Genzyme Corp. v. Bishop
| Decision Date | 31 October 2006 |
| Docket Number | No. 06-C-428-S.,06-C-428-S. |
| Citation | 460 F.Supp.2d 939 |
| Parties | GENZYME CORPORATION, Plaintiff, v. Charles BISHOP, Keith Crawford, Eric Messner, Proventiv Therapeutics LLC, and Cytochroma, Inc., Defendants. |
| Court | U.S. District Court — Western District of Wisconsin |
James R. Cole, Quarles & Brady, Madison, WI, for Defendants.
Plaintiff Genzyme Corporation commenced this civil action against defendants Charles Bishop, Keith Crawford, Eric Messner, ProventIV Therapeutics LLC, and Cytochroma, Inc. seeking both monetary and injunctive relief. Plaintiff alleges misappropriation and unjust enrichment against all defendants. Additionally, plaintiff alleges numerous claims against defendants Charles Bishop, Keith Crawford and Eric Messner. Such claims are as follows: (1) breach of contract based on alleged violations of a rights to intellectual property provision contained within said defendants' Employee Agreements, (2) breach of contract based on alleged violations of a promise to return company property provision contained within said agreements, (3) breach of contract based on alleged violations of a covenant not to compete contained within said agreements; (4) breach of duty of loyalty; and (5) conspiracy. Finally, plaintiff alleges usurpation of corporate opportunity against defendant Charles Bishop. Jurisdiction is based on 28 U.S.C. § 1332. The matter is presently before the Court on defendants Bishop, Crawford, and Messner's motion to dismiss counts three through eight of plaintiffs complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).1 For the purpose of this motion, the following facts relevant to defendants' motion are undisputed.
Plaintiff Genzyme Corporation is a Massachusetts corporation with its principal place of business in Cambridge, Massachusetts. Plaintiff is a biotechnology company whose products and services are focused on rare inherited disorders, kidney disease, orthopedics, transplant and immune disease, cancer, and diagnostic testing. On July 1, 2005 plaintiff completed its acquisition of Bone Care International (hereinafter Bone Care) a company specializing in Vitamin D products.
Defendant Charles Bishop a is citizen of the State of Wisconsin residing in Mt. Horeb, Wisconsin. He is Bone Care's former President, Chief Executive Officer, Director and Chief Scientific Officer. Defendant Keith Crawford is likewise a citizen of the State of Wisconsin residing in Fitchburg, Wisconsin. He is Bone Care's former Senior Director of Medical Marketing and Scientific Affairs. Defendant Eric Messner is a citizen of the State of Illinois residing in Lake Forest, Illinois. Defendant Messner served as Bone Care's Director of Marketing.
In March of 2005 defendant Bishop became Bone Care's Executive Vice-President and Chief Scientific Officer. On March 18, 2005 defendant Bishop entered into an Employee Agreement with Bone Care which became effective on April 25, 2005. Said agreement contained a covenant not to compete which provides in relevant part as follows:
That during the term of his ... employment by Bone Care and for a period of six months after the termination of such employment ... Employee will not directly or indirectly own, operate, manage, consult with regarding matters related to those exposed to during your employment with Bone Care, control, participate in the management or control of, be employed by in a position comparable to that occupied during your employment with Bone Care, or maintain or continue any interest whatsoever in any enterprise that competes with Bone Care in the development and or sale of vitamin D compounds as therapies for certain diseases in competition with Bone Care in pharmaceutical research and development ...
Additionally, said agreement contained a return of company property provision which provides as follows:
Employee agrees that, upon termination, he will not take or retain, without written authorization from an officer of Bone Care, any papers, lists, credit cards, electronic data files, patent applications, regulatory documents, standard operating procedures, assay methods, data, chemical syntheses, product development plans, equipment, samples, marketing plans, customer lists, or any other documents or copies thereof of any kind of belonging to or furnished by Bone Care or representative of his [] employment with Bone Care. All written materials and other property of Bone Care shall be returned upon termination.
