United States, et al v. Cytogel Pharma, LLC, No. 2:2016cv13987 - Document 297 (E.D. La. 2018)
Court Description: ORDER AND REASONS: IT IS ORDERED that Plaintiff the United States' 76 Motion to Dismiss Counts 10 and 13 of Defendant Cytogel Pharma, LLC's First Amended and Restated Counterclaims be and hereby is GRANTED, as set forth herein. IT IS FURTHER ORDERED that Counts 10 and 13 of Cytogel's 220 Second Amended and Restated Counterclaims as against the United States be and hereby are DISMISSED WITHOUT PREJUDICE. Signed by Judge Susie Morgan on 9/17/2018. (jls)
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United States, et al v. Cytogel Pharma, LLC Doc. 297 U N ITED S TATES D ISTRICT COU RT EASTERN D ISTRICT OF LOU ISIAN A TH E U N ITED S TATES an d TH E AD MIN ISTRATORS OF TH E TU LAN E ED U CATION AL FU N D , Plain tiffs CIVIL D OCKET VERSU S N O. 16 -13 9 8 7 CYTOGEL PH ARMA, LLC, D e fe n d an t SECTION : “E” ORD ER AN D REAS ON S Before the Court is Plaintiff the United States’ Motion to Dism iss Counts 10 and 13 1 of the First Am ended and Restated Counterclaim s by Defendant Cytogel Pharm a, LLC (“Cytogel”) under Rule 12(b)(1) of the Federal Rules of Civil Procedure. 2 Cytogel opposes this m otion as to Coun t 10 , but not as to Count 13. 3 Cytogel brings Count 10 against the United States pursuant to the Louisiana Unfair Trade Practices and Consum er Protection Law (“LUTPA”). For the reasons that follow, the Court construes the m otion as a m otion to dism iss Counts 10 and 13 of Cytogel’s Second Am ended an d Restated Counterclaim s pursuant to Rule 12(b)(1) and orders that the m otion is GRAN TED . BACKGROU N D In the 1990 s, Counterclaim Defendant Dr. J am es E. Zadina and his colleagues at Tulane University researched and developed opioid com pounds related to endom orphins, which are opioid peptides found naturally in the hum an body. 4 Based on their research, Plaintiff the Adm inistrators of the Tulane Educational Fund (“Tulane”) obtained two 1 In its Order and Reasons of March 28 , 20 17, this Court granted the United States’ Motion to Dism iss Count 11 of Cytogel’s counterclaim s pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. Because Count 11 already has been dism issed, the Court will not address Count 11 in this Order and Reasons. 2 R. Doc. 76. 3 R. Doc. 81. 4 R. Doc. 1 at 4– 5, ¶ 14– 16; R. Doc. 68 at 7, ¶ 16. 1 Dockets.Justia.com patents, U.S. Patent Nos. 5,885,958 (“the ’958 Patent”) and 6,30 3,578 (“the ’578 Patent”), claim ing these com pounds. 5 On Decem ber 1, 20 0 3, Tulane licen sed the patents to Cytogel. 6 After Tulane and Cytogel signed the Licensing Agreem en t, Dr. Zadina began perform ing consulting work for Cytogel. 7 He advised Cytogel on the developm ent of Cyt10 10 , another synthetic opioid peptide, for com m ercial use as an an algesic. 8 Dr. Zadina was a joint em ployee of Tulane and the Departm ent of Veterans Affairs (“VA”). 9 He and his colleague Dr. Laszlo Hackler developed new synthetic opioid com pounds for Tulane and the VA. 10 Drs. Zadina and Hackler applied for a patent for these com pounds and assigned their ownership rights in the pending patent to Tulane and the VA. 11 The application resulted in U.S. Patent No. 8,716,436 B2 (“’436 Patent”), which issued on May 6, 20 14 and lists Drs. Zadina and Hackler as co-inventors. 12 Cytogel alleges Dr. Zadin a secretly developed the com pounds covered by the ’436 Patent while acting as a consultant to Cytogel. 13 Cytogel asserts the com pounds covered by the ’436 Patent are related to Cyt-10 10 an d result from Dr. Zadina’s consulting work. 14 As a result, Cytogel claim s ownership of the ’436 Patent. 