Mass. Biologic Labs. of the Univ. of Mass. v. Medimmune, LLC

• Decision Date: 02 July 2012
• Docket Number: Civil No. 12–cv–10006.
• Citation: 871 F.Supp.2d 29
• Parties: MASSACHUSETTS BIOLOGIC LABORATORIES OF THE UNIVERSITY OF MASSACHUSETTS, Plaintiff, v. MEDIMMUNE, LLC, Defendant.
• Court: U.S. District Court — District of Massachusetts

871 F.Supp.2d 29

MASSACHUSETTS BIOLOGIC LABORATORIES OF THE UNIVERSITY OF MASSACHUSETTS, Plaintiff,

v.MEDIMMUNE, LLC, Defendant.

Civil No. 12–cv–10006.

United States District Court, D. Massachusetts.

July 2, 2012.

Barbara A. Fiacco, Donald R. Ware, Jenevieve J. Maerker, Foley Hoag LLP, Boston, MA, for Plaintiff.

Christopher M. Morrison, Kristin D. Casavant, Jones Day, Boston, MA, Jesse T. Smallwood, Paul B. Gaffney, Williams & Connolly LLP, Washington, DC, for Defendant.

MEMORANDUM & ORDER

GORTON, District Judge.

Actions to resolve the rights and obligations of the Massachusetts Biologic Laboratories of the University of Massachusetts (“MassBiologics”) and MedImmune, LLC (“MedImmune”) under the licensing agreement between the parties are on parallel tracks: one in Maryland state court and the other here in Massachusetts federal court. Pending before the Court is MedImmune's motion to stay this case pending resolution of the Maryland action.

I. Background

The Massachusetts Public Health Biologics Laboratories (“MPHBL”) was a public entity established in 1894 by the Massachusetts Board of Health to research, develop and produce childhood vaccines and biologic products for the public good. From 1959 to 1996, the MPHBL was administered by the Massachusetts Health Research Institute (“MHRI”), a private, non-profit entity under contract with the Massachusetts Department of Public Health (“MDPH”). MHRI is now known as Third Sector New England, Inc. (“Third Sector”).

In 1984, scientists George Siber and Jeanne Leszczynski working for MHRI developed technology (“the Technology”) employing naturally occurring immunoglobulin designed to treat and prevent respiratory syncytial virus (“RSV”), a serious respiratory illness affecting children. Five years later, MHRI entered into an agreement (“the RSV License Agreement”) with Molecular Vaccines, Inc. and Pediatric Pharmaceuticals, Inc., the corporate predecessors of MedImmune, under which MHRI granted those companies an exclusive right and license to the Technology in exchange for ongoing royalty payments on the sales of anti-RSV products developed by those companies.

In 1997, “MassBiologics” was established by the Massachusetts Legislature, M.G.L. 75, § 43, to take the place of the MPHBL,

so as to enable said laboratories to maintain their public purpose, preserve their ability to compete in an increasingly competitive marketplace and maximize their value to the Commonwealth,

1996 Mass. Acts ch. 334, at 1338. MassBiologics became a party to the RSV License Agreement when MedImmune, Third Sector and MassBiologics entered into an Assignment and Assumption Agreement (“the Assignment Agreement”) under which Third Sector transferred its rights, interests and obligations under the RSV License Agreement to MassBiologics. Pursuant to the Assignment Agreement, MedImmune has paid royalties to MassBiologics, averaging $30 million annually, on sales of anti-RSV products RespiGam® and Synagis®. In 2006, MedImmune offered to purchase the license outright in exchange for a one-time, lump-sum payment. MassBiologics declined.

In August 2011, MedImmune filed suit in Maryland state court (“the Maryland action”) seeking a declaratory judgment that its obligation to make royalty payments under the RSV License Agreement had ceased. MedImmune alleged that MassBiologics had breached the RSV License Agreement because 1) scientists within the UMass system had filed applications for research which MedImmune claims should have been licensed to MedImmune and 2) UMass granted a patent license to Novavax, Inc. (“Novavax”) which would purportedly assist Novavax to compete against MedImmune.

Included as defendants in the Maryland action are MassBiologics and Third Sector, successors-in-interest to signatories of the RSV License Agreement, and the Henry M. Jackson Foundation for the Advancement of Military Medicine, Inc. (“HJF”), a party to a separate licensing agreement concerning similar technology (collectively, “the Maryland defendants”). MassBiologics moved to dismiss the claims for lack of personal jurisdiction and on forum non conveniens grounds. The Maryland court denied the motion, concluding that Maryland's long-arm statute authorized personal jurisdiction over MassBiologics and that Maryland state court was a convenient forum in which to adjudicate the dispute. Parties have commenced discovery and trial is scheduled for October 1, 2012.

