Opinion
C22-0334JLR
06-10-2022
HDT BIO CORP., Plaintiff, v. EMCURE PHARMACEUTICALS, LTD., Defendant.
ORDER DENYING MOTION TO STAY DISCOVERY
JAMES L. ROBART, United States District Judge
I. INTRODUCTION
Before the court is Defendant Emcure Pharmaceuticals, Ltd.'s (“Emcure”) motion to stay discovery pending the outcome of its motion to dismiss. (Mot. (Dkt. # 25); Reply (Dkt. # 34); see also MTD (Dkt. # 23).) Plaintiff HDT Bio Corp. (“HDT”) opposes the motion. (Resp. (Dkt. # 29).) The court held oral argument on Emcure's motion to stay discovery on June 8, 2022. (See 6/8/22 Min. Entry (Dkt. # 36).) The court has considered the parties' submissions, the arguments of counsel, the relevant portions of the record, and the applicable law. Being fully advised, the court DENIES Emcure's motion to stay discovery.
II. BACKGROUND
This case arises from the alleged “theft of trade secrets” owned by HDT, a Seattle-based biotechnology company, by Emcure, “one of India's largest manufacturers and distributors of generic drugs.” (See Compl. (Dkt. # 1) ¶¶ 1-2, 5.) As alleged, this saga began when Dr. Sanjay Singh-the chief executive officer (“CEO”) of an Emcure subsidiary, Gennova Biopharmaceuticals Ltd. (“Gennova”), and, according to HDT, an Emcure Director-“visited HDT's headquarters in Seattle in January 2020.” (See Id. ¶ 10.) Dr. Singh met with HDT CEO, Dr. Steven Reed-a longtime colleague-and “proposed a partnership to bring HDT's then-incipient COVID-19 vaccine to market in India.” (Id.) This proposed arrangement was subsequently formalized through an Exclusive License Agreement (“License Agreement”) between Gennova and HDT. (Id.) Pursuant to the terms of the License Agreement, Gennova received “a limited license to use HDT's technology, ” consisting of its COVID-19 vaccine and delivery platform, “to develop and sell a COVID-19 vaccine in India.” (Id. ¶¶ 6, 11.) In return, “HDT would receive payments and royalties along with an unrestricted license to use Gennova's data to develop and sell the vaccisne everywhere else.” (Id. ¶ 11.)
HDT then began “furnishing Gennova with” proprietary information and essential materials, troubleshooting issues with sourcing raw materials, and providing ongoing technical support that allowed Gennova to quickly obtain regulatory approval to begin clinical trials. (See id. ¶¶ 65-69.) To facilitate this collaboration, “HDT and Gennova communicated by multiple means, including email and text message, but also weekly or biweekly Zoom teleconferences attended by participants in both Seattle and India.” (Id. ¶ 69; see also Khandhar Decl. (Dkt. # 32) ¶ 5, Ex. B (attaching Zoom invitation showing that the meetings were hosted on Emcure's account).) HDT was also able to secure funding through the National Institute of Health (“NIH”), which “helped HDT fund Gennova's” vaccine development efforts. (See Compl. ¶ 69.) Credit for early successes were shared between the parties: “Emcure and Gennova consistently credited HDT as (at a minimum) the developer of their vaccine and characterized the vaccine as based on” HDT's proprietary technology. (See id. ¶ 70.) HDT's contributions were even recognized through the name Gennova assigned to its vaccine, “HGC019, ” where the “H” stood for “HDT.” (Id.)
Trouble soon began, however. Emcure and Gennova began delaying or “refusing to share clinical data on the vaccine's safety and efficacy with HDT, ” an effort for which HDT suspects Emcure was to blame. (See id. ¶¶ 13, 77). Indeed, “Gennova personnel repeatedly told Dr. Reed and HDT personnel that ‘their hands were tied' by Emcure regarding various important decisions, including the release of clinical data to HDT.” (Id.) By the summer of 2021, “Emcure and Gennova began to take aggressive steps to steal HDT's intellectual property and to claim it as their own, ” including by “clandestinely fil[ing] two Indian patent applications that claim HDT's inventions.” (Id. ¶¶ 78-79.) Emcure also filed a prospectus “in preparation for” its initial public offering of Emcure stock, in which it touted its successful development of an mRNA COVID-19 vaccine without mention of HDT. (Id. ¶ 83.) “The final nail in the coffin, ” as HDT puts it, came when Dr. Singh visited Seattle in November 2021 to inform Dr. Reed of Emcure and Gennova's intention to sell their vaccine “free and clear of HDT's intellectual property rights.” (Id. ¶ 85.) As soon as Dr. Singh delivered this news, Emcure's CEO called Dr. Singh to speak with Dr. Reed in, according to HDT, a self-serving move born of his “concern[] that a dispute with HDT could jeopardize Emcure's public offering.” (Id.¶ 85.) A short while later, “Gennova terminated the License Agreement, ” a move HDT suspects Emcure ordered. (See id.)
