Mylan Technologies, Inc. v. Zydus Noveltech, Inc. ( 2012 )

Mylan Technologies, Inc. v. Zydus Noveltech, Inc., No. S0041-09 CnC (Crawford, J., Aug. 9, 2012)
[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the
accompanying data included in the Vermont trial court opinion database is not guaranteed.]
STATE OF VERMONT
SUPERIOR COURT CIVIL DIVISION
Chittenden Unit Docket No.: S0041-09 CnC
MYLAN TECHNOLOGIES, INC.
and MYLAN INC.
v.
ZYDUS NOVELTECH, INC., SHARAD K. GOVIL,
CADILA HEALTHCARE, LTD., PANKAJ PATEL and
SUNIL ROY
DECISION ON MOTION FOR JUDGMENT ON THE PLEADINGS
(STATUTE OF LIMITATIONS AND 9 V.S.A. § 4607(a))
This case concerns claims by Mylan Technologies, Inc. and Mylan, Inc. (“Mylan”) that
its former president Sharad K. Govil violated the Vermont Trade Secrets Act, 9 V.S.A. §§ 4601–
4609, when he left Mylan to go to work for Zydus Noveltech, Inc. In addition to the trade
secrets claim, Mylan made similar claims of breach of contract, breach of the covenant of good
faith and fair dealing, misappropriation of trade secrets, breach of fiduciary duty, and unfair
competition.
Mylan originally sued Zydus and Dr. Govil in January 2009. In November 2009, Mylan
moved to amend the complaint to name Cadila Healthcare, Ltd. and two of its officers. The
court granted the motion on June 16, 2010. The claims against Cadila, Mr. Patel, and Mr. Roy
are for misappropriation of trade secrets, tortious interference with contract, and unfair
competition.
Cadila is an Indian corporation. Mr. Patel and Mr. Roy are both Indian nationals who
live in that country. Mylan initially sought to persuade the three Indian defendants to accept
service of process through their American attorney. The Indian defendants rejected this request.
In September 2010, Mylan retained Indian counsel and started the process of effecting service
through the Hague Convention.
In May 2011, the Indian defendants filed a motion to dismiss the amended complaint on
grounds of lack of personal jurisdiction and failure to make service of process within 60 days of
filing as required by V.R.C.P. 6. The court denied the personal jurisdiction motion and that
ruling is not relevant here. With respect to the time for service, the court ruled:
Given that (1) plaintiffs commenced some form of service within the 60
day window provided by V.R.C.P. 3; (2) plaintiffs have attempted service
pursuant to the Hague Convention several times; and (3) a request for service
pursuant to the Hague is currently pending with India’s Ministry of Law and
Justice, the court will exercise its discretion and extend the time for service on the
Indian defendants. Service pursuant to the Hague Convention must be completed
by May 15, 2012 or the Indian defendants will be dismissed from the case without
prejudice.
Decision on Pending Motions at 2 (filed Oct. 26, 2011). Mylan completed service pursuant to
the Hague Convention in November 2011.
ANALYSIS
The Indian defendants move for judgment on the pleadings on two grounds. First, they
argue that all of the counts against them are time-barred pursuant to 12 V.S.A. § 523. Second,
they argue that the tortious-interference and unfair competition claims against them are
predicated on the alleged misappropriation of trade secrets, and are thus displaced by 9 V.S.A.
§ 4607(a). The court has considered the parties’ filings on these issues, as well as their argument
at a hearing held on August 8, 2012.
I. Statute of Limitations
A motion to dismiss on statute of limitations grounds raises four questions: (1) when did
the claim accrue; (2) what is the governing limitations period; (3) when was the complaint filed;
and (4) was service complete within the time allowed by law.
1. Accrual of the cause of action
“Accrual” for purposes of this case means the date by which the plaintiffs knew or
reasonably should have known about their claim. The parties disagree over the date. The Indian
defendants assert that the correct date is September 8, 2008, which is the date of a demand letter
sent by Mylan to Zydus, Dr. Govil, and Cadila threatening to sue if Dr. Govil revealed trade
secrets. Plaintiffs describe this letter as a routine measure issued whenever an employee goes to
work for a competitor. Plaintiffs argue that they had no reason to know of the claim until
January 2009 when they learned that Cadila was purchasing special equipment used in the same
business (transdermal administration of medication) as Mylan.
