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AVRA Surgical Robotics, Inc. v. Gombert

United States District Court, S.D. New York

August 22, 2014

AVRA SURGICAL ROBOTICS, INC., Plaintiff, -
v.
- BERND GOMBERT, Defendant

Decided August 21, 2014.

Page 351

For Avra Robotics, Inc, Plaintiff: Jared Bennett Stamell, LEAD ATTORNEY, Andrew R. Goldenberg, Stamell & Schaffer, LLP, New York, NY.

For Bernd Gombert, Defendant: Caroline Jean Heller, Greenberg Traurig, LLP, New York, NY; Leah Edmunds, Greenberg Traurig, LLP (NYC), New York, NY.

For Avra Surgical Robotics, Inc., ADR Provider: Jared Bennett Stamell, LEAD ATTORNEY, Stamell & Schaffer, LLP, New York, NY.

Page 352

MEMORANDUM AND ORDER

NAOMI REICE BUCHWALD, UNITED STATES DISTRICT JUDGE.

Plaintiff AVRA Surgical Robotics, Inc. (" AVRA" ) brings this diversity action against defendant Bernd Gombert, a German engineer whom plaintiff recruited and employed in Germany from 2012 to 2013. AVRA pleads multiple causes of action against Gombert for alleged wrongful activity occurring during his term of employment, including breach of contract, breach of fiduciary duty, tortious interference with contractual relations, and misappropriation of property and funds. Now pending before the Court is defendant's motion to dismiss the complaint for lack of personal jurisdiction or, in the alternative, for failure to state a claim. For the reasons stated herein, defendant's motion is granted based upon a lack of personal jurisdiction over the defendant.

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BACKGROUND[1]

I. Factual Allegations

Defendant Bernd Gombert is a lifelong German citizen who has continuously lived and worked in Germany. Def. Mem. at 1-2; Gombert Decl. ¶ 15. Gombert is a decorated engineer who studied mechanical and precision engineering at German universities, later became the head of a mechanics lab at a German robotics institute, and ultimately authored many scientific papers and won multiple engineering awards, including Germany's Federal Cross of Merit. Gombert Decl. ¶ ¶ 15-19. Gombert has never lived, worked, owned property, maintained a bank account, or employed anyone in New York. Def. Mem. at 2; Gombert Decl. ¶ ¶ 6-12.

Plaintiff AVRA is a Delaware corporation with its principal place of business in New York.[2] Pl. Opp. at 2. During the time period relevant to this action, AVRA sought to develop a surgical robotics system for use in performing minimally invasive surgery. Def. Mem. at 2-3; Pl. Opp. at 2. In November 2011, AVRA President and Chairman Barry Cohen first approached Gombert at the defendant's offices in Seefeld, Germany. Def. Mem. at 2-3. At the time, Gombert was employed by a German company, RG Mechatronics GmbH (" RGM" ), of which he is now the managing director. Gombert Decl. ¶ 32. Cohen, then living temporarily in Seefeld, Germany near AVRA's Munich office while scouting for engineers, recruited Gombert to join AVRA's surgical robotics development team. Def. Mem. at 3.

After months of Germany-based meetings, Gombert, Cohen and AVRA executives decided to form a subsidiary company responsible for the design, marketing, and distribution of the as-yet undeveloped surgical robotics system. Def. Mem. at 3. On July 7, 2012, AVRA, Gombert and another AVRA executive, Stephen Sagolla, also a German citizen, established the subsidiary, MIS-Robotics, GmbH (" MIS" ). Def. Mem. at 4. Gombert and Sagolla, as co-managing directors of MIS, each owned 10% of the subsidiary's shares; AVRA held the remaining 80% equity position in MIS. Def. Mem. at 4; Pl. Opp. at 2. MIS was incorporated under German law and maintained its only offices in Seefeld, Germany. Def. Mem at 4; Gombert Decl. ¶ 25.

The following month, AVRA's Board of Directors simultaneously appointed Gombert as AVRA's Chief Scientist and Technical Officer and Sagolla as AVRA's Chief Executive Officer. Def. Mem. at 4. Although AVRA's board made the appointments in August 2012, Gombert did not

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execute an employment contract with AVRA until October 5, 2012. Id. Having expressed a willingness to sign an agreement containing the same terms as those in Sagolla's contract, Gombert executed the employment contract in Germany without further negotiation and emailed the signed copy to AVRA. Id.