15 On August 19, 20 16, Plaintiffs the United States of Am erica and the Adm inistrators of the Tulane Educational Fund (“Tulane”), filed suit against Cytogel for declaratory judgm ents of ownership and inventorship of the ’436 Patent and related applications. 16 5 R. Doc. 1 at 5– 6, ¶ 17– 19; R. Doc. 68 at 7, ¶ 16. R. Doc. 1 at 6, ¶ 20 ; R. Doc. 68 at 7, ¶ 17. 7 R. Doc. 1 at 6– 9, ¶ 24– 36; R. Doc. 68 at 8 , ¶ 19. 8 R. Doc. 1 at 6, ¶ 20 – 21; R. Doc. 68 at 10 , ¶ 30 . 9 R. Doc. 1 at 3, ¶ 10 – 11; R. Doc. 68 at 5, ¶ 10 . 10 R. Doc. 1 at 9– 10 , ¶ 38 – 41; R. Doc. 68 at 16– 19, ¶ 45– 56. 11 R. Doc. 1 at 11– 12, ¶ 43– 47; R. Doc. 68 at 18 , ¶ 54. 12 R. Doc. 1 at 11– 12, ¶ 43– 47; R. Doc. 68 at 19, ¶ 57. 13 R. Doc. 68 at 20 , ¶ 61. 14 Id. at 16– 17, ¶ 45– 50 . 15 Id. at 26, ¶ 78. 16 R. Doc. 1. 6 2 On Septem ber 7, 20 16, Cytogel filed thirteen counterclaim s against Plaintiffs Tulane and the United States, joining Dr. Zadina as Counterclaim Defendant. 17 Cytogel brought Count 10 of its counterclaim s alleging a violation of the Louisiana Unfair Trade Practices and Con sum er Protection Law (“LUTPA”) against Tulane, Dr. Zadina, and the United States. 18 Cytogel brought Count 13, alleging unjust enrichm ent, against Tulane and the United States. 19 On Novem ber 7, 20 16, the United States filed a m otion to dism iss Counts 2, 3, and 8 – 13 of Cytogel’s counterclaim s as to the United States pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. 20 On February 6, 20 17, the Court granted the United States’ m otion. 21 The Court denied Cytogel’s request to am end its counterclaim s to state explicitly its counterclaim s are brought pursuant to the waiver of sovereign im m unity effected by the Federal Tort Claim s Act (“FTCA”). 22 On February 21, 20 17, Cytogel filed a Motion to Reconsider the Court’s Order of February 6, 20 17 pursuant to Rule 54(b) of the Federal Rules of Civil Procedure. 23 On March 28 , 20 17, the Court, vacated its Order of February 6, 20 17 with respect to Counts 8– 11 and 13 of Cytogel’s counterclaim s. 24 The Court denied the m otion as to Counts 8 , 9, and 13, granted the m otion as to Count 11, and deferred ruling on Count 10 . 25 The Court did not rule on the United States’ m otion to dism iss Count 10 of Cytogel’s counterclaim s, which is Cytogel’s LUTPA claim , because the Court could not 17 R. Doc. 6. Id. at 40 . 19 Id. at 46. 20 R. Doc. 31. 21 Id. 22 Id. at 3– 4. 23 R. Doc. 60 . 24 R. Doc. 67. 25 Id. 18 3 determ ine from Cytogel’s pleadings whether sovereign im m unity under the FTCA extends to the claim . 26 Specifically, the Court could not determ ine whether the exception to FTCA’s waiver of sovereign im m unity for tort claim s arising out of m isrepresentation or deception applies to this claim . 27 The Court deferred ruling on the m otion dism iss Count 10 to allow Cytogel to am end its counterclaim s to add m ore detail about the basis for its LUTPA claim against the United States. 28 Cytogel filed its First Am ended and Restated Counterclaim s on April 11, 20 17. 29 Cytogel alleges Dr. Zadina, Tulane, and the VA acquired and im properly used “Cytogel’s confidential inform ation and trade secrets” and “engaged in a long-term and concerted attem pt to conceal their m isconduct and delay its discovery by Cytogel.”30 On May 2, 20 17, the United States filed the in stant m otion to dism iss Counts 10 and 13 of Cytogel’s First Am ended and Restated Counterclaim s. 31 On May 23, 20 17, Cytogel opposed the m otion as to Count 10 , but not as to Count 13. 