District Court Finds No Personal Jurisdiction over Swedish Manufacturer of Pharmaceutical Product That Knew its Products Were Resold to U.S. Customers

The World in U.S. Courts: Spring 2016 - Personal Jurisdiction/Foreign Sovereign Immunities Act (FSIA)/Forum Non Conveniens | January.05.2016

Novotec Pharma LLC, v. Glycobiosciences, Inc., U.S. District Court for the District of New Jersey, January 5, 2016

The complicated history of this case began with a contract dispute between Novotec, a New Jersey limited liability company, and Glycobiosciences, a Canadian corporation. The contract named Novotec to be the U.S. Distributor for a wound gel that Glycobiosciences had developed. To fulfill the agreement, Glycobiosciences hired Bioglan, a manufacturer based in Sweden, to produce its wound gel. However, Bioglan terminated its relationship with Glycobiosciences after Glycobiosciences allegedly failed to pay invoices on time. Novotec then terminated its relationship with Glycobiosciences. Following receipt of Novotec's termination letter, Glycobiosciences allegedly contacted the New Jersey Board of Pharmacy in an alleged attempt to interfere with Novotec's license to distribute drug products. Novotec then sued Glycobiosciences, whose motion to dismiss the complaint was denied.

As relevant here, Glycobiosciences then brought claims against Bioglan for breach of contract and various business torts. Bioglan moved to dismiss the complaint based on a lack of personal jurisdiction, among other grounds.

The District Court in New Jersey explained that a court may exercise personal jurisdiction over a party either through general or specific jurisdiction. The plaintiff bears the burden of establishing that the court has personal jurisdiction over the defendant. However, if the court resolves the issue absent an evidentiary hearing, as was the case here, the plaintiff need only establish a prima facie case of personal jurisdiction. In doing so, the plaintiff must establish with reasonable particularity sufficient contacts between the defendant and the forum state.

General jurisdiction, which allows a court to hear any and all claims against a party, exists where a defendant's contacts with the forum are so continuous and systematic as to render it essentially "at home" in the forum. In all but exceptional cases, a corporation such as Bioglan will be subject to general personal jurisdiction only in the State where it is incorporated or has its principal place of business. Bioglan is not incorporated in New Jersey and does not have its principal place of business there, and the Court concluded that Glycobiosciences's proffer of evidence that Bioglan supplied goods to a company in New Jersey in previous years, and retained that company as an FDA liaison, failed to establish exceptional circumstances.

Specific jurisdiction is present only if the plaintiff's cause of action arises out of a defendant's forum-related activities, such that the defendant should reasonably anticipate being sued in the forum State. There are three requirements for specific jurisdiction over out-of-State defendants: (1) the defendant purposefully directed its activities towards the forum, (2) the litigation arises out of or relates to one or more of these activities, and (3) the exercise of jurisdiction comports with traditional notions of fair play and substantial justice. Glycobiosciences sought to base jurisdiction on Bioglan's knowledge that a U.S. customer (Novotec) existed for the resale of its product, but the Court found that mere knowledge inadequate to establish "purposeful availment." Glycobiosciences further argued that Bioglan's relationship with a New Jersey company to serve as its agent for FDA purposes showed that Bioglan directed its activities at New Jersey. However, the Court concluded that Bioglan's communications with that company were limited and unrelated to the present dispute. Therefore, the Court found the requirements for specific jurisdiction not to have been satisfied, and consequently rejected personal jurisdiction over Bioglan.

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