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Eshelman v. Puma Biotechnology, Inc.

United States District Court, E.D. North Carolina, Southern Division

February 7, 2017

FREDRIC N. ESHELMAN, Plaintiff,
v.
PUMA BIOTECHNOLOGY, INC., Defendant.

          ORDER

          JAMES C. DEVER, III Chief United States District Judge

         On February 2, 2016, Fredric N. Eshelman ("Eshelman") filed a complaint against Alan. H. Auerbach ("Auerbach") and Puma Biotechnology, Inc. ("Puma") alleging libel per se and libel per quod [D.E. 1, 5]. On April 4, 2016, Puma and Auerbach moved to dismiss Eshelman's complaint for lack of personal jurisdiction and failure to state a claim upon which relief can be granted, moved to transfer the case, moved for relief under California's Anti-SLAPP statute [D.E. 20], and filed a memorandum in support [D.E. 21]. On May 2, 2016, Eshelman voluntarily dismissed Auerbach as a defendant [D.E. 27], responded in opposition to Puma's motion [D.E. 28], and filed a cross-motion concerning Puma's motion for relief under the Anti-SLAPP statute [D.E. 29]. On May 19, 2016, Puma replied [D.E. 31]. On November 23, 2016, with leave of the court, Eshelman responded to Puma's reply [D.E. 55, 62]. On December 7, 2016, Puma replied to Eshelman's supplemental response [D.E. 69]. As explained below, the court denies Puma's motion to dismiss for lack of personal jurisdiction, denies Puma's motion to transfer, denies Puma's motion to dismiss for failure to state a claim, denies Puma's motion for relief under California's Anti-SLAPP statute, and dismisses as moot Eshelman's cross-motion concerning the Anti-SLAPP statute.

         I.

         Eshelman resides in Wilmington, North Carolina. Compl. [D.E. 5] ¶ 5. Eshelman founded Pharmaceutical Product Development ("PPD"). Id. Puma is a Delaware corporation based in Los Angeles, California. Id. ¶ 6. More than 50 Puma stockholders (including Eshelman) reside in North Carolina. See Id. ¶ 10.

         On November 1, 2001, PPD contracted with Aventis Pharmaceuticals ("Aventis") for research services concerning "a clinical study... to determine the safety and effectiveness" of the drugKetek. Id. ¶¶ 22-23. During the Ketek trial, a clinical investigator falsified documents. Id. ¶¶ 24-25. Eshelman was the CEO of PPD when these events occurred. 14123.

         Between May 18 and June 4, 2015, Eshelman acquired stock in Puma. [D.E. 28-1] ¶ 19. On October 28, 2015, Eshelman solicited proxy votes for a proposal to increase Puma's board of directors from five to nine directors, and proposed that Eshelman and three others be nominated to the new board positions. Compl. ¶ 29; [D.E. 20-6, 22]. On December 10, 2015, Puma responded to Eshelman's proxy solicitation by mailing a consent revocation to stockholders, including those in North Carolina, which directed stockholders to the homepage of Puma's investor-relations website for further consent-revocation materials. Compl. ¶ 10; [D.E. 20-5] 52.

         On January 7, 2016, Puma posted a link on the homepage of Puma's investor-relations website to download a .pdf file of an "Investor Presentation" addressing Eshelman's proposal. Compl. ¶ 33. Three slides of the Investor Presentation were titled "Eshelman Continues to Demonstrate a Lack of Integrity." Id.; [D.E. 5-1] 13-15. One of those slides stated that "Eshelman's misrepresentations are no surprise given his history, " that Eshelman was the CEO of PPD "when it managed a clinical trial during the development of the antibiotic drug Ketek, " that "[f]raud was uncovered in this trial by the FDA's Office of Criminal Investigation, " that "[a]s [CEO] of PPD, Eshelman was forced to testify before Congress regarding PPD's involvement in this clinical trial fraud in2008, " and that "Eshelman was replaced as CEO for PPD in 2009." Compl. ¶ 33; [D.E. 5-1] 14 (emphasis omitted). Another slide with the same title stated that "Puma's Board does not believe that someone who was involved in clinical trial fraud that was uncovered by the FDA should be on the Board of Directors of a public company; particularly a company that is in the process of seeking FDA approval." Compl. ¶ 33; [D.E. 5-1] 15.

