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Concordia Pharmaceuticals Inc v. Lazarus Pharmaceuticals Inc

United States District Court, D. South Carolina, Greenville Division

June 17, 2019

Concordia Pharmaceuticals Inc., S.A.R.L., Advanz Pharma Corp f/k/a Concordia International Corp., and Concordia Pharmaceuticals U.S. Inc., Plaintiffs and Counter Defendants,
v.
Lazarus Pharmaceuticals, Inc., Mark Thompson, and Jean Paul Laurin, Defendants and Counter Claimants. Concordia Pharmaceuticals Inc. and Concordia Pharmaceuticals U.S. Inc., Plaintiffs,
v.
Christopher Blake Kelley, Defendant.

          OPINION & ORDER

          HENRY M. HERLONG, JR., SENIOR UNITED STATES DISTRICT JUDGE

         This matter is before the court with the Report and Recommendation of United States Magistrate Judge Jacquelyn D. Austin, made in accordance with 28 U.S.C. § 636(b) and Local Civil Rule 73.02 of the District of South Carolina.[1] Concordia Pharmaceuticals, Inc., Advanz Pharma Corp. (f/k/a/ Concordia International Corp.), and Concordia Pharmaceuticals (US), Inc. (collectively “Concordia”), plaintiffs and counter defendants in Civil Action Number 6:18-1658-HMH-JDA, filed a motion to dismiss and strike counterclaims, pursuant to Rules 12(b)(6) and 12(f) of the Federal Rules of Civil Procedure. (Mot. Dismiss, ECF No. 102.) Magistrate Judge Austin recommends granting Concordia's motion to dismiss and strike counterclaims, denying Defendants' request to amend their answer, and denying Defendants' motion for oral argument. For the reasons set forth below, the court grants Concordia's motion to dismiss, dismisses Concordia's motion to strike as moot, and denies Defendants' motion for oral argument.

         I. Factual and Procedural History

         This action arises out of Lazarus Pharmaceuticals, Inc.'s (“Lazarus”) manufacturing and selling of a pharmaceutical phenobarbital and belladonna alkaloids (“PBA”) elixir used for the treatment of irritable bowel syndrome. (Am. Compl. ¶¶ 1, 19, ECF No. 80.) Concordia distributes and markets Donnatal pharmaceutical products, which also contain PBA, to treat irritable bowel syndrome. (Id. ¶¶ 15-17, ECF No. 80.) Concordia alleges that Lazarus is “seeking to exploit the success of Donnatal Elixir by manufacturing and marketing a ‘knock-off' PBA elixir while aided by intellectual property wrongfully obtained from Plaintiffs.” (Id. ¶ 19, ECF No. 80.) Defendant Mark Thompson (“Thompson”) is the founder and former chief executive officer of Concordia International. (Id. ¶¶ 72-73, ECF No. 80.) Defendant Jean Paul Laurin (“Laurin”) is the former vice president of Concordia International. (Id. 75, ECF No. 80.) After leaving Concordia, Thompson founded Lazarus, and Laurin is employed by Lazarus. (Am. Compl. ¶¶ 72-79, ECF No. 80.)

         Concordia filed an amended complaint on February 1, 2019. (Id., ECF No. 80.) On February 15, 2019, Defendants filed their answer and counterclaims against Concordia. (Answer & Countercl., ECF No. 94.) On March 8, 2019, Defendants filed their amended answer and counterclaims. (Am. Answer & Countercl., ECF No. 96.) Defendants allege counterclaims for (1) violation of the South Carolina Unfair Trade Practices Act (“SCUTPA”), SC Code Ann. § 39-5-10, et seq., (2) abuse of process, and (3) bad faith claim of misappropriation of trade secrets. (Id. ¶¶ 349-71, ECF No. 96.) On March 29, 2019, Concordia filed a motion to dismiss and strike Defendants' counterclaims. (Mot. Dismiss, ECF No. 102.) On April 12, 2019, Defendants filed their response in opposition. (Resp. Opp'n Mot. Dismiss, ECF No. 104.) On April 19, 2019, Concordia filed its reply. (Reply, ECF No. 107.)

         On April 29, 2019, Defendants filed a motion requesting oral argument on Concordia's motion to dismiss. (Mot. Hr'g, ECF No. 108.) On May 3, 2019, Concordia filed a response in opposition. (Resp. Opp'n Mot. Hr'g, ECF No. 112.) Magistrate Judge Austin issued her Report and Recommendation on May 17, 2019. (R&R, generally, ECF No. 115.) Defendants filed objections to the Report and Recommendation on May 31, 2019. (Objs., ECF No. 121.) Concordia filed its reply to the objections on June 14, 2019. (Reply Objs., ECF No. 126.) These matters are now ripe for review.

         II. Discussion

         A. Standard of Review

         1. Motion to Dismiss

         Under Federal Rule of Civil Procedure 12(b)(6), “a motion to dismiss for failure to state a claim should not be granted unless it appears certain that the plaintiff can prove no set of facts which would support its claim and would entitle it to relief.” Mylan Lab., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). “In considering a motion to dismiss, the court should accept as true all well-pleaded allegations and should view the complaint in a light most favorable to the plaintiff.” Id.

         To withstand a Rule 12(b)(6) motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (internal quotation marks omitted). While a complaint “does not need [to allege] detailed factual allegations, ” pleadings that contain mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. “Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Iqbal, 556 U.S. at 678 (internal quotation marks omitted). Stated differently, “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).

         2. Motion to Strike

         Federal Rule of Civil Procedure 12(f) authorizes the court to “strike from the pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” When presented with a motion to strike, “the court must view the pleading under attack in a light most favorable to the pleader.” Clark v. Milam, 152 F.R.D. 66, 71 (S.D. W.Va. 1993). A motion to strike is a drastic remedy that is disfavored by courts. Waste Mgmt. Holdings v. Gilmore, 252 F.3d 316, 347 (4th Cir. 2001).

         B. ...


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