32 On J uly 23, 20 18, Cytogel filed its First Am ended and Restated Affirm ative Defenses and Second Am ended an d Restated Counterclaim s. 33 Count 10 of Cytogel’s Second Am ended and Restated Counterclaim s is substantially identical to Count 10 of Cytogel’s First Am ended and Restated Counterclaim s. 34 As a result, the Court construes 26 Id. at 11. Id. 28 Id. 29 R. Doc. 68 . On April 13, 20 17, the Court denied as m oot the United States’ m otion to dism iss Count 10 of Cytogel’s counterclaim s prior to Cytogel’s am endm ent. R. Doc. 69. 30 R. Doc. 68 at ¶ 132, 135. 31 R. Doc. 76. 32 R. Doc. 81. 33 R. Doc. 220 . 34 Id. at 40 – 42, ¶ 134– 40 ; 46– 47, ¶ 162– 68. 27 4 the instant m otion as a m otion to dism iss Count 10 of Cytogel’s Second Am ended and Restated Counterclaim s pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. LAW AN D AN ALYSIS “Federal courts are courts of lim ited jurisdiction; without jurisdiction conferred by statute, they lack the power to adjudicate claim s.” 35 A m otion to dism iss under Federal Rules of Civil Procedure 12(b)(1) challenges a federal court’s subject-m atter jurisdiction. 36 Under Rule 12(b)(1), “[a] case is properly dism issed for lack of subject m atter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case.” 37 “Lack of subject-m atter jurisdiction m ay be found in the com plaint alone, the com plaint supplem ented by the undisputed facts as eviden ced in the record, or the com plaint supplem ented by the undisputed facts plus the court’s resolution of the disputed facts.” 38 “The United States is im m une from tort suits except as to the m anner and degree that sovereign im m unity is waived.”39 The Federal Tort Claim s Act (“FTCA”) waives sovereign im m unity in tort suits against the United States caused “by the negligent or wrongful act or om ission of any em ployee of the [federal] Governm en t while acting within the scope of his office or em ploym ent, under circum stances where the United States, if a private person, would be liable to the claim ant in accordance with the law of the place where the act or om ission occurred.”40 The FTCA creates an exception to its waiver of 35 In re FEMA Trailer Form aldehy de Products Liab. Litig. (Mississippi Plaintiffs), 668 F.3d 281, 286 (5th Cir. 20 12). 36 See F ED . R. CIV. P. 12(b)(1). 37 Hom e Builders Ass’n of Miss., Inc. v . City of Madison, Miss., 143 F.3d 10 0 6, 10 10 (5th Cir. 1998) (internal quotation m arks and citation om itted). 38 In re FEMA, 668 F.3d at 287. 39 Robinnett v. State Farm Mut. Auto. Ins. Co., 20 0 2 WL 18 22933, at *1 (E.D. La. Aug. 8 , 20 0 2) (citin g Gregory v. Mitchell, 634 F.2d 199, 20 3 (5th Cir. 1981)). 40 28 U.S.C. § 1346(b)(1). 5 sovereign im m unity for “[a]ny claim arising out of assault, battery, false im prisonm ent, false arrest, m alicious prosecution, abuse of process, libel, slander, m isrepresentation, deceit, or interference with contract rights.”41 For such claim s, sovereign im m unity is not waived. In determ ining whether a claim arises out of one of these enum erated torts, courts “focus on the conduct upon which the plaintiff’s claim is based. . . . Even if a plaintiff styles a claim so that it is not one that is enum erated in section 2680 (h), the plaintiff’s claim is still barred ‘when the underlying governm ental conduct ‘essential’ to the plaintiff’s claim can fairly be read to ‘arise out of conduct that would establish an excepted cause of action.’”42 For claim s alleging m isrepresentation, the Fifth Circuit applies a two-step analysis to determ ine whether the exception to the FTCA’s waiver of sovereign im m unity applies. Courts first “determ ine whether ‘the chain of causation’ from the alleged negligen ce to the injury depen ds upon a m isrepresentation by a governm ent agent.”43 For a claim to fall within the exception, it m ust allege “negligence in the com m unication of (or failure to com m unicate) inform ation” and not m erely “negligen ce in the perform ance of an operational task, with m isrepresentation being m erely collateral to such perform ance.’”44 Second, courts determ ine “whether Congress has nonetheless waived sovereign im m unity independently of the FTCA.”45 41 28 U.S.C. § 268 0 (h). Trum an v. United States, 26 F.3d 592, 594 (5th Cir. 1994) (citin g United States v. N eustadt, 366 U.S. 696 (1961) McN eily v. United States, 6 F.3d 343, 347 (5th Cir. 1993)). 