Case: 10-30211 Document: 00511587820 Page: 1 Date Filed: 08/30/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
August 30, 2011
No. 10-30211 Lyle W. Cayce
Clerk
ADMINISTRATORS OF THE TULANE EDUCATIONAL FUND, also known
as Tulane University; DAVID H. COY, Ph.D.,
Plaintiffs - Appellants
v.
IPSEN, S.A.; IPSEN PHARMA SAS, formerly named Societe de Conseils de
Recherche et d’applications Scientifiques SAS,
Defendants - Appellees
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:08-cv-5096
Before SMITH, BENAVIDES, and HAYNES, Circuit Judges.
PER CURIAM:*
The Administrators of the Tulane Educational Fund (“Tulane”) and Dr.
David Coy (collectively, “Plaintiffs”) brought suit against Ipsen, S.A. (“Ipsen”),
Ipsen Pharma SAS (“Ipsen Pharma”)1 and Biomeasure, Inc. (“Biomeasure”),
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
1
Ipsen Pharma is the successor-by-merger of Société Conseils, de Recherche et
d’Applications Scientifiques, S.A.S. (“SCRAS”), an originally named defendant. For purposes
of clarity, “Ipsen Pharma” will be used to refer both to SCRAS and Ipsen Pharma SAS.
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alleging breach of contract and other claims arising from Tulane’s dealings with
Biomeasure. Ipsen and Ipsen Pharma, two parent companies of Biomeasure,
moved for dismissal for a lack of personal jurisdiction, which the district court
granted after limited discovery. We AFFIRM.
I. Background
This dispute involves the rights to a drug called Taspoglutide, or BIM-
51077, which Plaintiffs assert could potentially be critical in treating diabetes.
Plaintiffs entered into an Amended and Restated Research Funding Agreement
(“RFA”) with Biomeasure in 1990.2 The agreement was amended in 1997 and
1998. Plaintiffs claim that Taspoglutide was developed by Dr. Coy pursuant to
research performed under the RFA. Tulane and Biomeasure filed a joint patent
application for certain compounds resulting from this research on December 7,
1998. Tulane and Biomeasure entered into an agreement under which
Biomeasure had exclusive license to compounds developed under the joint patent
(“Licensing Agreement”). On the same day that Tulane and Biomeasure filed
the patent application, Biomeasure filed another “Biomeasure only” application,
that did not include Tulane or Dr. Coy. The Biomeasure-only application
resulted in United States Patent #6,903,186 (the “‘186 patent”), which was
subsequently assigned to Ipsen Pharma. Ipsen Pharma then proceeded to grant
exclusive rights to develop and market BIM-51077 to a Swedish pharmaceutical
company. Plaintiffs claim that the patenting and licensing of the ‘186 patent
violated the terms of the RFA and the Licensing Agreement, and brought seven
related causes of action against Biomeasure, Ipsen Pharma, and Ipsen. Ipsen
and Ipsen Pharma moved to dismiss the claims against them for lack of personal
jurisdiction.
2
Neither Ipsen nor Ipsen Pharma was a party to the RFA.
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Biomeasure is a Massachusetts corporation, with its principal place of
business in Milford, Massachusetts. Biomeasure is a wholly-owned subsidiary
of SUTREPA, S.A.R.L. (“SUTREPA”), a French corporation that is, in turn,
jointly owned by Ipsen and Ipsen Pharma, two French companies having their
respective offices in France. Ipsen’s direct and indirect affiliates, including
Biomeasure, collectively comprise the “Ipsen Group” of companies. Through
SUTREPA, Ipsen and Ipsen Pharma indirectly own 100% of Biomeasure.
The district court initially determined that Plaintiffs failed to demonstrate
personal jurisdiction over Ipsen and Ipsen Pharma, but allowed them to conduct
limited jurisdictional discovery and file a supplemental memorandum. After
discovery and further briefing, the district court granted Ipsen and Ipsen
Pharma’s motions and dismissed the case without prejudice, ruling that
Plaintiffs still had not adequately demonstrated that personal jurisdiction
existed, with respect to both Ipsen and Ipsen Pharma. Plaintiffs timely
appealed.
