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Sneeze Wheeze & Itch Associates, LLC v. Dynavax Technologies Corp.

March 16, 2010

SNEEZE WHEEZE & ITCH ASSOCIATES, LLC, PLAINTIFF,
v.
DYNAVAX TECHNOLOGIES CORPORATION, CRN/ALLERGY AND RESPIRATORY LLC, DEFENDANTS.



The opinion of the court was delivered by: Joe Billy McDADE United States Senior District Judge

ORDER & OPINION

This matter is before the Court on both Defendants' Motions to Dismiss the counts of Plaintiff's Complaint that pertain to them. (Docs. 3 & 5). Plaintiff has responded in opposition to both of the Motions to Dismiss. For the reasons stated below, Defendant Dynavax Technologies Corporation's Motion to Dismiss is denied, and Defendant CRN/Allergy and Respiratory LLC's Motion to Dismiss is denied.

BACKGROUND

The essential background facts of this case are drawn from Plaintiff's Complaint and attached supporting documentation, and the Court draws all reasonable inferences in Plaintiff's favor.*fn1 Plaintiff Sneeze, Wheeze & Itch Associates ("Plaintiff" or "SWI") is a clinical drug trial facility in Normal, Illinois that performs studies of new drugs. As such, it enrolls study participants, administers medications or placebos as directed by the study, and monitors the study participants. Between January 13, 2003 and July 6, 2007, SWI was a member of Defendant CRN/Allergy and Respiratory ("CRN"), which was formed in order to contract with sponsors of clinical research studies for the performance of such studies by the principal investigators affiliated with its members, and to market these services. This relationship between SWI and CRN is memorialized in the January 13, 2003 Participation Agreement. (Doc. 1, Ex. 1). This Participation Agreement establishes CRN as SWI's agent for, inter alia, contracting with study sponsors, and marketing SWI's services to sponsors. (Doc. 1, Ex. 1 at 2).

Defendant Dynavax Technologies Corporation ("Dynavax") is a sponsor of clinical drug trials. On March 31, 2005, Dynavax and CRN entered into a Clinical Study Agreement. (Doc. 1, Ex. 2). This agreement pertained to the trial of a drug intended to treat ragweed allergy in children, DV1-SAR-08 ("08 study"). CRN agreed to recruit twelve clinical trial sites and principal investigators for this study, to enroll eligible children in the study, to negotiate the budget for the trial, and to pay the principal investigators to perform the study. Dynavax was to pay CRN up to $20,000 per study participant, and provided a detailed protocol for the study. With the assistance of Dr. Anjuli Nayak, one of the two owners of SWI, a budget for the study was created and approved by all parties.

A copy of the protocol and budget for the 08 study were provided to SWI prior to April 12, 2005. On April 7, 2005, Dynavax acknowledged to SWI that SWI would serve as a trial site for the study, and offered indemnification to Dr. Nicholas Nayak, the other owner of SWI and the principal investigator of the 08 study, for his participation in the study. (Doc. 1, Ex. 3). On April 12, 2005, CRN and SWI executed an agreement memorializing SWI's service as a trial site for the 08 study, and under which both Drs. Nayak were made principal investigators for the study ("2005 agreement"). (Doc. 1, Ex. 4). Under this agreement, CRN agreed to pay $18,920 per study participant and up to $15,000 in start-up and advertising costs; the 2005 Agreement noted that the Participation Agreement had established CRN as SWI's agent for contracting with Dynavax. On March 23, 2006, Dynavax and CRN entered into an amended Clinical Study Agreement. (Doc. 1, Ex. 5). Dr. Anjuli Nayak negotiated the terms of the amended Clinical Study Agreement for CRN. SWI performed all its obligations under the 2005 agreement between itself and CRN, and all of its obligations under the amended Clinical Study Agreement for the 08 study.

On December 20, 2005, Dynavax and CRN entered in another Clinical Study Agreement, pertaining to the trial of DV1-SAR-09; this trial was for a medication for ragweed-allergic adults ("09 study"). (Doc. 1, Ex. 6). Under this second Clinical Study Agreement, CRN agreed to contract with up to forty clinical research sites and to enroll eligible adults for the study. Dynavax agreed to make payments to CRN for the services provided by the study sites and principal investigators, up to $18,515 per study participant. CRN agreed to invoice Dynavax monthly, and Dynavax agreed to make payment within 30 days of receiving the invoice. Dynavax provided a detailed protocol for the study to CRN. With the assistance of Dr. Anjuli Nayak, a budget for the 09 study was created and approved by all of the parties, and the budget and protocol were provided to SWI prior to January 24, 2006.

