Case 7:19-cv-07577-KMK Document 129 Filed 03/30/21 Page 1 of 72
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`No. 19-CV-7577 (KMK)
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`OPINION & ORDER
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`PHARMACYCHECKER.COM, LLC,
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`
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`Plaintiff,
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`v.
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`NATIONAL ASSOCIATION OF BOARDS
`OF PHARMACY, et al.,
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`Defendants.
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`Appearances:
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`Aaron Robert Gott, Esq.
`Alexandra Shear, Esq.
`Bona Law PC
`Minneapolis, MN
`New York, NY
`Counsel for Plaintiff
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`Brian E. Casey, Esq.
`Paul T. Olszowka, Esq.
`Barnes & Thornburg LLP
`South Bend, IN
`Chicago, IL
`Counsel for National Association of Boards of Pharmacy
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`Erik Thomas Koons, Esq.
`Jana Irina Seidl, Esq.
`Stephen Weissman, Esq.
`Timothy Patrick Singer, Esq.
`Baker Botts LLP
`Washington, DC
`Counsel for National Association of Boards of Pharmacy
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`Rachel Johanna Adcox, Esq.
`Cristina Marie Fernandez, Esq.
`Jeny Maier, Esq.
`Axinn, Veltrop & Harkrider LLP
`Washington, DC
`Counsel for Alliance for Safe Online Pharmacies
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`Case 7:19-cv-07577-KMK Document 129 Filed 03/30/21 Page 2 of 72
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`Barry Werbin, Esq.
`Nicholas Grant Olear Veliky, Esq.
`Herrick, Feinstein LLP
`New York, NY
`Counsel for Center for Safe Internet Pharmacies Ltd.
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`John Tyler Mills, Esq.
`Mercedes Colwin, Esq.
`Ryan James Sestack, Esq.
`Gordon Rees Scully Mansukhani LLP
`New York, NY
`Counsel for LegitScript LLC
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`Justin Ward Lamson, Esq.
`Leslie Ellen John, Esq.
`Elizabeth Weissert, Esq.
`Jay N. Fastow, Esq.
`Ballard Spahr LLP
`New York, NY
`Philadelphia, PA
`Counsel for Partnership for Safe Medicines, Inc.
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`KENNETH M. KARAS, United States District Judge:
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`Plaintiff PharmacyChecker.com (“Plaintiff”) brings this Action against the National
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`Association of Boards of Pharmacy (“NABP”), Alliance for Safe Online Pharmacies (“ASOP”),
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`Center for Safe Internet Pharmacies Ltd. (“CSIP”), LegitScript LLC (“LegitScript”), and
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`Partnership for Safe Medicines, Inc. (“PSM”; collectively “Defendants”), alleging that
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`Defendants unlawfully conspired to restrain trade in violation of § 1 of the Sherman Act, 15
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`U.S.C. § 1, and that NABP falsely advertised or promoted in violation of § 43(a) of the Lanham
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`Act, 15 U.S.C. § 1125. (Am. Compl. (“AC”) (Dkt. No. 82).) Before the Court are the following
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`Motions: Defendants’ Joint Motion to Dismiss (the “Joint Motion”), (Joint Not. of Mot. To
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`Dismiss by Defs. (“Joint Mot.”) (Dkt. No. 100)), PSM’s Motion to Dismiss (the “PSM Motion”),
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`(Def. PSM’s Mot. To Dismiss the AC as to It with Prejudice (“PSM Mot.”) (Dkt. No. 97)),
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`ASOP’s Motion to Dismiss (the “ASOP Motion”), (Not. of Def. ASOP’s Mot. To Dismiss the
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`Case 7:19-cv-07577-KMK Document 129 Filed 03/30/21 Page 3 of 72
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`AC (“ASOP Mot.”) (Dkt. No. 104)), and LegitScript’s Motion to Dismiss (the “LegitScript
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`Motion”; collectively, the “Motions”), (Not. of Mot. (“LS Mot.”) (Dkt. No. 119)). The Joint
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`Motion, PSM Motion, and ASOP Motion are brought pursuant to Federal Rule of Civil
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`Procedure 12(b)(6). (Joint Mot.; PSM Mot.; ASOP Mot.) The LegitScript Motion is brought
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`pursuant to Rules 12(b)(2) and 12(b)(6). (LS Mot.) For the reasons that follow, the LegitScript
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`Motion is granted, the Joint Motion and the ASOP Motion are denied, and the PSM Motion is
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`granted in part and denied in part.
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`I. Background
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`A. Factual Background
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`The following facts are drawn from Plaintiff’s Amended Complaint (“AC”) and the
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`documents it references, and are taken as true for the purpose of resolving the instant Motions.
