United States District Court, W.D. Oklahoma
WARREN G. LOW and THOMAS K. TKACH, Plaintiffs,
OMNI LIFE SCIENCE, INC. GEORGE CIPOLLETTI, ELIZABETH CIPOLLETTI, and JOHN DOES 1-10, Defendants.
L. PALK, UNITED STATES DISTRICT JUDGE
the Court is the Motion to Dismiss Counts II, III, and IV of
Plaintiffs' Amended Complaint [Doc. No. 14] filed by
Defendants OMNI Life Science, Inc., George Cipolletti, and
Elizabeth Cipolletti. It is at issue. See Resp., Doc
No. 19; Reply, Doc. No. 22. These named defendants seek
dismissal of Plaintiffs' second, third, and fourth causes
of action-for fraud, negligent misrepresentation, and
negligence performance of contract, respectively-based on
Federal Rules of Civil Procedure 8(a), 9(b), and
12(b)(6). Mr. Cipolletti and Ms. Cipolletti also
seek dismissal of all claims asserted against them based on
the fiduciary shield doctrine under Rule 12(b)(6) and based
on the Court's lack of personal jurisdiction over them
under Rule 12(b)(2). Finally, Defendants assert that the
claims asserted against the John Doe defendants-who are
“officers, directors or shareholders of
OMNI”-should be dismissed as improperly brought. Am.
Compl. ¶ 6, Doc. No. 9. Defendants do not seek dismissal
of Plaintiffs' breach of contract claim (the first count
in the Amended Complaint), which is asserted against OMNI
invoke the Court's subject-matter jurisdiction under 28
U.S.C. § 1332(a).
are medical doctors who entered into a product development
and clinical surgical consulting service agreement with OMNI.
Pursuant to that agreement, Plaintiffs were to provide
consulting services to OMNI related to knee and hip
reconstruction and replacement products in exchange for
certain percentages of OMNI's net sales of such products.
These royalty payments were to be made at least annually, and
within 60 days after OMNI's annual calculation of its net
sales, subject to market-caused barriers to payment that
might arise, with such payment timing changes to be
reasonably consented to by Plaintiffs. The gravamen of
Plaintiffs' lawsuit is that the payments were not made
or, when made, were not made timely. Plaintiffs also claim
they were misled by Defendants about calculation of these
payments and when they would be paid.
February 2010 through July 2017, OMNI-via various officers or
employees-sent at least 28 communications to Plaintiffs
regarding calculation of the amounts owed by OMNI to
Plaintiffs and when such payments would be made. Ten of these
communications came from Mr. Cipolletti and five came from
Ms. Cipolletti. The remainder were sent by other OMNI
officers or employees not named as defendants in this action.
In its communications regarding the royalty payments, OMNI
(per Plaintiffs) “improperly and deceitfully
calculat[ed Plaintiffs'] Royalties . . . by improperly
deducting the average cost of goods sold, sales management
compensation and related expenses, medical device taxes and
shipping revenues from the amount used to calculate
[Plaintiffs'] royalties” and by “improperly
exclud[ing] amounts invoiced to and collected from the
Products used by surgeons at St. Anthony's Bone and Joint
Hospital” and “amounts invoiced for and collected
from the Apex Posterior Stabilized Knee System, ”
“the Apex Revision Knee System, ” “the Apex
Revision Tibia, ” “the Apex Modular Tibia,
” and for “the license OMNI sold to its affiliate
. . . to manufacture, distribute and sell as many of the
Products as [the affiliate] wishe[d] in multiple
countries.” Id. ¶¶ 26, 29-35.
Plaintiffs also assert that Defendants misrepresented to them
when royalty payments would be made in these communications.
Cipolletti and Ms. Cipolletti are two of OMNI's officers
and are residents of Massachusetts and Pennsylvania,
respectively. Plaintiffs allege Mr. Cipolletti
“made several trips to Oklahoma in connection with the
Product Development and Clinical Surgical Consulting Services
Agreement Plaintiffs entered into with . . . OMNI” and
also made multiple false promises to Plaintiffs regarding
when royalty payments would be made. Id. ¶ 4.
