PTC Therapeutics, Inc. v. AcureX Biosciences Corporation, et al.
- Martinez-Olguin
- 3:25-cv-04594
- U.S. District Court · Northern District of California
- 9
In PTC Therapeutics v. AcureX Biosciences, Judge Martinez-Olguin denied PTC’s motions to disqualify Dr. Monroy and CPM and strike her affidavit.
PTC’s motions to disqualify Dr. Gladys Monroy and Cotchett, Pitre & McCarthy, LLP, and to strike Dr. Monroy’s affidavit were denied. The order allowed Dr. Monroy and CPM to remain involved as described in the opinion.
What happened
PTC Therapeutics, Inc. v. AcureX Biosciences Corporation concerns PTC’s claim that AcureX, Dr. William Shrader, and Dr. Sean Pintchovski misappropriated trade secrets. PTC sought to disqualify Dr. Gladys Monroy and the defendants’ law firm, Cotchett, Pitre & McCarthy, LLP, and to strike Dr. Monroy’s affidavit.
Dr. Monroy had previously advised BioElectron, PTC’s predecessor-in-interest, on intellectual-property matters. PTC argued that this earlier attorney-client relationship created a conflict because BioElectron’s attorney-client privilege transferred to PTC when PTC acquired substantially all of BioElectron’s assets. Defendants argued that the privilege did not transfer and that Dr. Monroy had not used confidential information.
Judge Araceli Martinez-Olguin ruled that the asset purchase did not transfer BioElectron’s attorney-client privilege to PTC because it was not a merger and BioElectron remained in existence. The court denied PTC’s motion to disqualify Dr. Monroy and CPM and denied the motion to strike Dr. Monroy’s affidavit.
The detailed version
- PTC Therapeutics, Inc. v. AcureX Biosciences Corporation, et al. · No. 3:25-cv-04594
- Martinez-Olguin
- Nov. 26, 2025
Background
PTC alleges that AcureX Biosciences Corporation, Dr. William Shrader, and Dr. Sean Pintchovski misappropriated trade secrets concerning treatments for neurodegenerative diseases. Before PTC acquired substantially all of BioElectron Technology Corporation’s assets in April 2019, Drs. Shrader and Pintchovski worked for BioElectron on compounds including Vatiquinone and Utreloxastat.
Dr. Gladys Monroy was a patent attorney at Morrison & Foerster LLP and advised BioElectron on intellectual-property matters from 2005 to 2015, including patent filings involving matters that allegedly constitute trade secrets in this case. Defendants submitted Dr. Monroy’s affidavit in support of their motion to unseal the Complaint. Dr. Monroy stated that she relied on publicly redacted materials, public sources, and her professional experience, and did not review or rely on confidential information from her earlier work for BioElectron. She also stated that she had not communicated with CPM about the case or shared materials with the firm. CPM stated that it had not communicated with Dr. Monroy about the case and did not intend to retain her as an expert witness at trial or for the case generally.
The Parties’ Arguments
PTC moved to disqualify Dr. Monroy and CPM and to strike Dr. Monroy’s affidavit. PTC argued that Dr. Monroy’s prior role as BioElectron’s intellectual-property counsel created a conflict and that the conflict should be attributed to CPM. Defendants argued that Dr. Monroy’s duties to BioElectron did not transfer to PTC, that no relevant confidential information was transferred to Dr. Monroy, and that CPM never had a fiduciary relationship with PTC.
Legal Standard
The court explained that district courts have discretion to disqualify attorneys for ethical violations and that California law governs disqualification. California applies a “substantial relationship” test, which considers the relationship between the earlier and current legal matters and the relationship between the attorney and former client. When the attorney had a direct relationship with the former client, confidential information is presumed to have passed to the attorney.
The party seeking disqualification must establish a disqualifying conflict by a preponderance of the evidence, meaning that the conflict is more likely than not to exist.
Court’s Analysis
The court first considered whether the attorney-client privilege held by BioElectron transferred to PTC under the 2019 Asset Purchase Agreement. The court relied on Favila v. Katten Muchin Rosenman LLP, which held that an asset purchase—even a transfer of all assets followed by dissolution of the predecessor corporation—does not transfer the attorney-client privilege to the purchasing corporation.
The court found that Favila controlled. BioElectron transferred substantially all, but not all, of its assets to PTC, and the agreement required BioElectron to maintain its corporate existence for five years after the transaction. The transaction was therefore not a merger. The court held that BioElectron’s attorney-client privilege concerning Dr. Monroy’s representation did not transfer to PTC.
Because Dr. Monroy had no attorney-client relationship with PTC, the court found no basis to disqualify her and no basis to attribute a conflict to CPM. The court also rejected PTC’s argument that the asset purchase agreement itself transferred the privilege, explaining that PTC cited no California authority allowing a corporation to assign attorney-client privilege to another corporation without a merger. The court further rejected PTC’s reliance on its alleged financial stake in a breach of duties owed to BioElectron, noting that PTC had not shown BioElectron had a current stake in PTC and that a financial “stake” alone did not establish grounds for disqualification.
Disposition
The court DENIES PTC’s motion to disqualify Dr. Monroy and Cotchett, Pitre & McCarthy, LLP. The court also DENIES PTC’s motion to strike Dr. Monroy’s affidavit. The order disposes of Docket No. 45. The court separately set a January 20, 2026 hearing on defendants’ motion to dismiss and motion to unseal the Complaint.
Read the full 9-page opinion on CourtListener, the free public archive maintained by the Free Law Project.