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`Plaintiff is a Limited Liability Company organized under the laws of New York that
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`offers an accreditation program for pharmacies and provides drug price comparison information.
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`(AC ¶ 5.) Unlike its competitors in these industries, Plaintiff offers pharmacy accreditation to,
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`and provides comparative drug price information for, pharmacies operating worldwide. (Id.
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`¶¶ 27, 33.) However, Plaintiff’s business is not limited to certifying and providing price
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`information for foreign pharmacies. For example, Plaintiff also accredits U.S. online
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`pharmacies, and includes these U.S. online pharmacies in its price comparisons. (Id. ¶¶ 40, 43.)
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`The AC contains no allegations regarding the size of Plaintiff’s foreign accreditation and price
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`comparison businesses as compared to their U.S. equivalents.
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`While Plaintiff does not itself sell or import prescription drugs, it claims that the personal
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`import of drugs from pharmacies outside the U.S. “remains under some circumstances in a legal
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`gray area.” (Id. ¶ 24.) While foreign drug imports are generally prohibited due to U.S. labeling
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`requirements, In re Canadian Imp. Antitrust Litig., 470 F.3d 785, 789 (8th Cir. 2006), (see also
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`Decl. of Erik T. Koons in Supp. of Joint Mot. (“Koons Decl.”) Ex. C (“Google Non-Prosecution
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`Agreement”) 1 (Dkt. No. 102-1, at 81) (“Except under very limited circumstances . . . it is
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`unlawful for pharmacies outside the United States to ship prescription drugs to customers in the
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`United States.”)), Plaintiff identifies a handful of purported exceptions where personal imports
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`may be permitted, (AC ¶ 57). Defendants allow that personal imports “might” be permitted in
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`certain, limited cases. (Mem. Of Law in Supp. of Joint Mot. (“Defs.’ Mem.”) 4 (Dkt. No. 101).)
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`The AC makes no allegations regarding the conditions or legality of any foreign drug imports
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`made by users of Plaintiff’s pharmacy accreditation and drug price comparison services. (See
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`generally AC.)
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`NABP is an association of state boards of pharmacy. (Id. ¶ 6.) It competes with Plaintiff
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`in the pharmacy accreditation market through its Verified Internet Pharmacy Practice Sites
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`(“VIPPS”) program, its “.pharmacy” Verified Websites program, and its Internet Drug Outlet
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`Identification Program. (Id.)
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`LegitScript is a Limited Liability Company organized under the laws of Oregon offering
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`verification and monitoring services for online pharmacies. (Id. ¶ 9.) Like NABP, LegitScript
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`also competes with Plaintiff in the pharmacy accreditation market. (Id.)
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`ASOP is an organization that represents the Pharmaceutical Researchers and
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`Manufacturers of America (“PhRMA”) to address the problem of online drug sellers and
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`counterfeit drugs. (Id. ¶ 7.) NABP regularly participates in ASOP’s meetings. (Id. ¶ 67(a).)
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`One of ASOP’s members, GoodRx, competes with Plaintiff in the market for comparative drug
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`price information. (Id. ¶ 7.)
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`PSM is a nonprofit organization that has orchestrated a campaign against foreign drug
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`imports and often works with PhRMA. (Id. ¶ 10.) PSM is an observer to ASOP, and regularly
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`participates in ASOP meetings. (Id. ¶¶ 10, 67(a).)
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`CSIP is an organization that includes internet commerce gatekeepers, including Google,
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`Microsoft, Facebook, Mastercard, and UPS. (Id. ¶ 8.) It was organized and founded at least in
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`part by ASOP and LegitScript. (Id.)
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`In December 2018, NABP added Plaintiff’s website and blog to its Not Recommended
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`Sites list. (Id. ¶¶ 87, 90.) CSIP maintains a similar list, which is recognized by NABP as
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`adhering to NABP’s standards. (Id. ¶ 94.) In June and July of 2019, CSIP ran targeted online
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`ads against Plaintiff. (Id. ¶ 93.) On July 21, 2019, users of the Bing search engine began seeing
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`a red caution shield and a warning box when clicking on search results for pages from Plaintiff’s
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`website and blog. (Id. ¶ 95.) This change was driven by CSIP’s “Principles of Participation,”
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`under which its members have agreed to use data-sharing tools to detect and target suspected
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`illegitimate pharmacy websites. (Id. ¶¶ 75, 93.) The Bing warning caused Plaintiff to lose 76%
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`of its web traffic from Bing. (Id. ¶ 95.)