For purposes of the motion for judgment on the pleadings, the court will use the earlier
date put forward by the Indian defendants.
2
2. Governing period
The Indian defendants contend that all claims are governed by 12 V.S.A. § 523 which
establishes a three-year limitations period after the date “the misappropriation [of trade secrets]
was discovered or reasonably should have been discovered.” In other words, the Indian
defendants contend that the three year period began to run on September 8, 2008, and expired
three years later. The plaintiffs argue that certain of their claims are contractual and are entitled
to the general six-year period. See 12 V.S.A. § 511.
For purposes of the motion, the court will use the three-year period. This is the shortest
possible period proposed by either side. If it is satisfied, then all claims are timely.
3. Filing
There is no dispute that the amended complaint was filed with the court in November
2009 and that the filing date is within three years of accrual of the cause of action. Under the so-
called Wesiburgh rule, the timely filing tolls the statue of limitations, but only if timely service
under the Rules of Civil Procedure was accomplished. Bessette v. Dep’t of Corr., 2007 VT 42,
¶ 5, 182 Vt. 1 (quoting Weisburgh v. McClure Newspapers, Inc., 136 Vt. 594, 595 (1979))).
4. Service of process
The remaining question—and the one on which the court’s ruling principally depends—is
whether plaintiffs effected service within the time permitted by law.
The time for completion of service is set by V.R.C.P. 3 which requires “[w]hen an action
is commenced by filing, summons and complaint must be served upon the defendant within 60
days after the filing of the complaint.” The 60-day clock for service started running on June 16,
2010. See The Children’s Store v. Cody Enters. Inc., 154 Vt. 634, 642 (1990) (the date of
“filing” of the complaint for purposes of Rule 3 is the date the court grants the motion allowing
plaintiff to amend its complaint and add a party defendant).
The 60-day period is subject to enlargement under Rule 6(b), which provides:
When by these rules or by a notice given thereunder or by order of court an act is
required or allowed to be done at or within a specified time, the court for cause
shown may at any time in its discretion (1) with or without motion or notice order
the period enlarged if request therefor is made before the expiration of the period
originally prescribed or as extended by a previous order, or (2) upon motion made
3
after the expiration of the specified period permit the act to be done where the
failure to act was the result of excusable neglect . . . .
Motions to enlarge the time for service are very common, even in cases which do not involve
defendants located outside of the United States. They are routinely granted. Plaintiffs did not
seek additional time to make service within the 60 days. The court, however, granted them
additional time after considering the difficulties they experienced in completing service abroad.
This is not the first time a statute of limitations issue has turned upon the timing of
service. In Bessette, the plaintiff filed suit within the limitations period, but did not receive a
waiver from one of the named defendants and, just before the limitations period expired, moved
for a Rule 6(b)(1) enlargement to complete service. 2007 VT 42, ¶ 3. The trial court granted the
enlargement, and the defendant was served within the enlarged time, but filed a motion to
dismiss on the grounds that the limitations period had run and that Rule 3’s 60-day period for
service is absolute. Id. ¶¶ 3–5. The trial court disagreed and kept the defendant in the case, and
the defendant took an interlocutory appeal. Id. ¶ 4. The Supreme Court affirmed, holding that
“service is still timely if completed within a properly awarded Rule 6 extension.” Id. ¶ 1.
The facts in this case are different than those in Bessette. Here, it is undisputed that
Mylan did not seek a Rule 6(b)(1) enlargement within 60 days of the court’s June 16, 2010 ruling
granting Mylan’s motion to amend. However, as noted above, on October 26, 2011 the court
denied the Indian defendants’ motion to dismiss, and gave Mylan until May 15, 2012 to
complete service. Mylan completed service before the court’s May 15, 2012 deadline.
The parties’ arguments boil down to a dispute over whether the court’s October 26, 2011
ruling was a “properly granted Rule 6 extension,” Bessette, 2007 VT 43, ¶ 10, that has the effect
of making service “timely” for the purposes of the Weisburgh rule. The Indian defendants argue,
and the court agrees, that the court’s ruling could not have been made pursuant to V.R.C.P.
