Opinion
Civil Action No: 99-2207, Section: "J" (4)
June 29, 2000
ORDER AND REASONS
On February 8, 2000, the plaintiff, Administrators of the Tulane Educational Fund ("Tulane") filed a Motion to Compel (doc. #20) against defendants, Debiopharm, S.A., Debio Holding, S.A., Debiotech, S.A., and Debio Recherche Pharmaceutique, S.A. (hereinafter referred to as "Debiopharm"). Debiopharm and its related entities are Swiss corporations. whose principal places of business are in Switzerland. Tulane's motion challenges the sufficiency of the objections raised by Debiopharm to Tulane's First Set of Interrogatories and Request for Production of Documents.
I. FACTUAL BACKGROUND
In the 1970's and 1980's, Tulane's scientists invented the pharmaceutical compounds called Decapeptyl and Octapeptide Somatostain Analogs ("Octapeptides") (referred to by Tulane as the "Tulane Drugs"). Tulane, a Louisiana on-profit corporation and holder of the patents governing the compounds, entered into two separate agreements with Debiopharm, on May 3, 1982 and September 23, 1986, respectively. Under both agreements, Debiopharm obtained an exclusive license to market the Tulane Drugs, in exchange for Debiopharm paying Tulane certain royalties.
Debiopharm is engaged in the manufacture, sale and licensing of pharmaceutical products.
0n May 3, 1982, Tulane entered into an agreement with Debiopharm, S.A. relating to the Decapeptyl compound (the "Decapeptyl Agreement"). Then, on September 23, 1986, Tulane entered into another agreement with Debiopharm relating to the Octapeptides (the "Octapeptide Agreement") (the Decapeptyl and Octapeptide Agreements are hereinafter referred to collectively as "the Agreements").
Debiopharm's Statement of Uncontested Facts; Plaintiff's Complaint ¶ 27-28, Record doc. #1.
On July 21, 1999, Tulane filed a complaint against all of the Debiopharm entities, alleging that Depiopharm breached the 1982 and 1986 Agreements, by failing to market the Tulane Drugs and not paying the agreed royalties. Tulane further alleges that Debiopharm breached its fiduciary duty owed to Tulane by virtue of a joint venture relationship.
Id. at pp. 18-19, ¶ 93-95, ¶ 97-104.
Id. at pg. 20, ¶ 106-108.
On December 2, 1999, in an attempt to discover information about the Swiss corporations' minimum contacts with either Louisiana or the United States, Tulane propounded interrogatories and requests for production of documents to each of the Debiopharm entities. The Debiopharm entities objected to the production of the discovery.
Debiopharm filed a motion seeking dismissal of the claim because the court allegedly lacks jurisdiction over them.
Thereafter, on February 8, 2000, Tulane filed a Motion to Compel in which it sought to test the sufficiency of the objections raised by Debiopharm to Interrogatories Nos. 6 and 14. Tulane further challenged the sufficiency of the objections to Requests for Production Nos. 5, 37, 38, and 39.
On March 1, 2000, the matter was heard with oral argument before the undersigned. Following oral argument, the Court granted Tulane's motion in part and denied in part. See Record doc. # 34. The Court rejected Tulane's assertion that this case arises out of federal patent law such that it could conduct discovery of Debiopharm's nationwide contacts. Instead, the Court held that Tulane's claims are more appropriately characterized as state law breach of contract claims and that Tulane's discovery would be limited to the issue of contacts in Louisiana.
March 1, 2000 transcript, Plaintiff's Motion to Compel, pp. 21-22.
The Court further granted Tulane's motion in part and overruled numerous general objections posed by Debiopharm, as overly broad. The Court then ordered the parties to file supplemental memorandum, on the issue of agency as it pertains to personal jurisdiction in Louisiana.
Therefore, the issues currently before the Court are:
1. Whether Tulane can conduct discovery of Debiopharm's contracts, including licenses and sub-license agreements issued outside of Louisiana, concerning the Tulane Drugs under the theory of agency and/or co-venture, where the agent or coventurer are on-residents of Louisiana.
2. Whether Tulane can discover Debiopharm's royalty payments and sales documents regarding injection or other medical devices related to the administration of the Tulane Drugs.II. LEGAL ANALYSIS A. Sub-license/Agency Agreements
Tulane contends that it should be permitted to discover sub-license agreements and third-party contracts, which exist or have existed between any Debiopharm entity relating to the Tulane Drugs. Debiopharm concedes that the contacts of its agents can be imputed to it with respect to establishing personal jurisdiction, provided that the contacts occurred in Louisiana.
Defendants' Opposition Memorandum, p. 21, Record doc. #27.
Debiopharm contends, however, that under the stream of commerce theory, an agent's contacts can only be imputed to a on-resident defendant, if the agent is a resident of the forum state. Thus, Debiopharm contends that discovery of its contracts, including licenses and sublicense agreements, should be limited to information regarding resident agents in Louisiana.
