Jepsen v. Assured RX, LLC
| Decision Date | 14 November 2017 |
| Docket Number | HHDCV166068755S |
| Court | Connecticut Superior Court |
| Parties | Attorney General George JEPSEN v. ASSURED RX, LLC et al. |
UNPUBLISHED OPINION
Caption Date: November 13, 2017
The present enforcement action arises under General Statutes § 1-3b[1] and concerns two subpoenas duces tecum (subpoenas) that the petitioner, Attorney General George Jepsen, allegedly served on the respondents, Assured Rx, LLC (Assured) and Boots Rx, Inc. (Boots), pursuant to General Statutes § 4-61dd[2] in connection with the petitioner’s investigation of suspected violations of the Connecticut False Claims Act (act), General Statutes § 4-274 et seq. Currently before the court is a motion to dismiss the petitioner’s application to enforce the subpoenas, which was filed by the respondents. In view of the court’s previous decision on the respondents’ motion to dismiss in Jepsen v. Assured Rx, LLC, Superior Court, judicial district of Hartford, Docket No. CV-16-6068755-S (January 10, 2017 Dubay, J.) (63 Conn.L.Rptr. 689, 690-93), the sole issue in the present case is whether the exercise of personal jurisdiction over the respondents would violate constitutional principles of due process. For the reasons set forth subsequently in this memorandum, the court answers this question in the negative as to Assured and in the affirmative as to Boots. Accordingly, the court denies in part and grants in part the respondents’ motion to dismiss.
The following facts and procedural history are relevant to the court’s disposition of the respondents’ motion to dismiss. On June 2, 2017, the petitioner filed an application to enforce the subpoenas pursuant to § § 1-3b and 4-61dd(d). In his application, the petitioner alleges that (1) Assured is a Florida limited liability company (LLC) and a " compound pharmacy"; (2) Assured holds a nonresident pharmacy license that was issued by the Department of Consumer Protection (department); (3) Boots is a Florida corporation (4) Boots is a wholly owned subsidiary of Assured; and (5) Assured and Boots conduct business in the state of Connecticut by marketing compound pharmaceutical products (compound pharmaceuticals) in Connecticut, shipping compound pharmaceuticals into Connecticut, and receiving reimbursement payments from the state employee benefit plan (plan) and Connecticut consumers. The petitioner also alleges that he commenced an investigation of the marketing of compound pharmaceuticals to the plan’s members and- in particular- suspected false claims for reimbursement that were submitted to the plan. The petitioner further alleges that he has a basis to believe that violations of the act have occurred and the respondents " have knowledge and documents relevant to the investigation of the suspected violation(s)."
Additionally, the petitioner alleges that he served the subpoenas on Assured and Boots on June 29, 2015, and November 9, 2015, respectively. The petitioner also alleges that- although the respondents have produced some material in accordance with the subpoenas- they have not furnished a large portion of the content sought. Lastly, in the prayer for relief, the petitioner requests, inter alia, an order that compels the respondents to comply with the subpoenas by producing all outstanding documents.
On August 10, 2016, the respondents filed a motion to dismiss the petitioner’s application and a supporting memorandum of law pursuant to Practice Book § 10-30.[3] In particular, the respondents moved to dismiss the application (1) for lack of subject matter jurisdiction, because § 4-61dd(d) does not authorize the petitioner to issue extraterritorial investigative subpoenas that concern information that is not located in Connecticut, and, consequently, § 1-3b is inapposite; (2) for lack of personal jurisdiction, because the relevant longarm statutes, General Statutes § § 33-929[4] and 52-59b, [5] apply only to a " cause of action arising out of" business that is conducted in the state, and the present enforcement action is not, for purposes of the longarm statutes, a cause of action; and (3) on the ground that the petitioner has exceeded his authority in seeking the materials that are otherwise subject to the subpoenas. The respondents did not submit affidavits and/or other evidence in support of their motion to dismiss.