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`In addition, LegitScript or NABP allegedly convinced one vendor to list Plaintiff’s
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`website as “not safe,” “malicious,” or “pornography.” (Id. ¶ 84.) In 2015, NABP, CSIP, ASOP,
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`and LegitScript published articles disparaging Plaintiff, and in 2018 PSM did the same. (Id.
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`¶ 85.) NABP, CSIP, ASOP, LegitScript, and various companies that are members of PSM’s
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`collaborator PhRMA also jointly created the “.pharmacy” domain to serve a gatekeeping
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`function. (Id. ¶¶ 10, 80, 96.) As a result of these actions, since March 2019, Plaintiff’s site
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`traffic from organic search results has dropped more than 78%, and its monthly click-through
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`revenue has dropped more than 77%. (Id. ¶ 109.)
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`Plaintiff alleges that these efforts, collectively, are a group boycott, which attempts to
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`prevent Plaintiff from competing in the global markets for online pharmacy verification and
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`comparative drug price information. (Id. ¶¶ 28, 30–36, 104.) Defendants have referred
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`explicitly to the goal of coordinating their approach to online pharmacies via email, via press
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`release, and in meetings. (See id. ¶¶ 69–73.) Further, Defendants share close business
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`relationships, including common founders, (id. ¶¶ 67, 74), interlocking membership in
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`organizations, (id. ¶¶ 7–8, 10, 68), attending the same meetings, (id. ¶¶ 7–8, 67(a)), and
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`promotion of each other’s products and activities, (id. ¶¶ 68, 77, 95).
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`Plaintiff separately alleges that NABP has violated the Lanham Act. NABP’s website
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`claims that sites on its Not Recommended List are unsafe and illegal, including Plaintiff’s
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`website and blog. (Id. ¶¶ 119–122.) According to Plaintiff, these claims are false and
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`misleading. (Id. ¶¶ 126–32.) The purported purpose of these claims is to steer search engines
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`and consumers away from Plaintiff’s site and towards sites of NABP’s affiliates, which fund
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`NABP and its initiatives. (Id. ¶¶ 124, 134–35.) This has deceived or misled consumers, search
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`engines, and pharmacy websites into not using Plaintiff’s website, (id. ¶¶ 136–38), causing the
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`harm discussed above.
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`B. Procedural Background
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`Plaintiff filed its Complaint on August 13, 2019. (Compl. (Dkt. No. 1).) The next day,
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`Plaintiff moved for a preliminary injunction, requesting that the Court order NABP to remove
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`Plaintiff’s website and blog from its Not Recommended Sites list; order NABP to inform all
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`parties to which it had distributed the Not Recommended Sites list that Plaintiff was removed;
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`and order CSIP to accept the revised list, inform its members, and require its members to
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`incorporate this revision into their implementation of the list. (Pl.’s Not. of Mot. and Mot. For
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`Prelim. Inj. (Dkt. No. 17); Pl.’s Corrected Mem. of Law in Supp. of Mot. For Prelim. Inj. (Dkt.
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`No. 33); Aff. of Tod Copperman, MD in Supp. of Pl.’s Mot. For Prelim. Inj. (Dkt. No. 19));
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`Decl. of Aaron Gott in Supp. of Pl.’s Mot. For Prelim. Inj. (Dkt. No. 20).)1 On August 16, 2019,
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`the Court entered Plaintiff’s proposed Order To Show Cause, ordering a briefing schedule and
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`scheduling oral argument. (Dkt. No. 16.) On August 30, 2019, CSIP filed a Limited Opposition
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`to Plaintiff’s application for a preliminary injunction. (See Decl. of Marjorie Clifton in Supp. of
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`CSIP’s Partial Consent and Limited Opp’n to Pl.’s Mot. For Prelim. Inj. (Dkt. No. 36); Decl. of
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`Barry Werbin, Esq. in Supp. of CSIP’s Partial Consent and Limited Opp’n to Pl.’s Mot. For
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`Prelim. Inj. (Dkt. No. 37); CSIP’s Mem. of Law in Supp. of Its Partial Consent and Limited
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`Opp’n to Pl.’s Mot. For A Prelim. Inj. (Dkt. No. 38).) NABP opposed in full on the same date.
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`(NABP’s Brief in Opp’n to Pl.’s Mot. For Prelim. Inj. (Dkt. No. 40); Decl. of Paul Olszowka in
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`Supp. of NABP’s Opp’n to Pl.’s Mot. For Prelim. Inj. (Dkt. No. 41); Decl. of Carmen A.
