United States District Court, E.D. Pennsylvania
action arises out of J.M. Huber Corporation's alleged
breach of a Supply Agreement entered into as a part of a
Settlement Agreement to resolve a patent dispute. Presently
before the Court is Defendant's Motion to Dismiss and to
Stay. For the reasons that follow, the Motion is granted in
part and denied in part.
pertinent facts as set forth in plaintiff's Complaint are
summarized as follows. Defendant processes and supplies
calcium carbonate powder for use in pharmaceutical
manufacturing. Compl. ¶ 7. Plaintiff uses calcium
carbonate powder to manufacture calcium-based antacid
tablets, vitamins and other supplements. Compl. ¶ 6. On
August 27, 2012, plaintiff sued defendant for patent
infringement in the United States District Court for the
District of New Jersey, alleging that defendant infringed
plaintiff's patent for a process used to prepare a high
density calcium carbonate granulation. Compl. ¶ 8.
Following settlement negotiations, the parties entered into a
Settlement Agreement on May 15, 2014 (“2014 Settlement
Agreement”). Compl. ¶ 10. As part of the 2014
Settlement Agreement, the parties entered into a Supply
Agreement that was executed simultaneously with the
Settlement Agreement and has a term from May 15, 2014 through
December 31, 2024. Compl. ¶ ¶ 12, 13.
the terms of the Supply Agreement, defendant agreed to sell
plaintiff “a minimum of ninety percent (90%) of
Buyer's [plaintiff's] requirements in the U.S. for
qualified grades of calcium carbonate powder . . . .”
Supply Agreement, Compl. Ex. C, ¶ 2.1. Subsequent to the
signing of the Supply Agreement, plaintiff worked with
defendant to qualify grades of calcium carbonate powder to
satisfy plaintiff's requirements under the agreement.
Compl. ¶ 19. Plaintiff continued to provide defendant
with information regarding its manufacturing processes and
calcium carbonate needs, including information with respect
to the median particle size of the calcium carbonate powder
and the particle size distribution parameters. Compl. ¶
24. Pursuant to the Supply Agreement and the qualification
process, defendant provided calcium carbonate powder to
plaintiff with a particle size distribution that was
consistent with plaintiff's manufacturing process for a
period of approximately two years. Compl. ¶ 38.
September 2015, following a change in management of
defendant, defendant advised plaintiff of its belief that the
Supply Agreement was “a terrible agreement”
because of the low price that plaintiff was paying for the
calcium carbonate. Compl. ¶ 29. Thereafter, defendant
allegedly failed to comply with the terms of the Settlement
Agreement by limiting the amount of calcium carbonate
provided to plaintiff. Compl. ¶ 34. To resolve the
alleged breach, the parties entered into a Settlement
Agreement on August 3, 2016 (“2016 Settlement
Agreement”), whereby defendant paid plaintiff $400, 000
in damages resulting from that breach. Compl. ¶ 35.
to plaintiff, shortly after defendant paid the $400, 000
settlement pursuant to the 2016 Settlement Agreement,
defendant began providing plaintiff with a calcium carbonate
product that was “coarse and had a broader particle
size distribution” which prevented plaintiff from using
that product in its manufacturing processes. Compl. ¶
36. The calcium carbonate product at issue, HuberCal 150D,
deviated substantially from the HuberCal 150D that defendant
provided to plaintiff prior to August 2016. Id.
Despite repeated attempts to work with defendant to improve
the HuberCal 150D, defendant refused to meet with plaintiff
or make improvements to the product. Compl. ¶¶
filed the instant suit on September 7, 2017, alleging breach
of contract and two counts of breach of the implied covenant
of good faith and fair dealing, with respect to both the
Supply Agreement and the 2014 Settlement Agreement. Presently
before the Court is Defendant's Motion to Dismiss and
Stay. For the reasons that follow, Defendant's Motion to
Dismiss and Stay is granted in part and denied in part.
12(b)(6) of the Federal Rules of Civil Procedure permits a
party to respond to a pleading by filing a motion to dismiss
for “failure to state a claim upon which relief can be
granted.” To survive a motion to dismiss, a plaintiff
must allege facts that “‘raise a right to relief
above the speculative level.'” Victaulic Co. v.
Tieman, 499 F.3d 227, 234 (3d Cir. 2007) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). 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
Twombly, 550 U.S. at 570). A district court first
identifies those factual allegations that constitute nothing
more than “legal conclusions” or “naked
assertions.” Twombly, 550 U.S. at 555, 557.
Such allegations are “not entitled to the assumption of
truth” and must be disregarded. Iqbal, 556
U.S. at 679. The court then assesses “the
‘nub' of the plaintiff['s] complaint-the
well-pleaded, nonconclusory factual allegation[s]”-to
determine whether it states a plausible claim for relief.
Id. Importantly, the complaint's factual
allegations “enjoy a highly favorable standard of
review at the motion-to-dismiss stage.” Connelly v.
Lane Constr. Corp., 809 F.3d 780, 790 (3d Cir. 2016).
Thus, “a complaint may not be dismissed merely because
it appears unlikely that [a] plaintiff can prove those facts
or will ultimately prevail on the merits.” Id.
790-91 (quoting Phillips v. Cty. Of Allegheny, 515
F.3d 224, 231 (3d Cir. 2008)).
ruling on a motion to dismiss, a court may consider the
allegations in the complaint, exhibits attached to the
complaint and matters of public record. Pension Benefit
Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196
(3rd Cir. 1993). Plaintiff attached the 2014 Settlement
Agreement and the Supply Agreement to the complaint.
Accordingly, the Court considers those documents.
Court addresses plaintiff's claims in the order addressed
in the parties briefing, beginning with Count ...