Mr. Cipolletti sent Plaintiffs multiple communications
relating to royalties owed by OMNI to Plaintiffs which
Plaintiffs allege to have been intentionally misleading.
allege that Ms. Cipolletti “sent [them] numerous false
‘Statements of Account' in connection with the
Product Development and Clinical Surgical Consulting
Agreement Plaintiffs entered into with . . . OMNI” and
“also sent letters to Plaintiffs . . . in Oklahoma
which . . . contained false and deceptive
statements”-presumably the five specific communications
referenced supra. Id. ¶ 5.
considering a motion to dismiss pursuant to Rule 12(b)(6), a
court must determine whether the plaintiff has stated claims
upon which relief may be granted. Under Rule 8(a)(2), a
pleading is to contain “a short and plain statement of
[each] claim showing that the pleader is entitled to
relief.” While Rule 8(a)(2) “does not require
‘detailed factual allegations,' . . . it demands
more than an unadorned, the-defendant-unlawfully-harmed-me
accusation.” Iqbal, 556 U.S. at 678 (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). As such, “labels and conclusions” and
“a formulaic recitation of the elements of a cause of
action” are insufficient. Twombly, 550 U.S. at
555. In essence, a plaintiff must “nudge [his] claims
across the line from conceivable to plausible” in order
to survive a motion for dismissal. Id. at 570.
assess the sufficiency of claims made by a plaintiff, a
two-pronged approach is deployed. First, “a judge
ruling on a defendant's motion to dismiss a complaint
must accept as true all of the factual allegations contained
in the complaint.” Twombly, 550 U.S. at 572
(quotation marks and citation omitted). A court need not,
however, accept the veracity of “mere conclusory
statements.” Iqbal, 556 U.S. at 678. Second,
in light of the well-pleaded factual allegations, the court
must determine whether “a complaint states . . .
plausible claim[s] for relief.” Id. at 679.
addition to Rule 8(a)'s generally applicable pleading
requirements, certain claims “must state with
particularity the circumstances constituting fraud or
mistake, ” though “[m]alice, intent, knowledge,
and other conditions of a person's mind may be alleged
generally.” Fed.R.Civ.P. 9(b). At bottom, a
“complaint alleging fraud [must] set forth the time,
place and contents of the false representation, the identity
of the party making the false statements and the consequences
thereof.” Koch v. Koch Indus., Inc., 203 F.3d
1202, 1236 (10th Cir. 2000) (quotation marks and citation
omitted). The rule's “purpose is to afford
defendant[s] fair notice of plaintiff[s'] claims and the
factual ground[s] upon which they are based.”
Id. (quotation marks and citation omitted).
Analysis and discussion
Defendants' personal jurisdiction arguments
diversity case, a federal district court “may exercise
personal jurisdiction over a defendant who is subject to the
jurisdiction of a state court in the state where the federal
court is located.” Newsome v. Gallacher, 722
F.3d 1257, 1264 (10th Cir. 2013) (quotation marks omitted)
(citing Fed.R.Civ.P. 4(k)(1)(A)). The Court must therefore
apply state law, by which “[t]he Oklahoma legislature
has authorized Oklahoma courts to ‘exercise
jurisdiction on any basis consistent with the [Oklahoma]
Constitution . . . and the Constitution of the United
States.'” Id. (quoting Okla. Stat. tit.
12, § 2004(F)). Because Plaintiffs allege only
contacts-based jurisdiction and there is no allegation that
jurisdiction over Defendants would violate the Oklahoma
Constitution, the Court applies a well-known standard:
“[D]efendants must have minimum contacts with
[Oklahoma], such that having to defend a lawsuit [in
Oklahoma] would not offend traditional notions of fair play
and substantial justice.” Id. (quotation marks
and citation omitted). Plaintiffs' burden at this stage
of litigation is “light.” Wenz v. Memery
Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). Because
Defendants have not submitted evidence to contradict
Plaintiffs' allegations in the Amended Complaint, the
Court accepts as true the well-pleaded facts therein to
determine whether there is a prima facie showing of personal
jurisdiction. See id.
