Genesis Bio Pharm v. Chiron Corp

Opinions of the United
2002 Decisions States Court of Appeals
for the Third Circuit
1-10-2002
Genesis Bio Pharm v. Chiron Corp
Precedential or Non-Precedential:
Docket 0-2893
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
Nos. 00-2893 & 00-2981
___________
GENESIS BIO-PHARMACEUTICALS, INC.,
Appellant in No. 00-2893
v.
CHIRON CORPORATION; BEHRINGWERKE A.G.; CHIRON
BEHRINGWERKE GMBH & CO.; BIOLOGICAL AND POPULAR CULTURE,
INC.; CHIRON BEHRING GMBH & CO.; HOECHST A.G.
___________
GENESIS BIO-PHARMACEUTICALS, INC.
v.
CHIRON CORPORATION; BEHRINGWERKE A.G.; CHIRON
BEHRINGWERKE GMBH & CO.; BIOLOGICAL AND POPULAR CULTURE,
INC.; CHIRON BEHRING GMBH & CO.; HOECHST A.G.
CHIRON CORPORATION; CHIRON BEHRING GMBH & CO.,
Appellants in No. 00-2981
___________
On Appeal from the United States District Court
for the District of New Jersey
District Court Judge: The Honorable Katharine S. Hayden
(D.C. Civil No. 98-02445)
___________
Argued November 26, 2001
Before: ROTH, FUENTES and WEIS, Circuit Judges.
(Filed: January 10, 2002)
W. Michael Garner, Esq. (Argued)
Cheryl A. Stanton, Esq.
Dady & Garner
80 South Eighth Street
4000 IDS Center
Minneapolis, MN 55402
Counsel for Appellant/Cross-Appellee,
Genesis Bio-Pharmaceuticals, Inc.
Robert C. Epstein, Esq. (Argued)
Jacqueline Greenberg, Esq.
Porzio, Bromberg & Newman
100 Southgate Parkway
Morristown, NJ 07962
Counsel for Appellees/Cross-Appellants,
Chiron Corporation and Chiron Behring GMBH & Co.
________________________
MEMORANDUM OPINION
________________________
FUENTES, Circuit Judge:
In this matter, plaintiff Genesis Bio-Pharmaceuticals, Inc.
("Genesis"), a New
Jersey-based distributor of pharmaceutical products alleges that
defendants Chiron
Corporation ("Chiron"), a California company and Chiron Behring, a German
company,
breached an oral agreement for the distribution of a rabies vaccine in the
United States.
Genesis claims that the oral agreement was made between itself and Hoechst
A.G
("Hoechst"), at a meeting in Frankfurt, Germany and that, at the time the
agreement was
made, Chiron, a joint venturer with Chiron Behring, had authorized
Hoechst to act in its
behalf.
Following a series of motions, the District Court, among other
decisions: (1)
dismissed the complaint against Hoechst for lack of personal jurisdiction,
(2) denied
Chiron Behring's motion to dismiss for lack of personal jurisdiction, and,
(3) dismissed
the complaint against Chiron and Chiron Behring, holding that the Parol
Evidence Rule
barred Genesis' claims. The parties cross-appeal. Discerning no error, we
will affirm the
rulings of the District Court.
I.
The relevant facts are as follows. Hoechst, a German health care
company, is the
manufacturer of RabAvert, a rabies vaccine. Sometime between 1989 and
1990, Genesis
began to perform marketing consulting work for Hoechst, for the purpose of
becoming
the exclusive U.S. distributor of RabAvert.
In February, 1996, Hoechst entered into a joint venture agreement
with Chiron. As
part of this agreement, Hoechst transferred its entire vaccine business,
including the
right to produce and distribute RabAvert, to "Chiron Behring," the joint
venture entity.
Chiron Behring was incorporated and located in Germany. The joint venture
agreement
gave Chiron ultimate decision-making power with regard to all business
decisions
concerning the distribution of RabAvert. Shortly thereafter, Hoechst
informed Genesis
that Chiron was taking over the distribution of RabAvert in the U.S. At
this time, Genesis
began to demand compensation for its consulting services.
On April 30, 1996, Genesis' president Jerrold Grossman met with
representatives
from Chiron to discuss a potential distributor relationship. No agreement
was reached at
this meeting.
