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Charleston Laboratories, Inc. v. Sidis Corp.

United States District Court, E.D. Kentucky, Northern Division, Covington

August 29, 2017



          David L. Bunning, United States District Judge.

         I. Introduction

         This matter is before the Court upon Defendants' Motion to Dismiss Counts 7, 8, and 9 of Plaintiff Charleston Laboratories, Inc.'s Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). This Court has jurisdiction over this action pursuant to 29 U.S.C. § 1132.

         II. Factual and Procedural Background

         This case involves a large number of actors and defendants, all interconnected in various ways. Accordingly, the Court will begin by identifying the parties named in the Complaint.

         Plaintiff Charleston Laboratories, Inc. (“Charleston”) is an emerging pharmaceutical company. (Doc. # 1 at ¶ 18). Paul Bosse is the president, chief executive officer, and founder of Charleston. Id. at ¶ 19. Charleston has developed a drug, “CL- 108", that is undergoing U.S. Food and Drug Administration review for approval to sell. Id. at ¶¶ 20-21.

         Defendant SIDIS Corporation (“SIDIS”) is a holding company of “portfolio companies, ” that compete with Charleston in the pharmaceutical and biotechnology industries for investors, partners, affiliations, and strategic collaborations. Id. at ¶ 51. Nigel M. Ferrey is the founder, President, and CEO of SIDIS. Id. at ¶ 9. Ferrey and Defendant Ray Takigiku are the sole members and founders of Defendant bioLOGIC Corporation LLC (“bioLOGIC”). Id. at ¶ 3. Takigiku is also a board member of SIDIS, and is the registered agent of Bexion Pharmaceuticals, LLC (“Bexion”). Id. at ¶ 7.

         Defendant Charles D. LeCroix is a board member of SIDIS, and “claims to have ‘run' bioLOGIC for some period of time.” Id. at ¶ 6.

         Defendant Margaret Van Gilse is an officer or director of “various entity-defendants” named in the Complaint. Id. at ¶ 8.

         Prime DP LLC (“Prime”) is a limited liability company whose only identified member is Defendant LeCroix. Id. at ¶ 10. Defendant Van Gilse is Prime's last-known registered agent. Id. When Prime ceased doing business in Kentucky, its assets were acquired by or distributed to SIDIS or other SIDIS-related entities. Id.

         Defendant Charles R. Scheper is the settlor of the Defendant Charles R. Scheper Irrevocable Family Trust (the “Scheper Trust”). Id. at ¶ 5. The Scheper Trust is a stockholder of SIDIS. Id.

         Throughout the Complaint, Plaintiff refers to SIDIS and bioLOGIC collectively as “SIDIS-Related Entities” and to Ferrey, Takigiku, LeCroix, Van Gilse and Scheper as “SIDIS-Related Individuals.” Id. at ¶¶ 12-13.

         In 2007, a third party introduced John Ameling, a Charleston consultant, to Defendant Takigiku. Id. at ¶¶ 26-27. In 2008, Ameling and Bosse, Charleston's CEO, traveled to Cincinnati to meet with Takigiku, and discuss Takigiku's potential employment with Charleston. Id. at ¶ 29. According to Charleston, a number of SIDIS-related individuals also attended the meeting and attempted to create a relationship between Charleston and one or more SIDIS-related entities. Id. at ¶ 30. Charleston expressed that it was not interested in forming any affiliation with SIDIS. Id. at ¶ 31.

         Charleston subsequently hired Takigiku, and issued Charleston stock to him personally. Id. at ¶ 32. After issuing that stock, Charleston learned that Prime DP, a SIDIS-related entity, or some other SIDIS-related entity, had deposited funds into Takigiku's personal account or reimbursed Takigiku for his capital contribution to Charleston. Id. at ¶ 40. In 2009, Takigiku represented to Charleston that Scheper was a relative of his who was interested in becoming a stockholder of Charleston, and in 2010, Scheper caused the Scheper Trust to become a stockholder of Charleston. Id. at ¶¶ 41-42.

         As part of his employment with Charleston, Takiguku executed a Confidential Information and Invention Assignment Agreement (“CIIAA Agreement”). Id. at ¶ 93. Pursuant to that agreement, Takigiku agreed that during the term of his employment and thereafter, he would not disclose any of Charleston's confidential information. Id. at ¶ 94. Charleston now alleges that Takigiku violated the CIIAA agreement, and disclosed Charleston's proprietary, confidential information to the other Defendants. Id. at ¶ 96.

         Specifically, Charleston alleges that Takigiku reported to SIDIS, bioLOGIC, Ferrey, and LeCroix confidential information relating to Charleston's efforts to raise money, and its research and development of certain products, including CL-108. Id. at ¶ 53. According to Charleston, SIDIS, bioLOGIC, Ferrey, Takiguku, LeCroix, and Van Gilse falsely represented to Charleston investors and potential investors that Charleston is affiliated with SIDIS. Id. at ¶ 54. Charleston claims that the SIDIS-related entities and individuals used Charleston's name, as well as the advancement and success of Charleston's product, CL-108, to lure potential investors away from Charleston to SIDIS, by representing that an investment in SIDIS would include an interest in Charleston. Id. at ¶ 55. Allegedly, in 2015, bioLOGIC and Van Gilse falsely represented to investors that Charleston was a client of bioLOGIC. Id. at ¶ 57.

         On November 2, 2016, Charleston filed the instant Complaint seeking monetary damages and temporary and permanent injunctive relief, alleging tortious interference with contractual relationships, tortious interference with prospective contractual relationships, defamation, unfair competition, breach of confidentiality agreements, violations of Kentucky's Trade Secrets Act, civil conspiracy, and false designations of origin under the Lanham Act. Id. at 14. The Defendants collectively moved to dismiss Charleston's civil-conspiracy and false-designation-of-origin claims, as well as Charleston's claim under the Kentucky Trade Secrets Act.[1] (Doc. # 22). The Motion to Dismiss is now fully briefed (Docs. # 29 and 33) and ripe for the Court's review.

         III. Analysis

         A. Standard of Review

         To survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The plausibility standard is met when the facts in the complaint allow “the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. The complaint need not contain “detailed factual allegations, ” but must contain more than mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Id. Put another way, the “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         B. ...

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