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Prevention, LLC. v. EQ Biosciences, Inc.

United States District Court, D. Nebraska

May 27, 2016

PREVENTION, LLC, Plaintiff,
v.
EQ BIOSCIENCES, INC., Defendant.

          MEMORANDUM AND ORDER

          JOHN M. GERRARD UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on the defendant EQ Bioscience's motion to dismiss plaintiff's complaint for declaratory judgment or, in the alternative, transfer venue (filing 14). For the reasons discussed below, the Court will deny this motion.

         BACKGROUND

         The plaintiff has alleged and produced evidence of specific facts it contends support jurisdiction over the defendant in this case. The plaintiff, Prevention, LLC, is a Nebraska limited liability company. Filing 1 at 1; filing 23-1 at 1. Its owners and sole members are Eleanor G. Rogan and Ercole L. Cavalieri. Filing 23-1 at 1; filing 23-2 at 2. Both are faculty at the University of Nebraska Medical Center. Filing 1 at 2; filing 23-1 at 1; filing 23-2 at 1. Both are Nebraska residents, and were Nebraska residents at all relevant times. See, filing 22 at 2; filing 23-1 at 1; filing 23-2 at 1. The plaintiff owns a patent that covers, in part, certain pharmaceutical compositions intended to help prevent some forms of cancer. See filing 1-1 at 3. The original application for the patent, Patent Application No. 10/940, 600 (Application 600), was submitted by Cavalieri and Rogan. Filing 1 at 2; filing 23-1 at 1; filing 23-2 at 1. In August 2008, Cavalieri and Rogan assigned Application 600 to the plaintiff. Filing 1 at 2; filing 23-1 at 1; filing 23-2 at 1-2.

         The defendant, EQ Biosciences, Inc., is a Nevada corporation. Filing 22 at 1; filing 25-4. Its headquarters are in Nevada, and it maintains no property, offices, bank accounts, or corporate records in Nebraska. Filing 15 at 3; filing 16-2 at 2. John Raffanti and Stephen Sankowich, who both live outside Nebraska, are officers of the defendant. Filing 22 at 1; see, filing 24-2; filing 24-3. In October 2009, prior to the defendant's incorporation, Raffanti and Sankowich traveled to Nebraska to meet with Rogan, Cavalieri, and one other individual. Filing 22 at 2; filing 23-1 at 2-3; filing 23-2 at 2-3.[1] At the meeting, they discussed "the formation and ownership interests in the entity, EQ Biosciences, Inc." Filing 22 at 2; see, filing 23-1 at 2; filing 23-2 at 2. Additionally, the plaintiff has produced evidence that they negotiated the terms of an agreement for the plaintiff to license Application 600 to the defendant. Filing 22 at 2; see, filing 23-1 at 3, 63; filing 23-2 at 3. The defendant disputes that negotiations took place. Filing 24 at 3. Rather, the defendant points to Sankowich's affidavit, in which he states, "In October 2009, I traveled to Nebraska for the sole purpose of meeting the members of Prevention, LLC, and learning more about their research. I made the trip because I was interested in learning more about the opportunity to invest in [the compounds covered by Application 600] before agreeing to commit to any business venture." See, filing 24 at 3; filing 25-3.

         In November 2009, the defendant was incorporated. Filing 25-4 at 1. Cavalieri, Rogan, Raffanti, and Sankowich were all listed as directors in the articles of incorporation. Filing 25-4 at 1-2. On December 17, 2009, the plaintiff and the defendant entered into a license agreement for Application 600. Filing 1 at 2; filing 1-4 at 1. The defendant wired its payment for the license to a Nebraska bank. Filing 22 at 1; filing 23-1 at 3; filing 23-2 at 3. The defendant trademarked the compounds covered by Application 600 as "Prevennia." Filing 1 at 2; see filing 1-5.

