Medimpact Healthcare Sys., Inc. v. IQVIA Inc.
| Decision Date | 27 August 2020 |
| Docket Number | Case No.: 19cv1865-GPC(LL) |
| Parties | MEDIMPACT HEALTHCARE SYSTEMS, INC., a California corporation, MEDIMPACT INTERNATINAL LLC, a California limited liability company, MEDIMPACT INTERNATIONAL HONG KONG LTD., a Hong Kong company, Plaintiff, v. IQVIA INC., a Connecticut corporation; IQIA Ltd., a UK company; IQVIA AG, a Swiss company, OMAR GHOSHEH, individually, and AMIT SADANA, individually, Defendant. |
| Court | U.S. District Court — Southern District of California |
1) DENYING DEFENDANTS' MOTION TO DIMSISS FOR LACK OF PERSONAL JURISDICTION
2) GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DIMISS FOR FAILURE TO STATE A CLAIM
Before the Court is Defendants' motion to dismiss the first amended complaint under Federal Rule of Civil Procedure ("Rule") 12(b)(2) for lack of personal jurisdiction and Rule 12(b)(6) for failure to state a claim. (Dkt. Nos. 106, 107.) Oppositions were filed by Plaintiffs as well as replies by Defendants. (Dkt. Nos. 110, 111, 115, 116.) Based on the reasoning below, the Court DENIES Defendants' motion to dismiss for lack of personal jurisdiction and GRANTS in part and DENIES in part Defendants' motion to dismiss for failure to state a claim.
On September 26, 2019, Plaintiffs Medimpact Healthcare Systems, Inc. ("MHSI"), Medimpact International LLC ("MIL"), and MedImpact International Hong Kong Ltd. ("MI-HK") (collectively "Plaintiffs" or "MedImpact") filed a Complaint against Defendants IQVIA Holdings, Inc. ("IQVIA Holdings"), IQVIA Inc., IQVIA AG, Omar Ghosheh ("Dr. Ghosheh") and Amit Sadana ("Sadana") (collectively "Defendants") alleging twelve causes of action for misappropriation of trade secrets under state and federal law and other claims. (Dkt. No. 1, Compl.) On March 24, 2020, the Court granted Defendants' motion to dismiss for lack of personal jurisdiction with leave to amend.1 (Dkt. No. 91.) On April 7, 2020, Plaintiffs filed the operative first amended complaint ("FAC"). (Dkt. No. 93.) The FAC alleges ten causes of action for 1) breach of fiduciary duty; 2) inducing breach of contract; 3) intentional interference with prospective economic advantage; 4) negligent interference with prospective economic advantage; 5) intentional interference with a contractual relationship; 6) unfair competition; 7) conspiracy; 8) misappropriation of trade secrets under the Defend Trade Secrets Act ("DTSA"), 18 U.S.C. § 1836; 9) misappropriation of trade secrets under California Uniform Trade Secrets Act ("CUTSA"); and 10) violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c). (Id.) The named Defendants are IQVIA Inc., IQVIA Ltd., IQVIA AG, Dr. Ghosheh and Sadana. (Id.)
Plaintiff MHSI was founded in San Diego, California, in 1989, and provides pharmacy benefit management ("PBM") services to its clients. (Id. ¶ 14.) It is the largest privately held PBM provider in the United States with over 50 million members across 64,000 pharmacies. (Id.) It partners with the nation's finest health plans, hospitals, self-funded employers, state and local governments, and universities, including the University of San Diego, to provide PBM services. (Id.) It has spent more than 30 years and invested hundreds of millions of dollars developing its proprietary PBM platform. (Id.)
Plaintiff MIL is a wholly owned subsidiary of MedImpact and established and existing under the laws of California and began international business operations in 2011 and is active in the Middle East and Chinese markets. (Id. ¶ 15.) MI-HK is a private Hong Kong corporation, and is a wholly owned subsidiary of MIL, which is a wholly owned subsidiary of MHSI. (Id. ¶ 16.) MI-HK's principal place of business is in San Diego and MedImpact employees in San Diego support MI-HK's business. (Id.)
Seeking to build up its PBM platform globally, from around 2010 to 2011, MHSI formed MIL to expand its PBM services internationally, including the Middle East's Gulf Region which had no PBM providers at the time. (Id. ¶ 30.) Around 2011, MIL began discussions with Dimensions to establish a joint venture due to its regulatory contacts and presence in the United Arab Emirates ("UAE"). (Id.) At the time, Dimensions sold limited health IT software and integration products aimed primarily at pharmacy providers in the medical insurance market and did not have real-time online adjudication capabilities in the PBM market. (Id. ¶ 30.) Dimensions Healthcare LLC ("Dimensions") is a United Arab Emirates company headquartered in Dubai. (Dkt. No. 106-4, Ghosheh Decl. ¶ 2.) Defendant Dr. Ghosheh is a co-founder of Dimensions and has been employed with Dimensions until his recent retirement on March 31, 2020. (Id. ¶ 2.) Ghosheh is resident of Dubai, UAE and is also a board member of MedImpact Arabia. (Dkt. No. 93, FAC ¶ 22.)
