`
`UNITED STATES DISTRICT COURT
`FOR THE MIDDLE DISTRICT OF FLORIDA
`TAMPA DIVISION
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`
`
`Plaintiff,
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`ALFASIGMA USA, INC.
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`
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`v.
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`WESTMINSTER
`PHARMACEUTICALS, LLC
`
`
`
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`Defendant.
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`
`
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`Case No.
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`COMPLAINT AND DEMAND FOR
`JURY TRIAL
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`INJUNCTIVE RELIEF SOUGHT
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`
`
`COMPLAINT
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`Plaintiff Alfasigma USA, Inc. (“Alfasigma”) (formerly known as Nestlé
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`Health Science-Pamlab Inc.) brings this Complaint against Defendant Westminster
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`Pharmaceuticals, LLC (“Defendant”) and in support thereof, alleges as follows:
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`I.
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`INTRODUCTION
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`1.
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`This is an action against Defendant for tortious interference with a
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`settlement contract. In the August 26, 2014 Master Settlement Agreement and
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`Mutual Release (“the Agreement”), Plaintiff settled a false advertising and unfair
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`competition case it had filed against Virtus Pharmaceuticals, Inc. (“Virtus”),
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`captioned Nestlé Health Science-Pamlab, et al. v. Virtus Pharmaceuticals, LLC,
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`1
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 2 of 17 PageID 2
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`Docket No. 9:12-cv-81202 (S.D. Fla.) (the “Virtus Litigation”). Mr. Louis Sanchez,
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`the then-chief executive officer of Virtus, and Mr. Ryan Menendez, at that time
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`Virtus’s Vice President, received significant benefits under the Agreement, and were
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`bound by it. Messrs. Sanchez and Menendez subsequently joined Defendant
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`Westminster. As he did with Virtus, Mr. Sanchez currently serves as Defendant’s
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`Chief Executive Officer, while Mr. Menendez served as Defendant’s Senior Vice
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`President of Business Development.
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`2.
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`Under the Agreement, Messrs. Sanchez and Menendez were released
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`of all claims against them personally and, in exchange, agreed to refrain, until the
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`end of 2024, from assisting any third parties from manufacturing, marketing, or
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`offering for sale certain medical food products. Defendant, however, with
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`knowledge of the Agreement and Messrs. Sanchez’s and Menendez’s duty to not
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`provide assistance in launching the covered medical food products, induced them to
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`breach the Agreement. With Messrs. Sanchez’s and Menendez’s assistance,
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`Defendant launched competing medical food products, to Plaintiff’s ongoing injury.
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`3.
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`By inducing Messrs. Sanchez and Menendez to breach the Agreement,
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`Defendant has intentionally and willfully interfered with Plaintiff’s contractual
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`rights, and in so doing caused significant, ongoing, and irreparable injury to Plaintiff.
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`Alfasigma brings this suit to stop Defendant’s ongoing interference with its
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`2
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 3 of 17 PageID 3
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`contractual rights, and to obtain compensatory and punitive damages for
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`Defendant’s willful and intentional misconduct.
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`II. PARTIES
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`4.
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`Plaintiff Alfasigma USA, Inc., formerly known as Nestlé Health
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`Science Pamlab, Inc., is a Delaware corporation with its principal place of business
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`at 4099 Highway 190 East Service Road, Covington, Louisiana 70433. A fully
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`integrated pharmaceutical company founded over fifty years ago, Alfasigma
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`specializes in the development, manufacture, sale, and distribution of medical foods
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`throughout the United States.
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`5.
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`Defendant Westminster Pharmaceuticals, LLC is a pharmaceutical
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`company which claims to distribute “generic drugs to pharmacies, hospitals, and
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`trusted wholesalers and distributors across the country.” A limited liability company,
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`Defendant is organized under Delaware law, and has offices in Tennessee and
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`Tampa, Florida. Based on Defendant’s public filings, it has three members: Gajan
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`Mahendiran, Amuda Mahendiran, and Vijay Patel.
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`6.
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`Defendant may be served with process through its Florida Registered
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`Agent, Corporation Service Company, 1201 Hays St., Tallahassee, Florida 32301.
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`3
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 4 of 17 PageID 4
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`III.
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`JURISDICTION AND VENUE
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`7.
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`This Court has diversity jurisdiction over this action pursuant to 28
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`U.S.C. § 1332(a), as there is complete diversity of citizenship among the parties, and
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`the amount in controversy exceeds $75,000, exclusive of interests and costs.
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`8.
