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Regenicin, Inc. v. Lonza Walkersville, Inc.

United States District Court, N.D. Georgia, Atlanta Division

February 14, 2014

REGENICIN, INC., Plaintiff,
LONZA WALKERSVILLE, INC., et al., Defendants

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[Copyrighted Material Omitted]

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For Regenicin, Inc., Plaintiff: Carl Alexander Gebo, Paul Michael Spizzirri, LEAD ATTORNEYS, Gordon & Rees, LLP, Atlanta, GA.

For Lonza Walkersville, Inc., Lonza America, Inc., Defendants: Alexander N. Sedki, William Joseph Sheppard, LEAD ATTORNEYS, James, Bates, Brannan, Groover, LLP-Atl, Atlanta, GA; Janeen Olsen Dougherty, LEAD ATTORNEY, Grey Street Legal, LLC, Exton, PA.

For Lonza Group, Ltd., Defendant: Alexander N. Sedki, William Joseph Sheppard, LEAD ATTORNEYS, James, Bates, Brannan, Groover, LLP-Atl, Atlanta, GA.


Timothy C. Batten, Sr., United States District Judge.

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This case comes before the Court on several motions: Plaintiff Regenicin, Inc.'s motion to remand [10], Defendants Lonza Walkersville, Inc. and Lonza America, Inc.'s motion to dismiss or for a more definite statement [3], and two motions [7, 8] filed by Regenicin related to service of process.

I. Background

Regenicin filed this action in the Superior Court of Fulton County, Georgia on September 30, 2013. On October 31, Lonza removed it to this Court. This is a dispute between two businesses over a contract. The following facts are taken from Regenicin's complaint.

Lonza researches and develops pharmaceutical

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and life sciences products.[1] One product developed by Lonza, called PermaDerm, generates a skin substitute from a patient's own skin cells. Regenicin develops regenerative cell therapies.

On July 21, 2010, Lonza and Regenicin signed a contract calling for Regenicin to pay Lonza three million dollars. In exchange, Lonza gave Regenicin an exclusive license to use proprietary information about PermaDerm to seek approval for the product from the Food and Drug Administration. Lonza agreed to help Regenicin apply for FDA approval and to remit to Regenicin the proceeds of two grants.

If Regenicin won FDA approval for PermaDerm, three more obligations would arise under the contract: the parties would execute a stock purchase agreement calling for Regenicin to pay an additional two million dollars to buy all the stock of Cutanogen Corporation, a Lonza subsidiary that held a PermaDerm patent; Regenicin would use Lonza as its exclusive manufacturer and distributor of PermaDerm; and the two would share the revenue generated from selling the product.

Regenicin avers that in 2011, Lonza negotiated to sell one of its facilities to a Chinese company for $750 million, but the Chinese company insisted that Lonza license to it the PermaDerm rights already granted to Regenicin. According to Regenicin, Lonza concluded that selling to the Chinese company was a better business proposition, so it sought a way out of the Regenicin contract. On May 17, 2012, Lonza sent a letter to Regenicin stating that Regenicin had breached the contract by failing to pay outstanding invoices. On July 20, Regenicin responded with its own letter claiming that Lonza was the one who had breached. Regenicin avers that it satisfied its obligations under the contract, and to the extent that it did not, Lonza's conduct prevented it from doing so.

Regenicin avers that Lonza breached the contract in the following ways: by telling Regenicin it was receiving an exclusive license, but in fact giving similar " exclusive" licenses to thirteen other companies; by failing to give Regenicin all the required proprietary information about PermaDerm; by failing to remit grant proceeds to Regenicin; and by failing to execute the Cutanogen stock purchase agreement.

Regenicin avers that Lonza made various misrepresentations about the FDA's approval and designation of PermaDerm and Lonza's development and clinical trials of the product. Because Regenicin's averments of misrepresentations take up twenty-seven paragraphs of its complaint, the Court will not repeat them here. See [1-1] at 28-35.

Regenicin avers that Lonza acted in bad faith and tortiously interfered in the following ways: by abandoning the PermaDerm trademark but attempting to stop Regenicin from registering the trademark; by refusing to cooperate or comply with the FDA and preventing Regenicin from complying with the FDA's instructions; by changing the PermaDerm manufacturing process without instructing or consulting Regenicin; by charging Regenicin for services that were unauthorized or not performed; by refusing to share important information about PermaDerm with Regenicin;

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by refusing to approve almost all press releases and presentations Regenicin prepared for its investors and shareholders; and by instructing contractors and businesses not to communicate with Regenicin about PermaDerm. Finally, Regenicin avers that Lonza infringed on the PermaDerm trademark and patent and violated various federal and state statutes.

Regenicin has stated eighteen causes of action related to Lonza's conduct: (1) breach of contract, (2) breach of the duty of good faith and fair dealing, (3) tortious interference with business relations, (4) tortious interference with prospective contractual relations, (5) tortious interference with existing contractual relations, (6) negligent misrepresentation, (7) common law fraud, (8) fraudulent inducement, (9) violation of the New Jersey Consumer Fraud Act, N.J. Stat. Ann. § 56:8-2, (10) trademark infringement, (11) patent infringement, (12) unjust enrichment, (13) quantum meruit, (14) prima facie tort, (15) violation of the New Jersey Uniform Securities Law, N.J. Stat. Ann. § § 49:3-52, -71, (16) violation of Section 10(b) of the Securities Exchange Act, 15 U.S.C. § 78j(b) and Rule 10b-5 promulgated thereunder, (17) violation of the New Jersey Racketeering Act, N.J. Stat. Ann. § § 2C:41-1 to -6.2, and (18) violation of the federal RICO Act, 18 U.S.C. § 1962(c).

Two motions made by Regenicin in state court, both related to service of process on a Lonza entity located in Switzerland, were pending upon removal and followed this action here. After removal, Regenicin moved for remand and Lonza moved to dismiss or for a more definite statement.

II. Legal Standard

A. Motion to Remand

A defendant in a state action may remove an action to this Court if the Court would have jurisdiction over it. 28 U.S.C. § 1441(a). The Court may have original jurisdiction over claims in an action under diversity of citizenship, see 28 U.S.C. § 1332, or federal question, see 28 U.S.C. § 1331. Even if some claims are under state law and do not invoke original jurisdiction, the Court may hear the claims if they invoke supplemental jurisdiction.

State-law claims invoke supplemental jurisdiction if they are so related to the federal claims that " they form part of the same case or controversy." City of Chi. v. Int'l Coll. of Surgeons, 522 U.S. 156, 165, 118 S.Ct. 523, 139 L.Ed.2d 525 (1997) (quoting 28 U.S.C. § 1367); see also Behlen v. Merrill Lynch, 311 F.3d 1087, 1095 (11th Cir. 2002). The " same case or controversy" test is satisfied if " the [federal and state] claims arise from the same facts[] or involve similar occurrences, witnesses or evidence." Hudson v. Delta Air Lines, Inc., 90 F.3d 451, 455 (11th Cir. 1996); see Lucero v. Trosch, 121 F.3d 591, 597 (11th Cir. 1997) (stating the " common nucleus of operative fact" standard).

If a state-law claim invokes supplemental jurisdiction, the Court may nevertheless decline to exercise jurisdiction after considering the following four factors: (1) whether the claim raises a novel or complex issue of state law; (2) whether the state-law claim substantially predominates over the federal-law claim(s); (3) whether the federal-law claims have been dismissed; or (4) whether, in exceptional circumstances, there are other compelling reasons for declining supplemental jurisdiction. See 28 U.S.C. § 1367(c); Int'l Coll. of Surgeons, ...

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