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E. Claiborne Robins Company, Inc. v. Teva Pharmaceutical Industries Ltd.

United States District Court, E.D. Virginia, Richmond Division

September 22, 2019



          M. Hannah Lauck, United States District Judge

         This 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).[1] (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)[2] for lack of personal jurisdiction, [3] (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.[4] 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.

         I. Factual and Procedural Background

         A. Factual Allegations[5]

         This 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.)

         The 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."[6] (Id. ¶ 13 (quoting Contract §4.02(c).) The Contract defines "Commercially Reasonable Efforts" as:

[W]ith respect to any Person, [7] 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.


         The 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.)

         In 2011, Teva Ltd., the parent company of Teva USA, acquired Anesta's parent company.[8] 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 eighty percent.

         As a 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."[9](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.)

         B. Procedural Background

         The 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.

         After 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.[10] Robins opposed Teva Ltd.'s motions, and Teva Ltd. replied in a single reply.

         II. Standard of Review: Rule l2(bK6)

         "A 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 ...

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