Case: 3:21-cv-00107-NBB-RP Doc #: 1 Filed: 05/25/21 1 of 10 PageID #: 1
`
`IN THE UNITED STATES DISTRICT COURT FOR
`THE NORTHERN DISTRICT OF MISSISSIPPI
`OXFORD DIVISION
`
`
`MISEMER PHARMACEUTICALS, INC.,
`and ARUN KAPOOR
`
`VS.
`
`VIRTUS PHARMACEUTICALS, LLC
`
`
`
`CIVIL ACTION NO.: _________________
`
`PLAINTIFFS
`
`DEFENDANT
`
`
`
`
`
`
`COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF
`
`
`Plaintiffs Misemer Pharmaceuticals, Inc. (“Misemer”) and Arun Kapoor
`
`(“Kapoor” and collectively with Misemer, “Plaintiffs”) file this Complaint against
`
`Defendant Virtus Pharmaceuticals, LLC (“Virtus” or “Defendant”), as follows:
`
`INTRODUCTION
`
`1.
`
`On April 28, 2021, Virtus commenced an arbitration (the “Arbitration”)
`
`against Belcher Pharmaceuticals, LLC (“Belcher”), Supriya Taneja (“Taneja”),
`
`Misemer, and Kapoor by filing a notice of arbitration (the “Notice of Arbitration”)
`
`with the American Arbitration Association. A true and correct copy of the Notice of
`
`Arbitration is attached as Exhibit A.
`
`2.
`
`The Notice of Arbitration alleges that Belcher and Misemer are in
`
`violation of an exclusive Supply and Distribution Agreement between Virtus and
`
`Belcher (the “Virtus Agreement”). A true and correct copy of the Virtus Agreement
`
`is attached as Exhibit B.
`
`3. While the Virtus Agreement includes a mandatory arbitration clause,
`
`Virtus Agreement at § 13.2, neither Misemer nor Kapoor are parties or signatories
`
`
`
`
`
`IN THE UNITED STATES DISTRICT COURT FOR
`THE NORTHERN DISTRICT OF MISSISSIPPI
`OXFORD DIVISION
`
`
`MISEMER PHARMACEUTICALS, INC.,
`and ARUN KAPOOR
`
`VS.
`
`VIRTUS PHARMACEUTICALS, LLC
`
`
`
`CIVIL ACTION NO.: _________________
`
`PLAINTIFFS
`
`DEFENDANT
`
`
`
`
`
`
`COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF
`
`
`Plaintiffs Misemer Pharmaceuticals, Inc. (“Misemer”) and Arun Kapoor
`
`(“Kapoor” and collectively with Misemer, “Plaintiffs”) file this Complaint against
`
`Defendant Virtus Pharmaceuticals, LLC (“Virtus” or “Defendant”), as follows:
`
`INTRODUCTION
`
`1.
`
`On April 28, 2021, Virtus commenced an arbitration (the “Arbitration”)
`
`against Belcher Pharmaceuticals, LLC (“Belcher”), Supriya Taneja (“Taneja”),
`
`Misemer, and Kapoor by filing a notice of arbitration (the “Notice of Arbitration”)
`
`with the American Arbitration Association. A true and correct copy of the Notice of
`
`Arbitration is attached as Exhibit A.
`
`2.
`
`The Notice of Arbitration alleges that Belcher and Misemer are in
`
`violation of an exclusive Supply and Distribution Agreement between Virtus and
`
`Belcher (the “Virtus Agreement”). A true and correct copy of the Virtus Agreement
`
`is attached as Exhibit B.
`
`3. While the Virtus Agreement includes a mandatory arbitration clause,
`
`Virtus Agreement at § 13.2, neither Misemer nor Kapoor are parties or signatories
`
`
`
`
`
`Case: 3:21-cv-00107-NBB-RP Doc #: 1 Filed: 05/25/21 2 of 10 PageID #: 2
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`
`
`to the Virtus Agreement. Plaintiffs have not agreed to arbitrate any claims with
`
`Virtus.
`
`4.
`
`In addition, Virtus has sent a letter to Xiromed, LLC (“Xiromed”), a
`
`customer of Misemer, demanding that Xiromed cease and desist from purchasing
`
`certain pharmaceutical products from Misemer that allegedly violate the Virtus
`
`Agreement. Xiromed has since terminated its agreement with Misemer.
`
`5.
`
`Accordingly, Plaintiffs have filed this Complaint to seek: (1) a
`
`declaration that they are not required to arbitrate any claims with Virtus; (2) an
`
`order permanently enjoining Virtus from prosecuting an arbitration against
`
`Plaintiffs; and (3) damages to compensate Misemer for Virtus’s tortious interference
`
`with its contract with Xiromed.
