not meet the proper standards. ECF No. 1 ¶¶ 112–19. Aphena also alleges that it was forced to recall all products made from BioZone's work because of deficiencies. Id. ¶ 166.

On March 19, 2012, Aphena sued BioZone, BioZone Pharmaceuticals, and Fisher for (1) breach of contract, (2)–(3) fraud in the inducement, (4)–(5) intentional misrepresentation, (6) negligent misrepresentation, (7) negligent hiring, and (8) unjust enrichment. ECF No. 1. On May 21, 2012, BioZone and BioZone Pharmaceuticals answered. ECF No. 29. The same day, Fisher moved to dismiss for lack of personal jurisdiction.⁶ ECF No. 28. On May 30, 2012, the defendants moved to transfer the case to the U.S. District Court for the Northern District of California under 28 U.S.C. § 1404. ECF No. 35. On June 18, 2012, Aphena filed a consolidated response to the motions. ECF No. 39. On July 9, 2012, the defendants replied. ECF Nos. 40, 41.

On July 19, 2012, Aphena moved for leave to file a surreply to Fisher's motion to dismiss. ECF No. 43. On July 30, 2012, Fisher responded, ECF No. 44, and on August 9, 2012, Aphena replied, ECF No. 45.

II. Analysis

A. Leave to File Surreply

Aphena seeks leave to file a surreply to Fisher's motion to dismiss because Fisher—for the first time in his reply—relied on the incorrect standard for adjudication of his motion. ECF No. 43 at 2. Fisher asserts that the standard he articulated is correct. ECF No. 44 at 2.

Unless otherwise ordered by the Court, a party may not file a surreply. Local Rule 105.2(a) (D.Md. 2012). Leave to file a surreply may be granted when the movant otherwise would be unable to contest matters presented in the opposing party's reply. Khoury v. Meserve, 268 F.Supp.2d 600, 605 (D.Md.2003), aff'd85 Fed.Appx. 960 (4th Cir.2004).

Fisher had not addressed the legal standard for the dismissal in his motion, but Aphena presented its view of the standard in its opposition. See ECF No. 39 at 27. Fisher then presented his argument on the standard in his reply. ECF No. 40 at 10. As such, the standard was not first raised in the reply. Aphena had the first word on what standard the Court should use. Cf. Khoury, 268 F.Supp.2d at 605. As both sides of the argument have been presented, the motion will be denied.

B. Personal Jurisdiction

1. Legal Standard

Aphena asserts that it need make only a prima facie showing of personal jurisdiction. ECF No. 39 at 27. Fisher argues that the summary judgment standard applies under Fed.R.Civ.P. 12(d). ECF No. 40 at 10.

The party asserting the claim has the burden of proving personal jurisdiction. See Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.1989). If jurisdiction turns on disputed facts, the court may resolve the challenge after a separate evidentiary hearing, or may defer ruling until receiving, at trial, evidence relevant to jurisdiction. Id. If the court determines the issue without an evidentiary hearing, and relies only on the complaint, affidavits, and discovery materials, “the plaintiff need only make a prima facie showing of personal jurisdiction.” Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir.2003). In determining whether the prima facie case has been shown, the court “must draw all reasonable inferences arising from the proof, and resolve all factual, disputes in the plaintiff's favor.” Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir.1993).

A federal district court may assert specific personal jurisdiction over a non-resident when the exercise of jurisdiction is (1) authorized by the forum state's long-arm statute, and (2) consistent with due process.⁷

Fisher is incorrect that the summary judgment standard is applied under Rule 12(d). Rule 12(d) applies only to motions under 12(b)(6), failure to state a claim, and 12(c), judgment on the pleadings. A motion to dismiss for lack of personal jurisdiction is under Rule 12(b)(2). As the motion is based only on the complaint and affidavits, Aphena need make only a prima facie showing of personal jurisdiction. Carefirst, 334 F.3d at 396.

2. Jurisdiction over Fisher

Fisher argues that his contacts with Maryland are insufficient under the Maryland long-arm statute and do not satisfy due process.⁸ ECF No. 28–1 at 6–12. Aphena asserts that Fisher had sufficient contacts and falls within the long-arm statute. ECF No. 39 at 32–40.

Although Maryland's long-arm statute authorizes jurisdiction to the extent allowed by due process, the plaintiff must identify a specific provision authorizing personal jurisdiction.⁹ The parties dispute both the application of the long-arm statute and due process. Aphena asserts that this Court has jurisdiction under subsections (b)(1) and (b)(3) of the long-arm statute. ECF No. 39 at 38–39; seeMd.Code Ann., Cts. & Jud. Proc. § 6–103(b)(1), (3).

a. Subsection (b)(1)

Aphena asserts that Fisher's contacts with Aphena personnel in Maryland are sufficient to constitute transacting business within the state. ECF No. 39 at 38. Fisher argues that he performed no actions in Maryland, and his communications were directed at persons in other states. See ECF Nos. 28–1 at 11, 40 at 7–9, 13–14.

Under subsection (b)(1), a defendant who “transacts any business” in Maryland is subject to jurisdiction here. Md.Code Ann., Cts. & Jud. Proc. § 6–103(b)(1). Although a defendant need not engage in “commerce or ... transactions for profit,” ¹⁰ “Maryland courts have construed the phrase ‘transacting business' narrowly, requiring, for example, significant negotiations or intentional advertising and selling in the forum state.” ¹¹ Although a defendant need not have been physically present in Maryland,¹² the plaintiff must show “some...