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`For purposes of diversity jurisdiction, Alfasigma is a citizen of
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`Delaware and Louisiana.
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`9.
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`As a limited liability corporation, Defendant shares the citizenship of
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`its members. On April 6, 2021, Defendant filed its 2021 Foreign Limited Liability
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`Company Annual Report with the Florida Secretary of State, representing that the
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`address of all three of its members is 1321 Murfreesboro Pike, Suite 607, Nashville,
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`Tennessee 37217. In addition, in a document filed on September 24, 2020, in the
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`case captioned Jain et al. v. Nexgen Memantine, Inc. et al., Case No.: 8:20-cv-02263-
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`VMC-JSS, (M.D. Fla. Sept. 24, 2020), Dkt. 34, Mr. Gahan Mahendiran represented
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`that he is a resident of Virginia. Accordingly, and based on this publicly-filed
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`information, Defendant is a citizen of Tennessee and Virginia. Accordingly, there
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`is complete diversity between the parties.
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`10. The exercise of personal jurisdiction over Defendant in Florida is
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`proper as acts giving rise to Plaintiff’s cause of action have occurred in the state of
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`Florida. In addition, Defendant is registered as a Foreign Limited Liability Company
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`4
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 5 of 17 PageID 5
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`in Florida, and maintains corporate headquarters in Florida at 3450 Buschwood Park
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`Drive, Suite 110, Tampa, Florida 33618.
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`11. Venue is proper in this judicial district pursuant to 28 U.S.C. §
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`1391(b)(2) because a substantial part of the events giving rise to Plaintiff’s claim of
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`tortious interference alleged herein occurred in this District.
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`IV. FACTUAL BACKGROUND
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`A.
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`Plaintiff’s Medical Foods
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`12. Alfasigma specializes in the development of high quality medical
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`foods—defined by federal law as foods that are “formulated to be consumed or
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`administered enterally under the supervision of a physician and which [are] intended
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`for the specific dietary management of a disease or condition for which distinctive
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`nutritional requirements, based on recognized scientific principles, are established
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`by medical evaluation.” 21 U.S.C. § 360ee(b)(3).
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`13. Alfasigma markets and sells its medical foods throughout the United
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`States. Alfasigma’s products include Deplin®, formulated to address the distinctive
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`nutritional requirements of patients with depression or schizophrenia, and Metanx®,
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`formulated to address the distinctive nutritional requirements of patients with
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`diabetic peripheral neuropathy. Both Deplin® and Metanx® are formulated with a
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`stable, pure, and crystalline form of L-methylfolate Calcium—the biologically
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`active form of folate, which is critical for human health. Deplin® is formulated in
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`5
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 6 of 17 PageID 6
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`two strengths, with 15 mg of L-methylfolate Calcium and 7.5 mg of L-methylfolate
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`Calcium. Metanx® is formulated with 3 mg of L-methylfolate Calcium, 35 mg of
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`Pyridoxal-5´-Phosphate, and 2 mg of Methylcobalamin.
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`14.
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`In addition to marketing and selling its own brand-name medical foods,
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`Alfasigma also supplies medical foods to a joint venture, which offers authorized
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`generic versions of the original tablet forms of Deplin® and Metanx®, marketed
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`under the names L-Methylfolate and Foltanx™ (the “Authorized Generics”). The
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`Authorized Generics are sold throughout the United States.
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`15. A “generic” is a pharmaceutical product that is both pharmaceutically
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`equivalent to the brand name product—that is, formulated with the same active
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`ingredients, in the same amounts, and with the same dosage form—and
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`therapeutically equivalent—that is, has been shown to be bioequivalent to the brand
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`name product such that it will have the same clinical effect and safety profile when
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`administered to patients under the conditions specified in the label. The Authorized
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`Generics—manufactured using the same ingredients and in the same facility as
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`Deplin® and Metanx®—meet this demanding standard.
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`16. Medical foods, including Deplin®, Metanx®, and the Authorized
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`Generics, are often provided to patients through prescriptions written by their
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`doctors and filled at a pharmacy. Generally, pharmacists presented with a
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`prescription for a pharmaceutical product will consult a pharmaceutical information
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`6
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 7 of 17 PageID 7
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`database to determine if there is a generally less-expensive generic available for
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`dispensing. If there is, the generic will be substituted in place of the brand name
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`product actually prescribed. Unlike prescription drugs, however, the FDA does not
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`make equivalency determinations
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`regarding medical
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`foods. Thus,
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`the
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`pharmaceutical database providers make the decision whether to assign the same
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`database code—and thus “link” for substitution a generic product to a brand name
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`product—based on information provided by the companies that are marketing the
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`products.