On June 27, 1996, Grossman and Genesis' attorney met with Hoechst
executives
and attorneys in Frankfurt, Germany and reached a settlement agreement
(the "Settlement
Agreement"). The parties agreed that, among other things;
a) Hoechst would pay $380,000 to Genesis to release Hoechst
from
"any and all claims which Genesis has... relating in any way to
any
and all relationships between the Parties [to the Settlement
Agreement], for all time in which the Parties have had a
relationship."
b) Hoechst would use "reasonable and diligent efforts...to
assist
Genesis in 'negotiating and concluding' an agreement with Chiron
and the Joint Venture [Chiron Behring] for the distribution by
Genesis of ...RabAvert, in the U.S. on terms that are outlined in
the
annexed memoranda from Chiron to [Hoechst]...(with the
understanding that Chiron has strategic leadership of the joint
venture [Chiron Behring])," and that,
c) "[t]his Agreement contains the entire agreement of the
parties with
respect to the subject matter hereof, and all prior
understandings,
discussions and representations are hereby merged herein." (the
"complete integration clause").
Genesis maintains that it was induced to enter into the Settlement
Agreement by
Hoechst's representation that it had authority to negotiate on behalf of
Chiron. In its
complaint, Genesis alleges that the Hoechst representatives began the
meeting by
projecting onto a screen, two memos that Chiron sent Hoechst, proposing to
grant
Genesis certain distribution rights to RabAvert and other vaccines.
The first memo, dated May 30, 1996, stated that Chiron "would be
prepared
to...sell Genesis all Chiron vaccines, including rabies vaccine, at a
price equal to the
'best' distributor price...for a 5 year period," and "[w]ork with Genesis
to 'bid' on
contracts for rabies vaccines."
The second memo, dated June 21, 1996, stated that "Chiron has offered
to sell
Genesis...the complete line of Chiron vaccines at the best price offered
to vaccine
distributors in the U.S. In addition, we would work with Genesis on "bid
requests"...with
Genesis receiving a price...equal to the best price given to any other
vaccine
distributor...for that bid."
Soon after the Settlement Agreement meeting, Grossman traveled to
California
ostensibly, to close the deal, and to discuss a distributorship with
Chiron. Grossman met
only briefly with Chiron's president, who avoided all discussion of a
distribution
agreement. According to Grossman, Chiron refused to meet again with
Grossman,
refused to respond to Grossman's request for confirmation of an agreement
with it, and
claimed that Hoechst had "no authority to speak or negotiate on behalf of
Chiron or
represent Chiron in any way."
On March 9, 1998, Genesis filed suit in the Superior Court of New
Jersey against
Chiron, Hoechst, Chiron Behring, and Bio-Pop. Specifically, the suit
sought to enforce
the alleged Distribution Agreement, or alternatively to recover damages
for, among other
things, breach of contract, fraud, civil conspiracy and tortious
interference. On May 22,
1998, Chiron removed the case to federal district court in New Jersey.
Thereafter,
Hoechst moved to dismiss the complaint for lack of personal jurisdiction,
and for failure
to state a claim, contending that the Parol Evidence Rule barred Genesis'
claims. Chiron
Behring moved to dismiss the complaint for lack of personal jurisdiction.
Chiron and
Chiron Behring also joined in Hoechst's motion to dismiss based on the
Parol Evidence
Rule and filed a separate motion to dismiss on the additional grounds of
judicial estoppel
and absence of an indispensable party.
The District Court first disposed of Genesis' claims against Hoechst
by granting
Hoechst's motion to dismiss for lack of personal jurisdiction, noting
that "Hoechst is a
German company, and the settlement agreement was negotiated and executed
in
Germany, and no allegation evidence demonstrated that Hoechst ever entered
New Jersey
or directed activities there."
After further briefing and oral argument, the District Court denied
Chiron
Behring's jurisdictional motion, determining that Chiron Behring's "focal
role as the
manufacturer of the vaccine" in question, and their close corporate
relation with Chiron
allowed the court to exercise personal jurisdiction over Chiron Behring.
