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Eshelman v. Puma Biotechnology, Inc.

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

June 12, 2017



          JAMES C.DEVER III Chief United States District Judge.

         On February 2, 2016, Fredric N. Eshelman ("Eshelman") filed a complaint against Puma Biotechnology, Inc., ("Puma") alleging libel per se and libel per quod [D.E. 1, 5]. On February 6, 2017, the court denied Puma's motion to dismiss for lack of personal jurisdiction, to dismiss for failure to state a claim, to transfer the case, and for relief under California's Anti-SLAPP statute [D.E. 77]. On February 21, 2017, Puma answered Eshelman's complaint and asserted counterclaims of libel per se and libel per quod [D.E. 86].

         On March 14, 2017, Eshelman moved to dismiss Puma's counterclaims pursuant to Federal Rule of Civil Procedure 12(b)(6) and to strike Puma's counterclaims under California's Anti-SLAPP statute [D.E. 100] and filed a memorandum in support [D.E. 101]. On March 29, 2017, Puma responded in opposition to Eshelman's motion to dismiss [D.E. 104]. On April 18, 2017, Eshelman replied [D.E. 109]. As explained below, the court grants Eshelman's motion to dismiss.


         The court discussed the details of Eshelman's factual allegations and his claims against Puma in detail in this court's order denying Puma's motion to dismiss for lack of personal jurisdiction, to transfer the case, and for relief under California's Anti-SLAPP statute. See [D.E. 77] 1-3. Essentially, Eshelman alleged that on January 7, 2016, in the course of a proxy contest Eshelman initiated, Puma posted a link on its investor-relations website to download an "Investor Presentation" that falsely stated or gave the impression that Eshelman had been personally and culpably involved in clinical-trial fraud, when in fact Eshelman's company had been the victim of such fraud. See id.; Compl. [D.E. 5] ¶¶ 46-82. One of Puma's allegedly libelous statements in the Investor Presentation was that "Eshelman's misrepresentations are no surprise given his history." Compl. ¶¶ 50, 70. Eshelman did not claim that this statement was libelous because it falsely gave the impression that Eshelman had made "misrepresentations." Rather, the basis of Eshelman's libel claims was Puma's suggestion that Eshelman's "history" included personal, culpable involvement in clinical-trial fraud. Id. ¶¶ 46-82.

         Puma's asserts counterclaims of libel per se and libel per quod on the basis of statements Eshelman made on November 30, 2015, and January 4, 2016, during the same proxy contest. See Ans. [D.E. 86] ¶¶ 25-73. Puma counterclaims that Eshelman misrepresented the experience of members of Puma's board of directors and falsely accused Puma of making false and misleading statements to investors in violation of securities law. Puma alleges that in a November 30, 2015, presentation Eshelman libeled Puma by falsely asserting that the "current board has limited public company corporate governance and oversight experience, " that the board's "Drug Development and Regulatory" experience was limited to the experience of one board member, that the board's experience with mergers and acquisitions was limited to one board member, that "the current board members have limited oncology background, " and that "only one current board member ha[d] significant experience" with "[i]nvestment." Id. ¶¶ 32, 57. Puma also alleges that, in a January 4, 2016, presentation, Eshelman falsely asserted or suggested that Puma had lied to shareholders and concealed information by contrasting statements Puma made on July 22, 2014, with statements Puma made on November 30, 2015, and claiming the statements were inconsistent. Id. ¶¶ 26-31, 47-52.


         Eshelman moves to dismiss Puma's counterclaims as time-barred, or in the alternative for failure to state a claim. This court has subject-matter jurisdiction based on diversity jurisdiction. Thus, the court applies state substantive principles and federal procedural rules. See Erie R.R. v. Tompkins. 304 U.S. 64, 78-80 (1938); Dixon v. Edwards. 290 F.3d 699, 710 (4th Cir. 2002).

         A motion to dismiss under Rule 12(b)(6) tests the legal and factual sufficiency of the complaint. See Fed.R.Civ.P. 12(b)(6); Ashcroft v. Iqbal. 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly. 550 U.S. 544, 570 (2007); Coleman v. Md. Court of Appeals. 626 F.3d 187, 190 (4th Cir. 2010), affd, 566 U.S. 30 (2012); Giarratano v. Johnson. 521 F.3d 298, 302 (4th Cir. 2008); accord Erickson v. Pardus. 551 U.S. 89, 93-94 (2007) (per curiam). The court "accepts all well-pled facts as true and construes these facts in the light most favorable to the plaintiff in weighing the legal sufficiency of the complaint." Nemet Chevrolet Ltd. v. Inc.. 591 F.3d 250, 255 (4th Cir. 2009); see Burbach Broad. Co. of Del. v. Elkins Radio Corp.. 278 F.3d 401, 405-06 (4th Cir. 2002). The court need not, however, accept as true a complaint's "legal conclusions, elements of a cause of action, and bare assertions devoid of further factual enhancement." Nemet Chevrolet Ltd.. 591 F.3d at 255. Moreover, this court can consider documents relied on by the parties in their briefing if they are integral to and explicitly relied on in the complaint, and their authenticity is undisputed. See Occupy Columbia v. Haley. 738 F.3d 107, 117 n.7 (4th Cir. 2013).