II. Analysis
A. This court has jurisdiction to hear the appeal
Although neither party discusses whether the existence of patent issues
deprives this court of jurisdiction over Plaintiffs’ appeal, see 28 U.S.C. § 1295(a)
(stating that the Federal Circuit has exclusive jurisdiction over appeals arising
under § 1338), this court has a duty to consider its jurisdiction sua sponte. See
Christoff v. Bergeron Indus., Inc., 748 F.2d 297, 298 (5th Cir. 1984). We conclude
that we do have jurisdiction. Even where federal jurisdiction is solely premised
on 28 U.S.C. § 1338, we have held that we may determine whether the district
court’s exercise of jurisdiction was proper. See Scherbatskoy v. Halliburton Co.,
125 F.3d 288, 291 (5th Cir. 1997) (“[A] regional circuit court can determine its
own jurisdiction and supervise the exercise of jurisdiction by the district courts
within its circuit.”). Therefore, we have jurisdiction here, where the complaint
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only avers federal jurisdiction premised on diversity of citizenship, 28 U.S.C.
§ 1332, and the only issue before the court is whether the district court correctly
determined that it could not exercise personal jurisdiction over Ipsen and Ipsen
Pharma. We thus proceed to the merits of the appeal.
B. The district court correctly concluded that it does not have jurisdiction over
Ipsen and Ipsen Pharma
A court has personal jurisdiction over a nonresident defendant if the
exercise of jurisdiction is allowed by the forum state’s long-arm statute, and the
exercise of jurisdiction comports with due process. Dickson Marine Inc. v.
Panalpina, Inc., 179 F.3d 331, 336 (5th Cir. 1999). In Louisiana, these limits are
coextensive. Jackson v. Tanfoglio Giuseppe S.R.L., 615 F.3d 579, 584 (5th Cir.
2010).
As noted, the district court determined that it could not exercise
jurisdiction over Ipsen and Ipsen Pharma. Where the facts are undisputed,
review is de novo. See Walk Haydel & Assocs. v. Coastal Power Prod. Co., 517
F.3d 235, 241 (5th Cir. 2008). The allegations in the complaint must be taken
as true, except where controverted by affidavit, and the court should resolve
conflicts in favor of the party seeking to establish jurisdiction. See Thompson v.
Chrysler Motors Corp., 755 F.2d 1162, 1165 (5th Cir. 1985). To prevail at this
stage of litigation, Plaintiffs only need to make a prima facie showing of
jurisdiction. See Walk Haydel, 517 F.3d at 241; Alpine View Co. v. Atlas Copco
AB, 205 F.3d 208, 217 (5th Cir. 2000).
Plaintiffs’ jurisdictional arguments require a showing that Biomeasure’s
Louisiana contacts can be attributed to Ipsen or Ipsen Pharma.3 This court
3
Although Plaintiffs recite facts of other contacts that Ipsen has in Louisiana, they do
not argue in the body of their brief that Ipsen is subject to general jurisdiction in Louisiana,
and thus have waived that argument. Cf. Gen. Elec. Capital Corp. v. Acosta (In re Acosta), 406
F.3d 367, 374-75 (5th Cir. 2005) (“An assertion that a ruling is being appealed, in the absence
of any argument in the body of the brief supporting the appeal, does not preserve the issue on
appeal.”). Assuming arguendo the issue were preserved, the evidence shows that the contacts
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begins with a presumption that a subsidiary, even a wholly-owned subsidiary,
is independent of its parent company for jurisdictional purposes. See Dickson,
179 F.3d at 338. This presumption can be overcome by clear evidence. Id.
“Invariably such clear evidence requires an additional or a ‘plus’ factor,
‘something beyond the subsidiary’s mere presence within the bosom of the
corporate family.’” Id. (quoting Donatelli v. National Hockey League, 893 F.2d
459, 465 (1st Cir. 1990)).
