Plant Genetic Systems, NV v. Ciba Seeds

• Decision Date: 25 June 1996
• Docket Number: No. 1:95CV00741.,1:95CV00741.
• Citation: 933 F. Supp. 519
• Court: U.S. District Court — Middle District of North Carolina
• Parties: PLANT GENETIC SYSTEMS, N.V., Plaintiff, v. CIBA SEEDS and Mycogen Plant Science, Inc., Defendants.

933 F. Supp. 519

PLANT GENETIC SYSTEMS, N.V., Plaintiff, v. CIBA SEEDS and Mycogen Plant Science, Inc., Defendants.

No. 1:95CV00741.

United States District Court, M.D. North Carolina, Durham Division.

June 25, 1996.

COPYRIGHT MATERIAL OMITTED

Mark S. Thomas, Maupin Taylor Ellis & Adams, P.A., Raleigh, NC, for plaintiff Plant Genetic Systems, N.V.

W. Andrew Copenhaver, Elizabeth B. McGee, Womble Carlyle Sandridge & Rice, Winston-Salem, NC, for defendant Ciba Seeds.

James D. Myers, Robert William Glatz, Bell, Seltzer, Park & Gibson, P.A., Raleigh, NC, for defendant Mycogen Plant Science, Inc.

MEMORANDUM OPINION

OSTEEN, District Judge.

This matter comes before the court on the Motion to Dismiss Pursuant to Rule 12(b)(2), (3) & (5), Fed.R.Civ.P.; And, In the Alternative, to Transfer Pursuant to 28 U.S.C. § 1406(a) And/Or § 1404(a) filed by Defendant Mycogen Plant Science, Inc.

For the reasons stated herein, the motion will be denied.

I. FACTS

On October 18, 1995, Plaintiff Plant Genetic Systems, N.V.¹ ("PGS") filed an action against Defendant Ciba Seeds² and Defendant Mycogen Plant Science, Inc.³ ("MPSI"), alleging infringement of U.S. Patent No. 5,254,799⁴ ("'799 patent") assigned to Plaintiff. The subject matter of the '799 patent is seed corn with genetically-engineered Bacillus thuringiensis ("Bt") genes. The concept is that seed corn containing Bt genes is more resistant to insects.

In apt time, Defendant MPSI filed this motion to dismiss or, in the alternative, to transfer all or part of the case to the U.S. District Court for the Southern District of California. Defendant MPSI states several reasons for the motion: (1) lack of personal jurisdiction over Defendant MPSI in North Carolina; (2) lack of venue in the Middle District of North Carolina; and (3) insufficiency of service of process. Alternatively, Defendant MPSI contends that the case should be transferred in whole or in part to the U.S. District Court for the Southern District of California.⁵

II. DISCUSSION

A. Rule 12(b)(2) — Lack of Personal Jurisdiction

When a motion to dismiss is made pursuant to Rule 12(b)(2) for lack of personal jurisdiction, the burden to prove the basis for jurisdiction lies with the plaintiff. Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir.1993). The plaintiff must prove that (1) the exercise of personal jurisdiction comports with the requirements of the Due Process Clause of the Fifth Amendment, and (2) the relevant long-arm statute authorizes the exercise of personal jurisdiction over the defendant. Id. When deciding a motion to dismiss pursuant to Rule 12(b)(2), the court must construe all the facts in the light most favorable to the plaintiff and draw the most favorable inferences for the existence of jurisdiction. Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.1989).

The North Carolina courts have given the long-arm statute a liberal construction, extending to the courts "the full jurisdictional powers permissible under federal due process." Vishay Intertechnology, Inc. v. Delta Int'l Corp., 696 F.2d 1062, 1064 (4th Cir.1982) (quoting Dillon v. Numismatic Funding Corp., 291 N.C. 674, 676, 231 S.E.2d 629, 630 (1977)). Thus, some decisions have indicated that the two-part test can be merged into one inquiry regarding whether due process requirements have been fulfilled. See, e.g., Columbia Briargate Co. v. First Nat'l Bank, 713 F.2d 1052 (4th Cir.1983), cert. denied, 465 U.S. 1007, 104 S.Ct. 1001, 79 L.Ed.2d 233 (1984). However, other cases have indicated that both prongs of the test must be analyzed. See, e.g., English & Smith v. Metzger, 901 F.2d 36 (4th Cir.1990). This court will follow the latter approach and conduct a two-prong analysis.

1. Federal Due Process

In order for the court to properly exercise personal jurisdiction, the defendant must have certain minimum contacts with North Carolina such that the exercise of personal jurisdiction over that defendant does "not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Later cases have clarified that the minimum contacts must be "purposeful." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985). This requirement is founded on the basic principle that "there be some act by which the defendant purposefully avails itself of the privilege of conducting business within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 250-51, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958). The rule helps ensure that non-residents have fair warning that a particular activity may subject them to litigation within the forum. See Burger King, 471 U.S. at 472, 105 S.Ct. at 2182; see also World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980).