However, the
court dismissed the complaint against both Chiron and the Chiron Behring,
holding that
the Parol Evidence Rule excluded any evidence that Chiron and/or Chiron
Behring had
authorized Hoechst to negotiate an exclusive distribution agreement with
Genesis on
their behalf. The Court also denied Chiron and Chiron Behring's motion to
dismiss on
grounds of judicial estoppel, and on the absence of an indispensable party
claim.
Genesis appeals the District Court's dismissal of its claims under
the Parol
Evidence Rule. Chiron and Chiron Behring appeal the District Court's
denial of their
motion to dismiss against Chiron Behring for lack of personal jurisdiction
decision and
the denial of their judicial estoppel and indispensable party motions.
II.
A.
We must first consider the District Court's denial of Chiron
Behring's motion to
dismiss based on lack of personal jurisdiction. We review a District
Court's decisions
regarding personal jurisdiction de novo. See, Vetrotex Certainteed Corp.
v. Consolidated
Fiber Glass Products Co. 75 F.3d 147, 150 (3d Cir. 1996) (holding that
"whether
personal jurisdiction may be exercised over an out-of-state defendant is a
question of
law, and this court's review is therefore plenary.").
New Jersey's long-arm statute, N. J. Court Rule 4:4-4, has been
interpreted as
extending jurisdiction over non-residents "to the uttermost limits
permitted by the U.S.
Constitution." Charles Gendler Co. v. Telecom Equity Co. 102 N.J. 460, 469
(1980).
Under the Due Process Clause of the Fourteenth Amendment, personal
jurisdiction
depends upon "the relationship among the defendant, the forum, and the
litigation."
Shaffer v. Heitner 433 U.S. 186, 204 (1977).
Here, we find that Chiron Behring is subject to New Jersey personal
jurisdiction
because of the nature of its corporate relationship with Chiron
Corporation. New Jersey
courts have determined that a parent corporation's contacts with the forum
state may
justify exercise of personal jurisdiction over its (wholly-owned) non-
resident subsidiary.
See, Moon Carrier v. Reliance Insurance, 379 A.2d 517 (N.J. Super. 1977).
The relevant
jurisdictional inquiry is "whether the [subsidiary] and the parent...so
operate as single
entity, or unified and cohesive economic unit, that when the parent is
within venue of
court, the [subsidiary] is also within court's jurisdiction; [this]
'single entity' test requires
that a parent over which the court has jurisdiction so control and
dominate a subsidiary as
in effect to disregard the latter's independent corporate existence." Moon
Carrier v.
Reliance Insurance, 379 A.2d 517 (N.J. Super. 1977). This court has also
used the single
entity test. See, e.g., Lucas v. Gulf & Western Industries, Inc., 666 F.2d
800 (Cir. 3,
1981).
Chiron is a multi-national health care company that does business
within the State
of New Jersey. On the basis of these extensive contacts with the state,
Chiron has waived
any claims it might have with regards to personal jurisdiction. As the
attorney for both
Chiron and Chiron Behring admitted at oral argument, Chiron Behring is a
wholly-
owned subsidiary of Chiron Corporation. There is ample evidence in the
record that
Chiron dominates Chiron Behring and that the two are acting as a single
entity, at least in
this matter. For instance, Chiron has ultimate decision making power with
regard to all
business decisions concerning Chiron Behring (including the distribution
of RabAvert).
Additionally, both share the same legal counsel in this litigation.
Therefore, because of
the nature of the relationship between the parent corporation, Chiron, and
its wholly-
owned subsidiary, Chiron Behring, attributional jurisdiction attaches, and
the New Jersey
District Court acted properly in exercising personal jurisdiction over
Chiron Behring.
See, Lucas v. Gulf & Western Industries, Inc., 666 F.2d 800 (Cir. 3,
1981) (indicating
factors that may have a bearing on attributing the jurisdiction of a
subsidiary to a parent
corporation); Kuehne & Nagel v. Geosource, Inc., 874 F.2d 283 (5th Cir.
1989) (same).
B.
We next consider the District Court's determination that Genesis
failed to state a
claim upon which relief could be granted under FRCP 12(b)(6). The district
judge
granted the defendant's motion to dismiss, finding that the parol evidence
rule barred
Genesis' evidence of a completed distribution agreement. For the reasons
stated below,
we agree with the district judge and will affirm her ruling.
