Miller-Rich v. Altum Pharmaceuticals Inc.

Background

Nancy Miller-Rich sued Altum Pharmaceuticals Inc., BetterLife Pharma Inc., Ahmad Doroudian, Stephen Dattels, Krisztian Toth, Joseph Mimran, John and Jane Does 1-50, and ABC Corporations 1-20. She asserted a securities-fraud claim under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, two common-law fraud claims, and two breach-of-contract claims. The claims concerned her former consulting and employment relationships with Altum and shares she received as compensation.

Miller-Rich alleged that Altum failed to pay compensation required by her employment agreement and later failed to make payments required by a 2020 settlement agreement. She also alleged that Doroudian, Dattels, Toth, Mimran, and others participated in a scheme to divert Altum’s COVID-19-related interferon opportunity to BetterLife. The settlement agreement included a schedule stating that the parties submitted to the exclusive jurisdiction of the courts of British Columbia for matters arising under or related to the schedule.

Altum, BetterLife, and Doroudian moved to dismiss the amended complaint. Dattels separately moved to dismiss. Miller-Rich opposed both motions and conditionally requested limited discovery concerning personal jurisdiction. Toth, Mimran, the unnamed defendants, and the unnamed corporations had not appeared.

Issue preclusion

The defendants argued that the New York state court’s earlier dismissal on forum non conveniens grounds prevented Miller-Rich from disputing that British Columbia was the proper forum. Issue preclusion, also called collateral estoppel, prevents a party from relitigating an issue that was actually and necessarily decided in an earlier case after a full and fair opportunity to litigate it.

The court rejected that argument. It explained that the state court had decided only that the New York Supreme Court was an inconvenient forum compared with the federal court and the British Columbia court. The state court had not decided whether the Southern District of New York or the British Columbia court was the more convenient forum. Because the issues were not identical, the state-court decision did not preclude Miller-Rich from contesting the federal defendants’ forum argument.

Forum non conveniens

Forum non conveniens is a doctrine allowing a court to dismiss a case when another available forum is more appropriate and convenient. The court applied a modified analysis because the settlement agreement contained a forum-selection clause. Under that analysis, it considered whether the clause was reasonably communicated, mandatory, applicable to the claims and parties, and rebutted by a sufficiently strong showing that enforcement would be unfair, unjust, unreasonable, fraudulent, or the product of overreaching.

The court found that the clause was clearly written and reasonably communicated to Miller-Rich. It was mandatory because it required the parties to submit to the exclusive jurisdiction of the courts of British Columbia. The court also found that the clause covered all of Miller-Rich’s claims. The breach-of-settlement claim directly concerned the settlement agreement. The employment, securities-fraud, and other fraud claims were related to that agreement because the settlement agreement superseded earlier agreements, included releases concerning Miller-Rich’s employment with Altum, and concerned shares and compensation connected to those earlier agreements.

The court further held that the clause could be enforced by the non-signatory defendants. It found BetterLife closely related to Altum as Altum’s successor in interest, and found that Dattels, Toth, Mimran, the Does, and the Corporations were alleged to have acted in concert with signatories. It also found that Miller-Rich’s claims against those defendants were substantially identical to her fraud claim against Altum and Doroudian.

Finally, the court held that Miller-Rich had not overcome the clause’s presumption of enforceability. She did not allege that the clause was obtained through fraud or show that enforcement would be unfair or unreasonable. The court rejected her concerns that British Columbia might lack jurisdiction over Dattels, Toth, and Mimran or that a limitations period might bar claims there, describing those concerns as hypothetical. It also noted that the defendants had stipulated to accept service for an action in British Columbia and that Miller-Rich had agreed to British Columbia jurisdiction in three writings.

The court concluded that British Columbia was an adequate alternative forum and that the forum-selection clause should be enforced. It dismissed the federal case on forum non conveniens grounds without deciding the merits of Miller-Rich’s securities-fraud, fraud, or contract claims.

Disposition

The court granted Miller-Rich’s motion for leave to submit a declaration. It granted the Altum Defendants’ motion to dismiss and Dattels’s motion to dismiss. It denied Miller-Rich’s conditional cross-motion for jurisdictional discovery as moot and directed the clerk to close the case.