Homeopet LLC v. Speed Lab., Inc.
| Decision Date | 11 June 2014 |
| Docket Number | No 14-CV-663 (JFB) (AKT),14-CV-663 (JFB) (AKT) |
| Parties | HOMEOPET LLC, Plaintiff, v. SPEED LABORATORY, INC., Defendant |
| Court | U.S. District Court — Eastern District of New York |
Plaintiff HomeoPet LLC ("plaintiff" or "HomeoPet") produces and sells homeopathic remedies for common conditions suffered by animals. In this action, plaintiff claims that defendant Speed Laboratory, Inc. ("defendant" or "Speed") failed to meet its contractual obligation to perform certain tests on plaintiff's products, which led to the denial of plaintiff's application for a license to sell its products over the counter in Australia. As a result of these events, plaintiff alleges the following causes of action: (1) breach of contract; (2) negligence; (3) willful misconduct; and (4) gross negligence.
Plaintiff initially commenced this action against defendant on December 17, 2013, in the Supreme Court of the State of New York, County of Suffolk. After defendant was served with the complaint, defendant removed the case to this Court on January 30, 2014.
Presently before the Court is defendant's motion to dismiss this action pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(3), or, in the alternative, to transfer this action to the Northern District of Georgia pursuant to 28 U.S.C. § 1404(a). For the reasons set forth below, the Court grants the motion to dismiss the negligence, willful misconduct, and gross negligence claims for lack of personal jurisdiction, and grants the motion to transfer this case to the Northern District of Georgia. First, the Court grants in part and denies in part defendant's motion to dismiss for lack of personal jurisdiction. Specifically, plaintiff's complaint adequately alleges personal jurisdiction over defendant for the breach of contract claim, because the complaint alleges that the parties conducted preliminary negotiations leading to the execution of the contract at issue inplaintiff's headquarters in Westhampton, New York. At this juncture, the Court cannot consider defendant's contrary evidence suggesting that the parties never negotiated the contract in New York. However, even construing the complaint in the light most favorable to plaintiff, the Court concludes that plaintiff has failed to make a prima facie showing of personal jurisdiction over defendant for its remaining tort claims. With respect to these claims, plaintiff relies on New York's long-arm statute concerning torts committed outside New York that cause injury in New York. See N.Y. C.P.L.R. § 302(a)(3). Decisions applying this statute focus on the location of the "original event" causing injury in order to determine the situs of the injury. Here, even construing the complaint in the light most favorable to plaintiff, the Court determines that New York was not the situs of the injury because all relevant acts giving rise to the alleged torts occurred outside New York. Indeed, the only connection these torts bear to New York is plaintiff's location in New York, which is insufficient as a matter of law to warrant the exercise of long-arm jurisdiction. Accordingly, the Court grants the motion to dismiss the negligence, willful misconduct, and gross negligence claims for lack of personal jurisdiction. Second, with respect to the surviving breach of contract claim, the Court concludes that venue is proper because defendant removed this action from the Supreme Court of the State of New York in Suffolk County, which is located within this judicial district. Third, the Court grants defendant's motion to transfer this action to the Northern District of Georgia. Currently pending in the Northern District of Georgia is a substantially similar action brought by Speed against HomeoPet. Although that action was filed six days after the instant case, the Court determines that the balance of convenience factors warrants transfer to the Northern District of Georgia. In particular, because the Court is dismissing plaintiff's tort claims for lack of personal jurisdiction, plaintiff would have to raise those claims as counterclaims in the pending Georgia Action while maintaining its breach of contract claim in this Court. The federal transfer statute, 28 U.S.C. § 1404, empowers courts to prevent precisely that sort of wasteful, piecemeal litigation. Accordingly, the Court, in its discretion, grants defendant's motion to transfer this action to the Northern District of Georgia.
The following facts are taken from the complaint. These are not findings of fact by the Court. Instead, the Court assumes these facts to be true for purposes of deciding the present motions and construes them in the light most favorable to plaintiff, the non-moving party. The Court discusses additional facts in connection with the specific issues raised.
HomeoPet is a Delaware limited liability company with headquarters in Westhampton, New York. (Id. ¶ 1.) The company produces and sells homeopathic remedies for common conditions suffered by animals in the united States, the united Kingdom, and Ireland. (Compl. ¶¶ 1, 14-15.)
