ROCHE DIAGNOSTICS CORP. v. BINSON'S HOSPITAL SUPPLIES, INC.
1:17-cv-00949
S.D. Ind.Sep 18, 2017Background
- Roche (Indiana) manufactures blood-glucose test strips sold as higher‑priced "Retail Strips" (mostly reimbursed through pharmacy plans) and lower‑priced "DME Strips" sold exclusively to DME distributors under contract.
- Roche contracted with Michigan companies Binson’s and Northwood to sell DME Strips at discounted rates subject to restrictions and reporting (Utilization and Market Share Reports).
- After an amended agreement (July 2014) lowering Northwood’s purchase price and removing rebates, Northwood’s DME Strip purchases spiked; Roche’s investigators found DME Strips sold for cash at Binson’s retail stores.
- Roche alleges a diversion scheme: Northwood sold DME Strips to shell buyers (Olympus, then Delta, and Alpha) tied to J&B and individuals, who channeled the strips to a Florida reseller and ultimately to retail pharmacies.
- Roche sued asserting fraud, fraudulent inducement, aiding/abetting, criminal deception, unjust enrichment, civil conspiracy, negligent misrepresentation, breach of contract (against Binson’s/Northwood), and tortious interference (against third‑party resellers).
- Defendants moved to dismiss on personal jurisdiction and pleading‑deficiency grounds; the court granted some jurisdictional dismissals, dismissed fraud‑based claims for lack of Rule 9(b) particularity (without prejudice), and allowed certain non‑fraud claims to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over Olympus‑Delta defendants & Mankopf | Roche: jurisdiction exists because these defendants participated in a scheme that harmed an Indiana plaintiff | Olympus‑Delta/Mankopf: no purposeful contacts with Indiana; only worked with Michigan entities | Dismissed for lack of personal jurisdiction — mere effect in forum insufficient absent defendant‑created forum contacts |
| Personal jurisdiction over Individual Binson’s defendants | Roche: individual owners/executives must have known of scheme and are reachable because corporate contacts exist | Individual Binson’s: only corporate contacts; corporate form respected; no personal contacts with Indiana alleged | Dismissed for lack of personal jurisdiction as to Individual Binson’s defendants (no personal contacts alleged) |
| Sufficiency of fraud‑based allegations (Rule 9(b)) | Roche: pleaded fraud elements and may be excused from particularity where facts are inaccessible pre‑discovery | Defendants: Roche lumps defendants, fails to identify who made which misrepresentations, when, where, or how | Claims sounding in fraud (fraud, fraudulent inducement, aiding/abetting fraud, criminal deception, civil conspiracy tied to fraud, unjust enrichment tied to fraud) dismissed without prejudice for failure to meet Rule 9(b) |
| Pleading of non‑fraud claims (breach, negligent misrepresentation, tortious interference) | Roche: breach and other claims supported by allegations of contract, misrepresentations, inducement, and damages | Defendants: argue insufficient damages, insufficient duty or causation, and lack of jurisdiction for some defendants | Breach of contract (Binson’s, Northwood) and tortious interference (against those subject to jurisdiction) survive; negligent misrepresentation survives as plead but is dismissed as to individual Binson’s defendants for lack of jurisdiction |
Key Cases Cited
- Gibson v. City of Chicago, 910 F.2d 1510 (7th Cir. 1990) (on considering affidavits and resolving factual disputes for jurisdictional motions)
- RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272 (7th Cir. 1997) (federal court has personal jurisdiction only if state court would)
- Purdue Research Found. v. Sanofi‑Synthelabo, S.A., 338 F.3d 773 (7th Cir. 2003) (plaintiff need only make prima facie showing of jurisdiction on written materials)
- International Shoe Co. v. Washington, 326 U.S. 310 (1945) (minimum contacts and due process standard)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (purposeful availment and specific jurisdiction analysis)
- Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102 (1987) (purposeful availment and fairness factors)
- Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984) (general jurisdiction requires contacts so continuous and systematic)
- Walden v. Fiore, 571 U.S. 277 (2014) (forum contacts must be created by defendant, not merely effects in forum)