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Health & Beauty Technologies, Inc v. Merz Pharma GMBH KGAA

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

January 8, 2020




         This matter comes before the court on plaintiffs' motion to amend or alter the judgment, pursuant to Federal Rule of Civil Procedure 59(e). (DE 241). The issues raised have been fully briefed, and in this posture are ripe for ruling. For the reasons that follow, plaintiffs' motion is granted in part and denied in part.


         Plaintiffs initiated this action on June 26, 2017, in the United States District Court for the Southern District of Florida, alleging they are owed compensation for providing defendants with certain confidential and proprietary analysis on acquisition targets in or around December 6, 2013. On March 23, 2018, the Southern District of Florida found that it lacked personal jurisdiction over defendants but transferred the case to this district pursuant to 28 U.S.C. § 1406(a).

         Following transfer, the court granted plaintiffs' first motion for leave to amend their complaint. After several attempts to amend their pleading, the court allowed leave for plaintiffs to file their second amended complaint[1] on November 28, 2018. Plaintiffs alleged defendants are liable for breach of contract, unjust enrichment, fraud, and tortious interference with contract.

         Two weeks after plaintiffs filed their complaint, defendant Merz North America, Inc. (“Merz NA”) filed its motion to dismiss for failure to state a claim upon which relief can be granted, seeking dismissal of plaintiffs' complaint in its entirety. Defendant Merz Pharma GMBH KGAA (“Merz Pharma”) joined defendant Merz NA's motion. On September 26, 2019, the court granted defendants' motion to dismiss, holding that each of plaintiffs' causes of action failed to state a claim upon which relief can be granted.[2]

         After entry of judgment, plaintiffs timely filed the instant motion. Plaintiffs do not seek to amend the allegations in their complaint, and they do not seek to revive their fraud or tortious interference with contract claims. Plaintiffs solely ask the court to vacate its judgment to allow their breach of contract and unjust enrichment claims to proceed.


         The facts alleged in the complaint may be summarized as follows. During a conference held from September 18, 2013, to September 21, 2013, in France, Michael Polakov (“Polakov”), president of both plaintiffs in this action, met with Matthew Likens (“Likens”), then president and chief executive officer of Ulthera, regarding the possibility of Ulthera being acquired by a pharmaceutical company. (Compl. ¶¶ 11-13). Likens advised Polakov that although Ulthera had expressed interest in being acquired to several companies, no substantive discussions or active negotiations were ongoing. (Id. ¶¶ 13, 15). Thereafter, Likens and Polakov agreed at the conference that plaintiffs had a nonexclusive engagement to market Ulthera to potential acquiring companies in the pharmaceutical companies, and that plaintiffs would be entitled to a fee commensurate with a standard industry fee ranging from one to five percent of the acquisition price. (Id. ¶¶ 14, 16). Likens and Polakov shook hands to confirm their oral agreement. (Id. ¶ 17).

         Prior to meeting Likens, plaintiffs had prepared and maintained extensive confidential and proprietary analysis of the medical aesthetics industry, including Ulthera, with which Polakov had maintained a relationship for nearly a decade. (Id. ¶ 18). Both before and following discussion with Likens, Polakov performed an extensive analysis of the synergies and market potential of Ulthera for prospective acquirers. (Id. ¶¶ 19, 20).

         A few days after Polakov's discussion with Likens, he spoke with Jean-Yves Coste (“Coste”), the healthcare director of Michel Dyens & Co. (“Michel Dyens”), an investment banking company that represents acquirers within the healthcare and cosmetic medical field. (Id. ¶ 21). Coste indicated defendant Merz Pharma was interested in acquiring a company, and together plaintiffs and Michel Dyens agreed to provide defendants with various targets for acquisition. (Id. ¶ 22). Plaintiffs provided Coste with Polakov's detailed personal opinions, along with proprietary and confidential analysis, on several acquisition companies, including Ulthera. (Id. ¶¶ 23, 24).

         On September 26, 2013, Coste sent his initial email to Hans-Jorg Bergler (“Bergler”), defendant Merz Pharma's director of corporate development, providing a profile on Ulthera and other companies. (Id. ¶ 25). Coste asked whether he would be interested in meeting with Likens. (Id.). In October 2013, Ulthera and defendant Merz Pharma signed a non-disclosure agreement to allow exchange of information, but no active negotiations with Ulthera occurred at any time in 2013. (Id. ¶¶ 26, 27). Coste engaged in further communications with Bergler and Philip Burchard (“Burchard”), defendant Merz Pharma's chief executive officer, including an October 30, 2013, email where he again discussed possible target companies such as Ulthera. (Id. ¶ 28). Bergler forwarded Coste's email to Michael Parrish (“Parrish”), an employee of defendant Merz NA recruited by defendant Merz Pharma to assist in acquisition efforts, and Parrish encouraged Bergler to go forward with discussing the target companies with Coste by telephone on November 8, 2013. (Id. ¶¶ 30-33).

         Coste met with defendant Merz Pharma's employees by phone on November 8, 2013. (Id. ¶¶ 36-37). At defendant Merz Pharma's request, Coste sent plaintiffs' private confidential and written material regarding Ulthera and other potential target companies that had been discussed. (Id. ¶¶ 38-39). Bergler then arranged to have Polakov and Coste travel to defendant Merz Pharma's headquarters in Frankfurt to make a business presentation and proposal regarding acquiring companies including Ulthera. (Id. ¶ 40). In preparation for that meeting, Polakov prepared an extensive presentation, including previous and new information from confidential and proprietary sources on each of the acquisition targets that would be presented to defendants during the meeting. (Id. ¶ 44).

         On December 6, 2013, Polakov and Coste met with Bergler and Parrish, and Polakov provided confidential information and analysis on each of the target companies. (Id. ¶¶ 45, 48). Defendants allegedly agreed that, in exchange for information and analysis as well as applicable merger and acquisition advisory services, plaintiffs would receive industry standard compensation of between one to five percent of the acquisition price if defendant or any related entity purchased any of the target companies. (Id. ¶¶ 48, 57, 61). Plaintiffs allege they were promised a guaranteed one percent of the purchase price paid to acquire the target company, with the opportunity for that percentage to be enhanced up to five percent in accordance with industry standards, to be paid by defendant Merz NA or Merz Pharma or both. (Id. ¶¶ 49, 50, 60). During the meeting, Bergler and Parrish asked specific and detailed questions about each of the prospective acquisition targets and expressed concerns that Ulthera was not a good fit for defendants. (Id. ¶¶ 51, 52). In response, Polakov gave an extensive and detailed proprietary presentation about how acquiring Ulthera would be advantageous to defendants because investing in medical devices would produce significant returns. (Id. ¶¶ 54, 55). After hearing Polakov's explanation, Bergler and Parrish stated they had been educated by Polakov as to these points and would reassess their views on Ulthera. (Id. ¶ 56).

         At the close of the meeting in December 2013, which Merz entity that might make the acquisition was unknown, but Bergler and Parrish acknowledged the insightful and unique points made by Polakov. (Id. ¶ 58). Plaintiffs allegedly would undertake merger and acquisition services in connection with the Merz organization to the extent that defendants or a related entity went forward with the merger. (Id. ...

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