United States District Court, E.D. Virginia, Richmond Division
E. CLAIBORNE ROBINS COMPANY, INC., Plaintiff,
TEVA PHARMACEUTICAL INDUSTRIES LTD. and TEVA PHARMACEUTICALS USA, INC., Defendants.
Hannah Lauck, United States District Judge
matter comes before the Court on Defendants Teva
Pharmaceuticals USA Inc. ("Teva USA") and Teva
Pharmaceuticals Industries Ltd.'s ("Teva Ltd."
and, collectively with Teva USA, "Defendants" or
"Teva") Motions to Dismiss brought pursuant to
Federal Rule of Civil Procedure 12(b)(6). (ECF Nos. 6, 41.)
Plaintiff E. Claiborne Robins Company ("Robins")
responded, (ECF No. 11), and both Teva USA and Teva Ltd.
replied, (ECF Nos. 17, 44). Teva Ltd. filed an additional
Motion to Dismiss brought pursuant to Federal Rule of
Procedure 12(b)(2) for lack of personal jurisdiction,
(ECF No. 40), to which Robins responded, (ECF No. 43), and
Teva Ltd. replied, (ECF No. 44). The matter is ripe for
disposition. The Court dispenses with oral argument because
the materials before it adequately present the facts and
legal contentions, and argument would not aid the decisional
process. The Court exercises jurisdiction pursuant to 28
U.S.C. § 1332. For the reasons that follow, the Court
will grant both the Teva USA and Teva Ltd. Rule 12(b)(6)
Motions to Dismiss. (ECF Nos. 6, 41.) Concomitantly, the
Court will deny as moot Teva Ltd.'s Rule 12(b)(2) Motion
to Dismiss. (ECF No. 40.) The Court will grant Robins leave
to amend the Amended Complaint.
Factual and Procedural Background
breach of contract action arises out of Defendants alleged
failure to use Commercially Reasonable Efforts in the
marketing and sale of a drug developed by Robins. Robins
patented the drug Amrix, a cyclobenzaprine hydrochloride used
as a muscle relaxant. In 2007, Anesta AG
("Anesta"), a non-party to this suit,
"negotiated to purchase all of Robins's rights and
obligations related to Amrix." (Am. Compl. ¶¶
10, ECF No. 4.)
sale contract for Amrix (the "Contract") provides
that Anesta pay a "Base Purchase Price" while
creating an additional form of remittance referred to as
"Net Sales Milestone Payments." (Id.
¶ 11.) The "Net Sales Milestone Payments"
portion of the Contract designates a schedule by which Anesta
would make additional payments to Robins for twelve
years-until August 28, 2019-upon the occurrence of certain
events. (Id.) Because a large amount of Robins's
earnings from the deal depended on the future sales of Amrix,
the Contract provides that Anesta will, at all times, use
'"Commercially Reasonable Efforts' with respect
to the marketing and sale of Amrix." (Id.
¶ 13 (quoting Contract §4.02(c).) The Contract
defines "Commercially Reasonable Efforts" as:
[W]ith respect to any Person,  the efforts and
resources that would be used (including the promptness in
which such efforts and resources would be applied) by such
Person consistent with its normal business practices, which
in no event shall be less than the level of efforts and
resources standard in the pharmaceutical industry for a
company similar in size and scope to such Person, with
respect to a product at a similar stage in its
development or product life taking into account efficiency,
safety, commercial value, the competitiveness of alternative
products of third parties that are in the marketplace or
under development, and the Patent and other proprietary
position of such product.
Contract also includes a choice-of-law provision, which
designates New York law as applicable, and a choice-of-venue
provision that states, in relevant part: "Each party
hereby irrevocably submits to the jurisdiction of, and agrees
that any action arising out of this [Contract] shall be
brought in ... the United States District Court for the
Eastern District of Virginia." (Am. Compl. Ex. 1
"Contract" § 13.11.)
2011, Teva Ltd., the parent company of Teva USA, acquired
Anesta's parent company. According to Robins, Teva Ltd.
then "acquired all of... Anesta's rights and
obligations related to Amrix." (Am. Compl. ¶ 15.)
In 2015, Teva Ltd.'s financial situation dramatically
worsened, and the company's stock value fell nearly
result of Teva Ltd.'s deteriorating financial condition,
the company took "drastic" cost-cutting measures,
including "cutting the marketing budget and efforts
regarding the sale of Amrix, such that at some point in 2016
or thereafter Teva Ltd. and Teva USA failed to use
Commercially Reasonable Efforts with respect to the marketing
and sale of Amrix."(Id. ¶¶ 23-24.)
Robins claims that the subsequent "precipitous drop in
gross and net sales of Amrix" provides "evidence of
[Defendants'] failure" to use Commercially
Reasonable Efforts in marketing Amrix, as required by the
Contract. (Id. ¶ 25.)
seven-page Amended Complaint brings a single breach of
contract claim against Teva Ltd. and Teva USA. Teva USA filed
the Teva USA Motion to Dismiss. Robins filed its response,
and Teva USA replied.
its deadline to file an answer or responsive pleading, Teva
Ltd. filed a Motion for Extension of Time to Respond to the
Amended Complaint, (ECF No. 22), which this Court granted,
(ECF No. 39). Teva Ltd. then filed its dual Motions to
Dismiss, adopting in full the arguments in Teva USA's
12(b)(6) motion to dismiss, and focusing its briefing on its
own Rule 12(b)(2) arguments. Robins opposed Teva Ltd.'s
motions, and Teva Ltd. replied in a single reply.
Standard of Review: Rule l2(bK6)
motion to dismiss under Rule 12(b)(6) tests the sufficiency
of a complaint; importantly, it does not resolve contests
surrounding the facts, the merits of a claim, or the
applicability of defenses." Republican Party o/ N.C.
v. Martin,980 F.2d 943, 952 (4th Cir. 1992) (citing 5 A
Charles A. Wright & Arthur R. Miller, Federal
Practice and Procedure § 1356 (1990)). To survive
Rule 12(b)(6) scrutiny, a complaint must contain sufficient
factual information to "state a claim to relief that is
plausible on its face." Bell Ail. Corp. v.
Twombly,550 U.S. 544, 570 (2007); see also
Fed. R. Civ. P. 8(a)(2) ("A pleading that states a claim
for relief must contain... a short and plain statement of the
claim showing that the pleader is entitled to relief.")
Mere labels and conclusions declaring that the plaintiff is
entitled to relief are not enough. Twombly, 550 U.S.
at 555. Thus, "naked assertions of wrongdoing
necessitate some factual ...