Medimpact Healthcare Sys., Inc. v. IQVIA Holdings Inc.
| Decision Date | 24 March 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 HOLDINGS INC., a Delaware corporation, IQVIA INC., a Connecticut corporation, IQVIA AG, a Swiss company, OMAR GHOSHEH, individually, and AMIT SADANA, individually, Defendant. |
| Court | U.S. District Court — Southern District of California |
ORDER GRANTING DEFENDANTS' MOTION TO DIMSISS FOR LACK OF PERSONAL JURISDICTION WITH LEAVE TO AMEND; DENYING PLAINTIFFS' REQUEST FOR JURISDICTIONAL DISCOVERY; DENYING DEFENDANTS' MOTION TO DISMISS FOR INSUFFICIENT SERVICE OF PROCESS; AND DENYING DEFENDANTS' MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM AS MOOT
Before the Court is Defendants' motion to dismiss under Federal Rule of Civil Procedure ("Rule") 12(b)(2) for lack of personal jurisdiction, Rule 12(b)(5) for insufficient service of process, and Rule 12(b)(6) for failure to state a claim. (Dkt. Nos. 59, 60.) Oppositions were filed by Plaintiffs as well as replies by Defendants. (Dkt. Nos. 67, 70, 76, 77.) A telephonic hearing was held on March 20, 2020. (Dkt. No. 90.) Jennifer Bennett, Esq; Randall Kay, Esq.; Nick Hodges, Esq.; and Alyssa Moscrop, Esq. appeared on behalf of Plaintiffs and Bart Rankin, Esq. and Teresa Michaud, Esq. appeared on behalf of Defendants. (Id.) Based on the reasoning below, the Court GRANTS Defendants' motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2) with leave to amend, DENIES jurisdictional discovery, DENIES Defendants' motion to dismiss for insufficient service of process, and DENIES Defendants' motion to dismiss for failure to state a claim as MOOT.
On September 26, 2019, Plaintiffs Medimpact Healthcare Systems, Inc. ("MedImpact"), 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.)
Plaintiff MedImpact was founded in San Diego, California, in 1989 and provides pharmacy benefit management ("PBM") services to its clients. (Id. ¶ 10.) PBM manages prescription drug coverage for health plans,1 and Medimpact has spent more than 30 years and invested hundreds of millions of dollars in California developing, refining, and collating all the intellectual property in its proprietary PBM platform. (Id. ¶¶ 10, 23.) Its PBM platform includes real-time claims processing and adjudication, as well as business, financial, operational, technical and clinical know-how. (Id. ¶ 23.) MedImpact is the largest privately-held PBM provider in the United States, serving over 50 million members across 64,000 pharmacies. (Id. ¶ 10.) It partners with the nation's finest healthplans, hospitals, self-funded employers, state and local governments, and universities, including the University of San Diego, to provide PBM services. (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. ¶ 11.) MI-HK is a private Hong Kong corporation, and is a wholly owned subsidiary of MIL, which is a wholly owned subsidiary of MedImpact. (Id. ¶ 12.)
Seeking to build up its PBM platform globally, around 2010 or 2011, MedImpact formed MIL to expand its PBM services internationally, including the Middle East's Gulf Region which had no PBM providers at the time. (Id. ¶ 21.) 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.) Dimensions is a United Arab Emirates company with offices in Abu Dhabi, Dubai, and Ramallah. (Dkt. No. 59-5, Ghosheh Decl. ¶ 2.) Since 2008, Dimensions has provided healthcare informatics and related services to customers in the Middle East. (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. Defendant Dr. Omar Ghosheh, a resident of Dubai, UAE is the co-founder, officer and an employee of Dimensions.
On March 21, 2011, MIL and Dimensions began working together under a Non-Disclosure Agreement ("NDA"), pursuant to which Dimensions agreed to strictly maintain the confidentiality of MedImpact's confidential and proprietary trade secret information and not to use the information for any purpose other than the transaction contemplated in the NDA. 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 establishMedImpact Arabia ("MIA") to provide PBM services to the Gulf Region. (Id.) The JV Agreement also 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.) Additionally, 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 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. ¶ 22.) For approximately eight years after the execution of the NDA, the JV Agreement, and SLC, through e-mail, phone calls and in person meetings/training, MedImpact's San Diego employees taught Dimensions about all aspects of PBM. (Id. ¶ 24.) Throughout the JV with MIL, Dimensions obtained and used MedImpact's trade secret information. (Id. ¶ 25.)
MIA successfully secured many clients in the Territory, such as Oman Insurance Company ("Oman Insurance"), Vidal Health, AXA, Nextcare, Pentacare, Aafiya, Metlife, Alico MSH, Dubai Insurance, Aetna, and Al Buhaira Insurance Company. (Id. ¶ 27.) Out of its many clients, Oman Insurance was MIA's largest customer, accounting for approximately 25% of MIA's revenue. (Id.)
From 2011 through 2016, MIA demonstrated continued growth with increasing revenues and customers year after year. (Id. ¶ 31.) Then, according to the Complaint, in February 2016, after having used MedImpact to succeed in the PBM market in the Middle-East Gulf region and having gained access to MedImpact's proprietary and trade secret information, Dimensions agreed to be bought by IMS Health. (Id.) In October 2016, IMS Health merged with Quintiles Transnational Holdings, Inc. creatingQuintilesIMS. (Id.) At that time, IMS Health and Quintiles were substantial global companies specializing in providing healthcare data, not PBM services, to pharmaceutical companies. (Id.) In November 2016, QuintilesIMS rebranded itself as IQVIA Holdings, Inc. (Id.) Defendant IQVIA Holdings, Inc. is a corporation organized under the laws of Delaware with its principal place of business in Durham, North Carolina. (Id. ¶ 13.) IQVIA Holdings "is a global provider of advanced analytics, technology solutions, healthcare data and contract research services to the life sciences industry to customers throughout the United States . . . and has one of the largest collections of healthcare information in the world, which includes more than 600 million comprehensive, longitudinal, non-identified patient records spanning sales, prescription and promotional data, medical claims, electronic medical records, genomics, and social media." (Id.) Based on this data, IQVIA Holdings delivers information on over 85% of the world's pharmaceuticals. (Id.)
Defendant IQVIA, Inc., is a corporation organized under the laws of Delaware with its principal place of business in Danbury, Connecticut, and is a wholly-owned subsidiary of IQVIA Holdings. Defendant IQVIA, Inc. has a location in San Diego, California. (Id. ¶ 14.) Defendant IQVIA AG is a wholly-owned subsidiary of IQVIA Holdings, with its primary place of business in Switzerland. (Id. ¶ 15.)
During the acquisition, IQVIA Holdings2 represented to MedImpact's officers and employees in San Diego that the acquisition would not affect the JV but IQVIA Holdings decided Dimensions should terminate the JV with MedImpact. (Id. ¶ 31.)
Following Dimensions' acquisition by IMS Health, Dimensions sold its own competing PBM platform called Adjudication Insurance Management System ("AIMS"). (Id. ¶ 32.) In contravention, Dr. Ghosheh states that Dimensions developed AIMS, in2015, outside the United States before the acquisition of Dimensions and was developed without any involvement of any IQVIA AG or IQVIA Inc. employee. (Dkt. No. 59-5, Ghosheh Decl. ¶ 5.)
The Complaint asserts that IQVIA along with Dimensions engaged in a scheme to target and steal MedImpact customers, to undermine and destroy the joint venture and to misappropriate MedImpact's trade secrets for their benefit. (Id. ¶ 33.) In 2017, IQVIA...
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