`
`PARTIES
`
`6.
`
`Misemer is a Mississippi corporation with a principal place of business
`
`in Ripley, Mississippi. Misemer is a manufacturer and distributor of
`
`pharmaceutical products.
`
`7.
`
`Kapoor is a citizen of the State of Florida. Kapoor is the president of
`
`Misemer.
`
`8.
`
`Virtus is a limited liability company licensed in Delaware with a
`
`principal place of business in Langhorne, Pennsylvania. On information and belief,
`
`no member of Virtus is a citizen of the States of Florida or Mississippi.
`
`
`
`2
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`Case: 3:21-cv-00107-NBB-RP Doc #: 1 Filed: 05/25/21 3 of 10 PageID #: 3
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`
`
`JURISDICTION AND VENUE
`
`9.
`
`This court has jurisdiction under 28 U.S.C. § 1332(a)(1) because
`
`Plaintiffs and Defendant are citizens of different states and the amount in
`
`controversy exceeds $75,000.
`
`10. Under 28 U.S.C. § 1391, venue is proper in this district and division
`
`because a substantial part of the events giving rise to this case occurred in this
`
`district and division.
`
`11.
`
`This Court is empowered to issue a declaratory judgment under 28
`
`U.S.C. § 2201 et. seq.
`
`FACTS
`
`12. Belcher manufactures and packages a variety of finished
`
`pharmaceutical drug products including clidinium bromide, which is a generic
`
`pharmaceutical product prescribed to treat irritable bowel syndrome and other
`
`gastrointestinal disorders.
`
`13.
`
`In July 2014, Belcher and Virtus entered into the Virtus Agreement.
`
`The Virtus Agreement is set to expire on July 17, 2021.
`
`14. Under the Virtus Agreement, Belcher contracted to manufacture and
`
`supply Virtus with several unapproved pharmaceutical products, including
`
`unapproved chlordiazepoxide 5.0 mg/clidinium bromide 2.5 mg capsules. Virtus
`
`agreed to distribute and sell the unapproved pharmaceutical products supplied by
`
`Belcher.
`
`
`
`3
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`Case: 3:21-cv-00107-NBB-RP Doc #: 1 Filed: 05/25/21 4 of 10 PageID #: 4
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`
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`15. Belcher granted to Virtus the sole and exclusive right to distribute and
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`sell unapproved clidinium bromide products manufactured by Belcher throughout
`
`North America for the term of the Virtus Agreement. Virtus Agreement at § 2.1.
`
`16.
`
`Likewise, Virtus promised to “purchase from [Belcher] … all of Virtus’s
`
`requirements” for the pharmaceutical products subject to the Virtus Agreement.
`
`17.
`
`In the event of a dispute arising out of or related to the Virtus
`
`Agreement, Virtus and Belcher covenanted that they would first engage in informal
`
`dispute resolution. Id. at § 13.1. In the event that informal dispute resolution
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`failed, Virtus and Belcher agreed to submit the dispute to arbitration in the state of
`
`New Jersey pursuant to the Commercial Rules for the American Arbitration
`
`Association. Id at § 13.2.
`
`18. Neither Misemer nor Kapoor are parties or signatories to the Virtus
`
`Agreement.
`
`19. On October 31, 2016, Kapoor, who at the time was employed as
`
`Belcher’s Director of Business Development, executed the First Amendment to the
`
`Virtus Agreement on behalf of Belcher.
`
`20.
`
`In December 2016, Kapoor left his employment with Belcher.
`
`21.
`
`In or around August 2019, Kapoor purchased all of the issued shares of
`
`Misemer.
`
`22.
`
`In October 2019, Belcher and Misemer negotiated and executed a
`
`Development and Supply Agreement (the “Misemer Agreement”). The Misemer
`
`Agreement is attached as Exhibit C.
`
`
`
`4
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`Case: 3:21-cv-00107-NBB-RP Doc #: 1 Filed: 05/25/21 5 of 10 PageID #: 5
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`
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`23. According to the Misemer Agreement, Belcher agreed to manufacture
`
`and supply an approved clidinium bromide product to Misemer. In addition,
`
`Belcher agreed to develop the data necessary to prepare and file an ANDA for the
`
`approved clidinium bromide product it would supply.
`
`24. On September 8, 2020, Virtus submitted a proposal to Misemer to
`
`distribute clidinium bromide products.
`
`25. On October 12, 2020, Virtus offered to pay Misemer a $1,500,000
`
`licensing fee and 70% of the net revenues from the sale of the clidinium bromide
`
`products. Virtus’s agent stated that the up-front payment would cover Misemer’s
`
`contract manufacturing costs.