43 Life Partners Inc. v. United States, 650 F.3d 10 26, 10 31 (5th Cir. 20 11). 44 Id. 45 Id. 42 6 The United States argues that, because Cytogel’s LUTPA claim arises out of an alleged m isrepresentation, the claim falls within the exception to the FTCA’s waiver of sovereign im m unity, and, as a result, it should be dism issed pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. 46 The Court agrees. LUTPA m akes unlawful “[u]nfair m ethods of com petition and unfair or deceptive acts or practices in the conduct of any trade or com m erce.”47 “[T]he range of prohibited practices under LUTPA is extrem ely narrow,”48 and a LUTPA claim requires proof of “som e elem ent of fraud, m isrepresentation, deception, or other unethical act.”49 In Count 10 of its Am ended Counterclaim s, Cytogel alleges Dr. Zadina, Tulane, and the VA acquired and im properly used “Cytogel’s confidential inform ation and trade secrets” and “engaged in a long-term and concerted attem pt to conceal their m iscon duct and delay its discovery by Cytogel.”50 This claim arises out of m isrepresentation and deceit. Cytogel’s allegation that the VA concealed its alleged m isconduct is essential to Cytogel’s LUTPA claim because the alleged concealm ent provides the “elem ent of fraud, m isrepresentation, or other sim ilar act”51 necessary to state a LUTPA claim . The “chain of causation” from the VA’s alleged actions to the alleged unfair trade practice depen ds on the VA’s alleged deception and concealm ent of m isconduct. This is a failure to com m unicate inform ation, not m erely an instance of negligence in perform ing an operational task. The alleged m isrepresentation and deceit are not collateral to Cytogel’s LUTPA claim . 46 R. Doc. 76-1 at 1. La. R.S. § 51:140 1. 48 Cheram ie Servs., Inc. v. Shell Deepw ater Prod., Inc., 20 0 9-1633 (La. 4/ 23/ 10 ), 35 So. 3d 10 53, 10 60 . 49 Tubos de Acero de Mexico S.A. v. Am er. Int’l Investm ent Corp., 292 F.3d 471, 480 (5th Cir. 20 0 2) (quotin g Om nitech Intern ., Inc. v. Clorox Co., 11 F.3d 1316, 1332 (5th Cir.1994)). 50 R. Doc. 68 at ¶ 132, 135. 51 Tubos de Acero de Mexico S.A, 292 F.3d at 480 (quoting Om nitech Intern ., 11 F.3d at 1332). 47 7 As a result, Cytogel’s LUTPA claim again st the United States arises out of m isrepresentation and deceit for purposes of Section 2680 (h). The FTCA does not waive sovereign im m unity as to the claim , and Congress has not otherwise waived sovereign im m unity for such a claim indepen dent of the FTCA. This Court does not have subject m atter jurisdiction over Cytogel’s LUTPA claim again st the United States. CON CLU SION For the foregoing reasons, IT IS ORD ERED that Plaintiff the United States’ Motion to Dism iss Counts 10 and 13 of Defendant Cytogel Pharm a, LLC’s (“Cytogel”) First Am ended and Restated Counterclaim s be and hereby is GRAN TED . 52 IT IS FU RTH ER ORD ERED that Counts 10 and 13 of Cytogel’s Second Am ended and Restated Counterclaim s 53 as against the United States be and hereby are D ISMISSED W ITH OU T PREJU D ICE. N e w Orle a n s , Lo u is ian a, th is 17th d ay o f Se p te m be r, 2 0 18 . __________ ___________ _________ SU SIE MORGAN U N ITED S TATES D ISTRICT J U D GE 52 53 R. Doc. 76. R. Doc. 220 . 8
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