HDT now sues Gennova's parent company, Emcure, alleging that it misappropriated HDT's trade secrets in violation of the Defense of Trade Secrets Act, 18 U.S.C. § 1836, and Washington Uniform Trade Secrets Act, RCW §§ 19.108.010 et seq. (See Compl. ¶¶ 94-110.) On May 13, 2020, Emcure moved to dismiss the case, arguing that the court lacks personal jurisdiction over it; HDT has failed to state a claim; and that dismissal is warranted under the doctrine of forum non conveniens. (See generally MTD.) A week later, on May 20, 2022, Emcure filed the instant motion, through which it asked the court to stay discovery pending disposition of its motion to dismiss. (See generally Mot.) The court denied Emcure's stay motion on the record at the June 8, 2022 hearing and indicated that this written order would follow. (See 6/8/22 Min. Entry.)
III. ANALYSIS
“A pending motion to dismiss is generally not grounds for staying discovery.” See Edmonds v. Amazon.com, Inc., No. C19-1613JLR, 2020 WL 8996835, at *1 (W.D. Wash. Mar. 6, 2020). In deciding whether to impose a stay pending disposition of a motion, courts consider (1) whether the pending motion would dispose of the entire case, and (2) “whether the pending motion can be decided without additional discovery.” See Roberts v. Khounphixay, No. C18-0746MJP-BAT, 2018 WL 5013780, at *1 (W.D. Wash. Oct. 16, 2018) (citing Ministerio Roca Solida v. U.S. Dep't of Fish & Wildlife, 288 F.R.D. 500, 503 (D. Nev. 2013)). “In applying this test, courts take a preliminary peek at the merits of the dispositive motion to assess whether a stay is warranted.” Id.; see also Zeiger v. Hotel Cal. by the Sea LLC, No. C21-1702TL-SKV, 2022 WL 1499670, at *2 (W.D. Wash. May 12, 2022). “The ‘preliminary peek,' however, is not intended to prejudge the outcome of the motion.” See id.
Although Emcure seeks dismissal based on the court's lack of personal jurisdiction, HDT's failure to state a claim, and the doctrine offorum non conveniens (see MTD), it focuses on its personal jurisdiction and forum non conveniens arguments in its stay motion (see Mot. at 2 (arguing that the court “should stay merits discovery until it has resolved” the “threshold jurisdictional issues” of personal jurisdiction and forum non conveniens raised therein). Accordingly, the court has confined its “preliminary peek” to the personal jurisdiction and forum non conveniens issues.
A. Personal Jurisdiction
“Where a defendant moves to dismiss a complaint for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction is appropriate.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). Where the defendants' “motion is based on written materials rather than an evidentiary hearing, ‘the plaintiff need only make a prima facie showing of jurisdictional facts.'” Id. (quoting Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990)). In assessing whether a prima facie showing of jurisdiction has been made, “[t]he court may consider evidence presented in affidavits” but may also “order discovery on the jurisdictional issues.” Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001). The plaintiff cannot simply rest on the bare allegations of the complaint, but the court must accept any uncontroverted allegations in the complaint as true and resolve any disputes raised through conflicting affidavits in the plaintiff's favor. Schwarzenegger, 374 F.3d at 800; Boschetto, 539 F.3d at 1015.
The court's personal jurisdiction analysis begins with Washington's “long-arm” statute, see Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1123 (9th Cir. 2002), which “‘extends jurisdiction over a defendant to the fullest extent' due process permits, ” Puget Sound Surgical Ctr., P.S. v. Aetna Life Ins. Co., No. C17-1190JLR, 2018 WL 1172992, at *3 (W.D. Wash. Mar. 6, 2018) (first citing Wash. Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668, 672 (9th Cir. 2012); and then citing Shute v. Carnival Cruise Lines, 783 P.2d 78, 82 (Wash. 1989)). “Thus, the court's jurisdictional analysis collapses into a determination of whether the exercise of personal jurisdiction comports with due process, ” id., which requires that the court exercise personal jurisdiction only over a defendant who has “take[n] some act by which [it] purposefully avails itself of the privilege of conducting activities within the forum State, ” see Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., - U.S. -, 141 S.Ct. 1017, 1024 (2021) (quotation marks omitted).
HDT does not appear to allege that Emcure has “substantial” or “continuous and systematic” contacts with Washington, as is required to establish general jurisdiction over Emcure. See Bancroft & Masters, Inc. v. Augusta Nat'l, Inc., 223 F.3d 1082, 1086 (9th Cir. 2000); (see generally Compl.). Accordingly, the court considers only whether it would have specific personal jurisdiction over Emcure.
