Strobos v. Rxbio, Inc.

251 F. Supp. 3d 221, 2017 WL 1901952, 2017 U.S. Dist. LEXIS 70190
CourtDistrict Court, District of Columbia
DecidedMay 9, 2017
DocketCivil Action No. 2015-1994
StatusPublished

This text of 251 F. Supp. 3d 221 (Strobos v. Rxbio, Inc.) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Strobos v. Rxbio, Inc., 251 F. Supp. 3d 221, 2017 WL 1901952, 2017 U.S. Dist. LEXIS 70190 (D.D.C. 2017).

Opinion

MEMORANDUM OPINION

JAMES E. BOASBERG, United States District Judge

You don’t need to be a venture capitalist to know that an early investment in the development of a new drug may never pay off. Plaintiff Jurriaan Strobos, though, claims that he was stricken with more than a bad bet when Defendant RxBio, Inc., shortchanged him nearly $700,000 for his work on developing its flagship drug. The Company, in turn, acknowledges that it came down with a nasty case of the financial woes in 2014, but rejoins that it was Strobos who violated his employment contract and disclosed certain of its trade secrets.

Both parties, hoping for a swift tonic to these alleged ills, now cross-move for summary judgment on all counts. As the Court concludes that factual findings are needed to put many of their maladies to rest, it will largely deny both Motions.

I. Background

Because the Court is dealing with Cross-Motions, it cannot set forth the facts in the light most favorable to the non-moving party. Instead, it will offer only the undisputed background to this squabble and then detail specific relevant facts within the corresponding analysis subsections. It also provides a procedural history of the litigation here in a separate section.

A. Employment and Resignation

Defendant is an early-stage Tennessee company that is developing a drug— RxlOO—to prevent and treat acute radiation syndrome. See ECF No. 38 (RxBio Statement of Issues) (SOI), ¶ 2. On October 1, 2011, its President and CEO, W. Shannon McCool, verbally agreed to finalize the hiring of Plaintiff as its sole Vice President. Id., ¶¶ 4-5. A trained medical doctor and lawyer, Strobos brought with him particular expertise in navigating the regulatory gantlet required for the approval of new drugs. Id., ¶ 1.

*225 It was no coincidence, then, that he officially came on board just days after the Company secured an important three-year deal to develop RxlOO with the financial assistance of the U.S. Biomedical Advanced Research Development Authority (BARDA). Id. ¶¶ 19-21. In fact, RxBio’s “decision to hire [him], as well as the amount of [his] salary,” was directly tied to this deal, and the Company’s initial pitch to the federal agency “included proposed labor costs for [him] at a rate of $385,000 per year.” ECF No. 47-1 (Strobos SOI), ¶ 34. By the contract’s terms, moreover, RxBio had to track the time that Strobos worked on the development of RxlOO and submit this log to BARDA for monthly reimbursements. See RxBio SOI, ¶ 21; ECF 47-2 (Deposition of W. Shannon McCool) at 16:1-12.

This arrangement worked well for more than two years. In January 2014, though, a government audit flagged concerns about RxBio. See RxBio SOI, ¶¶ 35-37. BARDA immediately began withholding its monthly checks in response. Id. Forced to turn its microscopes inward, the Company soon realized that it had another potential problem with its books—namely, it did not have a current employment contract for Strobos (or other top executives). Id., ¶ 38. Plaintiff and Defendant quickly executed an agreement in mid-2014 with an effective date relating back to start of his tenure in October 2011. See RxBio SOI, ¶ 38; ECF No. 11-1, Exh. B (2014 Employment Contract).

Two months later, the government’s pause on the RxlOO project became more permanent when BARDA let its contract expire without exercising a lucrative option. See RxBio SOI, ¶¶ 39-40. This decision left Defendant in a serious financial bind as the agency was still withholding its earlier reimbursements. Id., ¶ 40. CEO McCool and his brother, who served as RxBio’s Chief Information Officer, consequently decided to slash their annual salaries in order to keep the project moving forward over the course of 2014. See Strobos SOI, ¶¶ 54-55.

Unfortunately, more bad news was just around the bend. In mid-2014, an independent study at the University of Maryland failed to show RxlOO effective for use in non-human primates. See RxBio SOI, ¶¶ 51-52, With its flagship project now in serious peril, Strobos, McCool, and others at RxBio agreed to review the study for potential design defects. Id., ¶ 52; see also ECF No. 23-6 (Deposition of Gabor Tigyi) at 43:10-44:3. Strobos, in particular, discussed possible issues with the study’s rehydration of its test animals with two outside clinicians: Dr. Nisha Chandra-Strobos, his wife and a well-regarded clinician in her own right, and Dr. William Greenough, an expert in diarrheal medicine. See RxBio SOI, ¶¶ 52-55.

By the fall of 2014, however, the Company was still in rather dire financial straits. With no other options on the table, in September, Strobos and McCool resolved to make additional spending cuts. See Strobos SOI, ¶ 59. More specifically, the men agreed that RxBio would no longer pay Strobos—its highest paid employee at the time at $385,000 - his full salary each month. See id., ¶¶ 59-60; RxBio SOI, ¶¶ 43-44; ECF No. 41-1 (Declaration of W. Shannon McCool), ¶ 53. The Company began instead to pay him at a rate of $20,000 per month and accrued the unpaid portions of his original salary and any bonuses on its books. See RxBio SOI, ¶¶ 43-44; ECF No. 11 (Amended Counterclaim), ¶¶ 24-25. Then, in November, Stro-bos and McCool again agreed verbally to reduce this monthly check further still, while they also coordinated similar sacrifices from other RxBio employees. See *226 RxBio SOI, ¶¶ 13, 46-49; Strobos SOI, ¶¶ 64-68, 76.

As the months ticked by under the Company’s obvious financial strain, the relationship between Strobos and McCool rapidly deteriorated. By early 2015, the. two seem to, have cpnie to a particularly contentious stalemate over the Company’s potential pursuit of animal-modeling projects. See Strobos SOI, ¶¶ 113-16. Animal modeling involves the design of studies that use animals as test subjects “to demonstrate, among other things, the efficacy of [drugs] in animals [as] satisfactorily predictive for use with humans.” Id., ¶ 17. Strobos, for his part, felt that a separate entity should be formed to handle' this work, while McCool thought the endeavour' properly housed within RxBio’s existing research framework. Id., ¶¶ 113-16.

On July 3, 2015, this disagreement reached a boiling point when the two men debated the issue over the phone. Id., ¶¶ 114-18. During this conversation, Stro-bos expressed that the animal-modeling endeavor would be much better off if he could solicit funding from BARDA directly in a new venture so as to avoid any residual RxBio “baggage” from the ill-fated RxlOO deal; Id. This message was pot well received by McCool, who began to question Strobos’s loyalty to the Company. See McCool Dep. at 139:25-140:9.

As a result of what .Strobos then perceived to be actions taken by McCool to sideline his influence and authority, Plaintiff resigned from the Company just two-weeks later on July 17, 2015, See Strobos SOI, ¶ 214; RxBio SOI, ¶ 71.

B, Procedural.History

Four months thereafter, Strobos brought this suit seeking to recover nearly $700,000 in expenses, salary, bonuses, and severance that he claimed RxBio unjustly refused to pay-him. See ECF No.

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Bluebook (online)
251 F. Supp. 3d 221, 2017 WL 1901952, 2017 U.S. Dist. LEXIS 70190, Counsel Stack Legal Research, https://law.counselstack.com/opinion/strobos-v-rxbio-inc-dcd-2017.