6(b)(1), since Mylan did not request an enlargement within Rule 3’s 60-day period. The
questions thus become (1) whether the court’s ruling was appropriate under V.R.C.P. 6(b)(2),
and (2) whether the extension under Rule 6(b)(2) effectively made the service “timely” for the
purposes of the Weisburgh rule.
Whether the Court’s October 26, 2011 Ruling was Appropriate Under V.R.C.P. 6(b)(2)
The court now makes explicit what was implicit in its October 26, 2011 ruling: the
circumstances in this case justified an extension pursuant to Rule 6(b)(2). Initially, since Rule
6(b)(2) states that the court may grant an extension “upon motion,” a request for such an
extension should be made upon a formal application for an order. See 4B Wright, Miller, Kane
& Marcus, Federal Practice and Procedure: Civil 3d § 1165 (WL updated Apr. 2012). However,
4
Mylan’s opposition to the Indian defendants’ motion to dismiss effectively asserted an
excusable-neglect type argument. Pls.’ Opp’n to Cadila’s Mot. to Dismiss at 13 (arguing that the
delay in effecting service could not be attributed to a lack of diligence on Mylan’s part). In light
of that, and the procedural posture in which the service issue was raised, it makes sense to treat
Mylan’s opposition as a Rule 6(b)(2) motion.1 In any case, no purpose would be served by
requiring Mylan to submit a motion now, since the Indian defendants have (twice) raised and
been heard on the service-of-process/timing issue. See Carter v. U.S. Dep’t of Justice, No.
5:04cv306-RH, 2010 WL 1645048, at *2 (M.D. Fla. Apr. 20, 2010) (no purpose would be served
by requiring plaintiff to submit a Rule 6(b) motion where the defendant had already raised and
been heard on the timeliness issue).
Turning to the basis for a Rule 6(b)(2) extension, the court finds no reason to depart from
its October 26, 2011 ruling. Rule 6(b)(2) permits an extension where the failure to act was the
result of “excusable neglect.” Excusable neglect “is an equitable concept that must take account
of all relevant circumstances of the party’s failure to act within the required time.” 4B Federal
Practice & Procedure: Civil 3d § 1165.
Common sense indicates that among the most important factors are: the
possibility of prejudice to the other parties, the length of the applicant’s delay and
its impact on the proceeding, the reason for the delay and whether it was within
the control of the movant, and whether the movant has acted in good faith.
Id.; see also In re Town of Killington, 2003 VT 87A, ¶ 16, 176 Vt. 60 (reciting the same four
factors for evaluating excusable neglect under V.R.A.P. 4(d)). The most important factor is the
reason for the delay, including whether it was within the reasonable control of the movant. Town
of Killington, 2003 VT 87A, ¶ 16. As the court’s October 26, 2011 suggested, the reason for the
delay in completing service was due to circumstances largely outside of Mylan’s control,
including difficulties determining who might be representing the Indian defendants and then the
need to go through the lengthy process of service under the Hague Convention.2 Moreover, there
is no indication of any lack of good faith on Mylan’s part—indeed, Mylan was diligent in
attempting to effectuate service after June 16, 2010. Furthermore, although it took a long time to
complete service, the court can discern little prejudice to the other parties to the case, and the
1
Other courts have done the same under similar circumstances. E.g., Potter v. Health Care Auth., No. 03-1326-
WEB, 2006 WL 580986, at *4 n.4 (D. Kan. Mar. 8, 2006) (treating plaintiff’s response to a motion as the
“functional equivalent” of Rule 6(b) motion for extension on “excusable neglect” grounds); Card v. Estate of Casto,
No. CA-8157, 1990 WL 173365, at *2 (Ohio Ct. App. Nov. 5, 1990) (treating memorandum in opposition to motion
to dismiss as a Rule 6(b) motion to extend time). Of course, the better practice would be to file a formal motion
pursuant to V.R.C.P. 7.