In November 2011, MassBiologics filed suit against MedImmune in Massachusetts Superior Court for Suffolk County (“the Massachusetts action”). The Complaint recites claims for breach of contract (Count One), breach of the implied covenant of good faith (Count Two), unfair and deceptive trade practices in violation of the Massachusetts Consumer Protection Act, M.G.L. 93A, §§ 2, 11 (Count Three) and declaratory judgment (Count Four). Plaintiff requests relief in the form of 1) actual and treble damages, 2) specific performance of the RSV License Agreement and 3) declaratory judgments that a) the RSV License Agreement is enforceable and has not expired, b) MassBiologics' obligations thereunder encompass only research and other activities performed by MassBiologics scientists and do not extend to research and other activities performed by UMass faculty and staff and c) in the event MedImmune ceases to pay royalties due under the RSV License Agreement, MedImmune will thereby forfeit the right to sell its royalty-bearing products.

Plaintiff's contract and consumer protection claims are premised on allegations that, by rejecting plaintiff's offer to cure, unilaterally terminating the RSV License Agreement and filing the Maryland action, MedImmune not only breached the RSV License Agreement but also engaged in deceptive trade practices. As MassBiologics sees it, MedImmune now seeks to obtain through litigation what it could not achieve through negotiation.

In January 2012, MedImmune timely removed the case to this Court based on the diversity of citizenship of the parties and moved for a stay pending resolution of the Maryland action.

II. Legal AnalysisA. Standard

1. The Colorado River and Wilton/Brillhart doctrines

When a federal action runs parallel to a state court proceeding involving similarparties and issues, a district court may, under certain circumstances, stay the federal action or certain of the claims, pending the resolution of the state court action, in the interests of cooperative federalism and judicial economy. The standard to determine whether a stay is appropriate depends on the character of relief sought.

If the federal plaintiffs seek damages or injunctive relief (hereafter referred to as “coercive relief”), a district court may stay the case only in “exceptional circumstances.” Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976). Because federal courts have a “virtually unflagging obligation” to exercise the jurisdiction granted to them by Congress, the “crevice” in federal jurisdiction carved out by the Colorado River doctrine “is a narrow one.” Jiménez v. Rodríguez–Pagán, 597 F.3d 18, 27 (1st Cir.2010). The doctrine “is to be used sparingly and approached with great caution.” Nazario–Lugo v. Caribevision Holdings, Inc., 670 F.3d 109, 115 (1st Cir.2012) (ruling that the District Court abused its discretion in dismissing case pursuant to the Colorado River doctrine).

Conversely, if the federal plaintiffs seek declaratory relief, a district court has broad discretion to stay the federal action as long as the necessary parties have been joined in the state court proceeding and the claims of all parties in interest can satisfactorily be adjudicated by that tribunal. Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 495, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942); Wilton v. Seven Falls Co., 515 U.S. 277, 281–90, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). Declaratory judgment claims are treated differently than their coercive counterparts because Congress, in enacting the Declaratory Judgment Act, conferred on federal courts “unique and substantial discretion in deciding whether to declare the rights of litigants.” Wilton, 515 U.S. at 286, 115 S.Ct. 2137 (stressing that 28 U.S.C. § 2201(a) provides that a federal court “ may declare the rights and other legal relations of any interested party seeking such declaration”) (emphasis added); id. at 288, 115 S.Ct. 2137 (“By the Declaratory Judgment Act, Congress sought to place a remedial arrow in the district court's quiver; it created an opportunity, rather than a duty, to grant a new form of relief to qualifying litigants.”). Thus, in the declaratory judgment context, the general principle that federal courts should adjudicate claims within their jurisdiction “yields to considerations of practicality and wise judicial administration.” Id.

2. The Circuit Split

Courts are split on which standard to apply where, as here, plaintiffs bring claims for coercive and declaratory relief. At least five distinct approaches have emerged. New England Ins. Co. v. Barnett, 561 F.3d 392, 395–96 (5th Cir.2009) (cataloguing the approaches). The absence of consensus is unsurprising given that there can be “no simple compromise between the [strict] duty to exercise jurisdiction over coercive claims, and the discretion to exercise jurisdiction over declaratory claims.” Columbia Gas v. Am. Int'l Grp., No. 10–1131, 2011 WL 294520, at *1 (W.D.Pa. Jan. 27, 2011).

The Second, Fifth and Tenth Circuits hold that the Colorado River standard governs all claims whenever an action includes both declaratory and coercive claims for relief. New England Ins. Co. v. Barnett, 561 F.3d 392, 395–96 (5th Cir.2009); United States v. City of Las Cruces, 289 F.3d 1170, 1181–82 (10th Cir.2002); Vill. of Westfield v. Welch's, 170 F.3d 116, 125 n. 5 (2d Cir.1999). Those courts reason that, when in conflict, a federal court's “virtually unflagging obligation” to exercisejurisdiction over...