1. Ipsen
Plaintiffs’ arguments to establish a “plus factor” over Biomeasure can be
divided into two basic categories: (1) Ipsen’s control over Biomeasure established
a prima facie alter-ego relationship, and (2) the public image of Biomeasure was
such that Biomeasure served as Ipsen’s agent, actually or impliedly.
a. Biomeasure is not an Alter-Ego of Ipsen
Plaintiffs argue that the degree of control that Ipsen exerts over
Biomeasure amounts to a prima facie showing of alter-ego.4 The district court
examined the two corporations’ relationship under the factors this court
established in Hargrave v. Fibreboard, 710 F.2d 1154, 1159-61 (5th Cir. 1983):
(1) [the] amount of stock owned by the parent of the subsidiary; (2)
did the two corporations have separate headquarters; (3) did they
are not Ipsen’s but rather those of another Ipsen subsidiary, Tercica, Inc. (“Tercica”).
Plaintiffs have made no showing that Tercica’s contacts should be imputed to Ipsen, which,
as discussed below, is required.
4
As noted above, Biomeasure is not directly owned by Ipsen, but rather is a subsidiary
of SUTREPA. Ipsen and Ipsen Pharma, relying on Alpine View, 205 F.3d at 218, and Kelly v.
Syria Shell Petroleum Development B.V., 213 F.3d 841, 856 (5th Cir. 2000), argue that Ipsen
and Ipsen Pharma can only be alter egos of Biomeasure to the extent that SUTREPA is an
alter ego of each. However, those cases construe Texas law. Plaintiffs point out that under
Louisiana law, at least one appellate court has suggested that where a showing of control
amounting to alter ego is shown, the court may disregard an intermediary corporation. See
Brown v. Auto. Cas. Ins. Co., 644 So.2d 723, 727 (La. Ct. App. 1994). Because we conclude that
Plaintiffs have not met their burden regardless of whether SUTREPA is accounted for, we
need not decide that issue here.
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have common officers and directors; (4) did they observe corporate
formalities; (5) did they maintain separate accounting systems; (6)
did the parent exercise complete authority over general policy; (7)
did the subsidiary exercise complete authority over daily operations.
Dickson, 179 F.3d at 339.5
In its analysis, the district court found that Ipsen indirectly owns all of
Biomeasure’s stock, that the two corporations have a number of common officers
and directors, and that Ipsen exercises substantial control over Biomeasure’s
general policy decisions. However, it determined that these factors did not
establish a prima facie showing of alter ego. Cf. Hargrave, 710 F.2d at 1160
(“We have noted often that 100% stock ownership and commonality of officers
and directors are not alone sufficient to establish an alter ego relationship
between two corporations.”); id. at 1161 (“The policymaking authority held and
exercised by [the parent corporation] was no more than that appropriate for a
5
Although Hargrave was suggested to the district court and our court as the
appropriate standard, and certainly is informative regarding imputed jurisdictional contacts
among corporations, the general use of the Hargrave factors in Louisiana diversity cases
should be discouraged. Where federal jurisdiction is based on diversity of citizenship, this
court applies the applicable state law to determine whether contacts should be imputed to a
parent company due to an alter-ego or agency relationship. See Jackson, 615 F.3d at 587
(noting that either Louisiana law or Italian law would apply in determining whether
companies were alter egos for purposes of establishing personal jurisdiction). The Hargrave
factors construe Texas state law. See Hargrave, 710 F.2d at 1161 & n.4 (“[W]e do not believe
that [the plaintiff] has demonstrated that [the parent company] possessed and exercised the
nature and degree of control over [the subsidiary] necessary to fuse the two corporations for
purposes of the Texas long-arm statute.”). This court has also adopted the Hargrave factors
in cases construing federal common law. See Dickson, 179 F.3d at 339. An alter ego analysis
in Louisiana diversity cases should be performed under factors enunciated under Louisiana
law. See Jackson, 615 F.3d at 587 (noting that factors to consider under Louisiana law include
“common ownership, directors and officers, employees, and offices; unified control; inadequate
capitalization; noncompliance with corporate formalities; centralized accounting; unclear
allocation of profits and losses between corporations; one corporation paying the salaries,
expenses or losses of another corporation; and undocumented transfers of funds between
entities”). However, we find that for the present purposes, the district court’s analysis is
sufficient for appellate review. Cf. Century Hotels v. United States, 952 F.2d 107, 110 n.4 (5th
Cir. 1992) (“State and federal alter ego tests are essentially the same.”).