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`B.
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`Plaintiff’s Lawsuit and Settlement with Virtus
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`17. On October 29, 2012, Plaintiff brought suit against Virtus in Case No.
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`9:12-cv-81202, in the United States District Court for the Southern District of
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`Florida (the “Virtus Litigation”). The Virtus Litigation asserted claims of false
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`advertising and unfair competition in connection with Virtus’s marketing of
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`unauthorized, purportedly generic versions of Deplin® and Metanx® (among other
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`products).
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`18.
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`In the Virtus Litigation, Plaintiff alleged that the products Virtus was
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`advertising and selling as “generic” versions of Deplin® and Metanx® were in fact
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`inequivalent and substandard, but nevertheless had been linked to Deplin®,
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`Metanx®, and the Authorized Generics in pharmaceutical information databases.
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`The Plaintiff further alleged that the advertising and sale of inequivalent products
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`7
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 8 of 17 PageID 8
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`injured Plaintiff both in terms of sales and reputation. Notably, even in its own
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`motion practice, Virtus acknowledged that Messrs. Sanchez and Menendez had
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`admitted during trial that Virtus had not tested its products for stability. Case No.
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`9:12-cv-81202, Dkt. 352.
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`19. The jury’s questions during their deliberations indicated they likely
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`would have returned a plaintiff’s verdict. For example, a jury note to the Court
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`during deliberations concerned the definition of “detriment”—an element of one of
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`Plaintiff’s claims—and whether it was “considered a detriment if a consumer was
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`mislead [sic] to purchase a product when the product was not what the consumer
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`intended to buy?” Case No. 9:12-cv-81202, Dkt. 387 (Tr. Proceeding Aug. 26,
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`2014), at 4:4-6.
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`20. Virtus agreed to settle the litigation while the jury deliberated, resulting
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`in the Agreement. See Case No. 9:12-cv-81202, at Dkt. 363 (Aug. 26, 2014)
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`(“Parties announced settlement prior to verdict.”) One of Plaintiff’s objectives in
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`resolving the Virtus Litigation was to prevent the advertising and sale of inequivalent
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`products as “generic” versions of Deplin® and Metanx®. To this end, the Agreement
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`provided that, until the end of 2024, the “Virtus Parties”—which includes Messrs.
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`Sanchez and Menendez—would not “assist or attempt to assist” any “Third Parties”
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`in “engag[ing] in any manufacture, use, sale, offers for sale, importation,
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`distribution, advertising, promotion, or marketing of any such Third Party's product
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`8
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 9 of 17 PageID 9
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`given the same Database Code by pharmaceutical databases as any” of the products
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`covered by the Agreement, including the “Tablet Product.”
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`21.
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`“Tablet product” is defined in the Agreement by reference to the
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`database codes for the Authorized Generics of Deplin® and Metanx®.
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`C. Defendant’s Chief Executive Officer and Senior Vice President of
`Business Development Are Bound by the Agreement
`22. Mr. Sanchez, Virtus’s Chief Executive Officer during the Virtus
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`Litigation and at the time of the negotiation and execution of the Agreement,
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`executed the Agreement:
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`23. Along with Mr. Sanchez, the Agreement designated Mr. Menendez,
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`then serving as Virtus’s Vice President, as the persons to receive notices for Virtus
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`under the Agreement:
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`9
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 10 of 17 PageID 10
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`24. The Agreement provided significant consideration to both Messrs.
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`Sanchez and Menendez, including releasing them personally from all claims by
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`Plaintiff. In exchange, Messrs. Sanchez and Menendez were bound by the
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`Agreement as among the “Virtus Parties,” further defined as “Virtus and its
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`Affiliates,” which was defined to include persons, such as Virtus’s Chief Executive
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`officer and Vice President, who had “the power to direct or cause the direction of
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`the management and policies of” Virtus.
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`25.
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`In executing the Agreement, Mr. Sanchez expressly represented that he
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`acted with actual authority to bind the Virtus Parties, specifically including himself
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`and Mr. Menendez as Virtus’s “Affiliates.”
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`D. Defendant’s Tortious Interference with the Agreement
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`26. By 2020, Messrs. Sanchez and Menendez had both left their positions
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`at Virtus and joined Defendant: Mr. Sanchez as Defendant’s Chief Executive
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`10
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 11 of 17 PageID 11
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`Officer, and Mr. Menendez as Defendant’s Senior Vice President of Business
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`Development.