2
The Indian defendants assert that Mylan did not even start the process of attempting service under the Hague
Convention until after the 60-day window had closed. The court does not see that as determinative in light of the
fact that Mylan was diligent in attempting to procure a waiver of service and, when that failed, in attempting service
under the Hague Convention.
5
impact on the proceedings has not been excessive, especially since the Indian defendants were
participating in the case (without waiving their objections, of course) anyway.3
The issues raised by the delay in obtaining service would be simpler if plaintiffs had filed a
motion under Rule 6(b)(1) within the 60 day period. Absent some unusual circumstances, the
extension of time to serve would have been automatic. Relief under rule 6(b)(2) subjects the
plaintiffs’ conduct to more scrutiny, but it does not bar relief entirely. If it did, there would be no
need to read past Rule 6(b)(1).
The circumstances which amount to excusable neglect include the difficulty of serving process in
a foreign country. India is no exception. As the record in this case indicates, service abroad
requires an attorney to operate in an unfamiliar legal environment. In this case, the plaintiffs
took reasonable measures to move the process along, including hiring an Indian law firm. The
court reviewed these measures and decided that they were reasonable and sincerely intended to
effect service. For this reason, the court allowed additional time to serve – many more months as
it happened than were actually needed. For these reasons, the court remains convinced that
extending the time to effect service under Rule 6(b)(2) remains the right thing to do.
Whether the Extension under Rule 6(b)(2) Made the Service “Timely”
The Indian defendants maintain that, unlike Rule 6(b)(1), Rule 6(b)(2) cannot be used to
toll the statute of limitations. They maintain that any extension of time for service under Rule
6(b) must be obtained before the expiry of both the statute of limitations and the time for service
allowed by Rule 3. Defendants argue that the court has no authority to revive an action
retroactively after it has become time-barred. The court disagrees, and concludes that a properly-
granted extension under either Rule 6(b)(1) or Rule 6(b)(2) makes service “timely” for the
purposes of the Weisburgh rule.
Although it deals with a Rule 6(b)(1) extension, the reasoning in Bessette applies with
equal force to Rule 6(b)(2) extensions. The Court in Bessette explicitly held that “service is still
timely if completed within a properly awarded Rule 6 extension.” 2007 VT 42, ¶ 1 (emphasis
added). The Court did not suggest that its holding might be limited to Rule 6(b)(1) extensions.
Indeed, the Court cited McGuire v. Turnbo, 137 F.3d 321, 324 (5th Cir. 1998), which held that
the statute of limitations was tolled because the plaintiff filed suit within the limitations period,
and completed service within an extension granted pursuant to F.R.C.P. 6(b)(2) on the basis of
excusable neglect. Moreover, the Court recognized that “[t]he time permitted for service once a
3
The Indian defendants pointed out at oral argument that in its October 26, 2011 ruling, the court remarked that the
evidence suggested that “the service failures stem from plaintiffs’ own oversight.” Decision on Pending Mots. at 2
(filed Oct. 26, 2011). The point of that comment was not that Mylan was not diligent in attempting service, but
instead that for various reasons—such as unpaid filing fees or incorrectly attested documents—many of the attempts
failed.
6
complaint has been filed . . . is a procedural matter controlled by the rules.” 2007 VT 42, ¶ 13.
This court can discern no basis for concluding that the time permitted for service is controlled by
only some of the rules. Authority from Vermont is in accord. See Zhang v. Smugglers’ Notch
Mgmt. Co., No. 2:11-cv-302, 2012 WL 2872841, at *3–*4 (D. Vt. July 12, 2012) (concluding
that the plaintiff had demonstrated excusable neglect and was entitled to enlargement under Rule
6(b)(2), thereby rendering moot the defendant’s motion to dismiss on statute-of-limitations
grounds); Lucus v. Wengert, No. 2:06-CV-169, 2007 WL 2792496, at *4 (D. Vt. Sept. 25, 2007)
(granting an extension pursuant to V.R.C.P. 6(b)(2), thereby making service timely and tolling
the statute of limitations).4
These rulings demonstrate the fundamental difference between the statutory limitations date and
the Rule 3 and Rule 6 time requirements. The statutory limitations period cannot be “fixed” by
the court. Despite the inroads made by subjective discovery and accrual rules, people and
organizations continue to rely upon the fixed periods of time in making decisions about keeping
records, maintaining insurance, and other measures related to potential liability. Few people
would rely upon the possibility that a delay in service will relieve them of liability. Instead, Rule
3 and Rule 6 are court-oriented “housekeeping” rules which relate to the management of lawsuits
within the legal system. They are subject to extension by the court precisely because they do not
confer substantive rights and expectations upon the parties. As long as the extension results from
a reasonable exercise of discretionary decision-making by the judge, it should have the same
effect upon the parties whether it issues under Rule 6(b)(1) or Rule 6(b)(2).