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sole shareholder of a corporation, and certainly not enough to warrant the
extraterritorial exercise of jurisdiction over that shareholder[.]”).
Plaintiffs argue that the district court’s analysis understated the amount
of control that Ipsen has over Biomeasure, particularly its conclusion that Ipsen
does not exercise significant authority over Biomeasure’s day-to-day activities.
Significantly, Plaintiffs do not dispute the district court’s finding that
Biomeasure and Ipsen observed corporate formalities. Where a parent and
subsidiary observe corporate formalities, the plaintiff has a heavy burden to
establish a degree of control sufficient to impute the subsidiary’s jurisdictional
contacts to the parent. See Jackson, 615 F.3d at 588; Dalton v. R & W Marine,
Inc., 897 F.2d 1359, 1363 (5th Cir. 1990); see also Access Telecomm., Inc. v. MCI
Telecomms. Corp., 197 F.3d 694, 717 (5th Cir. 1999) (“[T]ypically, the corporate
independence of companies defeats the assertion of jurisdiction over one by using
contacts with the other.”).
As noted, the district court found that Ipsen exercises significant control
over Biomeasure’s general policies, but no more than appropriate for a wholly-
owned subsidiary. The evidence that Plaintiffs present to show Ipsen’s control
over Biomeasure can be divided into three categories: (1) evidence that Ipsen
oversees Biomeasure’s operations and research, (2) evidence that Ipsen exercises
some control over Biomeasure’s budgeting, and (3) evidence that Ipsen has an
established purpose for Biomeasure.
Regarding oversight, Plaintiffs have provided some evidence that various
“Operations Committees” within Ipsen have some degree of oversight over the
research and operations of its subsidiaries. However, the descriptions of the
these committees upon which Plaintiffs rely support the district court’s finding
that Ipsen controls Biomeasure’s general policies, not its day-to-day operations.
These groups “coordinat[e]” and make decisions regarding “organisational,
budget and technical matters.” The description of these groups is consistent
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with the district court’s observation that these groups “appear to provide general
guidance to the entire group of Ipsen affiliates.” See Hargrave, 710 F.2d at 1160
(stating that “selection of product lines, hiring and firing of [] officers, and
approval of sizeable capital investments” are matters of general policy).
Similarly, Plaintiffs’ argument that some Biomeasure employees are members
of these operating committees does not establish more than an appropriate level
of control over Biomeasure’s general policies.
Plaintiffs also argue that Ipsen controls day-to-day aspects of Biomeasure’s
budget. Notably, there is substantial evidence in the record that Biomeasure
has significant control over its budget. Its president, Dr. Moreau, testified that
Biomeasure “maintain[s] separate budgets for all of its expenses.” He also
testified that although Biomeasure receives general budget allocations from
Ipsen, it has autonomy over what drugs to research and how to perform the
research. To establish Ipsen’s control over Biomeasure’s finances, Plaintiffs rely
primarily upon a practice known as “ring-fencing,” a process of designating
certain expenses to require approval from Ipsen’s Executive Committee.
However, Plaintiffs concede that ring-fencing only applies to certain budget
items. Plaintiffs bear the burden of establishing that Ipsen’s control over
Biomeasure’s budget is such that they functionally became “the same entity.”
