Faryniarz v. Jose E. Ramirez, JR Chem, LLC

Decision Date09 November 2015
Docket Number3:13-CV-01064 (CSH)
CourtU.S. District Court — District of Connecticut


HAIGHT, Senior District Judge:

Anyone who read the Court's prior decision in this case, reported at Faryniarz v. Ramirez, 62 F. Supp. 3d 240 (D. Conn. 2014) ("the December 2014 Ruling"), might feel a sense of déjà vu this second time around. The subject of this Ruling, Plaintiff's proposed seconded amendment complaint, reasserts federal patent infringement, 35 U.S.C. § 271, and Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1962 and 1964, claims based on allegations that are materially identical to those pleaded in the first proposed amended complaint and recited in the Court's December 2014 Ruling dismissing that proposed pleading with leave to amend.


Plaintiff Joseph Faryniarz, a resident of Middlebury, Connecticut, seeks leave to file his seconded amended complaint and assert federal patent, RICO, and state statutory and common law claims against defendants Jose E. Ramirez, JR Chem, LLC, JR Chemical, Inc. and Obagi Medical Products, Inc. JR Chemical, Inc., and Obagi Medical Products, Inc. have not filed appearances in this action; however, Defendants Jose E. Ramirez and JR Chem, LLC (collectively, "Defendants") oppose the instant motion and seek dismissal of this action with prejudice to Plaintiff's right to replead. The motion is ripe for adjudication. This Ruling decides it.


On August 1, 2013, the Court heard oral argument and received testimony concerning whether the common law and state statutory claims asserted in the original complaint, [Doc. 1], implicated this federal district court's subject matter jurisdiction pursuant to 28 U.S.C. § 1332. Concluding "that Plaintiff failed to establish with the requisite degree of certitude that complete diversity of citizenship exists between the parties," the Court dismissed the complaint for lack of subject matter jurisdiction without prejudice to Plaintiff's right to reassert those claims in a court of competent jurisdiction. Doc. 13, at 1. In accordance with that Order, the Clerk entered judgment dismissing this case on August 5, 2013. Doc. 16.

Plaintiff subsequently filed a motion for leave to amend the complaint, alleging "violations of federal law making diversity [of citizenship] moot and jurisdiction proper in this court." Doc. 18, at 1. Specifically, the proposed amended complaint asserted civil RICO, 18 U.S.C. §§ 1962 and 1964, and patent infringement violations, 35 U.S.C. § 271, as the bases for this Court's subject matter jurisdiction. In the December 2014Ruling, I concluded that it would be futile to allow the proposed amendments since they failed to sufficiently allege either a RICO claim or a patent infringement claim, and the Court lacked subject matter jurisdiction over the non-federal claims. Accordingly I denied Plaintiff's motion to amend the complaint without prejudice to refiling.

On January 6, 2015, Plaintiff filed the instant motion to amend the complaint and a proposed second amend complaint, which purports to address the pleading deficiencies identified in the Court's December 2014 Ruling. The proposed second amended complaint ("SAC") is the subjectof this Ruling.


The following facts are derived from Plaintiff's allegations in the SAC, Doc. 28-1. Those allegations, to the extent that they are well-pleaded and not conclusory, are accepted as true for the purposes of this disposition, so that the viability of Plaintiff's proposed claims may be discerned under the governing law. The Court also relies on two exhibits appended to the SAC: Exhibit A, which purports to be a written contract between Plaintiff and Ramirez, dated October 6, 2006, and Exhibit B, which purports to be a schedule of chemical compounds invented by Plaintiff and misappropriated by Ramirez. See Subaru Distribs. Corp. v. Subaru of Am., Inc., 425 F.3d 119, 122 (2d Cir. 2005) ("In determining the adequacy of the complaint, the court may consider any written instrument attached to the complaint as an exhibit or incorporated in the complaint by reference, as well as documents upon which the complaint relies and which are integral to the complaint."); New York Life Ins. Co. v. United States, 724 F.3d 256, 258 (2d Cir. 2013) (citing same).

