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SMA Medical Laboratories v. Advanced Clinical Laboratory Solutions, Inc.

United States District Court, E.D. Pennsylvania

July 11, 2018

SMA MEDICAL LABORATORIES, Plaintiff,
v.
ADVANCED CLINICAL LABORATORY SOLUTIONS, INC, and LEONID REYFMAN, M.D., Defendants.

          MEMORANDUM

          DuBois, J.

         I. INTRODUCTION

         Presently before the Court is defendants Advanced Clinical Laboratory Solutions, Inc. ("ACLS''), and Leonid Reyfman‘s Motion to Dismiss Plaintiffs Complaint Pursuant to Federal Rules of Civil Procedure 12(b)(2), (3) and (6) or, in the Alternative, to Transfer the Action Pursuant to 28 U.S.C § 1404(a). For the reasons set forth below, the Court grants defendants‘ Motion to Transfer the Action Pursuant to 28 U.S.C § 1404(a) and denies defendants‘ Alternative Motion to Dismiss Pursuant to Federal Rules of Civil Procedure 12(b)(2) and (3) for lack of personal jurisdiction and improper venue as moot. The Court takes no action with respect to defendants‘ Alternative Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim.

         II. BACKGROUND

         In assessing a motion to transfer, "all well-pleaded allegations in the complaint are generally taken as true unless contradicted by the defendant‘s affidavits, and the Court may examine facts outside the complaint to determine proper venue.'' Holiday v. Bally's Park Place, Inc., No. 06-cv-4588, 2007 U.S. Dist. LEXIS 66554, at *4-5 (E.D. Pa. Sep. 7, 2007). Based on the Complaint, the affidavits submitted by the parties, and the other submissions of record, the facts of the case may be summarized as follows:

         Plaintiff SMA Medical Laboratories, Inc. ("SMA'') brought suit for misappropriation of trade secrets. The case arises from a contract between SMA and ACLS for the provision of certain toxicology testing services. Compl. ¶ 1. SMA is a Pennsylvania corporation with its principal place of business in Feasterville, Pennsylvania, in the Eastern District of Pennsylvania ("District''), Compl. ¶ 2, with additional offices in New York, New York, Reyfman Decl. ¶ 15, Doc. No. 16-3. ACLS is a New York corporation with its principal place of business in Brooklyn, New York, in the Eastern District of New York. Compl. ¶ 3. ACLS has no facilities or employees in Pennsylvania. Reyfman Decl. ¶ 21. Defendant Leonid Reyfman, a resident of New York, is one of the three shareholders of ACLS and is its Chief Operating Officer. Compl. ¶ 4. The two other shareholders of ACLS, Arkady Lipnitsky and Anatoly Mecrovich, are not named as defendants in the Complaint.

         SMA provides a "wide range of [medical] testing services'' and contracted with ACLS to provide certain blood tests that SMA itself was unable to provide. Compl. ¶¶ 2, 5. The contract negotiations occurred in New York, as did a number of subsequent meetings regarding the contract. Reyfman Decl. ¶¶ 22, 24, 33, 38. Plaintiff contends that Reyfman also attended meetings with SMA in Feasterville. Shvartsburd Decl. ¶¶ 16-17, Doc. No. 18-1. SMA and ACLS executed the contract electronically on April 18, 2014, from Feasterville and Brooklyn, respectively. Compl. ¶ 17; Reyfman Decl. ¶ 23; Shvartsburd Decl. ¶ 10. Under the contract, SMA forward specimens from patients to ACLS facilities in Brooklyn, where the specimens were tested. Reyfman Decl. ¶ 39.

         In forwarding the specimens, SMA provided ACLS with "confidential business information, including customer identifications'' and "ACLS agreed not to contact or solicit any of SMA‘s customers or to collect any fees from SMA‘s customers without the prior consent and approval of SMA.'' Compl. ¶¶ 5, 25. Despite that agreement, using SMA‘s confidential information, "ACLS contacted, engaged, and paid SMA‘s marketing representatives to solicit SMA‘s customers on behalf of ACLS, '' allegedly at Reyfman‘s direction. Compl. ¶¶ 44, 47. Critically, although the marketing representatives solicited customers in Pennsylvania on ACLS‘s behalf, none of the marketing representatives contacted directly by ACLS reside in Pennsylvania. Shvartsburd Decl. ¶¶ 28; Reyfman Decl. ¶ 54.

         Plaintiff SMA filed its Complaint in this Court on August 23, 2017, setting forth nine counts for: breach of contract (Count I), misappropriation of trade secrets under Pennsylvania, federal, and New York law (Counts II, III, and IV), conversion of trade secrets (Count V), unjust enrichment (Count VI), tortious interference with contract (Counts VII and VIII), and unfair competition (Count IX). Defendants‘ Motion to Dismiss Plaintiffs Complaint Pursuant to Federal Rule of Civil Procedure 12(b)(2), (3) and (6) or, in the Alternative, to Transfer the Action Pursuant to 28 U.S.C § 1404(a) is ripe for decision.

         III. LEGAL STANDARD

         A. Venue

         Venue in federal courts is generally governed by 28 U.S.C. § 1391. See Jumara v. State Farm Ins. Co., 55 F.3d 873, 878 (3d Cir. 1995). Section 1391 provides that venue is proper in any judicial district where either "any defendant resides, if all defendants are residents of the State in which the district is located'' or "a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated.'' 28 U.S.C. § 1391(b)(1)-(2). If no district meets those requirements, the action may be brought in any district where "any defendant is subject to the court‘s personal jurisdiction with respect to such action.'' Id. § 1391(b)(3). Under 28 U.S.C. § 1406(a), a court where venue is improperly laid may either dismiss the case "or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.''

         B. Transfer

         While § 1406 permits either the dismissal or the transfer of a case where venue is not proper in the original forum, § 1404(a) "provides for the transfer of a case where both the original and the requested venue are proper.'' Jumara, 55 F.3d at 878-79. Section 1404(a) provides: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil ...


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