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Maiden Biosciences Inc. v. MPM Medical Inc.

United States District Court, N.D. Texas, Dallas Division

November 14, 2019

MAIDEN BIOSCIENCES, INC., Plaintiff-Counterdefendant,
v.
MPM MEDICAL, INC., et al., Defendants-Third-Party Plaintiffs,
v.
DANIEL ZANG, et al., Third-Party Defendants.

          MEMORANDUM OPINION AND ORDER

          SIDNEY A. FITZWATER SENIOR JUDGE.

         In this breach of contract action, third-party defendants Daniel Zang (“Zang”) and Mark Gorman (“Gorman”), officers of Maiden Biosciences, Inc. (“Maiden”), move under Fed.R.Civ.P. 12(b)(2) to dismiss the claims of defendants-third-party plaintiffs MPM Medical, Inc. (“MPM”) and RBC Life Sciences, Inc. (“RBC”) for lack of personal jurisdiction. MPM and RBC oppose the motions and seek leave to amend their third-party complaint. For the reasons that follow, the court grants Zang's and Gorman's motions to dismiss, denies MPM and RBC's request for leave to amend, and dismisses the third-party actions of MPM and RBC against Zang and Gorman without prejudice by Rule 54(b) final judgment.

         I

         This case is the subject of several prior memorandum opinions and orders. See Maiden Biosciences, Inc. v. MPM Med., Inc., 2019 WL 2075585, at *1 (N.D. Tex. May 10, 2019) (Fitzwater, J.); Maiden Biosciences, Inc. v. MPM Med., Inc., 2019 WL 935478, at *1 (N.D. Tex. Feb. 26, 2019) (Fitzwater, J.); Maiden Biosciences, Inc. v. MPM Med., Inc., 2018 WL 2416071, at *1 (D. Md. May 29, 2018). The court will therefore recount only the background facts and procedural history that are pertinent to this decision.

         Plaintiff Maiden, a Maryland corporation, is a biotechnology company that manufactures wound dressing. Maiden and MPM, a Texas corporation and wholly-owned subsidiary of RBC that distributes medical devices, entered into a supply agreement whereby MPM would purchase an annual minimum quantity of wound dressing and pay for a separate order of custom-made products. When MPM allegedly failed to uphold its end of the bargain, Maiden filed suit against MPM and RBC for breach of contract in the District of Maryland.

         In their May 10, 2019 second amended answer to plaintiffs' second amended complaint and defendants' first amended counterclaim, [1] MPM and RBC allege that Gorman and Zang obtained MPM's trade secrets and used this information to poach MPM's Primary Collagen Purchaser (“PCP”) by offering the PCP a much lower price than MPM charged. MPM and RBC assert that MPM lost sales and a prospective asset purchase as a result. MPM and RBC assert counterclaims against Maiden, and third-party claims against Gorman and Zang, for misappropriation of trade secrets, under the Defend Trade Secrets Act, 18 U.S.C. §§ 1836-1839, and the Texas Uniform Trade Secrets Act, Tex. Civ. Prac. & Rem. Code § 134A.001, et seq. (West 2019). MPM and RBC also assert claims for breach of fiduciary duties, conversion and civil theft, breach of contract, fraud, interference with actual or prospective business relationships, and promissory estoppel.

         On July 1, 2019 and July 3, 2019, respectively, Zang and Gorman moved to dismiss these claims for lack of personal jurisdiction under Rule 12(b)(2). MPM and RBC did not respond to these motions. Instead, without leave of court, MPM and RBC filed on July 22, 2019 a second amended counterclaim and first amended third-party claim. This pleading was filed 59 days after Maiden and RBC filed their May 24, 2019 answer to defendants' amended counterclaim, 73 days after MPM and RBC filed their May 10, 2019 second amended answer to plaintiffs' second amended complaint and defendants' first amended counterclaim, and 83 days after the April 30, 2019 deadline for filing a motion for leave to amend pleadings set forth in the scheduling order, as amended. Then, on August 5, 2019, Zang and Gorman moved anew to dismiss for lack of personal jurisdiction, contending that the untimely filings and failures to respond provide independent bases to dismiss the claims against them. MPM and RBC have timely responded to the second round of Zang's and Gorman's dismissal motions filed on August 5, 2019, and in their response they request leave to amend their answer under Rule 15(a)(2). Maiden opposes the requests for leave to amend.