         A motion to dismiss under Rule 12(b)(6) "generally cannot reach the merits of an affirmative defense, such as the defense that the plaintiff s claim is time-barred." Goodman v. Praxair. Inc.. 494 F.3d 458, 464 (4th Cir. 2007) (en banc). Nevertheless, a district court may reach the merits of an affirmative defense "if all facts necessary to the affirmative defense clearly appear on the face of the complaint." Id. (emphasis omitted). "A complaint showing that the statute of limitations has run on the claim is the most common situation in which the affirmative defense appears on the face of the pleading, rendering dismissal appropriate." Brooks v. City of Winston-Salem. N.C. . 85 F.3d 178, 181 (4th Cir. 1996) (quotation omitted). Thus, failure to comply with the statute of limitations is "a recognized basis for dismissal" under Rule 12(b)(6). Evans v. Trinity Indus.. Inc.. 137 F.Supp.3d 877, 881 (E.D. Va. 2015); see Brooks, 85 F.3d at 181; West v. ITT Cont'1 Rakinp Co. 683 F.2d l 845, 846 (4th Cir. 1982).

         Eshelman's motion to dismiss requires the court to consider the parties' state-law claims, counterclaims, and defenses. Accordingly, the court must predict how the Supreme Court of the state in question would rule on any disputed state-law issue. See Twin City Fire Ins. Co. v. Ben Arnold-Sunbelt Beverage Co. of S.C.. 433 F.3d 365, 369 (4th Cir. 2005). In doing so, the courtmust look first to opinions of that state's highest court. See Stahle v. CTS Corp.. 817 F.3d 96, 100 (4th Cir. 2016). If there are no governing opinions from the highest court of the relevant state, this court "may consider lower court opinions[, ]... treatises, and the practices of other states." Twin City Fire Ins. Co.. 433 F.3d at 369 (quotation omitted).[1] In doing so, a federal court "should not create or expand [a] [s]tate's public policy." Time Warner Entm't-Advance/Newhouse P'ship v. Carteret-Craven Elec. Membership Corp.. 506 F.3d 304, 314 (4th Cir. 2007) (first alteration in original) (quotation omitted); Wade v. Danek Med.. Inc.. 182 F.3d 281, 286 (4th Cir. 1999). Moreover, in predicting how the highest court of a state would address an issue, this court must "follow the decision of an intermediate state appellate court unless there is persuasive data that the highest court would decide differently." Toloczko. 728 F.3d at 397-98.


         To determine which state's limitations period applies to a state-law claim, a federal district court exercising diversity jurisdiction applies the choice-of-law rules of the forum state, in this case North Carolina. See Guaranty Tr. Co. v. York. 326 U.S. 99, 110 (1945); MedCap Corp. v. Betsy Johnson Health Care Sys.. Inc.. 16 F.App'x 180, 182 (4th Cir. 2001) (per curiam) (unpublished); Snknlnwski v. Flatizer, 769 F.2d 975, 977 (4th Cir. 1985). Under North Carolina's choice-of-law rules, North Carolina's procedural rules apply to actions brought in North Carolina, and a statute of limitations is considered a procedural rule. See Boudreau v. Baughman. 322 N.C. 331, 340, 368 S.E.2d 849, 857 (1988). In determining whether a rule is substantive or procedural under this analysis, "the federal district court accepts the characterization placed on the involved rule by the [forum] state court." Sokolowski. 769 F.2d at 978; see Thornton v. Cessna Aircraft Co.. 886 F.2d 85, 88 (4th Cir. 1989). When a federal court is sitting in diversity and the forum state would consider a statute of limitations to be a procedural rule and would therefore apply its own statute of limitations, the federal court also applies the forum state's statute of limitations. Sokolowski. 769 F.2d at 978.

         In North Carolina, libel suits must be filed within one year of the libelous statement's publication. See Henderson v. Town of Hope Mills. No. 5:13-CV-635-FL, 2013 WL 5954816, at *4 (E.D. N.C. Nov. 6, 2013) (unpublished), affd. 549 F.App'x 195 (4th Cir. 2015) (per curiam) (unpublished); Gordon v. Fredle. 206 N.C. 734, 734, 175 S.E. 126, 126 (1934); Philips v. Pitt Cty. Mem.Hosp..Inc..222 N.C.App. 511, 526, 731 S.E.2d 462, 472 (2012); N.C. Gen. Stat. § 1-54(3). A one-year statute of limitations also applies in California. See Perfect 10. Inc. v. Visa lnt'l Serv.. Ass'n. 494 F.3d 788, 810 (9th Cir. 2007); Shively v. Bozanich.31 Cal.4th 1230, 1246, 80 P.3d 676, 685 (Cal. 2003); Cal. Code Civ. Proc. ยง 340(c). Puma filed its counterclaims on February 21, 2017, alleging that Eshelman published libelous ...

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