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William C. Stone, et al. v. Ranbaxy Pharmaceuticals

June 16, 2011

WILLIAM C. STONE, ET AL.
v.
RANBAXY PHARMACEUTICALS, INC., ET AL.



The opinion of the court was delivered by: J. Frederick Motz United States District Judge

MEMORANDUM

Plaintiffs William C. Stone, Kathleen Bremner, and Cynthia E. Dietz have filed suit against Defendants Ranbaxy Pharmaceuticals, Inc. ("Ranbaxy Pharm") and Ranbaxy Laboratories, Ltd. ("Ranbaxy Lab") for claims arising from the death of Westchester County, New York resident Paula Palladino. *fn1 Now pending are motions to dismiss filed by both Ranbaxy Pharm and Ranbaxy Lab. The issues have been fully briefed and no hearing is necessary. For the reasons stated below, I deny Ranbaxy Lab's motions to dismiss pursuant to Fed. R. Civ. P. 12(b)(2) and deny Ranbaxy Pharm's motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(5). I further order Plaintiffs to properly serve process on Ranbaxy Lab within 60 days of the date of this opinion and the attached order.

I.Facts

On or about October 6, 2008, Westchester County resident Paula Palladino was prescribed the generic drug ciprofloxacin; she received another prescription for ciprofloxacin on October 29, 2008 for treatment of a urinary tract infection. On or about October 30, 2008, Ms. Palladino sought treatment from the Orange Regional Medical Center for a developing fever and rash. On November 18, doctors diagnosed her with Stevens Johnson Syndrome, a rare skin condition that can be life-threatening. Eight days later, Ms. Palladino died. Plaintiffs, who are Ms. Palladino's heirs, allege that her death resulted from her exposure to ciprofloxacin manufactured by the defendants.

Defendant Ranbaxy Lab is an Indian corporation headquartered in New Delhi. The company develops, manufactures, markets, and sells generic pharmaceuticals, including the generic drug ciprofloxacin. Ranbaxy Lab is not registered to do business in New York State and maintains neither an office nor an agent in New York.

Defendant Ranbaxy Pharm is a wholly-owned subsidiary of Ranbaxy Lab. The company appears to be a Florida corporation that maintains a principal place of business in Princeton, New Jersey. Plaintiffs allege that Ranbaxy Pharm is the exclusive marketer, distributor, and seller of Ranbaxy Lab pharmaceuticals in the United States.

II.Defendant Ranbaxy Lab's Motion to Dismiss Under Fed. R. Civ. P. 12(b)(2)

A.Standard of Review

A court is "obligated to dismiss an action against a defendant over which it has no personal jurisdiction" upon motion by that defendant. In re Ski Train Fire, 230 F.Supp.2d 403, 406 (S.D.N.Y. 2002); see also Fed. R. Civ. P. 12(b)(2). Prior to discovery, a plaintiff challenged by a 12(b)(2) motion to dismiss may defeat the motion by making a prima facie showing of jurisdiction. Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 184 (2d Cir. 1998). "At that preliminary stage, the plaintiff's prima facie showing may be established solely by allegations." Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990). In establishing their prima facie showings of jurisdiction, plaintiffs "may rely entirely on allegations of fact, and they will prevail even if the moving party makes contrary allegations which controvert their prima facie case." In re Ski Train Fire, 230 F.Supp.2d at 406 (internal citations omitted). As with the review of other motions to dismiss, a court reviewing a motion to dismiss for lack of personal jurisdiction must view all of the pleadings in the light most favorable to the plaintiffs. Id. (citing Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985)).

B.General Jurisdiction Over Defendant Ranbaxy Lab

Whether a federal court may exercise personal jurisdiction over a foreign corporation in relation to a diversity action is determined by the law of the state in which the court sits. Jazini, 148 F.3d at 183-184. Accordingly, I look to New York law to determine whether this Court has jurisdiction over Ranbaxy Lab.

Under New York law there are two ways in which a court may exercise personal jurisdiction over a non-domiciliary corporation:

(1) If the corporation 'does business' in New York, jurisdiction may be exercised pursuant to N.Y. CPLR § 301. (2) Even if the corporation does not 'do business' in New York, jurisdiction may be exercised if the corporation falls under New York's long-arm statute (N.Y. CPLR § 302).

Aerotel, Ltd. V. Sprint Corp., 100 F.Supp.2d 189, 191 (S.D.N.Y. 2000) (quoting King v. Best Western Country Inn, 138 F.R.D. 39, 41 (S.D.N.Y. 1991)). Under the "doing business" test, a foreign corporation is subject to general jurisdiction in the state of New York if the corporation is engaged in such a continuous and systematic course of "doing business" in New York as to warrant a finding of its "presence" in the jurisdiction. Frummer v. Hilton Hotels Int'l, Inc., 19 N.Y.2d 533, 536 (1967) (internal citations omitted). Where the claim is that a foreign corporation is present in New York because of the activities of a subsidiary within the state, the subsidiary must be either an "agent" or a "mere department" of the foreign parent. Jazini, 148 F.3d at 184 (citing Koehler v. Bank of Bermuda Ltd., 101 F.3d 863, 865 (2d Cir. 1996)). To establish that a subsidiary is an agent of the parent, a plaintiff must demonstrate that the subsidiary "does all the business which [the parent corporation] could do were it here by its own officials." 148 F.3d at 184 (citing Frummer, 19 N.Y.2d 533, 536 (1967)). To determine whether a subsidiary is a "mere department" of a parent, New York courts must consider four factors: (1) common ownership of parent and subsidiary; (2) financial dependence of the subsidiary on the parent corporation; (3) the degree to which the parent interferes with the selection and assignment of the subsidiary's executives and fails to observe corporate formalities; and (4) the extent of control that the parent exercises over the marketing and operations policies of the subsidiary. Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d 117, 120-121 (2d Cir. 1984).

The parties agree that Ranbaxy Pharm is the wholly-owned subsidiary of Ranbaxy Lab. Plaintiffs allege that Ranbaxy Pharm is the exclusive marketer, seller, and distributor of Ranbaxy Lab products in the United States. Plaintiffs further allege that Ranbaxy Pharm's U.S. sales constitute a significant portion of global sales for Ranbaxy Lab, and that Ranbaxy Lab lists Ranbaxy Pharm employees as contacts for North American operations questions. Finally, Plaintiffs allege that Ranbaxy Lab purchased a liquid manufacturing ...


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