         II

         As a preliminary matter, the court considers whether it should address the motions to dismiss filed on July 1 and July 3, 2019, the motions to dismiss filed on August 5, 2019, or all four. The court holds that it must consider the motions filed on July 1 and 3, but not the motions filed on August 5. This is because the August 5 motions address the July 22, 2019 second amended counterclaim and first amended third-party claim of MPM and RBC, which was improperly filed without leave of court and therefore can be disregarded. See, e.g., Johnson v. Karr, 2017 WL 2362043, at *1 (N.D. Tex. May 31, 2017) (Fitzwater, J.) (disregarding improperly-filed amended third-party complaint). This is also because the court decides below that the request of MPM and RBC for leave to amend should be denied. See infra § VI(B). Because the July 22, 2019 pleading can be disregarded and the court is denying the request of MPM and RBC for leave to amend, the court will only consider the motions to dismiss that are addressed to the May 10, 2019 second amended answer to plaintiffs' second amended complaint and defendants' first amended counterclaim, i.e., the first round of motions to dismiss filed on July 1 and July 3, 2019.

         III

         The court now turns to the motions to dismiss for lack of personal jurisdiction under Rule 12(b)(2). “When a nonresident defendant presents a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the district court's jurisdiction over the nonresident.” Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985) (citing Thompson v. Chrysler Motors Corp., 755 F.2d 1162, 1165 (5th Cir. 1985); D.J. Invs., Inc. v. Metzeler Motorcycle Tire Agent Gregg, Inc., 754 F.2d 542, 545 (5th Cir. 1985)). The determination whether a federal district court has in personam jurisdiction over a nonresident defendant is bipartite. The court first decides whether the long-arm statute of the state in which it sits confers personal jurisdiction over the defendant. If it does, the court then resolves whether the exercise of jurisdiction is consistent with due process under the United States Constitution. See Mink v. AAAA Dev. LLC, 190 F.3d 333, 335 (5th Cir. 1999). Because the Texas long-arm statute extends to the limits of due process, the court need only consider whether exercising jurisdiction over the defendant would be consistent with the Due Process Clause of the Fourteenth Amendment. See id.; Alpine View Co. v. Atlas Copco AB, 205 F.3d 208, 214 (5th Cir. 2000).

The Due Process Clause of the Fourteenth Amendment permits the exercise of personal jurisdiction over a nonresident defendant when (1) that defendant has purposefully availed [it]self of the benefits and protections of the forum state by establishing “minimum contacts” with the forum state; and (2) the exercise of jurisdiction over that defendant does not offend “traditional notions of fair play and substantial justice.” To comport with due process, the defendant's conduct in connection with the forum state must be such that [it] “should reasonably anticipate being haled into court” in the forum state.

Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999) (footnotes omitted) (first quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); then quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). To determine whether exercising jurisdiction would satisfy traditional notions of fair play and substantial justice, the court examines “(1) the defendant's burden; (2) the forum state's interests; (3) the plaintiff's interest in convenient and effective relief; (4) the judicial system's interest in efficient resolution of controversies; and (5) the state's shared interest in furthering fundamental social policies.” Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 421 (5th Cir. 1993).

         A defendant's contacts with the forum may support either specific or general jurisdiction over the defendant. Mink, 190 F.3d at 336. “For the court properly to assert specific personal jurisdiction, the defendant must have ‘purposefully directed' his activities at residents of the forum, and the litigation must result from alleged injuries that ‘arise out of or relate to' the defendant's activities directed at the forum.” Archer & White, Inc. v. Tishler, 2003 WL 22456806, at *2 (N.D. Tex. Oct. 23, 2003) (Fitzwater, J.) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)). “General jurisdiction exists when a defendant's contacts with the forum state are unrelated to the cause of action but are ‘continuous and systematic.'” Id. (quoting Mink, 190 F.3d at 336).

         “The district court usually resolves the jurisdictional issue without conducting a hearing.” Ham v. La Cienega Music Co., 4 F.3d 413, 415 (5th Cir. 1993) (footnote omitted).

When a court rules on a motion to dismiss for lack of personal jurisdiction without holding an evidentiary hearing, it must accept as true the uncontroverted allegations in the complaint and resolve in favor of the plaintiff any factual conflicts posed by the affidavits. Therefore, in a no-hearing situation, a plaintiff ...

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