IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
INCYTE CORPORATION, )
)
Plaintiff, )
)
v. ) C.A. No. N15C-09-055 MMJ CCLD
)
FLEXUS BIOSCIENCES, INC., )
TERRY ROSEN, and JUAN JAEN, )
)
Defendants. )
Submitted: May 19, 2016
Decided: May 26, 2016
On Defendants’ Motion for Reargument
DENIED
ORDER
Richard H. Cross, Jr., Esq. (Argued), Joseph Grey, Esq., Christopher P. Simon,
Esq., Cross & Simon, LLC, Attorneys for Plaintiff
Jonathan A. Patchen, Esq. (Argued), Taylor & Company Law Offices, LLP,
Patricia Carson, Esq. (Argued), Daniel Forchheimer, Esq., Leora Ben-Ami, Esq.,
Ashley Borom, Esq., Kirkland & Ellis LLP, Gregory V. Varallo, Esq., C. Malcolm
Cochran, Esq., Katharine Lester Mowery, Esq., Richards Layton & Finger, P.A.,
Attorneys for Defendants.
JOHNSTON, J.
1. By Opinion dated April 19, 2016, the Court granted in part and denied
in part Defendants’ Motion to Dismiss. The Court held:
Counts II and V of the Complaint directly
implicate the Confidentiality Agreement between Incyte
and Dr. Fridman. These counts raise allegations of
substantially interdependent and concerted misconduct
by both Defendants (nonsignatories) and Dr. Fridman (a
signatory). Arbitration is appropriate as to these counts
because Incyte’s claims against Defendants arise out of
and relate directly to the Confidentiality Agreement
between Incyte and Dr. Fridman. The doctrine of
equitable estoppels applies. Thus, the Court lacks
jurisdiction over these claims. Counts II and V must be
dismissed.
Counts I, III, and IV of the Complaint do not relate
directly to the Confidentiality Agreement. The resolution
of these claims does not depend on parsing out the terms
of the agreement. Counts I, III, and IV will not be
dismissed.
Resolution of Counts I, III, and IV of the
Complaint is not dependent on a determination of
whether Dr. Fridman breached the Confidentiality
Agreement. Speculative reputational damage, and a mere
possibility of inconsistent results from a possible future
arbitration, do not warrant dismissal pursuant to Rule
12(b)(7). Dr. Fridman is neither a necessary nor
indispensable party to the remaining Counts, and the case
may proceed in his absence.1
2. Defendants have moved for reargument. Defendants contend that the
Court overlooked the second independent equitable estoppel test for Counts I, III
1
Incyte Corp. v. Flexus Biosciences, Inc., 2016 WL 1735485, at *10 (Del. Super.).
2
and IV. That test provides that equitable estoppel is warranted to dismiss a claim
in favor of arbitration when the signatory to the contract containing an arbitration
clause raises allegations of substantially interdependent and concerted misconduct
by both the nonsignatory and one or more of the signatories to the contract.
Defendants also assert that Count IV (Conspiracy) should be dismissed because it
tracks the language of Count V (Aiding and Abetting), and Count V was
dismissed.
3. The findings of the Court demonstrate consideration of the principle set
forth in the second prong of the equitable estoppel test. The Court held that the
claims set forth in Counts I (Misappropriation of Trade Secrets), III (Unjust
Enrichment), and IV (Conspiracy) may be determined without looking to the
Confidentiality Agreement. The mere existence of a contract does not compel the
conclusion that disputes among the contracting parties and a nonsignatory must be
resolved through mandatory arbitration. The second prong test cannot be
reasonably read as requiring nonsignatories to be hailed into arbitration on the
basis of allegations of “substantially interdependent and concerted misconduct”
that can be proven or disproved without reference to the contract.
4. The Court clearly considered whether the averred misconduct was
substantially interdependent and concerted “by both the nonsignatory and one or
more of the signatories to the contract.” This prong specifically refers to the
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contract. As the Court ruled, resolution of Counts I, III and IV “is not dependent
on parsing out the terms of the Confidentiality Agreement.”
5. A prerequisite to liability under Count V (Aiding and Abetting) is a
finding of an underlying breach of contract. Therefore, in this case, equitable
estoppel applies to aiding and abetting a breach of the contract containing a
mandatory arbitration clause. In contrast, Count IV (Conspiracy) resulting in
damage to business interests may be determined without reference to the
Confidentially Agreement.
6. The purpose of moving for reargument is to seek reconsideration of
findings of fact, conclusions of law, or judgment of law. 2 Reargument usually will
be denied unless the moving party demonstrates that the Court overlooked a
precedent or legal principle that would have a controlling effect, or that it has
misapprehended the law or the facts in a manner affecting the outcome of the
decision.3 “A motion for reargument should not be used merely to rehash the
arguments already decided by the court.” 4
7. The Court has reviewed and considered the parties’ written submissions
and arguments. The Court did not overlook a controlling precedent or legal
principle, or misapprehend the law or the facts in a manner affecting the outcome
of the decision.
2
Hessler, Inc. v. Farrell, 260 A.2d 701, 702 (Del. 1969).
3
Ferguson v. Vakili, 2005 WL 628026, at *1 (Del. Super.).
4
Wilmington Trust Co. v. Nix, 2002 WL 356371, at *1 (Del. Super.).
4
THEREFORE, Defendants’ Motion for Reargument is hereby DENIED.
IT IS SO ORDERED.
/s/
The Honorable Mary M. Johnston
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