Coastal Laboratories, Inc. v. Jolly, 502 F.Supp.3d 1003

Background

Plaintiffs Coastal Laboratories (Coastal) and AMSOnSite (AMS) are Maryland companies that purchased/operated two Arizona medical labs to provide COVID-19 testing for nursing homes; Coastal acquired the Arizona labs from Dr. Tarun Jolly on March 18, 2020.
Defendants include Cormeum, Sensiva, Z DiagnostiX (ZDX), Vita Health, and several individual principals (Jolly, the Sillimans, Vigerust, Williamson); plaintiffs allege these entities/individuals are affiliated and coordinated conduct.
Plaintiffs contracted with ZDX and others for management, technology (LIMS), and regulatory assistance (EUA) to scale COVID testing; plaintiffs allege defendants misled them, then diverted ZDX resources and obtained an EUA for Cormeum instead, leaving Coastal without EUA and customers and prompting Coastal to send samples to Cormeum.
Disputes followed: defendants allegedly restricted web-portal access for Maryland nursing-home customers, solicited those customers to switch to defendants, and retained Coastal’s loaned lab equipment in Louisiana; Cormeum and Jolly filed related suits in the Eastern District of Louisiana in August 2020.
Procedural posture: Coastal/AMS sued in Maryland (July 31, 2020) for tortious interference, conspiracy, conversion, unfair competition, and fraud; defendants moved to dismiss for lack of personal jurisdiction, improper venue/transfer based on forum-selection clause, first-filed rule, and failure to state claims. The District of Maryland denied the motion on November 23, 2020.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Personal jurisdiction	Defendants purposefully availed: negotiated contracts with Maryland plaintiffs, provided/controlled web portal serving Maryland customers, directed electronic activity at MD, and conspired to harm MD business	Insufficient minimum contacts with Maryland; defendants are nonresidents and core conduct occurred elsewhere	Court: PJ proper — Maryland long-arm and Due Process satisfied via specific jurisdiction, electronic-activity test, and conspiracy theory
Venue / forum-selection clause	Maryland is proper; the claims arise from a broader pre-existing course of conduct and multiple contracts (including the MIPA with no venue clause), so the April 7 Lab Services Agreement clause is not the controlling document	April 7 Laboratory Services Agreement contains a mandatory Orleans Parish forum clause that requires transfer/dismissal to Louisiana	Court: forum clause in Lab Services Agreement not controlling for plaintiffs’ broader tort claims; denied transfer/dismissal under §1404 and Rule 12(b)(3)
First-to-file rule (lab equipment conversion)	Maryland complaint was filed first (July 31) and the conversion allegation relates back to the original complaint, so no transfer is required	Jolly filed a declaratory-judgment action in Louisiana earlier than plaintiffs’ amendment adding conversion, so Louisiana should have priority	Court: first-to-file does not mandate transfer here; Maryland action was first filed and the amendment relates back, so conversion claim remains in Maryland
Failure to state claims (12(b)(6))	Plaintiffs allege specific misrepresentations about obtaining EUA, concrete acts (shutting portal, diverting customers), and damages — fraud pled with particularity under Rule 9(b)	Claims are conclusory and insufficiently pled for tortious interference, conspiracy, and fraud	Court: Plaintiffs plausibly alleged tortious interference, conspiracy, and fraud under Twombly/Iqbal and Rule 9(b); 12(b)(6) denied

Key Cases Cited

Int'l Shoe Co. v. Washington, 326 U.S. 310 (minimum contacts/Due Process standard)
Burger King Corp. v. Rudzewicz, 471 U.S. 462 (contacts/contractual relationships analysis for specific jurisdiction)
M/S Bremen v. Zapata Off–Shore Co., 407 U.S. 1 (forum-selection clauses presumptively valid)
Atlantic Marine Constr. Co. v. U.S. Dist. Court, 571 U.S. 49 (enforcement and effect of forum-selection clauses on §1404 transfer analysis)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for Rule 12(b)(6))
Ashcroft v. Iqbal, 556 U.S. 662 (applying Twombly plausibility framework)
ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707 (electronic-activity test for jurisdiction)
CareFirst of Md., Inc. v. CareFirst Pregnancy Ctrs., Inc., 334 F.3d 390 (long-arm statute/Due Process discussion in Fourth Circuit)
Mackey v. Compass Mktg., 892 A.2d 479 (Md. Supreme Court on conspiracy theory of jurisdiction)
Consulting Eng'rs Corp. v. Geometric Ltd., 561 F.3d 273 (procedures for deciding jurisdictional challenges on the pleadings)