Genesis alleges that there were two aspects to their Settlement
Agreement with
Hoechst. The first, clearly documented in the Agreement, was Hoechst's
$380,000
payment to Genesis for its past efforts. The second was an alleged
distribution agreement
with Chiron and Chiron Behring. Genesis claims that Chiron and Chiron
Behring had
[verbally] authorized Hoechst to negotiate at the Frankfurt meeting on
their behalf, and
that they left that meeting with the essential terms of a distribution
agreement hammered
out. We agree with the district judge that the parol evidence rule
prohibits our
consideration of this evidence . See, Genesis Bio-Pharmaceuticals v.
Chiron Corp. D.C.
Civil No. 98-2445 (D.N.J. 2000) (determining that if such evidence were
allowed into
the record, it would allow for the contradiction of the written settlement
agreement by
"the story of the negotiation" of [the] written contract "as told by the
litigant" (quoting
Advanced Medical, Inc. v. Arden Medical Sys., Inc., 955 F.2d 188, 195 (3d
Cir. 1992))).
The parol evidence rule provides that any previous oral
representations or
agreements, offered to "vary, modify, or supersede the written contract,
[are]
inadmissible in evidence." Fr. Winkler KG v. Stoller, 839 F.2d 1002 (3d
Cir. 1988); See
also, Compton Press, Inc. Employees' Profit Sharing Retirement Plan v.
Granada
Investments, Inc., 1992 WL 566329 (D.N.J.,1992). (instructing that "the
parole evidence
rule bars, as a matter of substantive contract law, any attempt to offer
oral evidence to
vary the terms of a fully integrated written contract").
The Settlement Agreement in this matter is clearly fully integrated.
See,
Appellant's Appendix, at A52 (stating that "this Agreement contains the
entire agreement
of the parties with respect to the subject matter hereof, an all prior
understanding,
discussions and representations are hereby merged within."). Furthermore,
the plain
language of the Settlement Agreement requires that Hoechst use "reasonable
and diligent
efforts...to assist Genesis in negotiating and concluding an agreement
with [Chiron and
Chiron Behring] for the distribution by Genesis of Chiron vaccine
products." Later in the
same paragraph there is a disclaimer that Hoechst's promise to assist
Genesis is made
"with the understanding that Chiron has strategic leadership of the joint
venture."
If Hoechst had truly been "authorized" to negotiate a distribution
agreement on
behalf of the others, as Genesis contends, then the language in the
Settlement Agreement
modifying Hoechst's promise "with the understanding that Chiron has
strategic
leadership of the joint venture" becomes meaningless. Furthermore, if the
result of the
Frankfurt meeting was "a distribution agreement going forward" between
Genesis,
Chiron and Chiron Behring, then the language in the Settlement Agreement
that Hoechst
would subsequently further "assist" Genesis in "negotiating (and
concluding)" a
distribution agreement with those same parties is superfluous.
The only written evidence that Genesis offers in support of its
allegation that it
had negotiated a binding distribution agreement with Chiron are the two
memos from
Chiron to Hoechst. However, these documents make no specific mention of
any
authorization by Chiron and Chiron Behring for Hoechst to conclude a
multi-million
dollar distribution agreement in their absence. Even when viewing these
memos in the
light most favorable to Genesis, they require us to draw inferences that
are contradicted
by the plain language of the Settlement Agreement. We have previously
determined that
this court is not obliged to accept as true, even at this preliminary
stage, such
"unsupported conclusions and unwarranted inferences." See, City of
Pittsburgh, 147 F.3d
at 263 (3d Cir. 1998). Accordingly, we affirm the ruling of the District
Court dismissing
this matter for failure to state a claim upon which relief can be granted.
In light of this
determination, we need not reach Chiron and Chiron Behring's motions to
dismiss the
complaint based on the judicial estoppel doctrine or the absence of an
indispensable
party.
III.
For the reasons set forth above, we affirm the ruling of the District
Court denying
Chiron Behring's motion to dismiss based on lack of personal jurisdiction.
However, we
grant Chiron and Chiron Behring's motion to dismiss based on the Parol
Evidence Rule.
_____________________________
TO THE CLERK OF THE COURT:
Kindly file the foregoing Opinion.
/s/ Julio M. Fuentes
Circuit Judge