AllCells, LLC v. BioIVT, LLC

Background

AllCells sued its former employee, James Lee, for breach of a confidential settlement agreement. Under that agreement, for five years beginning April 17, 2017, Lee could not receive from a direct competitor of AllCells an annual salary exceeding $250,000 or any equity compensation. AllCells also sued BioIVT, LLC, Lee’s current employer, and Kevin King, BioIVT’s Chief Operating Officer, for intentional interference with contractual relations. AllCells brought an unlawful-practices claim under California’s Unfair Competition Law against all defendants.

Lee worked for Physicians Plasma Alliance, Inc. (PPA), which AllCells alleged was a direct competitor. BioIVT later acquired all outstanding PPA stock, and Lee began working for BioIVT. Defendants submitted declarations and documents stating that Lee did not own equity in PPA, BioIVT, or another direct competitor, and that he was not paid more than $250,000 per year. BioIVT capped Lee’s compensation at $250,000, and his 2021 offer letter stated that his total annual compensation could not exceed that amount.

Procedural history

AllCells filed the case on August 27, 2020. During earlier proceedings, the court dismissed AllCells’s claim under the unlawful prong of California’s Unfair Competition Law. The court later treated defendants’ pending motion as a motion for summary judgment on the remaining claims.

Summary judgment is granted when the evidence shows no genuine dispute over a fact that could affect the result and the moving party is entitled to judgment under the law. AllCells argued that more evidence and discovery were needed to determine whether Lee secretly owned PPA stock or received compensation connected to BioIVT’s acquisition of PPA. AllCells also argued that Lee’s ownership of JL Bio, LLC showed that he owned equity in a direct competitor.

Breach-of-contract claim against Lee

The court held that the evidence overwhelmingly showed Lee did not breach the settlement agreement. Lee, King, Jeffrey Gatz, Ray Soly, and Darren Lowenthal each provided sworn statements that Lee did not own equity in PPA or BioIVT. Pay records, tax returns, and the 2019 stock purchase agreement supported those statements. The court found that AllCells offered only speculation based principally on Lee’s salary increase and did not provide evidence supporting the theory that he had secretly received PPA shares or related payment.

The court also rejected AllCells’s JL Bio theory. Although Lee owned JL Bio and its tax filings described its business as providing human primary cells, the record contained no evidence that JL Bio had sold those products or actually competed with AllCells. The court concluded that the company’s existence and business description alone did not create a genuine factual dispute.

The court also declined to delay summary judgment for additional discovery. Under Federal Rule of Civil Procedure 56(d), a party seeking more discovery must identify the specific facts it expects to find, show that those facts exist, and explain why they are essential to opposing summary judgment. The court found that AllCells had not met that requirement.

Intentional-interference claim

The court granted summary judgment to BioIVT and King on AllCells’s claim for intentional interference with contractual relations. Under California law, that claim requires an actual breach or disruption of the contractual relationship. Because the court found no genuine factual dispute that Lee breached the settlement agreement, the interference claim also failed.

Disposition

The court granted defendants’ motion for summary judgment on all remaining claims. It ordered the clerk to enter judgment and close the case. The order does not state that the judgment was entered with or without prejudice.