On January 24, 2006, CRN and SWI executed an agreement that SWI would serve as a clinical research site for the 09 study, and both Drs. Nayak were made principal investigators for the study ("2006 agreement"). (Doc. 1, Ex. 7). Under this agreement, CRN agreed to pay SWI up to $17,290 per study participant and to pay certain start-up and chart review costs, up to $10,000; the agreement recited that, under the Participation Agreement, SWI had appointed CRN as its agent to contract with Dynavax. On March 23, 2006, Dynavax and CRN executed an amended Clinical Study Agreement for the 09 study, which was negotiated on CRN's behalf by Dr. Anjuli Nayak. (Doc. 1, 8). On April 7, 2006, Dynavax acknowledged to SWI that SWI would serve as a trial site for the study, and offered indemnification to Dr. Nicholas Nayak for his participation in the study. (Doc. 1, Ex. 9). On April 13, 2006, the amended Clinical Study Agreement for the 09 study was provided to SWI; it did not reduce the total payment per patient to SWI, but changed certain protocol requirements. SWI performed all its obligations under the 2006 agreement between itself and CRN, and all of its obligations under the amended Clinical Study Agreement for the 09 study.

On February 23, 2007, Dynavax sent an email to the investigators for the 08 and 09 studies, which advised them that Dynavax was terminating both studies early. (Doc. 1, Ex. 10). SWI performed reconciliations for the 08 and 09 studies, and found that SWI was owed $71,857 for the 08 study and $273,129 for the 09 study; SWI tendered these reconciliations to CRN and Dynavax. On March 12, 2007, Dynavax informed SWI that it would not make payment based on the reconciliations. (Doc. 1, Ex. 12).

On May 27, 2009, SWI filed suit against Dynavax and CRN. Counts I and II allege, respectively, breaches of the 08 and 09 Clinical Study Agreements between Dynavax and CRN by Dynavax, with SWI suing as a third-party beneficiary to those contracts. Counts III and IV allege, respectively, breaches of the 2005 and 2006 agreements between SWI and CRN.

DYNAVAX'S MOTION TO DISMISS

Dynavax argues that its Motion to Dismiss should be granted on either of two grounds: the Court lacks personal jurisdiction over Dynavax, and the Court lacks subject-matter jurisdiction over this matter because Plaintiff does not have standing to bring this suit. The Court granted Dynavax leave to file a Reply brief in support of its Motion to Dismiss. (10/02/09 Text Order). The Court finds that neither ground requires dismissal of the counts against Dynavax.

I. Personal Jurisdiction

Dynavax moves to dismiss Counts I and II of Plaintiff's Complaint under Federal Rule of Civil Procedure 12(b)(2), arguing that this Court lacks personal jurisdiction over it. This Court has personal jurisdiction over a defendant if the courts of Illinois would have personal jurisdiction over it. Citadel Group Ltd. v. Washington Regional Medical Center, 536 F.3d 757, 760 (7th Cir. 2008) (citing RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997)). As Dynavax points out, the two-step process for determining whether Illinois would have personal jurisdiction, application of the Illinois long-arm statute and analysis of whether due process is satisfied under the Illinois and United States Constitutions, has effectively collapsed into a single analysis, since Illinois' long-arm statute now reaches as far as permitted by the United States Constitution, and as "no case has yet emerged where due process was satisfied under the federal constitution but not under the Illinois constitution." Id. at 761 (citing Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 715 (7th Cir. 2002); RAR, 107 F.3d at 1276; Sabados v. Planned Parenthood of Greater Indiana, 882 N.E.2d 121, 125 & fn. 2 (Ill. App. Ct. 2007)).

In ruling on a Motion to Dismiss under Rule 12(b)(2), the court "may receive and weigh affidavits prior to trial on the merits." Nelson by Carson v. Park Industries, Inc., 717 F.2d 1120, 1123 (7th Cir. 1983) (citing O'Hare International Bank v. Hampton, 437 F.2d 1173, 1176 (7th Cir. 1971). Though the plaintiff has the burden of proof, if the court decides the personal jurisdiction issue on the basis of written materials, this "burden of proof is met by a prima facie showing that personal jurisdiction is conferred," and the court must resolve all factual disputes in the record in the plaintiff's favor. Id. (citing O'Hare International Bank, 437 F.2d at 1176; Neiman v. Rudolf Wolff & Co., 619 F.2d 1189, 1190 (7th Cir. 1980)). In addition, the Court draws "every inference" in the plaintiff's favor. Central States, Southeast and Southwest Areas Pension Fund v. Phencorp, 440 F.3d 870, 878 (7th Cir. 2006).

Dynavax argues that it is not subject to either general or specific jurisdiction in Illinois. (Doc. 4 at 5-8). Plaintiff concedes that Illinois does not have general jurisdiction over Dynavax, but argues that specific jurisdiction is appropriate in this claim for breach of the 08 and 09 Clinical Study Agreements between Dynavax and CRN.*fn2 (Doc. 10 at 4-8). Unlike general jurisdiction, which permits jurisdiction for claims not "arising out of or related to the defendant's contacts with the forum" and is appropriate where the defendant's contacts with the forum are "continuous and systematic," specific jurisdiction applies where the "suit arises out of or is related to the defendant's contacts with the forum." Citadel Group Ltd., 536 F.3d at 760 fn. 3 (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 514 & fn. 9 (1984)).

Due process requires that, for a state to exercise specific jurisdiction over a defendant, the defendant must have "certain minimum contacts" with the state "such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). The defendant must "purposefully avail itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 (1985) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). Further, the defendant's connections with the state must be such that it should "reasonably anticipate being haled into court there." Id. at 474-75 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). The overall inquiry ...


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