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`Catizone (Dkt. No. 42).) On September 6, 2019, Plaintiff filed its Reply to NABP’s Opposition,
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`(Pl.’s Reply Brief to NABP’s Opp’n to Pl.’s Mot. For Prelim. Inj. (Dkt. No. 53); Decl. of Aaron
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`Gott in Supp. of Pl.’s Reply Brief to NABP’s Opp’n to Pl.’s Mot. For Prelim. Inj. (Dkt. No. 54);
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`Decl. of Lisa Mittwol (Dkt. No. 55); Aff. Of Tod Cooperman, MD in Supp. of Pl.’s Mot. For
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`Prelim. Inj. (Dkt. No. 56)), and to CSIP’s Limited Opposition, (Pl.’s Reply Brief to CSIP’s
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`Opp’n to Pl.’s Mot. For Prelim. Inj. (Dkt. No. 57)). On September 11, 2019, the Court after oral
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`argument denied Plaintiff’s Motion for a Preliminary Injunction. (Dkt. No. 73.)
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`1 When filed on August 14, 2019, Plaintiff’s preliminary injunction papers contained a
`deficiency. (See Dkt. No. 15.) Subsequently, the Plaintiff’s re-filed Memorandum of Law
`contained an additional deficiency. (See Dkt. No. 18.) The text of this Opinion & Order cites
`the operative version of each document.
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`On October 4, 2019, the Parties stipulated to and the Court ordered a schedule for
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`Plaintiff to submit an amended complaint, and for Defendants to respond. (Dkt. Nos. 80, 81.)
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`On October 21, 2019, Plaintiff filed its Amended Complaint. (AC.) On November 6, 2019,
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`NABP, PSM, and LegitScript filed letters requesting a pre-motion conference regarding their
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`contemplated motions to dismiss. (Dkt. Nos. 85, 86, 87.) Plaintiff replied on November 12,
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`2019, (Dkt. Nos. 89, 90, 91), and the Court scheduled a pre-motion conference, (Dkt. No. 92).
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`At the pre-motion conference, the Court adopted a briefing schedule for Defendants’ Motions To
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`Dismiss. (Dkt. (minute entry for Feb. 6, 2020); Dkt. No. 94.)
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`On March 13, 2020, the Defendants filed the Joint Motion. (Joint Mot.; Defs.’ Mem;
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`Koons Decl. (Dkt. No. 102); Decl. of Marjorie Clifton in Supp. of Joint Mot. (“Clifton Decl.”)
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`(Dkt. No. 103).) On the same date, PSM, (PSM Mot.; Mem. of Law of PSM in Supp. of PSM
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`Mot. (“PSM’s Mem.”) (Dkt. No. 98); Decl. of Leslie E. John, Esq. in Supp. of PSM Mot. (“John
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`Decl.”) (Dkt. No. 99)), ASOP, (ASOP Mot.; Mem. of Law in Supp. of ASOP Mot. (“ASOP’s
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`Mem.”) (Dkt. No. 105); Decl. of Rachel J. Adcox in Supp. of ASOP Mot. (“Adcox Decl.”) (Dkt.
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`No. 107)), and LegitScript, (LS Mot. ; Decl. (“Horton Decl.”) (Dkt. No. 120); Mem. of Law in
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`Supp. of LS Mot. (“LS’s Mem.”) (Dkt. No. 121)), filed individual motions to dismiss.2 On April
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`17, 2020, Plaintiff opposed the Motions. (Pl.’s Opp’n to Joint Mot. (“Pl.’s Mem.”) (Dkt. No.
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`114); Pl.’s Opp’n to PSM Mot. (“Pl.’s PSM Mem.”) (Dkt. No. 111); Pl.’s Opp’n to ASOP Mot.
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`(“Pl.’s ASOP Mem.”) (Dkt. No. 110); Pl.’s Opp’n to LS Mot. (“Pl.’s LS Mem.”) (Dkt. No.
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`2 When filed on March 13, 2020, LegitScript’s motion to dismiss papers contained a
`deficiency. (See Dkt. No. 106.) The text of this Opinion & Order cites the operative filings.
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`123).)3 On May 15, 2020, Defendants submitted their reply memoranda. (Reply Mem. of Law
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`in Supp. of Joint Mot. (“Defs.’ Reply”) (Dkt. No. 116); Reply Mem. of Law of PSM in Further
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`Supp. of PSM Mot. (“PSM’s Reply”) (Dkt. No. 115); Reply in Further Supp. of ASOP Mot.