`
`26. On October 19, 2020, Virtus’s agent stated that the minimum future
`
`order of clidinium bromide products would be 2,000 units.
`
`27. On October 21, 2020, Virtus sought clarification from Misemer
`
`regarding the product labeling noting that Belcher would be the contract
`
`manufacturer for the clidinium bromide product.
`
`28. On November 25, 2020, Virtus’s counsel sent a letter to Belcher stating
`
`that “[i]t has come to Virtus’ attention that Belcher has entered into, or is
`
`contemplating entering into, an arrangement with Misemer Pharmaceuticals
`
`(“Misemer”), regarding the manufacture, distribution and licensing of Clidinium
`
`Bromide . . . . Virtus expects Belcher and Misemer to refrain from entering into or
`
`continuing with any arrangements concerning Clidinium Bromide that violate the
`
`
`
`5
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`Case: 3:21-cv-00107-NBB-RP Doc #: 1 Filed: 05/25/21 6 of 10 PageID #: 6
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`
`
`exclusivity terms of the [Virtus] Agreement.” A true and correct copy of Virtus’s
`
`November 25 letter is attached as Exhibit D.
`
`29. Nonetheless, Virtus and Misemer continued to negotiate the terms of a
`
`supply agreement and the contents of the product labeling through the winter of
`
`2021.
`
`30. Negotiations between Virtus and Misemer stalled in February 2021.
`
`On February 23, Kapoor wrote to Virtus’s agent advising that if the parties were
`
`unable to finalize a supply agreement then Misemer would seek another partner to
`
`commercialize the clidinium bromide product.
`
`31. On March 4, Virtus asserted for the first time that it had the exclusive
`
`right to commercialize Misemer’s clidinium bromide product through July. Virtus
`
`also informed Kapoor that it could not “do an agreement directly with Misemer due
`
`to your ongoing legal and government investigation.” Virtus further stated that it
`
`was “still open to purchasing the ANDA from you as well.”
`
`32. On March 22, 2021, Misemer agreed to a binding term sheet to supply
`
`Xiromed with clidinium bromide products.
`
`33. On March 31, 2021, Virtus’s counsel served a letter (the “Notice
`
`Letter”) on Belcher and Misemer claiming that both Belcher and Misemer were in
`
`breach of the Virtus Agreement. Specifically, Virtus alleged that Belcher’s supply of
`
`clidinium bromide products to Misemer violated the exclusivity terms of the Virtus
`
`Agreement. A true and correct copy of the Notice Letter is attached as Exhibit E.
`
`
`
`6
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`Case: 3:21-cv-00107-NBB-RP Doc #: 1 Filed: 05/25/21 7 of 10 PageID #: 7
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`
`
`34.
`
`The Notice Letter stated that “Virtus continues to hope that it will be
`
`able to conclude an arrangement successfully, including either a supply agreement
`
`with Belcher or an acquisition of Misemer’s ANDA for the Clidinium Bromide
`
`product.”
`
`35. On April 19, 2021, in accordance with the Misemer Agreement,
`
`Misemer served an indemnification notice on Belcher in relation to the Notice
`
`Letter. On the same day, Misemer responded to Virtus denying the claims in the
`
`Notice Letter.
`
`36. On April 28, Virtus filed the Notice of Arbitration. Among other
`
`things, the Notice of Arbitration alleges that Misemer is an alter ego of Belcher and
`
`that “Kapoor was designated President of Misemer to conceal the Tanejas and
`
`Belcher’s true ownership and control over the corporation.” Notice of Arbitration at
`
`¶¶ 40, 41.
`
`37.
`
`The Notice of Arbitration omits any reference to Virtus’s lengthy
`
`negotiations with Misemer concerning its distribution of Misemer-supplied
`
`clidinium bromide products.
`
`38. Contrary to the Notice of Arbitration, Misemer, and Belcher are two
`
`separate and distinct legal entities that are engaged in a business relationship
`
`through an arm’s length product supply agreement:
`
`a. Mismer observes all corporate formalities including annual meetings of
`
`the board of directors.
`
`
`
`7
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`Case: 3:21-cv-00107-NBB-RP Doc #: 1 Filed: 05/25/21 8 of 10 PageID #: 8
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`
`
`b. Misemer has its own bank account and is adequately capitalized for its
`
`corporate purpose.
`
`c. Misemer is not controlled by, does not control, and is not under
`
`common control with, Belcher.
`
`d. Neither Belcher nor any of its owners directly or indirectly own any
`
`interest in Misemer or are involved in the management of Misemer.
`
`e. Neither Misemer nor its owner directly or indirectly owns any interest
`
`in Belcher or is involved in the management of Belcher.
