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Osiris Therapeutics, Inc. v. Mimedx Group, Inc.

United States District Court, D. Maryland

December 11, 2018

OSIRIS THERAPEUTICS, INC.
v.
MIMEDX GROUP, INC.

          MEMORANDUM

          Catherine C. Blake, United States District Judge.

         Currently pending before the court is a motion to dismiss for lack of personal jurisdiction or, in the alternative, for failure to state a claim, filed by defendant MiMedx Group, Inc. ("MiMedx"). This dispute arises between Osiris Therapeutics, Inc. ("Osiris"), a Maryland corporation, and MiMedx, a corporation incorporated in Florida with its primary place of business in Georgia. For the reasons outlined below, MiMedx's motion to dismiss for lack of personal jurisdiction will be granted. The issues have been briefed and no oral argument is necessary. See Local Rule 105.6 (D. Md. 2018).

         BACKGROUND

         Osiris is a regenerative medicine company based in Maryland. (Compl. ¶ 20, ECF No. 1). MiMedx, a competitor of Osiris, also produces products that serve the wound and orthopedic medicine market. (Id. ¶ 21). In 2013, Osiris entered into a distribution agreement (the "Distribution Agreement") with Stability Biologies ("Stability"). (Id. ¶ 4). Under the Distribution Agreement, which expired December 31, 2015, Stability agreed to sell Osiris's products to hospitals and clinics. (Id. ¶ 3-4). Stability also agreed to protect Osiris's confidential information, including its customer lists. (Id. ¶ 4). In the last quarter of 2015, Osiris pre-paid Stability $1.28 million in commissions under the assumption that Stability would adhere to the Distribution Agreement and sell the Osiris products in its possession. (Id. ¶ 10).

         On January 13, 2016, MiMedx acquired Stability. (Id. ¶ 7). In the lead-up to this acquisition, Stability's sale of Osiris products slowed substantially, and Stability ultimately did not sell $2.2 million worth of Osiris's products. (Id. ¶ 9). These products expired in Stability's warehouse and Stability, acting under MiMedx's direction, did not compensate Osiris for the expired products or reimburse the $1.28 million commission payment that Osiris had advanced. (Id.). In March 2016, Stability stopped making payments it owed Osiris under a payment plan (the "Ovation Payment Plan"), leading to an additional loss for Osiris of $2, 950, 075.00. (Id. ¶ 12). Osiris alleges that Stability and MiMedx also improperly accessed Osiris's customer lists and sales information, and began selling MiMedx's products to Osiris customers. (Id. ¶ 11). In total Osiris claims to have sustained $6, 751, 416.21 in damages, not including the unascertainable damage that resulted from MiMedx's use of Osiris's proprietary information. (Id. ¶ 15).

         On April 2, 2018, Osiris brought suit against MiMedx alleging: (1) breach of the Ovation and Grafix Sales contract;[1] (2) conspiracy to breach the Ovation and Grafix Sales contract; (3) tortious interference with the Ovation and Grafix Sales contract; (4) civil conspiracy to interfere with the contract for Ovation and Grafix sales; (5) misappropriation of Osiris's information under the Maryland Uniform Trade Secrets Act ("MUTS A"); (6) unfair competition; (7) civil conspiracy to misappropriate Osiris's information under MUTS A; (8) civil conspiracy to commit unfair competition; (9) breach of the Ovation Payment Plan; (10) conspiracy to breach the Ovation Payment Plan contract; (11) tortious interference with the Ovation Payment Plan contract; and (12) civil conspiracy to interfere with the Ovation Payment Plan contract. (Id. ¶¶ 42-111). Osiris seeks monetary damages. (Id.).

         STANDARD OF REVIEW

         "When personal jurisdiction is properly challenged under Rule 12(b)(2), the jurisdictional question is to be resolved by the judge, with the burden on the plaintiff ultimately to prove grounds for jurisdiction by a preponderance of the evidence." Carefirst of Maryland, Inc. v. Carefirst Pregnancy Centers, Inc., 334 F.3d 390, 396 (4th Cir. 2003) (citing Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 59-60 (4th Cir. 1993)). If the court resolves the personal jurisdiction question without an evidentiary hearing, "the plaintiff need only make a prima facie showing of personal jurisdiction." Carefirst, 334 F.3d at 396 (citing Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989)). In assessing whether the plaintiff has carried this burden, the court resolves all disputed facts and reasonable inferences in the plaintiffs favor. Carefirst, 334 F.3d at 396 (citing Mylan Labs, 2 F.3d at 60).

         ANALYSIS

         For a federal court to exercise personal jurisdiction over a foreign defendant, two hurdles must be surpassed. First, the forum state's long-arm statute must be satisfied. Second, the forum state's exercise of personal jurisdiction must comport with due process. Consulting Engineers Corp. v. Geometric Ltd., 561 F.3d 273, 277 (4th Cir. 2009). The Maryland long-arm statute "authorize[s] the exercise of personal jurisdiction to the full extent allowable under the Due: Process Clause." CSR, Ltd. v. Taylor, 411 Md. 457, 473 (2009) (quoting Bond v. Messerman, 391 Md. 706, 721 (2006)). Because the court finds that the exercise of personal jurisdiction over MiMedx would offend the Due Process Clause, the court need not resolve whether MiMedx's actions satisfy § 6-103(b)(4)'s strictures. Md. Code Ann., Cts. & Jud. Proc. § 6-103(b)(4).[2]

         In keeping with the Due Process Clause, a court may exercise personal jurisdiction over a nonresident defendant if the defendant has "minimum contacts" with the forum state so that haling the defendant to court in the forum state "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).-Depending on the breadth of a nonresident defendant's contacts with the forum state, a court may exercise either of two types of jurisdiction: general or specific. The court will consider each in turn.

         A. General Jurisdiction

         Consonant with the Due Process Clause, general jurisdiction exists where a nonresident defendant's contacts with the forum are so "continuous and systematic" as to "render [the nonresident defendant] essentially at home in the forum State." Daimler AG v. Bauman, 571 U.S. 117, 127 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S.-915, 919 (2011)). A corporation's place of incorporation and principal place of business are the two paradigmatic bases for general jurisdiction. Daimler, 571 U.S. at 760. Absent one of these two bases, it may be possible to establish general jurisdiction in an "exceptional case." Id. at 761 n.19. But the corporation's operations in the forum state must be "so substantial and of a such a nature as to render the corporation at home in that State." Id.

         Osiris pleads that the court has personal jurisdiction over MiMedx under § 6-103 (b)(4), but Osiris did not plead in its complaint that this court may exercise general jurisdiction over MiMedx, (Compl. ¶ 18). In its response to MiMedx's motion to dismiss, Osiris appears to suggest that the court may exercise general jurisdiction over MiMedx because MiMedx operates an amniotic membrane tissue bank in Maryland, [3] which is regulated by the Maryland Department of Health and. Mental Hygiene, Office of Health Care Quality and because MiMedx assumed Stability's debts to Osiris. (Pl.'s Response Opp'n Mot. Dismiss ["Pl.'s Opp'n"] at 6, 7 n. 1, ECF No. 28). A party may not amend their pleadings via briefing. See S. Walk at Broadlands Homeowner's Ass'n v. OpenBand ...


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