         On January 20, 2016, Eshelman sent a letter to Puma and its board of directors, demanding that Puma apologize for and retract the statements in the Investor Presentation, which Eshelman said were defamatory. Compl. ¶¶ 34-36. On January 27, 2016, Puma posted a document titled "[a]dditional proxy soliciting materials" to their investor-relations homepage. Id. ¶¶ 36-37. In the document, Puma disclosed the contents of Eshelman's January 20th letter, stated that the Investor Presentation "included certain factual and publicly available information regarding Eshelman's background, " and rejected Eshelman's demands. Id.; [D.E. 5-2] 5-10.

         Puma's statements in the Investor Presentation and the January 27th rej ection of Eshelman's demands harmed Eshelman's professional reputation. Compl. ¶¶ 39-45.

         On February 2, 2016, Eshelman filed a complaint alleging state-law claims of libel per se and libel per quod against Puma and Auerbach. On April 4, 2016, Puma and Auerbach moved to dismiss Eshelman's complaint for lack of personal jurisdiction and failure to state a claim upon which relief can be granted, moved to transfer the case, moved for relief under California's Anti-SLAPP statute [D.E. 20], and filed a memorandum in support [D.E. 21]. On May 2, 2016, Eshelman voluntarily dismissed Auerbach as a defendant [D.E. 27], responded in opposition to Puma's motion [D.E. 28], and filed a cross-motion concerning Puma's motion for relief under the Anti-SLAPP statute [D.E. 29]. On May 19, 2016, Puma replied [D.E. 31]. On November 23, 2016, with leave of court, Eshelman responded to Puma's reply [D.E. 55, 62]. On December 7, 2016, Puma replied to Eshelman's supplemental response [D.E. 69].

         II.

         A.

         Puma moves to dismiss under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. To defeat a Rule 12(b)(2) motion, a plaintiff typically must prove by a preponderance of the evidence that the court can exercise personal jurisdiction. See Grayson v. Anderson, 816 F.3d 262, 268 (4th Cir. 2016); Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989). If a court rules on a motion to dismiss for lack of personal jurisdiction without an evidentiary hearing, the plaintiff need only establish a prima facie case. Combs, 886 F.2d at 676. When determining whether the plaintiff has met this burden, courts resolve all factual disputes and draw all reasonable inferences in the light most favorable to the plaintiff. Id.; see Mylan Labs.. Inc. v. Akzo. N.V., 2 F.3d 56, 60 (4th Cir. 1993). However, an evidentiary hearing need not include live testimony, but merely the opportunity for the parties to present evidence and argument on the question of jurisdiction. Grayson. 816 F.3d at 268. After the court has considered such evidence and argument, it determines whether a plaintiff have proven by a preponderance of the evidence that the court has personal jurisdiction over the defendant. Id.

         A federal court may exercise personal jurisdiction over a person to the extent allowed by state law in the state where the federal court sits. See Fed.R.Civ.P. 4(e)(1), (h)(1)(A). The North Carolina long-arm statute extends personal jurisdiction over out-of-state defendants in all cases in which the Fourteenth Amendment's Due Process Clause permits. See Dillon v. Numismatic Funding Corp., 291 N.C. 674, 676, 231 S.E.2d 629, 630-31 (1977); Century Data Sys., Inc. v. McDonald,109 N.C.App. 425, 427, 428 S.E.2d 190, 191 (1993). To determine whether the North Carolina long-arm statute reaches a particular defendant, courts analyze whether the defendant has sufficient minimum contacts with North Carolina such that "maintenance of the suit does not offend ...


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