Plaintiffs assert the existence of both general
contacts-based jurisdiction and specific contacts-based
jurisdiction as to Mr. Cipolletti and Ms. Cipolletti.
See Am. Compl. ¶ 9, Doc. No. 9. But Plaintiffs
have not indicated the existence of the “limited set of
affiliations with a forum [to] render” either Mr.
Cipolletti or Ms. Cipolletti “amenable to all-purpose
jurisdiction” in the State of Oklahoma. Daimler AG
v. Bauman, 571 U.S. 117, 137 (2014). “For an
individual, the paradigm forum for the exercise of general
jurisdiction is the individual's domicile”
(id.)-here, Massachusetts for Mr. Cipolletti and
Pennsylvania for Ms. Cipolletti. See Am. Compl.
¶¶ 4-5, Doc. No. 9. Plaintiffs have not alleged
facts to support even the prima facie existence of general
jurisdiction over Mr. Cipolletti or Ms. Cipolletti in
Oklahoma, and the Court finds that it lacks such
Court therefore turns to whether Plaintiffs have alleged
facts supporting specific contacts-based jurisdiction as to
Mr. Cipolletti and Ms. Cipoletti. In its analysis, the Court
considers: “(1) whether the defendant purposefully
directed [his or her] activities at residents of the forum
state; (2) whether the plaintiff[s'] injury arose from
those purposefully directed activities; and (3) whether
exercising jurisdiction would offend traditional notions of
fair play and substantial justice.” Newsome,
722 F.3d at 1264. For the first requirement,
“purposeful direction has three elements: (a) an
intentional action that was (b) expressly aimed at the forum
state with (c) knowledge that the brunt of the injury would
be felt in the forum state.” Id. at 1264-65
(quotation marks and citation omitted). For the second
requirement (the arising-from requirement), the
Court-applying the most restrictive test-“examine[s]
whether any of the defendant's contacts with the forum
are relevant to the merits of the plaintiff[s']
claim[s].” Id. at 1270 (quotation marks and
citation omitted). Finally, for the third requirement, the
Court's fair-play-and-substantial-justice analysis
involves five factors:
(1) the burden on the defendant, (2) the forum state's
interest in resolving the dispute, (3) the plaintiff's
interest in receiving convenient and effective relief, (4)
the interstate judicial system's interest in obtaining
the most efficient resolution of controversies, and (5) the
shared interest of the several states in furthering
fundamental substantive social policies.
Id. at 1271 (quotation marks and citation omitted).
allege that Mr. Cipolletti made several trips to Oklahoma
regarding Plaintiffs' agreement with OMNI, that he made
promises to Plaintiffs while Plaintiffs were in Oklahoma, and
that he sent ten different communications regarding
Plaintiffs' agreement with OMNI to them in Oklahoma.
Plaintiffs have alleged that Mr. Cipolletti's
communications with them were intentional (see e.g.,
Am. Compl. ¶ 45, Doc. No. 9 (indicating that Mr.
Cipolletti's letter made a “material
represent[ation]”)) and were aimed at them. There is no
indication that Mr. Cipolletti may have been unaware of
Plaintiffs' location; the agreement executed by Mr.
Cipolletti on behalf of OMNI was “entered into . . . in
Oklahoma County, Oklahoma.” Id. ¶¶
1-2. And the agreement stated both that Dr. Low was “a
physician duly licensed to practice medicine in the state of
Oklahoma” and that notices required by the agreement
should be sent to him in Oklahoma. Product Development &
Clinical/Surgical Consulting Services Agreement, Doc. ...