Jackson, 615 F.3d at 586 (quoting Patin v. Thoroughbred Power Boats, Inc., 294
F.3d 640, 653 (5th Cir. 2002)). To establish the scope of ring-fencing, Plaintiffs
rely on a policy document stating that a company seeking to hire a professor for
research assistance must get approval before engaging the professor. The mere
fact that Ipsen exercises some budgeting control over Biomeasure is not enough
to establish a prima facie case of alter ego. See Hargrave, 710 F.2d at 1160
(finding no jurisdiction where parent had “approval of sizeable capital
investments); see also United States v. Bestfoods, 524 U.S. 51, 72 (1998) (noting
that “monitoring of the subsidiary’s performance, supervision of the subsidiary’s
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finance and capital budget decisions, and articulation of general policies and
procedures” is “consistent with the parent’s investor status”).
Finally, Plaintiffs emphasize that “Biomeasure’s primary purpose [is] to
conduct research and development within the United States on behalf of Ipsen.”
To this end, Plaintiffs have presented evidence that Biomeasure has a patent
assignment agreement with Ipsen Pharma under which it assigns all of its
patents to Ipsen Pharma. Subsequently, most or all of Biomeasure’s funding is
provided by Ipsen Pharma or other Ipsen subsidiaries. Notably, these
arguments focus on Ipsen Pharma, not Ipsen. Plaintiffs have not argued, and
have not presented evidence that Ipsen and Ipsen Pharma are alter egos or that
an agreement with Ipsen Pharma should otherwise be attributed to Ipsen. Cf.
Alpine View, 205 F.3d at 218 (noting that to attribute activities of a subsidiary
to a parent, an alter ego relationship between the subsidiary and the parent
must be established); Dickson, 179 F.3d at 338 (“Although there is ample
evidence of [affiliated] corporations having many dealings with each other, there
is no evidence in the record of [the parent company] exercising control over [the
subsidiaries].”).
Assuming arguendo that the arrangement were attributed to Ipsen, it still
does not establish an alter-ego relationship. Biomeasure and Ipsen Pharma
appear to have an arrangement under which Ipsen Pharma finances
Biomeasure’s research in return for Biomeasure assigning its patents to Ipsen
Pharma. As noted by the district court, Biomeasure entered into an advance
pricing agreement (“APA”) with the Internal Revenue Service (“IRS”) which
determined that under the terms of the APA, the compensation that Biomeasure
receives from non-U.S. Ipsen subsidiaries is commercially reasonable and
reflects arm’s-length transactions. Therefore, this showing is not enough to
establish a prima facie case of alter ego. To the extent that Plaintiffs’ evidence
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establishes that Biomeasure’s purpose is to benefit Ipsen, that is in the nature
of a parent-subsidiary relationship.
Plaintiffs have thus failed to show that Ipsen is an alter ego of
Biomeasure.
b. Biomeasure is not an agent of Ipsen
Furthermore, Plaintiffs have failed to show that Biomeasure acted as an
agent of Ipsen for purposes of the RFA and Licensing Agreement. To establish
agency, Plaintiffs rely heavily on the image put forth by Biomeasure and Ipsen,
particularly Biomeasure’s extensive use of the Ipsen trademark. As Plaintiffs
argue, “Ipsen has told the world that Biomeasure is Ipsen. It cannot now deny
that.”
In Louisiana law, an agency relationship can be created through express
authorization or by an implied appointment arising from apparent authority.
See Crescent City Marine v. M/V Nunki, 20 F.3d 665, 668 (5th Cir. 1994).
Though Plaintiffs make a bald assertion that Biomeasure was Ipsen’s actual
agent, they offer no evidence to support an express authorization for Biomeasure
to act as Ipsen’s agent with regard to the RFA or Licensing Agreement.