None of the cases the Indian defendants cite convince the court that it should reach a
contrary conclusion. In Fercenia v. Guiduli, the plaintiff filed her complaint within the
limitations period but only filed proof of Rule 4(l) service by waiver after the 60-day window
had closed. 2003 VT 50, ¶¶ 3–4, 175 Vt. 541 (mem.). Ruling on an interlocutory appeal, the
Supreme Court noted that Rule 4(l) makes service complete on the date the waiver is filed, and
concluded that timely service under Rule 3 was not completed. Id. ¶ 9. The plaintiff did not,
however, move for an extension of the filing deadline, and the trial court did not determine
whether the failure to file on time was the result of excusable neglect. The only rule considered
on appeal was Rule 3.
4
Authorities from other jurisdictions are also in accord. See Protective Life Ins. Co. v. Zaliagiris, No. 5:07 cv 112,
2008 WL 2180187, at *2 (W.D.N.C. May 22, 2008) (even though the time for service had expired, court found
excusable neglect and ordered, nunc pro tunc, that plaintiff be allowed additional time to serve defendants); Nelle v.
Ciotti, 151 F.R.D. 568, 569 (E.D. Pa. 1993) (“A party has the opportunity to show good cause after the 120 day
period has expired pursuant to filing a motion for enlargement of time under Rule 6(b)(2) of the Federal Rules of
Civil Procedure.”); Motsinger v. Flynt, 119 F.R.D. 373, 375 (M.D.N.C. 1988) (noting that “[m]otions for an
extension of the service time made after the running of the 120-day period require a considerably greater showing of
cause,” but not suggesting that such motions could not be granted in an appropriate case); Baden v. Craig-Hallum,
Inc., 115 F.R.D. 582, 585–87 (D. Minn. 1987) (concluding that there was good cause for the failure to effect service
within the 120-day period, and granting an extension even though plaintiff did not move for an extension within that
period).
7
In Peters v. Benways Transportation, the plaintiff filed her complaint within the statute of
limitations but failed to complete service upon the defendants within sixty days of filing. No.
2004-148 (Vt. Aug. 2004) (unpublished mem.), available at http://www.vermontjudiciary.org/d-
upeo/eo04148.aspx. Her only request for an extension came in the form of a Rule 6(b)(2)
motion, filed nine days after the statute of limitations had expired. The trial court granted the
Rule 6(b)(2) motion and the plaintiff served the defendants within the extended time period. The
defendants moved to dismiss, and the trial court granted the motion, ruling that the plaintiff
could not use Rule 6(b)(2) to extend the statutory deadline. The Supreme Court panel affirmed,
stating:
Here, both the sixty-day period for service and the statute of limitations had
passed before plaintiff sought an extension of time to serve defendants. Thus,
plaintiff’s lawsuit had not been perfected at the end of the applicable limitations
period. Plaintiff’s attempt to revive her complaint through a Rule 6(b)(2) motion
is unavailing. She seeks to apply the rule to extend the statutory limitations
period, but Rule 6(b) expressly limits its scope to enlarging the time provided by
court rules or orders. See Hammons v. Int’l Playtex, Inc., 676 F. Supp. 1114, 1118
(D. Wyo. 1988) (sixty-day period for service established by state court rule is
integral part of statute of limitations, and Rule 6(b)(2) may not be used to
circumvent statute of limitations); see also Cuocci v. Goetting, 812 F. Supp. 451,
453 (D. Vt. 1993) (plaintiffs’ failure to timely serve complaint resulted in running
of limitations period). We recognize that plaintiff could have filed her complaint
one day before the limitations period had run and still had sixty days to serve
defendants, but in this case the complaint was not perfected by timely service, and
the complaint could not be revived after the statutory limitations period had
expired.