Speed is a Georgia corporation headquartered in Buford, Georgia. (Id. ¶ 1.) Speed provides comprehensive analytical laboratory services to pharmaceutical, biotech, homeopathic, medical device, environmental, and specialty chemical companies. (Id. ¶ 3.) The company also claims expertise in advising companies on how to comply with international good manufacturing practices, international goodlaboratory practices, and regulations promulgated by the U.S. Food and Drug Administration ("FDA") and by foreign regulatory agencies. (Id. ¶ 4.)
The instant case concerns HomeoPet's unsuccessful application for an unrestricted license to sell its homeopathic pet products over the counter in Australia. Specifically, in 2005, HomeoPet decided to expand its business by applying for a General Sales License in Australia, which would have allowed HomeoPet to market and sell its products over the counter in Australia without restriction. (Id. ¶ 16.) HomeoPet filed its application for a General Sales License with the Australian Pesticides and Veterinarian Medicines Authority ("APVMA") on September 15, 2005. (Id. ¶ 26.) Shortly thereafter, the APVMA issued HomeoPet a restricted license to sell its products to veterinarians in Australia. (Id. ¶ 27.) A restricted license allows an applicant for a General Sales License to sell its products to veterinarians in Australia, and the veterinarians who use the applicant's products are required to maintain records concerning their use in treatment. (Id. ¶¶ 19-20.) The applicant with a restricted license must collect these records over a period of at least five years to prove to the APVMA that the products are safe. (Id.) Accordingly, in late 2010, HomeoPet submitted a dossier of data collected by veterinarians over the previous five years, along with other required documentation and records, to the APVMA in support of its application for a General Sales License. (Id. ¶ 29.)
The APVMA sent HomeoPet a letter on November 24, 2010, indicating that HomeoPet's application was deficient. (Id. ¶ 30.) In particular, the APVMA noted that HomeoPet had failed to include evidence that its products complied with internationally accepted good manufacturing practices. (Id.) Accordingly, the APVMA requested that HomeoPet provide the following additional evidence by March 30, 2012: (1) an accelerated stability test conducted over six months, which would determine the products' shelf lives; and (2) test results confirming the certificates of analysis prepared by HomeoPet's suppliers. (Id. ¶¶ 30-31.)
In order to comply with the APVMA's request, HomeoPet sought the services of Speed in the spring of 2011. (Id. ¶ 32.) On April 25, 2011, HomeoPet and Speed executed an agreement, according to which HomeoPet would pay Speed $50,000, and Speed would perform an accelerated stability test on nine of HomeoPet's products. (Id. ¶¶ 33-34.) After the agreement was executed, Speed agreed to test four additional HomeoPet products. (Id. ¶ 33.) Pursuant to the agreement, HomeoPet paid Speed in full and provided samples for Speed to test. (Id. ¶¶ 35-36.) HomeoPet also gave Speed specific instructions on how to perform the tests in conformity with international good manufacturing practices, which require an accelerated stability test to test three separate sample batches for each product. (Id. ¶ 37.)
Speed performed the stability test and reported its results to HomeoPet on March 27, 2012—three days before HomeoPet's deadline to submit the report to the APVMA. (Id. ¶ 38.) The results report shows that Speed tested only one sample batch for each product tested—in violation of international good manufacturing practices—and that Speed tested only eight of HomeoPet's products. (Id. ¶¶ 39-40.) Nonetheless, HomeoPet filed the test report with the APVMA on March 29, 2012, in order to meet the March 30, 2012 deadline. (Id. ¶ 41.) When HomeoPet alerted Speed to the problems in its testing, Speed's President, Alex Getahoun ("Getahoun"), sent HomeoPet an e-mail on May 17, 2012,in which he admitted that the testing had not been performed correctly and had not included all of HomeoPet's products. (Id. ¶ 43.) Getahoun further informed HomeoPet that Speed had fired the laboratory technician who had performed the testing, and that he would be personally involved in ensuring that Speed addressed the issue without additional mistakes. (Id.) Speed also promised to retest all thirteen of HomeoPet's products, in addition to several other products unrelated to HomeoPet's application with the APVMA, at no additional cost to HomeoPet. (Id. ¶ 46.)
Unsurprisingly, on September 11, 2012, the APVMA sent a letter to HomeoPet indicating that the accelerated stability testing was deficient because it had not been performed in accordance with good manufacturing practices. (Id. ¶ 44.) However, the APVMA gave HomeoPet an opportunity to cure this...
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