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`27. At the time Messrs. Sanchez and Menendez joined Defendant as
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`officers, Defendant had constructive knowledge and, upon information and belief,
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`actual knowledge of the Agreement binding Messrs. Sanchez and Menendez.
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`28. Due to their positions and roles with Virtus, Messrs. Sanchez and
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`Menendez possess and, at the time they joined Defendant, possessed specialized
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`knowledge
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`regarding
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`the development,
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`formulation,
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`ingredient sourcing,
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`manufacturing, and marketing of purportedly generic versions of Deplin® and
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`Metanx®.
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`29. By the Fall of 2021, Defendant had begun manufacturing, advertising,
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`promoting, distributing, marketing, offering to sell and selling medical foods in
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`Tablet form marketed under the names L-Methyl-B6-B12 and L-Methylfolate
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`Calcium (“Defendant’s Tablet Products”). Defendant advertises, promotes,
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`distributes, markets, offers for sale, and sells these products as having the same
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`ingredients and with the same strengths as the Authorized Generics. Defendant’s
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`Tablet Products share the same Database Code as the Authorized Generics and are
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`thus “linked” for substitution.
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`30. Defendant aggressively advertises, promotes, distributes, markets,
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`offers for sale, and sells Defendant’s Tablet Products nationwide, including in
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`11
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 12 of 17 PageID 12
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`Florida and in this judicial district. Defendant’s sale of these products have diverted
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`sales away from the Authorized Generics, to Plaintiff’s injury, and have further
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`caused price erosion.
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`31. Upon information and belief, Defendant relied upon, and continues to
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`rely upon, the assistance and direction of Messrs. Sanchez and Menendez,
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`Defendant’s Chief Executive Officer and Senior Vice President of Business
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`Development, in manufacturing, selling, offering for sale, distributing, advertising,
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`promoting, and/or marketing Defendant’s Tablet Products.
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`32. Upon information and belief, Defendant did not begin manufacturing,
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`selling, offering for sale, distributing, advertising, promoting, and/or marketing
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`Defendant’s Tablet Products until after Messrs. Sanchez and Menendez joined
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`Defendant as its Chief Executive Officer and Senior Vice President Business
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`Development.
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`33. Upon information and belief, Defendant could not have manufactured,
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`sold, offered for sale, distributed, advertised, promoted, and/or marketed
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`Defendant’s Tablet Products without Messrs. Sanchez and Menendez assistance.
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`34. Messrs. Sanchez and Menendez’s assistance to Defendant in its
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`manufacture, sale, offering for sale, distribution, advertising, promotion, and/or
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`marketing of Defendant’s Tablet Product constitutes a material and ongoing breach
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`of the Agreement.
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`12
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 13 of 17 PageID 13
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`35. Despite having constructive (and, upon information and belief, actual)
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`knowledge of the Agreement, Defendant induced Messrs. Sanchez and Menendez to
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`breach the Agreement to provide their specialized knowledge regarding the
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`development, formulation, ingredient sourcing, manufacturing, and marketing
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`obtained with Virtus in order to assist and to continue assisting Defendant in
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`manufacturing, marketing, selling, offering for sale, distributing, advertising,
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`promoting and marketing Defendant’s Tablet Products.
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`36. Defendant’s inducement of Messrs. Sanchez’s and Menendez’s breach
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`of the Agreement was willful and/or reckless, and has continued despite notice from
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`Plaintiff regarding the ongoing breach.
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`37. Defendant’s interference with the Agreement, and its inducement of
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`Messrs. Sanchez’s and Menendez’s breach of the Agreement have injured, and will
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`continue to injure, Plaintiff. In addition to direct financial losses resulting from the
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`loss of sales of the Authorized Generics, Defendant’s interference also has caused
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`irreparable harm to Plaintiff through the loss of customers and the damage to its
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`reputation.
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`38. Plaintiff has retained the undersigned law firms of Carlton Fields P.A.
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`and Shearman & Sterling LLP to pursue this matter on its behalf, and it is obligated
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`to pay them reasonable attorneys’ fees and costs and litigation expenses associated
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`with the prosecution of this matter.
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`13
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 14 of 17 PageID 14
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`COUNT I
`TORTIOUS INTERFERENCE WITH CONTRACT
`39. Plaintiff incorporates the allegations of the preceding paragraphs as
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`though fully set forth herein.