However, the panel in Peters also stated that “even assuming Rule 6(b)(2) could be used to
extend the statutory limitations period, plaintiff has utterly failed to demonstrate excusable
neglect.” That basis for affirmance is independent of the Rule 6(b)(2) question, and thus there
was no need for the Bessette Court to overrule Peters.5
There was a similar independent basis for the results in Hammons v. International
Playtex, Inc. (cited by the panel in Peters) and in Gero v. Moore, No. 416-9-06 Wmcv, 2007 WL
5826061 (Vt. Super. Ct. May 11, 2007) (Wesley, J.) (adopting the reasoning in Peters, but
5
To the extent there is a need to reconcile Peters and Bessette, the court notes that the rationale in the section of
Peters block-quoted above was that the scope of Rule 6(b) is limited to enlarging the time provided by court rules
and orders. Bessette acknowledges that Rule 6(b) is limited to acts controlled by the procedural rules or by the
court, but explicitly rejects the theory that an extension under Rule 6(b) impermissibly enlarges the limitation
period. 2007 VT 42, ¶¶ 11–13.
8
decided before Bessette). In Ostheimer v. Stark—also cited by the Indian defendants—the trial
court actually denied the plaintiff’s Rule 6(b)(2) motion, and the Supreme Court panel did not
need to opine on the effect of a properly granted Rule 6(b)(2) extension because it agreed with
the trial court’s conclusion that there had been no excusable neglect that would warrant one. No.
2003-349 (Vt. Jan. 2004) (unpublished mem.), available at http://www.vermontjudiciary.org/d-
upeo/eo03349.aspx. Likewise in Cuocci v. Goetting (also cited by the panel in Peters), the court
concluded that the failure to serve did not result from any excusable neglect, but was instead
only “garden-variety oversight.” 812 F. Supp. 451, 453 (D. Vt. 1993).6
In Hutchins v. Lerch, the plaintiff filed her complaint within the applicable limitations
period, and, after failing to serve the complaint upon the Canadian defendant within the 60-day
window, filed motions to enlarge the time to serve. No. 2005-172 (Vt. Oct. 2005) (unpublished
mem.), available at http://www.vermontjudiciary.org/d-upeo/eo05-172.S.aspx. The trial court
granted each of the motions to enlarge, and the plaintiff eventually completed service within the
enlarged time. The defendant moved to dismiss the action, arguing that timely service within 60
days of filing was necessary to toll the statute of limitations. The trial court granted the motion,
and the plaintiff appealed. The Supreme Court panel affirmed, citing Fercenia and going on to
reason as follows:
In light of the foregoing, the conclusion is inescapable that plaintiff’s
filing of the complaint was ineffective to toll the statute, which expired when
plaintiff failed to effect timely service of process within sixty days of the filing.
Although plaintiff asserts that her case is distinguishable because she requested
and received several extensions of time to effect service, the argument is
unpersuasive. As the trial court here observed, plaintiff cannot claim that she
received permission to extend the statute of limitations or that she relied to her
detriment on such rulings when the court, in granting the motions, was unaware of
any statute of limitations issue. Plaintiff also relies on Weisburgh, one of the cases
cited in Fercenia, where this Court—in holding that the plaintiff’s complaint was
time-barred for failure to effect service of process within the requisite time
period—observed that “[n]o motion to enlarge the time for completing service
under V.R.C.P. 6 was made within the period.” Weisburgh, 136 Vt. at 595. We
are doubtful whether this dicta in Weisburgh implies that a motion to enlarge time
for service can actually enlarge the time prescribed by a statute of limitations, but
note that plaintiff’s motion here was not filed “within the period” for service of
process. Accordingly, Weisburgh provides no basis to find that the complaint was
timely.
6
Notably, the only reason the Cuocci court articulated for its ruling was that excusable neglect was not present. The
court did not suggest that, even if the failure had been the result of excusable neglect, the grant of a Rule 6(b)(2)
motion would not toll the applicable statute of limitations.
