5:20-cv-00067
E.D.N.C.Oct 27, 2020Background
- Plaintiff U.S. Medical Supplies, LLC (USM) is a North Carolina LLC; Defendant Geri-Care Pharmaceuticals, Corp. (and affiliated supply LLC) is a New York corporation that sells pharmaceuticals internationally but has no office, property, or advertising in North Carolina and derives <5% of its business from North Carolina.
- USM and Geri-Care negotiated exclusive-distributor/agent letter agreements (2015 negotiations; a 2018 two-year exclusivity agreement for calcium carbonate tablets) conducted by phone/email; Geri-Care bottled the tablets in New York and USM arranged shipment to Saudi Arabia.
- USM purchased substantial product from Geri-Care in 2018 (approx. $608,722) and alleges Geri-Care subsequently breached exclusivity by selling to others (including Rakaa Medical Co., Ltd.), concealing the breaches, and causing ~ $1M in damages to USM in North Carolina.
- USM asserted seven North Carolina-law claims (breach of contract, fraud, constructive fraud, fiduciary breach, tortious interference, unfair/deceptive trade practices, etc.).
- Procedural posture: Geri-Care moved to dismiss for lack of personal jurisdiction under Rule 12(b)(2); USM opposed and alternatively moved to transfer venue to the Eastern District of New York. The court denied the motion to dismiss and denied the motion to transfer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| General jurisdiction — is Geri-Care "at home" in NC? | USM: Geri-Care's relationship and sales to USM (including >$600k in 2018) and other NC sales support general jurisdiction. | Geri-Care: Incorporated in NY, principal places of business outside NC; <5% of business in NC; only limited sales to USM. | Denied — Court finds contacts (three sales plus <5% business) insufficient to render Geri-Care "at home" in NC; no general jurisdiction. |
| Specific jurisdiction — did Geri-Care purposefully avail itself of NC? | USM: Geri-Care entered multi-year contractual relationship with USM, created continuing obligations with NC resident and negotiated with NC representatives by phone/email. | Geri-Care: No physical presence, no in-person contacts in NC, performance occurred outside NC, mere contract formation is insufficient. | Granted — Court finds purposeful availment via ongoing contractual relationship; first ALS factor satisfied. |
| Relatedness and reasonableness (do USM's claims arise from NC-directed activities and is jurisdiction reasonable?) | USM: Claims arise from the contracts and injuries suffered in NC; jurisdiction is reasonable. | Geri-Care: Events occurred outside NC; witnesses and third parties are abroad; litigating in NC is unduly burdensome. | Granted — Court finds the claims arise from NC-directed activities and exercise of jurisdiction is constitutionally reasonable; inconvenience arguments go to venue, not jurisdiction. |
| Motion to transfer venue to EDNY | USM: alternatively sought transfer if jurisdiction were doubtful. | Geri-Care: Favored dismissal/keeping case away from NC forum. | Denied — Having found specific jurisdiction in NC, court denied USM's alternative transfer motion. |
Key Cases Cited
- Daimler AG v. Bauman, 571 U.S. 117 (2014) (limits general jurisdiction—corporation is typically "at home" only in state of incorporation or principal place of business)
- Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984) (mere purchases or isolated transactions do not establish in personam jurisdiction)
- Goodyear Dunlop Tire Operations, S.A. v. Brown, 564 U.S. 915 (2011) (general jurisdiction requires contacts so continuous and systematic as to render the corporation at home)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (ongoing contractual relationships that create continuing obligations can establish purposeful availment)
- Walden v. Fiore, 134 S. Ct. 1115 (2014) (plaintiff must show defendant's own contacts with the forum; effects-based contacts alone insufficient)
- Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017) (claims must arise out of defendant's forum contacts for specific jurisdiction)
- ALS Scan, Inc. v. Digit. Serv. Consultants, Inc., 293 F.3d 707 (4th Cir. 2002) (articulates the three-factor specific-jurisdiction test used by the Fourth Circuit)
- ESAB Group, Inc. v. Centricut Inc., 126 F.3d 617 (4th Cir. 1997) (Fourth Circuit requires more than attenuated knowledge of forum injury to establish specific jurisdiction)