Defendants' Memorandum of Law on the Role of Agency in Jurisdictional Discovery, pg. 2-3, Record doc. # 35; Transcript of Oral Argument on the plaintiff's Motion to Compel, March 1, 2000, pp. 31-41. The very cases cited by defendants, explicitly refer to the Court's examination of the contract/agreement in its agency determination. See e.g., O'Qunn v. World Industrial Construction, Inc., et al., 847 F. Supp. 143, 145 n. 1 (E.D. Tex. 1995) (Court examined contract between purported agent and defendant to determine whether agency relationship existed).
The Fifth Circuit has long held that the actions of an agent are attributable to a non-resident principal for purposes of establishing personal jurisdiction. See Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 492 (5th Cir. 1974). Indeed, Louisiana's long-arm statute specifically provides that a court may exercise personal jurisdiction over a nonresident who acts directly "or by an agent."
Louisiana's long-arm statute provides in pertinent part:
A court may exercise personal jurisdiction over a nonresident who acts directly or by an agent, as to a cause of action arising from any one of the following activities performed by the on-resident:
A. Transacting any business in this state.
B. Contracting to supply services or things in this state.
C. In addition to the provisions of Subsection "A", a court of this state may exercise personal jurisdiction over a on-resident on any basis consistent with the Constitution of this State and of the Constitution of the United States. La. Rev. Stat. § 13:3201.
In order for an agent's contacts with the relevant forum to subject a on-resident defendant to personal jurisdiction, the plaintiff must establish that; an agency relationship exists and that the agent engaged in contacts with the relevant forum in furtherance of the relationship. See Nolan v. Boeing Company, 736 F. Supp. 120, 126 (E.D.La. 1990).
Under the first requirement, an agency relationship is created by either the express appointment of a mandatory under Civil Code Article 2985, or by some implied appointment which traces to apparent authority. Richard A. Cheramie Enterprises v. Mt. Airy Refining, 708 F.2d 156, 158 (5th Cir. 1983); Nolan, 736 F. Supp. at 126. To establish implied agency, the plaintiff must show that the principal made some overture or inference to a third party and the third party reasonably relied on the putative agent's purported authority as a direct consequence of the principal's representations. Id.
Under the second requirement, the plaintiff must show that the agent engaged in contacts with the relevant forum in furtherance of the relationship. Id.
The record does not support Debiopharm's contention and or does Debiopharm cite a single agency or "stream of commerce" case to support the proposition that an agent must be a resident of the forum state in order for his contacts to be imputed to his on-resident principal. See Defendants' Opposition Memorandum, Record docs. #27 and #35. Further, the stream of commerce theory is not the exclusive method of establishing personal jurisdiction.
To the contrary, district courts have routinely held that contacts made by an agent in the forum may be imputed to a on-resident principal, even though the agent does not reside in the forum. See Aircraft Guaranty Corporation v. Strato-Lift, Inc., 974 F. Supp. 468, 473 (E.D.Pa. 1997) (contacts of Connecticut agent with Pennsylvania imputed to Belgian defendant for purposes of obtaining personal jurisdiction over defendant in Pennsylvania); Grand Entertainment Group, Ltd. v. Star Media Sales, Inc., et al., 988 F.2d 476, 483 (3rd Cir. 1993) (California based agent's contacts with Pennsylvania imputed to Spanish defendants).
Further, Louisiana state courts have also routinely imputed the actions of an agent to a non-resident defendant where the agent was not a resident of Louisiana. See e.g., Hunter v. Meyers, 96-1075 (La.App. 1 Cir. 3/27/97), 691 So.2d 318, 322-23 (contacts of agent located in Florida with Louisiana held to be properly imputed to New York defendant for purposes of establishing personal jurisdiction).
The Court, therefore, finds that Debiopharm's objection to the production of contracts, license and sub-licenses is OVERRULED. Debiopharm shall provide Tulane with copies of any contracts, including licenses and sub-license agreements, entered into between any Debiopharm entity and any other third-party entity, relating to the manufacture, sale, distribution, or marketing of drugs, containing the pharmaceutical compound Decapeptyl or Octapeptide, within 20 days of this order.
B. Contracts/Co-Venture Agreements
Tulane also seeks documents reflecting or pertaining to any contract or contractual arrangement, between or among any of the defendants concerning the Tulane Drugs. Tulane maintains that the requested information is relevant and discoverable under the theory that a coventurer's contacts are imputed to the other co-venturers for purposes of establishing personal jurisdiction. Debiopharm has objected on the ground that the information sought is irrelevant to the issue of whether there are sufficient minimum contacts with Louisiana by any of the
Plaintiff's Request for Production No. 38.