`
`39.
`
`Further, Kapoor is not an agent or employee of Belcher.
`
`40. Citing to the Virtus Agreement, Virtus sent a letter to Xiromed on
`
`April 30, 2021 demanding that Xiromed cease and desist from marketing selling or
`
`distributing any clidinium bromide products manufactured and/or supplied by
`
`Misemer (the “Cease and Desist Letter”). A true and correct copy of the Cease and
`
`Desist Letter is attached as Exhibit F.
`
`41. On May 8, 2021, Xiromed terminated its agreement with Misemer
`
`citing the claims made in the Cease and Desist Letter.
`
`COUNT 1 – DECLARATORY JUDGMENT
`
`42.
`
`Paragraphs 1 through 40 are incorporated here by reference.
`
`43.
`
`There is a genuine dispute and actual controversy and disagreement
`
`regarding the arbitrability of Virtus’s claims against Misemer and Kapoor.
`
`44. While the Virtus Agreement contains a mandatory arbitration clause,
`
`neither Misemer nor Kapoor are parties or signatories to the Virtus Agreement.
`
`45. Misemer is not an alter ego of Belcher.
`
`
`
`8
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`Case: 3:21-cv-00107-NBB-RP Doc #: 1 Filed: 05/25/21 9 of 10 PageID #: 9
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`
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`46. Misemer is not an Affiliate of Belcher as that term is defined in the
`
`Virtus Agreement.
`
`47. Kapoor is not employed by and is not an agent of Belcher.
`
`48. Accordingly, Plaintiffs cannot be required to submit to the Arbitration.
`
`49.
`
`Plaintiffs therefore demand judgment in their favor and against
`
`Defendant and respectfully request that the Court enter an order: (1) declaring that
`
`Plaintiffs are not obligated to submit to the Arbitration; (2) preliminarily and
`
`permanently enjoining Virtus from prosecuting the Arbitration against Misemer; (3)
`
`awarding Plaintiffs reasonable attorney’s fees, costs, and expenses relating to this
`
`action; and (4) awarding such other and further relief as the Court may deem
`
`equitable and just.
`
`COUNT 2 – TORTIOUS INTERFERENCE
`
`50.
`
`Paragraphs 1 through 46 are incorporated here by reference.
`
`51. Misemer executed a binding term sheet with Xiromed to supply
`
`clidinium bromide products to Xiromed.
`
`52. Virtus sent the Cease and Desist Letter to Xiromed with the intent to
`
`cause Xiromed to terminate its agreement with Misemer.
`
`53. Misemer is not a party to the Virtus Agreement; therefore, Virtus had
`
`no privilege or justification to send the Cease and Desist Letter to Xiromed.
`
`54. As a result of the Cease and Desist Letter, Xiromed has terminated its
`
`agreement with Misemer causing Misemer damages.
`
`55.
`
`Plaintiffs therefore demand judgment in their favor and against
`
`Defendant and award Plaintiffs: (1) actual, compensatory, consequential, incidental,
`
`
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`9
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`Case: 3:21-cv-00107-NBB-RP Doc #: 1 Filed: 05/25/21 10 of 10 PageID #: 10
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`
`
`and punitive damages; (2) pre and post-judgment interest; (3) award Plaintiffs
`
`reasonable attorney’s fees, costs, and expenses relating to this action; and (4) such
`
`other and further relief as the Court may deem equitable and just.
`
`For these reasons, Plaintiffs request that the Court render judgment in
`
`Plaintiffs’ favor and against Defendant:
`
`A.
`
`Declaring that Plaintiffs are not obligated to submit to the
`
`Arbitration preliminarily;
`
`B.
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`Permanently enjoining Virtus from prosecuting the Arbitration
`
`against Misemer; and
`
`C.
`
`Awarding actual, compensatory, consequential, incidental, and
`
`punitive damages, as well as pre and post-judgment interest,
`
`reasonable attorney’s fees, costs, and expenses, and such other
`
`and further relief as the Court may deem equitable and just.
`
`Dated: May 25, 2021.
`
`
`
`By:
`
`
`
`
`
`
`MISEMER PHARMACEUTICALS, INC.,
`and ARUN KAPOOR
`
`/s/ Timothy J. Anzenberger
`M. Scott Jones (MSB No. 4240)
`Timothy J. Anzenberger (MSB No. 103854)
`ADAMS AND REESE LLP
`1018 Highland Colony Parkway, Suite 800
`Ridgeland, MS 39157
`Telephone: 601.353.3234
`Facsimile: 601.355.9708
`scott.jones@arlaw.com
`tim.anzenberger@arlaw.com
`
`
`
`
`
`10
`
`
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