997 F. Supp. 2d 1304
N.D. Ga.2014Background
- Regenicin (plaintiff) and Lonza entities (defendants) contracted in 2010 regarding Lonza’s PermaDerm technology; Regenicin paid $3M for an exclusive license and related cooperation toward FDA approval, with contingent further payments and manufacturing/distribution arrangements upon approval.
- Regenicin alleges Lonza breached the contract, gave conflicting "exclusive" licenses to others, withheld proprietary information and grant proceeds, failed to execute a stock purchase agreement, made multiple misrepresentations about PermaDerm development/approval, and engaged in tortious interference and IP infringements.
- Regenicin pleaded 18 counts (contract, fraud and fraud-related claims, securities and RICO claims, trademark/patent claims, unjust enrichment/quantum meruit, state consumer and securities statutes, etc.).
- Regenicin filed in Georgia state court (Sept. 2013); Lonza removed to federal court (Oct. 2013). Plaintiff moved to remand; Lonza moved to dismiss or for a more definite statement. Plaintiff also sought Hague service on a Swiss Lonza entity and a determination of diligence/time for service.
- The court found federal-question jurisdiction as to the securities (§10(b)) and federal RICO claims, and addressed whether supplemental jurisdiction covers the remaining state-law claims; it also evaluated the complaint’s form (shotgun pleading and Rule 9(b)) and Hague-service issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Removal / Subject-matter jurisdiction | Remand: state and federal claims are not the same controversy; remand appropriate | Federal jurisdiction exists for §10(b) and RICO; supplemental jurisdiction may cover the rest | Court denied remand; federal question jurisdiction exists for claims 16 and 18 and supplemental jurisdiction applies to state claims |
| Whether to decline supplemental jurisdiction under §1367(c) | State claims are novel/complex, predominate, or other exceptional reasons favor remand | State claims arise from same nucleus of operative facts as federal claims; no exceptional circumstances | Court declined to relinquish supplemental jurisdiction; state claims arise from same facts and do not substantially predominate or present novel state-law issues |
| Complaint form: shotgun pleading / Rule 12(e) more definite statement | Complaint is long but not impossible to understand | Complaint is a shotgun pleading: excessive incorporation and failure to ascribe allegations to specific Lonza entities | Court ordered repleading: GRANTED in part — plaintiff must attribute allegations to specific defendants and reduce indiscriminate incorporation |
| Fraud pleading: Rule 9(b) particularity | Plaintiff contends allegations suffice as pled | Defendants argue fraud and fraud-related counts lack particularity (who, when, what, where) | Court held Rule 9(b) deficiencies exist; plaintiff must replead fraud-based counts with particularity (leave to amend) |
| Service on Swiss defendant under Hague Convention; time to serve | Requested permission to serve English exhibits without translation; sought a finding of diligence/time | Defendants require Hague compliance and translations per Switzerland’s reservation; dismissal possible for undue delay | Court denied alternate-service request; required translations for nonpublic exhibits and set a due-diligence standard for Hague service, suggesting service by April 30, 2014 would likely be diligent |
Key Cases Cited
- City of Chicago v. Int’l Coll. of Surgeons, 522 U.S. 156 (same-case-or-controversy test for supplemental jurisdiction)
- Hudson v. Delta Air Lines, 90 F.3d 451 (11th Cir.) (federal and state claims arise from same facts / witnesses standard)
- Strategic Income Fund, L.L.C. v. Spear, Leeds & Kellogg Corp., 305 F.3d 1293 (shotgun pleading description and prohibition)
- Magluta v. Samples, 256 F.3d 1282 (shotgun pleading; repleading doctrine)
- Beckwith v. BellSouth Telecomms., Inc., [citation="146 F. App'x 368"] (11th Cir.) (failure to specify which defendant committed which acts supports shotgun pleading finding)
- United States ex rel. Clausen v. Lab. Corp. of Am., 290 F.3d 1301 (fraud pleading particularity under Rule 9(b))
- Lucas v. Natoli, 936 F.2d 432 (9th Cir.) (Hague Convention service: Rule 4(m) time limits do not apply)
- Nylok Corp. v. Fastener World Inc., 396 F.3d 805 (7th Cir.) (Hague service time not unlimited; diligence required)
- O’Rourke Bros., Inc. v. Nesbitt Burns, Inc., 201 F.3d 948 (7th Cir.) (discussion of pre-Rule 4(m) practice and diligence standard for foreign service)