On September 9, 2016, the petitioner filed a memorandum of law in opposition to the respondents’ motion to dismiss pursuant to Practice Book § 10-31.[6] Specifically, the petitioner argued that the court has subject matter jurisdiction under § 1-3b to enforce the subpoenas because, inter alia, the respondents’ alleged conduct falls within the ambit of the relevant longarm statutes; the court can exercise personal jurisdiction over the respondents because specific jurisdiction exists with respect to the respondents given their business contacts with Connecticut; and a motion to dismiss is the improper procedural vehicle to challenge the scope of the petitioner’s authority to issue and serve the subpoenas. In support of his opposing memorandum of law, the petitioner submitted (1) the affidavit of Thomas Martin, a legal investigator with the Office of the Attorney General; (2) the affidavit of Kevin Jeffko, a forensic fraud examiner with the Office of the Attorney General; and (3) documentary exhibits to the Martin and Jeffko affidavits. Oral argument on the respondents’ motion to dismiss was heard at short calendar on September 26, 2016.
On January 10, 2017, the court, Dubay, J., filed a memorandum of decision regarding the respondents’ motion to dismiss. Jepsen v. Assured Rx, LLC, supra, 63 Conn.L.Rptr. 689-93. As discussed in the January 10, 2017 memorandum of decision, the court concluded that (1) subject matter is not lacking here, because the court is statutorily authorized to adjudicate the present enforcement action by virtue of § 1-3b; (2) the first part of the two-pronged personal jurisdiction analysis is satisfied, because, under § § 33-929 and 52-59b, the present enforcement action is a " cause of action" that " arises out of a contract made or performed in this state, out of business solicited in this state, and out of the production, manufacture or distribution of goods that would reasonably be expected to be consumed in this state" and it " arises from an entity or entities transacting business within the state"; and (3) a motion to dismiss is an improper procedural for raising the issue of whether the subpoenas exceeded the scope of the petitioner’s statutory authority, because such an issue goes to the merits, rather than the jurisdictional requisites, of the present case. Id., 690-93. Moreover, after arriving at the second previously mentioned conclusion, the court further concluded that an evidentiary hearing is necessary to resolve the second part of the two-pronged personal jurisdiction analysis; id., 693; and, therefore, the court declined to make a merits determination as to the second prong at that time. See id. Accordingly, although the respondents’ motion to dismiss was ultimately denied in large part, the petitioner and the respondents were ordered to appear before the court at a later date for the purpose determining jurisdictional facts relevant to the second prong of the personal jurisdiction analysis. Id.
On May 26, 2017, the court, Dubay, J., held a status conference on the record at which the petitioner and the respondents appeared. Both parties were represented by counsel. During a colloquy with the court, the petitioner’s counsel and the respondents’ counsel stipulated that an evidentiary hearing is unnecessary in the present case, and the court may decide the second step of the personal jurisdiction analysis on the basis of the existing record, i.e., the pleadings, affidavits, and documentary exhibits that were submitted in connection with the respondents’ motion to dismiss. Before the May 26, 2017 status conference concluded, the court ordered an additional hearing on a future date, the focus of which would be the remaining prong of the personal jurisdiction analysis. After the status conference, on June 29, 2017, the respondents filed a memorandum of law concerning the issue of personal jurisdiction.
On July 18, 2017, the court, Dubay, J., held an additional hearing at which the petitioner and the respondents appeared through counsel. The focus of the additional hearing was the issue of whether the second prong of the personal jurisdiction analysis is satisfied in the present case, i.e., whether the exercise of personal jurisdiction over the respondents comports with constitutional principles of due process. The court permitted the petitioner and the respondents to file posthearing memoranda. In turn, the respondents filed their posthearing memorandum on July 26, 2017, and, on July 28, 2017, the petitioner filed his posthearing memorandum. Additional facts and procedural history will be set forth as necessary.
As an initial matter, the court sets forth the well established procedural standard that governs motions to dismiss and the fundamental principles relevant to personal jurisdiction. " A motion to dismiss ... properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court." (Internal quotation marks omitted.) Mangiafico v. Farmington 173 Conn.App. 178, 187, 163 A.3d 631 (2017). " In ruling upon whether a complaint survives a motion to dismiss, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader." (Internal quotation marks...
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