Debiopharm entities.
A joint venture is defined as a special combination of two or more persons who engage in a specific venture for their joint profit or gain, without an actual partnership or corporate designation. See Hayes v. Muller, 245 La. 356, 158 So.2d 191, 194 (La. 1963); Rabeaux v. Aetna Casualty Surety Company, 577 So.2d 1214, 1217 (La.App. 1st Cir. 1991). It has routinely been held that whenever one co-venturer acts in the forum to further the interests of the venture, its contacts with the forum will be attributed to the co-venturers. See Nolan v. Boeing Company, 736 F. Supp. 120, 127 (E.D.La. 1990) (citing Itel Containers Intern. v. Atlanttrafik Exp. Serv., 116 F.R.D. 477 (S.D.N.Y. 1987)). Thus, when the activities of one co-venturer in the forum are sufficient to sustain the exercise of personal jurisdiction, jurisdiction will attach as to all the participants in the venture. Nolan, 736 F. Supp. at 127 (citing Aigner v. Bell Helicopters, Inc., 86 F.R.D. 532, 540 (N.D.Ill. 1980)).
In Louisiana, joint ventures are generally governed by the law of partnership. Huffman Technical Drilling, Inc. v. Smith, 424 So.2d 435 (La.App. 5th Cir. 1982). As a result, four factors drive a determination about whether a joint venture exists: "(1) whether the parties intended to form a joint venture; (2) whether the parties share a common interest in the subject matter of the venture; (3) whether the parties share profits and losses from the venture; and (4) whether the parties have joint control or the joint right of control over the venture." Davidson v. Enstar Corp., 848 F.2d 574, 577 (5th Cir. 1988).
If defendants entered into a joint venture agreement regarding the Tulane compounds and any one of the Debio entities had contacts with Louisiana, those contacts are relevant. Therefore, Debiopharm's objection to the production of documents reflecting or pertaining to any contract or contractual arrangement between or among any of the defendants concerning the Tulane Drugs is OVERRULED. Debiopharm is, therefore, required to produce the requested documents within 20 days of this order.
C. Royalty Payments Injection and Medical Device Sales Records
Further, Tulane seeks information and documents regarding royalty or other payments relating to the Tulane Drugs. It also seeks documents regarding the sale of injection or other medical devices by Debiopharm regarding the Tulane Drugs. Debiopharm has objected on the ground that the information sought is irrelevant to the issue of whether there are sufficient minimum contacts with Louisiana by any of the Debiopharm entities.
Plaintiff's interrogatory No. 14 and Request for Production No. 37.
Plaintiff's Request for Production No. 39.
The Court finds that the issue of royalties or other payments is relevant to the determination of whether a joint venture exists between the Debiopharm entities, because it may show that the parties share profits from the purported venture.
However, information regarding the sales by Debiopharm of injection or other medical devices related to the administration of the Tulane Drugs is OVERBROAD. Medical and injection devices may be used to administer pharmaceutical drugs other than those drugs containing Decapeptyl and Octapeptyde. Therefore, Debiopharm's objection to producing documents reflecting royalty or other payments received by any of the defendants, arising out of the licensing, sub-licensing, manufacture, distribution, marketing, or sale of drugs, containing the pharmaceutical compound Decapeptyl or Octapeptide is OVERRULED. Debiopharm's objection to producing medical and injection device information and documents is SUSTAINED.
Accordingly,
Tulane's Motion to Compel (doc# 20) is HEREBY GRANTED IN PART AND DENTED IN PART.
IT IS ORDERED that Debiopharm, S.A., Debio Holding, S.A., Debiotech, S.A., and Debio Recherche Pharmaceutique, S.A. PRODUCE copies of all contracts, including licenses and sub-license agreements, issued by any Debio entity to any third party regarding the manufacturer, sale, distribution or marketing of drugs containing the pharmaceutical compound Decapeptyl or Octapeptide, within 20 days of this order.
IT IS FURTHER ORDERED that Debiopharm, S.A., Debio Holding, S.A., Debiotech S.A., and Debio Recherche Pharmaceutique, S.A. PRODUCE all documents reflecting or pertaining to any contract or contractual arrangement between or among any of the defendants concerning the pharmaceutical compound Decapeptyl or Octapeptide, within 20 days of this order.
IT IS FURTHER ORDERED that Debiopharm, S.A., Debio Holding, S. A., Debiotech, S.A., and Debio Recherche Pharmaceutique, S.A. PRODUCE copies of all documents reflecting royalty or other payments received by any of the defendants, arising out of the licensing, sublicensing, manufacture, sale, distribution, or marketing of drugs containing the pharmaceutical compound Decapeptyl or Octapeptide, within 20 days of this order.
IT IS FURTHER ORDERED that Tulane's request for production of all injection and medical device sales documents is DENIED.