Among other terms, the employment contract provided for Gombert's 300,000 euro base salary and various benefits, and provided for termination of employment by resignation, discharge by AVRA or death. Gombert Decl. Ex. 2 at ¶ ¶ 2, 3, 5. The contract also included a confidentiality clause affirming that certain unspecified " confidential information is the exclusive property of AVRA," that Gombert would use that confidential information " solely for the purpose of performing [his] duties on behalf of AVRA," and that he would not use such information " to the detriment of AVRA." Id. ¶ 4. The contract went on to state that if Gombert terminated his employment with AVRA, he would not " own, manage or control any business that competes with AVRA" for a two-year period thereafter. Id. Finally, the contract contained a " Governing Law" clause, providing that " [t]his Agreement will be governed by and construed in accordance with the law of the State of New York without giving effect to the rules of conflicts of law." Id. at ¶ 6. The contract contained no choice of forum clause.

To pursue development of the surgical robotics system, the newly created subsidiary MIS entered into a Development and Manufacturing Agreement in October 2012 with RGM, Gombert's German engineering company, whereby RGM agreed to conduct the engineering work necessary to developing and manufacturing the surgical robotics system and bill MIS accordingly. Def. Mem. at 4-5; Pl. Opp. at 2. Pursuant to this agreement, Gombert assigned RGM engineers to the project and directly supervised their work. Def. Mem. at 5.

AVRA agreed to provide capital for the project to its subsidiary MIS, which would, in turn, pay the invoices issued by RGM for the engineering work. Def. Mem. at 5; Pl. Opp. at 2. To that end, beginning in September 2012, AVRA sold shares in its own corporate entity to American investors, including New York-based investors, and wired that money to Germany. Pl. Opp. at 3. According to Gombert, AVRA's expected financing was supposed to amount to at least 20 million euros in the form of shareholder loans. Def. Mem. at 5; Gombert Decl. ¶ 37. Over the course of the next six months, AVRA provided to MIS loans totaling over 3 million euros, or approximately 4.5 million U.S. dollars. Def. Mem. at 5; Pl. Opp. at 3.

In late 2012, this funding arrangement faltered and the relationship soured. As of December 2012 or before, Gombert began articulating serious concerns about AVRA's failure to fund MIS as promised. Def. Mem. at 5-6. Gombert advised AVRA executives Cohen and General Counsel Jared Stamell of meaningful shortfalls in funding in a December 18, 2012 email entitled " Red Flag -- RG Mechatronics is running out of money." Gombert Reply Decl. Ex. 3. In that email, Gombert reiterated financial difficulties he had raised " already several times," and further noted that " [t]his month we can't pay any more the checks for the engineers." Id. Gombert also flagged " unpaid invoices of about USD 900,000 (AVRA) and open invoices of our supplier of about USD 250,000 (RGM)," amounting to " a lack of cash of about USD 1,150,000." Id. Gombert summarized thus: " [In] other word[s]: we need immediately USD 1,500,000 otherwise the party is over." Id.

Over the course of the next few weeks, Gombert's concerns regarding the company's

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financial health intensified. By email of January 8, 2013, with subject line " Unacceptable situation with AVRA," Gombert raised with AVRA executive Cohen a number of " significant misgivings," including primarily that " AVRA Surgical Robotics, Inc., in the persons of yourself and Jared [Stamell], has made financial commitments to MIS/RGM but not adhered to them." Id. Describing a pattern of insufficient financing and repeated failures to make good on Cohen's personal " commitment to guarantee the funding," Gombert informed AVRA personnel that " I have had personally to finance salaries, development costs and the complete operational expenses . . . [which] led in December not only to overextension of RGM but also almost to my own personal bankruptcy." Id. Gombert concluded by advising that, if AVRA could not secure the promised operational funding by February 15, " I will be forced to resign from my duties as CTO of AVRA and MIS, and also to terminate the development contract between RGM and AVRA/MIS." [3] Id.

At the same time, AVRA began to fall behind in its payments of Gombert's salary, guaranteed by his employment contract. The parties do not dispute that AVRA satisfied only the first payroll installment owed to Gombert, amounting to only 26,225 euros. Gombert Decl. ¶ 31; Cohen Decl. ¶ 21. This non-payment prompted Gombert to email AVRA executives in January 2013 and complain that " the salary for my contractually-agreed full-time employment for AVRA/MIS has also not yet been paid," a failure that Gombert viewed as ...


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