Finally, said agreement contained a rights to intellectual property provision which provides in relevant part as follows:
The Employee will disclose promptly and fully to Bone Care all inventions, improvements, or discoveries made or conceived by the employee, solely or jointly with others, in the course of such employment or with the use of Bone Care's time, material, or facilities, or related to or suggested by the business or investigations of Bone Care, or of the companies it owns or controls at the time of such inventions. The employee will assign to Bone Care all rights, title, and interest in any inventions, improvements or discoveries that he ... may conceive of or first actually reduce to practice during his ... employment with the company....
Since Employee is to assign to Bone Care inventions which he ... may conceive or first actually reduce to practice while in the employ of the company, he ... will list at the end of this Agreement all those inventions which are owned by the Employee at this time and which should be brought to the attention of the Company to avoid future misunderstandings as to ownership....
Additionally, defendants Crawford and Messner entered into Employee Agreements containing identical provisions. When plaintiff acquired Bone Care it became the successor to said agreements.
In July and August of 2005 defendants Bishop, Crawford, and Messner (hereinafter collectively referred to as individual defendants) all terminated their employment with Bone Care/Genzyme.2 In September of 2005 the individual defendants formed defendant Proventiv Therapeutics LLC (hereinafter Proventiv.) Defendant Proventiv is a Delaware limited liability company with its principal place of business in Madison, Wisconsin.
In June of 2006 the individual defendants sold defendant Proventiv to defendant Cytochroma, Inc. (hereinafter Cytochroma.) Defendant Cytochroma is a Canadian corporation with its headquarters in Markham, Ontario. Defendant Cytochroma purchased defendant Proventiv in part for its drug pipeline and patent applications covering new Vitamin D uses. The individual defendants currently serve as defendant Cytochroma's executive officers.
On August 8, 2006 plaintiff commenced this action. Defendants filed both their answer and their motion to dismiss on September 1, 2006. On October 10, 2006 plaintiff filed an amended complaint. As is relevant to the present motion, plaintiffs amended complaint alleges various breach of contract claims against the individual defendants based on alleged violations of provisions of their Employee Agreements. Additionally, plaintiffs complaint alleges numerous tort claims against the individual defendants. Specifically, count six of plaintiffs complaint alleges breach of duty of loyalty against all three individual defendants. Said count alleges in relevant part as follows:
... [The individual defendants] each breached their duties by engaging in competing, self-dealing activities, while employed, and by misappropriating [plaintiffs] confidential or proprietary non-trade secret information in order to form what Bishop called a `better Vitamin D company than Bone Care' in an effort to compete with [plaintiff.] ... These competing, self-dealing activities include, but are not limited to, (1) meeting with each other and their attorney to discuss plans to develop a new company that would comp[]ete with [plaintiff]; (2) using time in Boston, Massachusetts, during which they were supposed to be working on the integration of Bone Care and [plaintiff,] to meet with potential supporters or advisors of the company they intended to form in order to compete with plaintiff; and (3) misappropriating [plaintiffs] business and marketing plans, contact information for "key opinion leaders" in the Vitamin D industry, equipment, electronic files, and other materials....
Count seven of plaintiffs complaint alleges usurpation of corporate opportunity solely against defendant Bishop. Said count alleges in relevant part as follows:
... Bishop's fiduciary duty of loyalty included, among other things, the obligation to refrain from using his position as a corporate insider to gain personally from business opportunities belonging to Bone Care. Bone Care had an opportunity to develop and market Vitamin D products and uses that were based upon proprietary development plans, some of which may or may not be trade secrets. Bone Care had both an interest and an expectancy in its ability to pursue this opportunity.... Bishop has seized this opportunity for his own benefit ... and, in doing so, has breached his fiduciary duty of loyalty to Bone Care....
Finally, count eight of plaintiffs complaint alleges conspiracy against all three individual defendants. Said count alleges in relevant part as follows:
... [D]efendants Bishop, Crawford, and Messner ... formed a conspiracy to breach their duties to [plaintiff,] misappropriate confidential and/or proprietary, non-trade secret information, and unjustly retain the benefits of possessing, selling, and otherwise using [plaintiffs] confidential, non-trade secret information and materials..... [D]efendants Bishop, Crawford, and Messner did, in furtherance of their unlawful conspiracy, establish Proventiv for the purpose of using and exploiting confidential, non-trade secret information belonging to Bone Care.... [Said] defendants ... used and exploited Bone Care's confidential, non-trade secret...
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