Lapchak v. Paradigm Biopharmaceuticals (USA), Inc.

District Court, S.D. California·Decided August 5, 2025·No. 3:24-cv-00143·Unknown

Opinion

PAUL A. LAPCHAK, an individual, Case No.: 24-CV-143 JLS (DDL)

Plaintiff, ORDER GRANTING DEFENDANTS’ v. MOTION TO DISMISS

(ECF No. 19) (USA), INC., a Delaware corporation; and DONNA SKERRETT, an individual, Defendants.

Presently before the Court are Defendants Paradigm Biopharmaceuticals (USA), Inc. (“Paradigm”) and Donna Skerrett’s (“Skerrett”) (collectively, “Defendants”) Motion to Dismiss Plaintiff’s Second Amended Complaint’s First and Second Causes of Action (“Mot.,” ECF No. 19) and Memorandum of Points and Authorities in Support Thereof (“Mem.,” ECF No. 19-1). Plaintiff Paul A. Lapchak (“Plaintiff”) filed an Opposition to the Motion (“Opp’n,” ECF No. 20), to which Defendants submitted a Reply (“Reply,” ECF No. 21. The Court took this matter under submission without oral argument pursuant to Civil Local Rule 7.1(d)(1) on June 27, 2025. ECF No. 22. Having carefully considered the Parties’ arguments, Plaintiff’s Second Amended Complaint (“SAC,” ECF No. 18), and the law, the Court GRANTS Defendants’ Motion to Dismiss. / / / I. Procedural Background Plaintiff initiated this action by filing a Complaint against Defendants on January 22, 2024. See ECF No. 1. Plaintiff filed his First Amended Complaint (“FAC”) on March 28, 2024, alleging four causes of action: (1) breach of contract against all Defendants; (2) breach of fiduciary duties against Skerrett; (3) violation of “California Whistleblower Statute” against all Defendants; and (4) violations of “California employment law” against all Defendants. ECF No. 4 (“FAC”). Subsequently, Defendants filed a Motion to Dismiss Plaintiff’s First, Second, and Fourth Causes of Action for failure to state a claim upon which relief can be granted. See generally ECF No. 9. On February 7, 2025, the Court granted Defendants’ Motion and dismissed Plaintiff’s First, Second, and Fourth Cause of Action. See ECF No. 15 (“FAC Order”) at 9. However, the dismissal was without prejudice and the Court granted Plaintiff leave to amend his complaint. See FAC Order at 18–19. On April 29, 2025, Plaintiff filed a Second Amended Complaint (“SAC,” ECF No. 18). Plaintiff’s SAC now alleges seven causes of action: (1) breach of contract against both Defendants; (2) violation of “California Whistleblower Statute” against both Defendants; (3) violation of California Labor Code § 204 against Paradigm, (4) violation of California Labor Code § 203 against Paradigm; (5) violation of California Labor Code § 226 against Paradigm; (6) retaliation in violation of public policy against Paradigm; (7) and retaliation under California Labor Code § 98.6 against Paradigm. See generally On May 13, 2025, Defendants filed a Motion to Dismiss (1) the First Cause of Action as to Defendant Skerrett only, and (2) the Second Cause of Action for Whistleblower Violations as to both Defendants. See Mot. On June 12, 2025, Plaintiff filed an Opposition. See Opp’n. And on June 18, 2025, Defendants filed their Reply. See Reply. / / / / / / II. Second Amended Complaint: Plaintiff’s Allegations Plaintiff Paul Lapchak, a San Diego, California resident, is a renowned scientist with a PhD in Pharmacology. SAC ¶¶ 1, 8. Plaintiff was hired by Paradigm, a Delaware corporation that develops and sells drug formulas, to be its executive, holding the title of “Global Head of Translational Development,” on or about October 7, 2022. Id. ¶¶ 2, 9, 11. Plaintiff and Paradigm entered into a contract, the “Employment Agreement,” which required Paradigm to provide certain financial compensation and Paradigm shares to Plaintiff as part of the employment inducement. Id. ¶¶ 24, 25. Plaintiff was an executive for approximately 12 months, and his last performance evaluation indicated he “exceeded on all measures of performance.” Id. ¶ 10. On or about October 3, 2023, Paradigm sent Plaintiff a new employment agreement that had not been negotiated with him, and which “materially altered several aspects of the parties’ agreed-upon contractual relationship.” Id. ¶ 12. On or about October 10, 2023, Plaintiff protested the changes and stated he would not enter into the new agreement. Id. ¶ 13. Plaintiff is also a shareholder in Paradigm and shares promised to him have not been timely provided, as set forth in his Employment Agreement. Id. ¶ 14. For example, his “sign on bonus” of 25,000 shares were due October 24, 2022, and were not timely provided. Id. ¶ 15. His one-year anniversary 100,000 shares were due October 24, 2023, and were also not timely provided. Id. ¶ 16. On October 29, 2023, Paradigm issued a “trading halt” and issued a “rights offer” or “entitlement offer” to its employees, and Plaintiff timely exercised his entitlement/rights offer as to the missing 125,000 shares of Paradigm stock. Id. ¶ 17. Plaintiff has not received the 125,000 shares to which he is entitled, nor other shares to which he is entitled under a capital raise. Id. ¶ 18. He indicates Defendant Skerrett, “is a person responsible for Paradigm’s failure to pay Lapchak wages under California law.” Id. ¶ 31. One of the drugs Paradigm currently develops is a pentosan polysulfate sodium (“PPS”), an “FDA-approved drug that has a long track record of safely treating inflammation for over 60 years.” Id. ¶ 11. Paradigm’s primary focus, per Plaintiff, is to develop PPS (under the name of Zilosul®) to treat osteoarthritis. Id. On November 1, 2023, at a company-wide team meeting, Plaintiff “presented an overview of drug toxicity of PPS or Zilosul.” Id. ¶ 20. Then on November 17, 2023, Plaintiff “presented a power point deck to Paradigm’s safety officer, director of clinical operations, and head of osteoarthritis[,] summarizing significant multi-organ toxicity of Paradigm’s drug product, PPS or Zilosul.” Id. ¶ 20. Plaintiff proceeded to inform the regulatory department of the multi-organ toxicity of the same product. Id. Subsequently, purportedly retaliating against Plaintiff’s actions, Defendants disabled Plaintiff’s access to the workplace computers. Id. ¶ 21. After Plaintiff protested, Defendants purportedly “falsely claimed” Plaintiff was still an employee. Id. ¶ 21. Defendants formally terminated Plaintiff on or about January 12, 2024. Id. ¶ 22. Rule 12(b)(6) permits a party to raise by motion the defense that the complaint “fail[s] to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). The Court evaluates whether a complaint states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil Procedure 8(a), which requires a “short and plain statement of the claim showing that the pleader is entitled to relief.” “[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration in original). To survive a 12(b)(6) motion, then, “a complaint must contain sufficient factual matter . . . 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 claim is facially plausible when the facts pled “allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged— but it has not ‘show[n]’—‘that the pleader is entitled to relief.’” Id. at 679 (second alteration in original) (quoting Fed. R. Civ. P.

Lapchak v. Paradigm Biopharmaceuticals (USA), Inc., (S.D. Cal. 2025).

Lapchak v. Paradigm Biopharmaceuticals (USA), Inc. (Lapchak v. Paradigm Biopharmaceuticals (USA), Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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