In a tort case, “a defendant has sufficient minimum contacts with the forum state to establish specific personal jurisdiction if: (1) the defendant purposefully directs activities toward the forum state, (2) the plaintiff's claim arises out of or relates to those activities, and (3) an exercise of jurisdiction would be reasonable.” Burri L. PA v. Skurla, --- F.4th ---, 2022 WL 1815827, at *4 (9th Cir. 2022) (first citing Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002); and then citing Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1227-28 (9th Cir. 2011)).
At the June 8, 2022 hearing, counsel for Emcure conceded that HDT's uncontroverted allegations and record evidence would likely permit the court to exercise jurisdiction over its subsidiary, Gennova, based on its contact with HDT in Seattle through its CEO, Dr. Singh. Counsel for Emcure further acknowledged that a factual dispute exists regarding Dr. Singh's relationship with Emcure, including whether he was an Emcure Director during the relevant period, and, accordingly, the extent to which his contacts with HDT are fairly attributable to Emcure. As the court noted on the record, this factual dispute must be resolved in favor of HDT at this early phase. See Schwarzenegger, 374 F.3d at 800. Resolved in that manner, the court cannot say-after taking only a “preliminary peek”-that Emcure's personal jurisdiction arguments will prevail and that its motion will, accordingly, dispose of this case. See Zeiger, 2022 WL 1499670, at *2. The court emphasizes, however, the preliminary nature of this conclusion, which is necessarily reached without the benefit of complete briefing on Emcure's motion to dismiss or the more complete record that will likely exist once that motion has ripened. See id. (noting that the court's “preliminary peek” does not betray any prejudgment of the dispositive motion).
B. Forum Non Conveniens
“A party moving to dismiss based on forum non conveniens bears the burden of showing (1) that there is an adequate alternative forum, and (2) that the balance of private and public interest factors favors dismissal.” See Dole Food Co., 303 F.3d at 1118. An adequate alternative forum exists “when defendants are amenable to service of process in the foreign forum” and that forum “provides the plaintiff with a sufficient remedy for his wrong.” Id. The relevant private interests include “ease of access to sources of proof; availability of compulsory process for attendance of unwilling witnesses, and cost of obtaining attendance of willing witnesses; and likelihood of a fair trial.” Id. at 1119. The relevant public interest factors include “court congestion, local interest in resolving the controversy, and preference for having a forum apply a law with which it is familiar.” Id.
As the court indicated at the hearing, based on the record before it, it has serious concerns about the extent to which HDT could obtain relief in India on its tort-based misappropriation of trade secrets claims. (See, e.g., Berkowitz Decl. (Dkt. # 30) ¶ 10, Ex. F at 55 (attaching a report issued by the United States Trade Representative (“USTR”), which observes that companies “continue to face uncertainty due to insufficient legal means to protect trade secrets in India”).) Moreover, because HDT has selected its home forum, Emcure bears a “heavy burden” of showing that litigating in this court “results in oppressiveness and vexation . . . out of all proportion to the plaintiff's convenience.” Cooper v. Tokyo Elec. Power Co., Inc., 860 F.3d 1193, 1210-11 (9th Cir. 2017) (quotation marks omitted) (quoting Carijano v. Occidental Petroleum Corp., 643 F.3d 1216 (9th Cir. 2011)). The court is not convinced on its “preliminary peek, ” Zeiger, 2022 WL 1499670, at *2, that the private and public interest factors-which appear cross-cutting-tip the balance so heavily in that direction, see Carijano, 643 F.3d at 1227 (“[T]here is ordinarily a strong presumption in favor of the plaintiff's choice of forum, which may be overcome only when the private and public interest factors clearly point towards trial in the alternative forum.” (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255 (1981)).
The court cites to Exhibit F's internal pagination.
The court takes judicial notice of the USTR report attached to Ms. Berkowitz's declaration. See United States v. 14.02 Acres of Land More or Less in Fresno Cnty., 547 F.3d 943, 955 (9th Cir. 2008) (noting that district courts may take judicial notice of reports issued by federal agencies when considering a motion made under Federal Rule of Civil Procedure 12); see also EduMoz, LLC v. Republic of Mozambique, 968 F.Supp.2d 1041, 1048-49 (C.D. Cal. 2013) (taking judicial notice of a federal agency report “concerning corruption in Mozambique” and collecting examples of courts in the Ninth Circuit taking judicial notice of similar reports published by federal agencies on conditions in foreign countries), aff'd, 686 Fed.Appx. 486 (9th Cir. 2017). "
IV. CONCLUSION
For the foregoing reasons, as well as those given on the record during the June 8, 2022 hearing, Emcure's motion to stay discovery (Dkt. # 25) is DENIED.