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`40. A binding and enforceable contract exists between Plaintiff and
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`Defendant’s Chief Executive Officer, Louis Sanchez, and with Ryan Menendez,
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`who served as Defendant’s Vice President of Business Relations. At all times
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`relevant herein, Defendant had constructive knowledge and, upon information and
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`belief, actual knowledge of this binding Agreement.
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`41.
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`In material breach of the Agreement, Messrs. Sanchez and Menendez
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`assisted Defendant in its manufacture, sale, offers for sale, distribution, advertising,
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`promotion, or marketing of Defendant’s Tablet Products.
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`42. Defendant interfered with Plaintiff’s rights under the Agreement when
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`it induced Messrs. Sanchez and Menendez to breach the Agreement by assisting
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`Defendant in its manufacture, sale, offers for sale, distribution, advertising,
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`promotion, or marketing of Defendant’s Tablet Products.
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`43. Defendant did not act with any legal justification in interfering with
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`Plaintiff’s Agreement, and Defendant was not acting under any privilege in its
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`interference.
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`44. As a result of Defendants’ tortious interference and the Plaintiff’s
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`Agreement, Plaintiff has suffered, and unless such acts and practices are enjoined by
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`14
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 15 of 17 PageID 15
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`this Court, will continue to suffer, irreparable injury and damage for which it is
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`entitled to relief.
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`45. Plaintiff is entitled to an award of compensatory damages for
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`Defendant’s tortious interference, in an amount which exceeds $75,000. Because
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`Defendant has acted deliberately, intentionally, and/or grossly negligently, Plaintiff
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`also is entitled to an award of punitive damages.
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`V.
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`JURY DEMAND
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`Plaintiff demands a trial by jury of all issues so triable.
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`VI. PRAYER FOR RELIEF
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`WHEREFORE, Plaintiff respectfully prays for the following relief:
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`A.
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`The Court enter a judgment and order that Defendant, its agents,
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`servants, employees, attorneys, successors and assigns, and all others in active
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`concert or participation with them, be preliminarily and permanently enjoined from
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`interfering with Plaintiff’s rights under the Agreement, and specifically that until the
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`end of 2024, Defendant will not accept the assistance of its Chief Executive Officer
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`Louis Sanchez or Ryan Menendez, who served as its Vice President of Business
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`Development, in its manufacture, sale, offers for sale, distribution, advertising,
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`promotion, or marketing of Defendant’s Tablet Products;
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`B.
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`The Court enter a judgment and order requiring Defendant to pay
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`Plaintiff compensatory damages in the amount of Plaintiff’s actual and consequential
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`15
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`Case 8:22-cv-00717 Document 1 Filed 03/28/22 Page 16 of 17 PageID 16
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`damages and any unjust enrichment by Defendant resulting from its tortious
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`interference with Plaintiff’s Agreement;
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`C.
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`That the Court enter a judgment and order requiring Defendant to pay
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`Plaintiff punitive damages for Defendant’s deliberate, intentional, and/or grossly
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`negligent conduct which injured Plaintiff;
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`D.
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`The Court enter a judgment and order awarding Plaintiff its costs in this
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`action, as well as awarding pre-judgment interest and post-judgment interest on any
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`damages award;
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`E.
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`The Court enter a judgment and an order awarding Plaintiff such other
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`and further relief as the Court deems just and equitable.
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`Dated: March 28, 2022
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`Respectfully submitted,
`CARLTON FIELDS, P.A.
`
`/s/ J. Coy Stull
`J. Coy Stull
`Florida Bar No. 15864
`Kai Su
`Florida Bar No. 1018977
`4221 W. Boy Scout Blvd., Suite 1000
`Tampa, Florida 33607-5780
`Tel. No.: (813) 229-4395
`Fax No.: (813) 229-4133
`Email: jstull@carltonfields.com
`Email: ksu@carltonfields.com
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`
`-and-
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`SHEARMAN & STERLING LLP
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`Saul Perloff (pro hac vice motion
`forthcoming)
`Lead Counsel
`Andre Hanson (pro hac vice motion
`forthcoming)
`Robert Rouder (pro hac vice motion
`forthcoming)
`Mary Catherine Amerine (pro hac vice
`motion forthcoming)
`300 W. 6th Street, 22nd Floor
`Austin, Texas 78701
`Tel. No.: (512) 647-1900
`Email: saul.perloff@shearman.com
`Email: andre.hanson@shearman.com
`Email: bob.rouder@shearman.com
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`Attorneys for Plaintiff Alfasigma USA, Inc.
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`17
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