9
Under the analysis above, this court finds that reasoning unpersuasive—neither Fercenia nor
Weisburgh stand for the proposition that a properly granted Rule 6(b)(2) enlargement cannot
make service timely for the purposes of the Weisburgh rule. Because Hutchins is not controlling
precedent, the court declines to follow it. See V.R.A.P. 33.1(d) (“An entry order decision issued
by a three-justice panel that is not published in the Vermont Reports may be cited as persuasive
authority but shall not be considered as controlling precedent.”).
The court concludes that its October 26, 2011 ruling was appropriate under Rule 6(b)(2),
and that the Rule 6(b)(2) extension does make Mylan’s service “timely” for the purposes of the
Weisburgh rule. Accordingly, because timely service under the Rules was accomplished, the
three-year limitations period established by 12 V.S.A. § 523 was tolled on November 30, 2009—
the date that Mylan filed its First Amended Complaint. Having reached this conclusion, the
court does not reach any of Mylan’s other arguments on the topic of the statute of limitations.
II. Whether Counts III and VI against the Indian Defendants are Displaced by 9 V.S.A. § 4607(a)
The Indian defendants have a second basis—independent of the statute of limitations—
upon which they seek dismissal of Counts III (interference with contract) and VI (unfair
competition) against them. The Indian defendants contend that those two counts are predicated
on the misappropriation of trade secrets, and are therefore entirely displaced by 9 V.S.A.
§ 4607(a).7 In opposition, Mylan maintains that its tortious interference claim is not based on
trade secret misappropriation, but is rather based on contract, and thus comes within
§ 4607(b)(1). Mylan also contends that Count III alleges two breaches: Dr. Govil’s breach of his
contractual duty not to disclose Mylan’s trade secrets, but also his breach of his non-compete
agreement. According to Mylan, Dr. Govil’s breach of his non-compete agreement is unrelated
to whether he disclosed or misused Mylan’s information, and thus that portion of Count III
comes within § 4607(b)(2). As to Count VI, Mylan maintains that its unfair competition claim is
not premised upon misappropriation of trade secrets, but rather arises out of Dr. Govil’s breach
of his contract and fiduciary duties to Plaintiffs. The Indian defendants reply that only the use of
7
Section 4607 of Title 9 provides as follows:
(a) Except as provided in subsection (b) of this section, this chapter displaces conflicting tort,
restitutionary, and any other law of this state providing civil remedies for misappropriation of a
trade secret.
(b) This chapter does not affect:
(1) contractual remedies, whether or not based upon misappropriation of a trade secret;
(2) other civil remedies that are not based upon misappropriation of a trade secret; or
(3) criminal remedies, whether or not based upon misappropriation of a trade secret.
10
Mylan’s trade secrets could make Cadila’s competition with Mylan unfair or Cadila’s
cooperation with Dr. Govil tortious.
The court cannot conclude that this count comes within § 4607(b)(1). It is true that the
claim involves a contract—namely, the trade secrets and non-compete contract between Dr.
Govil and Mylan. To the extent that Count III is asserted against the Indian defendants,
however, they were not parties to that contract. The gist of Mylan’s claim against the Indian
defendants is that they hired Dr. Govil away from Mylan with knowledge that doing so would
put Dr. Govil in breach of his contract. That is not a contract claim with contract remedies. It is
(as the name of the cause of action suggests) a tort claim. The court therefore rejects Mylan’s
claim that Count III comes within § 4607(b)(1) because it is “based on contract.”
However, to the extent that Count III involves a claim that the Indian defendants
tortuously interfered with Dr. Govil’s contract not to compete with Mylan, that claim is not
“based upon misappropriation of a trade secret.” 9 V.S.A. § 4607(b)(2). The alleged
interference with that provision of the contract did not necessarily have anything to do with trade
secrets. To the extent that Count VI involves alleged conduct that is similarly detached from
trade secrets, it is also not barred by § 4607(a).
ORDER
Pankaj Patel, Sunil Roy, and Cadila Healthcare, Ltd.’s motion for judgment on the
pleadings is denied.
Dated at Burlington this 9 day of August, 2012.
______________________________
Geoffrey W. Crawford
Superior Court Judge
11