Personal jurisdiction is divided into two categories — specific and general. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 nn. 8-9, 104 S.Ct. 1868, 1872 nn. 8-9, 80 L.Ed.2d 404 (1984). Specific jurisdiction is exercised by the court when the suit arises out of or is related to the defendant's contacts with the forum state. General jurisdiction is exercised when the suit is not related to the defendant's contacts with the forum state. Id.

Defendant MPSI claims that Plaintiff has failed to produce any evidence indicating that Defendant MPSI has jurisdictionally-significant contacts with North Carolina. In addition, Defendant MPSI contends that Defendant MPSI has provided affirmative proof, by way of declaration, of the lack of any contacts between Defendant MPSI and North Carolina to warrant the exercise of jurisdiction by this court either under a specific or general jurisdiction theory.

According to Defendant MPSI, it has no facilities, assets, or employees in North Carolina; conducts no activities in this state; sells no products in North Carolina, either directly or indirectly through an intermediary; does not have a registered agent for service of process in North Carolina; is not licensed to do business in North Carolina; and does not have a bank account or own property in this state. Thus, Defendant MPSI asserts that the exercise of jurisdiction over Defendant MPSI violates the Due Process Clause.

Plaintiff contends that Defendant MPSI has contacts with North Carolina sufficient to warrant the exercise of specific jurisdiction over Defendant MPSI. Plaintiff asserts that the basis for exercising jurisdiction comes from an agreement between Defendant MPSI and Defendant Ciba Seeds, dated July 14, 1993, entitled "Agreement for Exchange of Insect Control Technology and Patent Rights" ("Agreement"). This Agreement, Plaintiff argues, provides evidence that Defendant MPSI and Defendant Ciba Seeds have actively induced each other and third parties to commit infringing activity in the Middle District of North Carolina.

MPSI entered into the Agreement with Ciba Seeds with the hope of deriving economic gain and business advantages in North Carolina, by providing Ciba Seeds, a forum resident, with MPSI "New Bt Toxin(s)" and related MPSI information, thus obligating Ciba Seeds to "carry out transformation of said new Bt Toxin Gene(s) to produce Joint Pest Tolerant Maize Plants." This Agreement with a forum resident corporation shows that MPSI has purposefully availed itself of the privilege of conducting business within North Carolina, thereby invoking the benefits and protections of its laws.

(Pl.'s Resp. to Def. MPSI's Mot. to Dismiss at 9.) (Internal citation omitted.) Plaintiff argues that it was foreseeable that Defendant MPSI's tortious active inducement of Defendant Ciba Seeds would lead to direct infringement of Plaintiff's rights in North Carolina since the terms of the Agreement specified infringement by Defendant Ciba Seeds. According to Plaintiff, Defendant MPSI "should reasonably anticipate being haled into court" in North Carolina. World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567. Thus, Plaintiff contends that exercising jurisdiction over Defendant MPSI fully comports with federal due process.

Defendant MPSI argues that the Agreement cited by Plaintiff does not obligate Defendant MPSI to undertake any specific obligations or activities. The Agreement was entered into only by Defendant Ciba Seeds and Agrigenetics, L.P.; Defendant MPSI is not a party to the Agreement. Defendant MPSI is merely a nominal signatory to the Agreement as managing general partner of Agrigenetics, L.P. Defendant MPSI asserts that only Agrigenetics, L.P. was bound as a result of the signing of the Agreement by Defendant MPSI. Defendant MPSI maintains that the signing of the Agreement did not bind Defendant MPSI in any way.

Before determining whether jurisdiction over Defendant MPSI in North Carolina is proper, it is important to understand the corporate structure of Defendant MPSI. Defendant MPSI is a subsidiary of Mycogen Corp. Agrigenetics, L.P., d/b/a Mycogen Plant Sciences, operated as a limited partnership, and Defendant MPSI served as the managing general partner for Agrigenetics, L.P. On December 31, 1993, Agrigenetics, L.P. incorporated, and Defendant MPSI became the majority shareholder. Agrigenetics, Inc. became a party to the Agreement through corporate succession. Presently, Agrigenetics, Inc. is a subsidiary of Mycogen Corp. but remains a separate corporate entity from Defendant MPSI.

After construing the facts in the light most favorable to Plaintiff and drawing the most favorable inferences for the existence of jurisdiction, the court finds that the signature of Defendant MPSI as managing general partner for Agrigenetics, L.P. on the Agreement is sufficient to subject Defendant MPSI to personal jurisdiction in North Carolina to the same extent that Agrigenetics, Inc. would be subject to personal jurisdiction in this state.

The court must now...