Path to Riches, LLC v. CardioLync, Inc.

290 F. Supp. 3d 280
CourtDistrict Court, D. Delaware
DecidedFebruary 21, 2018
DocketCIVIL ACTION No. 17–161
StatusPublished
Cited by5 cases

This text of 290 F. Supp. 3d 280 (Path to Riches, LLC v. CardioLync, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Path to Riches, LLC v. CardioLync, Inc., 290 F. Supp. 3d 280 (D. Del. 2018).

Opinion

McHUGH, J.

*283This is a dispute over whether one Israel-based company improperly obtained confidential and proprietary information from another. Plaintiff Path to Riches purports to bring direct and derivative claims on behalf of MMT, an Israeli company in which it holds a majority share, against Defendants CardioLync and its owners. Defendants now move to dismiss based on lack of personal jurisdiction, lack of subject matter jurisdiction, and forum non conveniens. Without deciding either jurisdictional issue, I find that Israel is an adequate alternative forum for this dispute, and that the deference owed to Plaintiff's choice of forum is outweighed by the substantial private and public interests in holding this proceeding in Israel. Specifically, all of the parties and essential non-party witnesses are either Israeli residents or have significant ties to Israel; two of the three companies are based there; and Israeli law likely governs most of Plaintiff's claims. Accordingly, Defendants' motion to dismiss will be granted on FNC grounds.

I. Background

This case arises from Plaintiff Path to Riches, LLC's (PTR's) allegation that Defendants Gamliel Kagan (Gam) and Jacob Levy (Dr. Levy), through their company, Defendant CardioLync, misappropriated proprietary information belonging to M.M.T. Diagnostics (2014), Ltd., by inducing MMT's CEO to breach his contractual and fiduciary duties. Because I ultimately decide this motion on FNC grounds, the location of and relationship among the parties and witnesses are of primary importance.

PTR is a limited liability company organized under the laws of Delaware and based in New York state. It is wholly owned by Dr. and Ms. Minkowitz, non-parties whose primary residence is in New York. The Minkowitzes have a second home in Israel, where they visit each year for extended periods and where their children attend school. Their neighbor in Israel is Jeremy Kagan, an Israeli who is not a party but around whom this dispute centers. Jeremy's brother is Defendant Gam, who also resides in Israel.

In 2013, Jeremy and Dr. Minkowitz entered into a telemedicine business venture, which the pair would eventually incorporate under the laws of Israel as MMT. (MMT is named as both a plaintiff and a nominal defendant in this action.) MMT initially focused on pathology, but according to PTR, hoped to expand into other fields, including cardiology. Jeremy owns 40 percent of MMT, and PTR (the Minkowitzes' company) owns the remaining 60 percent. Although MMT's incorporation documents provide for a five-member board of directors-three to be appointed by Dr. Minkowitz and two by Jeremy-Jeremy is the sole board member. Schreiber Decl. ¶ 22, ECF No. 14. In 2014, Jeremy also became the CEO of MMT via an employment agreement created under the laws of Israel. He remained in that post through 2015.

Although MMT is based in Israel, PTR alleges that Jeremy and Dr. Minkowitz agreed in August 2015 to hire two people to work on MMT's product in New York. Jeremy allegedly refused to cooperate with these employees or speak with them by phone, and "never traveled to the United States to visit" them. Compl. ¶ 44. PTR alleges that in November 2015, "as a result of Gam's funding," a cease and desist letter was served upon Dr. Minkowitz and the New York employees claiming they *284were misappropriating MMT's confidential information. Then, on January 26, 2016, Jeremy filed a lawsuit individually and on behalf of MMT in New York state court alleging that Dr. Minkowitz had formed a new company and was misappropriating MMT's intellectual property.

In this lawsuit, PTR alleges the opposite. On the same day that Jeremy sued Dr. Minkowitz, Gam and Dr. Levy (a cardiologist who is Jeremy's brother-in-law), incorporated CardioLync in Delaware-Gam and Dr. Levy are its shareholders and directors. CardioLync is a cardiology telemedicine company based in Israel, and PTR alleges that it targets the same market as MMT. PTR claims that Gam and Dr. Levy, through CardioLync, misappropriated MMT's proprietary information by inducing Jeremy to breach his fiduciary duties and employment agreement with MMT. PTR brings one federal and nine state claims "directly and derivatively" on behalf of MMT.1

Defendants now move to dismiss for lack of subject-matter jurisdiction, lack of personal jurisdiction over Gam and Dr. Levy, and on the basis of FNC, arguing that Israel is the more appropriate forum. Central to Defendants' subject matter jurisdiction argument is their claim that PTR lacks standing because it has not complied with Israeli requirements for bringing a shareholder's derivative action on behalf of MMT. The parties have provided dueling affidavits as to what Israeli law requires and whether PTR should be exempted from Israel's pre-suit demand requirement. Schreiber Decl. ECF No. 14; Stein Decl. ECF No. 22.

II. Standard

Although Defendants raise multiple grounds for dismissal, this case calls for resolution of only one: forum non conveniens (FNC). The FNC doctrine empowers federal courts to dismiss an action when "a foreign tribunal is plainly the more suitable arbiter of the merits of the case." Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp. , 549 U.S. 422, 425, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007). When deciding a motion to dismiss that is based on FNC and other grounds, courts have "discretion to respond at once to a defendant's [FNC] plea, and need not take up first any other threshold objection." Id. Thus, where "considerations of convenience, fairness, and judicial economy so warrant," courts may exercise their discretion to dismiss on FNC grounds without deciding any jurisdictional questions. Id. In this case, FNC considerations "weigh heavily in favor of dismissal"-as explained below-and the existence of subject-matter and personal jurisdiction is "difficult to determine."2 See *285Sinochem , 549 U.S. at 436, 127 S.Ct. 1184. I therefore "take the less burdensome course" and dismiss on FNC grounds alone. See id.

FNC is a discretionary tool that empowers a district court "to dismiss an action on the ground that a court abroad is the more appropriate and convenient forum for adjudicating the controversy."

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Bluebook (online)
290 F. Supp. 3d 280, Counsel Stack Legal Research, https://law.counselstack.com/opinion/path-to-riches-llc-v-cardiolync-inc-ded-2018.