Plaintiffs’ implied agency argument also fails. To establish implied agency
in this case, Plaintiffs must show: (1) that Ipsen made some overture or
inference directly to the Plaintiffs and (2) that Plaintiffs reasonably relied on
Biomeasure’s purported authority as a direct consequence of these
representations. See id. at 669. Assuming arguendo that Plaintiffs could prevail
on the first prong, they have provided no evidence of reliance by Tulane or Dr.
Coy. Although Dr. Coy has declared that he believed Ipsen or Ipsen Pharma
would finance the joint research, he has not stated at any point that his belief
was founded on any representations or inferences made by Ipsen. Similarly, the
mere fact that Dr. Coy met with Ipsen employees does not establish an agency
relationship when the declaration does not state for what purposes he met with
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Ipsen employees or that the employees represented to him that Biomeasure was
acting on behalf of Ipsen. Because Plaintiffs at no point assert reliance on
representations made by Ipsen, their implied agency claim cannot succeed.
c. Biomeasure’s contacts with Louisiana cannot be imputed to Ipsen
For the above reasons, the district court correctly determined that
Biomeasure’s contacts with Louisiana cannot be imputed to Ipsen. This is
consistent with other holdings of our court that even a significant amount of
control is insufficient to impute contracts to a parent corporation where
corporate formalities are observed. See Jackson, 615 F.3d at 587 (finding that
contacts could not be imputed where two companies were “operated in a way
that their brands and products appear identical and their business relationships
are deeply intertwined, . . . shared office space, phone numbers, . . . officers and
directors, [and the employees of a close business associate] testified that they .
. . viewed [the companies] as one company”); Dalton, 897 F.2d at 1363.
2. Ipsen Pharma
a. Ipsen Pharma is not an alter ego of Biomeasure
The district court found that the only Hargrave factors that weighed in
favor of asserting jurisdiction over Ipsen Pharma is that it indirectly owns
Biomeasure’s stock with Ipsen and that it shares common officers and directors
with Biomeasure.
To establish an alter ego relationship between Biomeasure and Ipsen
Pharma, Plaintiffs rely upon the APA, the fact that Biomeasure assigns its
patents to Ipsen Pharma as a matter of course, and that Biomeasure has an
International Cash Pooling Agreement (“ICPA”) with Ipsen Pharma. As noted
above, we find that the arrangement whereby Biomeasure assigns its patents to
Ipsen Pharma in exchange for research funding under the terms of the APA does
not establish an alter ego status, particularly in light of the IRS finding that the
arrangement was commercially reasonable.
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Under the ICPA, Biomeasure can borrow or deposit money with Ipsen
Pharma. However, the evidence shows that such loans are accounted for and
credited to the appropriate Ipsen subsidiary. Indeed, the evidence establishes
that such loans accrue interest at a rate based upon the London Interbank
Offered Rate. This court has previously noted that “[t]he existence of
intercorporate loans does not establish the requisite dominance, and in fact,
interest-bearing loans suggest separation of corporate entities.” Alpine View, 205
F.3d at 219; see also Fletcher v. Atex, Inc., 68 F.3d 1451, 1459 (2d Cir. 1995)
(“Courts have generally declined to find alter ego liability based on a parent
corporation’s use of a cash management system.”).
We therefore find that Ipsen Pharma is not an alter ego of Biomeasure.
b. Biomeasure is not an agent of Ipsen Pharma
Plaintiffs’ attempt to establish an agency relationship between Ipsen
Pharma and Biomeasure fails for essentially the same reasons that it failed with
regard to Ipsen. At no point do Plaintiffs establish an express authorization on
behalf of Ipsen Pharma for Biomeasure to act as its agent regarding the RFA or
the Licensing Agreement. Furthermore, Plaintiffs have failed to assert reliance
on any representations made by Ipsen Pharma. For these reasons, Plaintiffs
have failed to establish an agency relationship between Ipsen Pharma and
Biomeasure.
III. Conclusion
For the foregoing reasons, we AFFIRM the district court’s dismissal
without prejudice of all claims against Ipsen and Ipsen Pharma.
12