Plaintiff Joseph Faryniarz and Defendant Jose E. Ramirez are chemists. They met and developed a friendship during the course of their employment at Chesebrough-Ponds in Trumbull, Connecticut, before its merger with Unilever. Doc. 28-1, at ¶16. Sometime in or around 2003, Ramirez left Unilever to form his own business venture, JR Chem, LLC, to develop chemical compositions and license those chemical technologies to cosmetic and pharmaceutical companies. Id. at ¶ 19. In the late 2003 early 2004 time frame, Plaintiff, upon Ramirez's invitation, agreed to take an early retirement from Unilever and join him as an equal partner in that endeavor. Id. at ¶¶ 20-21. Pursuant to their agreement, Ramirez would handle the administrative and business related tasks associated with the venture, which notably included applying for patents and negotiating withpotential licensees, including defendant Obagi Medical Products, Inc. ("Obagi"). Plaintiff, for his part, would run the venture's lab, which was located in Milford, Connecticut, and assume primary responsibility for developing the patentable chemical technologies. Id. at ¶ 20. Although Ramirez and Plaintiff were equal partners in the venture, they agreed that Plaintiff would work as a consultant for JR Chem, LLC, whose sole member was Ramirez, and that the royalties from licensing agreements would be paid directly to JR Chem, LLC. Id. at ¶¶ 7, 22.

By late 2004, Plaintiff had made enough progress developing promising chemical technologies, that Ramirez, through JR Chem, LLC, was able to secure a five year development contract with Obagi, which was to commence on January 1, 2005. Doc. 28-1, at ¶ 24. The agreement provided that Obagi would pay a royalty based on the sale proceeds of the licensed technology to JR Chem, LLC, and that Plaintiff and Ramirez would be paid through JR Chem, LLC. Id.

In or about March 2006, Ramirez began to prepare and file patent applications with the United States Patent and Trademark Office ("USPTO") for chemical technologies invented principally by Plaintiff. Id. at ¶ 26. Around this time, Plaintiff requested to reduce to writing his agreement with Ramirez to share equally the profits of their business venture. Id. at ¶ 27.

On October 6, 2006, Plaintiff, on behalf of Joseph Faryniarz LLC, and Ramirez, on behalf of JR Chem, LLC, signed a written contract. Doc. 28-2, [Ex. A]. The contract, which I refer to in this Ruling as the "October 2006 Contract," listed nine chemical technologies, the "invention" of which Plaintiff "contributed to," and stated that "[a]s part of compensation for his services, JR Chem., LLC will share in equal parts any royalties and licensing fees for these patents with Joseph Faryniarz LLC." Id.; see also Doc. 28-1, at ¶ 36. At the time Plaintiff and Ramirez signed theOctober 2006 Contract, patent applications for the nine chemical technologies were pending before the USPTO.

Although not reduced to writing, Ramirez also assured Plaintiff that both he and Plaintiff would be listed as co-inventors on all patent application filed with the USPTO, but that "to ensure the equivalency of ownership in any inventions and to recognize their joint efforts," he would alternate the first-named inventor when filing applications with the USPTO. Id., at ¶ 29. Throughout this Ruling, I refer to Plaintiff's and Ramirez's oral agreement to alternate the first-named inventor on patent applications as the "Naming Agreement."

Apart from the October 2006 Contract and the Naming Agreement, Plaintiff and Ramirez entered into a separate oral agreement to share equally the proceeds of a raw material manufactured by the venture called Cu/Zn malonate, a chemical technology developed principally by Plaintiff. Id., at ¶ 35. The Cu/Zn malonate raw material supported Obagi's "Elastiderm" product line. Id. I refer to this oral agreement between Plaintiff and Ramirez to share equally in the proceeds of the Cu/Zn malonate raw material as the "Raw Material Agreement."

The relationship between Plaintiff and Ramirez began to break down irreparably sometime in 2008 when Plaintiff discovered that Ramirez had not been strictly adhering to the Naming Agreement. When Plaintiff confronted Ramirez about his failure to honor the Naming Agreement, Ramirez initially told Plaintiff "that it did not matter since Plaintiff was getting paid." Id., at ¶ 38. Later, Ramirez agreed to correct the inventor names on the patent applications, but in spite of that promise, has not made corrective filings with USPTO to date. Id.

By 2009, Plaintiff noticed that Ramirez was becoming increasingly secretive about the venture's business dealings and was sharing less and less information with Plaintiff. Id., at ¶ 39. InOctober 2010, with the business venture's development contract with Obagi drawing to a close, Ramirez informed Plaintiff that his negotiations to renew the contract had been unsuccessful. Id. at ¶ 43. Not long thereafter, Plaintiff stopped receiving his share of the Obagi royalty payments even though JR Chem, LLC continued to receive payments from Obagi through the third quarter of 2012. Id. at ¶¶ 44-46.

The business relationship between Plaintiff and Ramirez was further complicated by the matter of patent ownership. At the inception of the venture's development contract with Obagi, Ramirez represented to Plaintiff that "in order to ensure that they received payment from . . . Obagi, it was necessary" for Plaintiff to assign to JR Chem, LLC "his entire right, title and interest in or to each of...

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