         The plaintiff contends that after the parties entered into the license agreement, Raffanti, acting on the defendant's behalf, "continuously sent correspondence" to Rogan and Cavalieri, requesting various forms of assistance. Filing 22 at 2. For example, Raffanti asked Rogan and Cavalieri to write materials for the defendant's website, review and critique the website, and gather information for and write large portions of an FDA application for Prevennia. Filing 22 at 2-3; filing 23-1 at 3; filing 23-2 at 3.

         In August 2010, Rogan and Cavalieri resigned from their positions with the defendant. Filing 22 at 1-2; filing 23-1 at 3; filing 23-2 at 3. The plaintiff alleges that on March 8, 2011, the defendant sent a demand letter to the plaintiff claiming that the plaintiff violated the license agreement. Filing 1 at 4. The defendant sent additional demand letters on September 19, 2013, and June 26, 2015. Filing 1 at 4. The latest of these letters is attached to the complaint. It asserts that after Cavalieri and Rogan resigned from their roles with the defendant in 2010, they "ceased assisting EQ Biosciences in marketing and developing Prevennia, despite requirements in the Agreement." Filing 1-6 at 2. The demand letter further states that "by failing to follow through on promises to promote and market the technology, including conducting a human clinical trial, [the plaintiff] is undermining [the defendant's] ability to profit from the Agreement." Filing 1-6 at 3. Additionally, the letter asserts that the plaintiff began working with another company to develop and market products that relied on the technology covered in Application 600, in violation of the license agreement. Filing 1-6 at 2-3. In response to the defendant's implication that the plaintiff was in breach of contract, the plaintiff filed the present action seeking a declaration that they have not violated the license agreement.

         STANDARD OF REVIEW

         When jurisdiction is challenged on a pretrial motion to dismiss, the nonmoving party need only make a prima facie showing of jurisdiction. Pangaea, Inc. v. Flying Burrito LLC, 647 F.3d 741, 745 (8th Cir. 2011); see Fastpath, Inc. v. Arbela Techs. Corp., 760 F.3d 816, 820 (8th Cir. 2014). The evidence is viewed in the light most favorable to the plaintiff. Viasystems, Inc. v. EBM-Papst St. Georgen GmbH & Co., 646 F.3d 589, 592 (8th Cir. 2011). Nonetheless, if the defendant controverts or denies jurisdiction, the plaintiff still carries the burden of proof. See, Fastpath, 760 F.3d at 820; Dairy Farmers of Am., Inc. v. Bassett & Walker Int'l, Inc., 702 F.3d 472, 475 (8th Cir. 2012); Viasystems, 646 F.3d at 592; Wells Dairy, Inc. v. Food Movers Int'l, Inc., 607 F.3d 515, 518 (8th Cir. 2010); Miller v. Nippon Carbon Co., 528 F.3d 1087, 1090 (8th Cir. 2008). The plaintiff's prima facie showing must be tested, not by the pleadings alone, but by the affidavits and exhibits presented with the motions and opposition thereto. Fastpath, 760 F.3d at 820; Dairy Farmers, 702 F.3d at 475; Miller, 528 F.3d at 1090; Coen v. Coen, 509 F.3d 900, 904-05 (8th Cir. 2007).

         ANALYSIS

         A. Motion to Dismiss

         The defendant moves to dismiss, arguing that this Court lacks personal jurisdiction over it. Filing 14. The plaintiff contends that there is specific personal jurisdiction over the defendant in Nebraska. Filing 22 at 5.

         In order to satisfy due process, a defendant must have minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Pangaea, 647 F.3d at 745;see also Dairy Farmers, 702 F.3d at 477. The fundamental inquiry is whether the defendant has purposefully availed itself of the benefits and protections of the forum state to such a degree that it should reasonably anticipate being haled into court there. Viasystems, 646 F.3d at 594; see also Dairy Farmers, 702 F.3d at 477. Purposeful availment is required to ensure that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts, or the unilateral activity of another party or a third person. Stanton v. St. Jude Med., Inc., 340 ...


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