On March 21, 2011, MIL and Dimensions began working together under a Non-Disclosure Agreement ("NDA") where Dimensions agreed to strictly maintain the confidentiality of MedImpact's confidential and proprietary trade secret information and not to use such information for any purpose other than the transaction contemplated in the NDA. (Id. ¶ 31.) Under the NDA, MIL began sharing MedImpact's closely guarded proprietary and trade secret information with Dimensions. (Id.) Subsequently, on February 1, 2012, MIL and Dimensions entered into a Joint Venture Agreement ("JV Agreement"), under which they agreed to establish MedImpact Arabia ("MIA") to provide PBM services to the Gulf Region. (Id.) The JV Agreement required Dimensions to maintain the confidentiality of "confidential and proprietary information or trade secrets" and "not utilize the Confidential information for any purpose other than as necessary to conduct the Business pursuant to this Contract (including as contemplated by the Services and License Contract)." (Id.) On the same day, MIL and Dimensions also entered into a service level agreement (the "SLC") with similar confidentiality provisions. (Id.) The SLC also stated that Claims Data could solely be used by the JV for providing JV services. (Id.) By entering into the JV Agreement, Dimensions agreed that any business opportunity that arose under the agreement within the Territory would strictly belong to the joint venture. (Id.) The Territory, at the time, included members of the Gulf Co-operation Council, Jordan, Lebanon, and any other country the parties to the JV Agreement agreed in writing. (Id.) On January 1, 2014, with the consent of Dimensions, Plaintiff MIL assigned its rights and interest in the joint venture to Plaintiff MI-HK. (Id.)
MHSI spent decades developing its PBM platform in San Diego and is supported on servers in San Diego. (Id. ¶ 32.) It processed about 25,000 to 30,000 claims per day in San Diego on behalf of the JV. (Id.) After the execution of the NDA, the JV Agreement, and SLC, through e-mails, phone calls and in person meetings/training, andthrough MHSI's MedAccess2 platform hosted on servers in San Diego, MedImpact's San Diego employees taught Dimensions, including Dr. Ghosheh, about all aspects of the PBM. (Id. ¶ 33.) It was through the JV, under the protection of the confidentiality restrictions, that Dimensions and Dr. Ghosheh gained access to MedImpact's trade secrets. (Id.) MedImpact and Dimensions successfully launched their first PBM in the Middle-East Gulf region around October 1, 2011, and from 2011 through 2016, MIA had continued growth with increasing revenues and customers every year. (Id. ¶ 34.) Oman Insurance was MIA's largest customer accounting for about 25% of the JV's revenue. (Id.) By late 2015, MIA had processed tens of millions of pharmaceutical claims in the Middle East from MedImpact's PBM platform in San Diego. (Id.)
In late 2015, representatives from IQVIA AG (then IMS Health AG) and IQVIA Ltd. (then IMS Health HQ Ltd.) (collectively "IMS Health") contacted MedImpact in San Diego about five to six time by telephone and follow up emails regarding IMS Health AG's interest in acquiring Dimensions but the true motives for the acquisition were never disclosed. (Id. ¶ 35.) In late 2015, IMS Health employees Carlos Santos ("Santos") (now with IQVIA Ltd.) Jordan Mitchell, James Salitan, Defendant Sadana (now with IQVIA AG), Esther Horvath and Celine Zeng initiated several phone calls with MedImpact concerning IMS Health AG's acquisition of Dimensions and during these conversations, IMS Health learned about the JV business and repeatedly mispresented to MedImpact that the JV would not be impacted by the acquisition. (Id. ¶¶ 35, 36.) IMS Health directed due diligence type questions about the business, technology and finances of the JV to MedImpact's executives in San Diego. (Id. ¶ 37.) From these conversations, IMS Health understood that MedImpact was a JV partner with Dimensions, was based in San Diego and provided its San Diego based PBM to the JV to adjudicate pharmaceuticalclaims. (Id.) Representatives of MedImpact explicitly told IMS Health executives that MedImpact did not sell pharmaceutical data. (Id.) Through conducting its own diligence, IMS Health, on information and belief, knew that Dimensions was developing AIMS, a competing PBM product based off of MedImpact's trade secrets but this information was kept concealed during the phone calls and emails with MedImpact. (Id.)
For example, on December 9, 2015, Santos (now with IQVIA Ltd) emailed Dale Brown, ("Brown") President of MedImpact in San Diego, memorializing an earlier meeting about IMS Health's strategic intentions to acquire Dimensions and Defendant Dr. Ghosheh and Defendant Sadana (now with IQVIA AG), and James Salitan, General Counsel of IMS Health, were copied on the email. (Id. ¶ 38.) The email sought the opportunity to ask due diligence questions and access to "certain specific financial information regarding the JV." (Id.) On ...
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