Pederson v. Frost

Background

Lee Michael Pederson brought the action in Minnesota against Phillip Frost; Opko Health, Inc.; Brian Keller; CoCrystal Pharma, Inc.; and John Does 1–50. He alleged a fraudulent scheme involving the funding of drug-delivery technology and tortious interference with his prospective business advantage. The opinion states that Pederson is a Minnesota resident, is licensed to practice law in Minnesota, and performed patent-related legal services for the defendants and a predecessor company.

Opko Health, Inc., and CoCrystal Pharma, Inc., are identified as Delaware corporations with principal places of business in Florida and Georgia, respectively. Phillip Frost, Opko’s CEO, is identified as a Florida resident, and Brian Keller, an officer and director of a predecessor to CoCrystal, is identified as a California resident.

Report and Recommendation

The defendants moved to dismiss the amended complaint on several grounds, including lack of personal jurisdiction. Personal jurisdiction is a court’s authority to exercise power over a defendant. Magistrate Judge Becky R. Thorson recommended granting the motion because Pederson had not made the required initial showing that the defendants had sufficient minimum contacts with Minnesota.

The recommendation applied five factors used by the United States Court of Appeals for the Eighth Circuit: the nature and quality of the defendants’ contacts with Minnesota, the quantity of those contacts, the relationship between the claims and the contacts, Minnesota’s interest in providing a forum for its residents, and the convenience of the parties. The recommendation found that many of the alleged actions did not occur in Minnesota and were not purposefully directed there. It also found that phone calls, mail, and email communications were insufficient and largely reflected contacts with Pederson rather than contacts with Minnesota.

Analysis

Pederson objected that the recommendation focused on his Minnesota residence and failed to account for his Minnesota attorney license. He argued that, by using his legal services, the defendants benefited from protections under Minnesota law, including attorney-client privilege, confidentiality, and the work-product doctrine.

The court rejected that argument. It explained that doing business with a forum-state resident generally does not by itself create the required contacts between a nonresident defendant and the forum. The court also stated that the fact that work might foreseeably be performed in Minnesota is not enough. Any connection arising from Minnesota law in this case flowed through Pederson, making him the only link between the defendants and Minnesota. The court found that Pederson identified no facts showing that the defendants deliberately sought a Minnesota-specific benefit or legal protection independent of their relationship with him, or that the legal services had to be performed in Minnesota or under Minnesota law.

Because Pederson did not object to the rest of the recommendation, the court reviewed those portions for clear error and found none.

Disposition

The court overruled Pederson’s objections, adopted the July 11, 2018 report and recommendation, and granted the defendants’ motion to dismiss the amended complaint. The court dismissed the amended complaint without prejudice for lack of personal jurisdiction. It also denied Pederson’s written and oral requests to supplement the record. Judge Wilhelmina M. Wright ordered that judgment be entered accordingly.