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`(“ASOP’s Reply”) (Dkt. No. 118); Reply Mem. of Law in Further Supp. of LS Mot. (“LS’s
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`Reply”) (Dkt. No. 122).)4 On September 29, 2020, Plaintiff filed a Notice of Supplemental
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`Authority. (Dkt. No. 124.) Defendants responded on October 2, 2020. (Dkt. No. 125.) On the
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`same date, Defendants submitted a Notice of Supplemental Authority. (Dkt. No. 126.) The
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`Court held oral argument on the Motions on November 10, 2020. (Dkt. (minute entry for Nov.
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`10, 2020).)
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`II. Personal Jurisdiction Over LegitScript
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`LegitScript argues, pursuant to Rule 12(b)(2), that this Court lacks personal jurisdiction
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`over LegitScript. (LS’s Mem. 3–15.) It further argues, pursuant to Rule 12(b)(6), that the AC
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`fails to allege that LegitScript joined the alleged conspiracy, (id. at 15–16), and that Plaintiff’s
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`claim is barred by the statute of limitations, (id. at 17). Because LegitScript moves to dismiss
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`pursuant to Rules 12(b)(2) and (6), “the Court must first address the preliminary question[] of . . .
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`personal jurisdiction before considering the legal sufficiency of the allegations in the amended
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`complaint.” Corrado v. N.Y. Unified Court Sys., 163 F. Supp. 3d 1, 10 (E.D.N.Y. 2016) (citation
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`and quotation marks omitted), aff’d, 698 F. App’x 36 (2d Cir. 2017); see also Arrowsmith v.
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`United Press Int’l, 320 F.2d 219, 221 (2d Cir. 1963) (“[L]ogic compel[s] initial consideration of
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`3 When filed on April 17, 2020, Plaintiff’s opposition to the Joint Motion and LegitScript
`Motion contained deficiencies. (See Dkt. Nos. 112, 113.) The text of this Opinion & Order cites
`the operative filings.
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` When filed on May 15, 2020, LegitScript’s reply memorandum contained a deficiency.
`(See Dkt. No. 117.) The text of this Opinion & Order cites the operative filing.
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`the issue of jurisdiction over the defendant [because] a court without such jurisdiction lacks
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`power to dismiss a complaint for failure to state a claim . . . .”).
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`On a Rule 12(b)(2) motion to dismiss, a plaintiff has the burden of establishing that the
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`court has jurisdiction over the defendant. See Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 240
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`(2d Cir. 1999). However, “[p]rior to discovery, a plaintiff challenged by a jurisdiction testing
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`motion may defeat the motion by pleading in good faith . . . legally sufficient allegations of
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`jurisdiction, i.e., by making a prima facie showing of jurisdiction.” Jazini v. Nissan Motor Co.,
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`148 F.3d 181, 184 (2d Cir. 1998) (quotation marks and citations omitted); see also Metro. Life
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`Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996). “[A] prima facie showing of
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`jurisdiction does not mean that plaintiff must show only some evidence that defendant is subject
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`to jurisdiction; it means that plaintiff must plead facts which, if true, are sufficient in themselves
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`to establish jurisdiction.” Bellepointe, Inc. v. Kohl’s Dep’t Stores, Inc., 975 F. Supp. 562, 564
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`(S.D.N.Y. 1997). A plaintiff may “make this showing through [its] own affidavits and
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`supporting materials[,] containing an averment of facts that, if credited . . . , would suffice to
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`establish jurisdiction over the defendant.” Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208
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`(2d Cir. 2001) (quotation marks and citations omitted). While a court may consider materials
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`beyond the pleadings, the court must credit a plaintiff’s allegations in support of jurisdiction.
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`See A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79–80 (2d Cir. 1993) (“[W]here the issue is
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`addressed on affidavits, all allegations are construed in the light most favorable to the plaintiff
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`and doubts are resolved in the plaintiff’s favor, notwithstanding a controverting presentation by
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`the moving party.”).
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`There are three requirements for the Court to exercise personal jurisdiction. Licci ex rel.
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`Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 59–61 (2d Cir. 2012). First, “the plaintiff’s
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`service of process upon the defendant must have been procedurally proper.” Id. at 59. Second,
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`“there must be a statutory basis for personal jurisdiction that renders such service of process
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`effective.” Id. Third, “the exercise of personal jurisdiction must comport with constitutional due
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`process principles.” Id. at 60. Here, LegitScript waived service, (Dkt. No. 24), so only the
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`second and third requirements are potentially at issue. As to the second requirement, the Court
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`considers the two operative long-arm statutes—the Clayton Act’s, 14 U.S.C. § 22, and New
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`York’s, N.Y. C.P.L.R. §§ 301–02—and finds that neither provides a basis for personal
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`jurisdiction. As a result, the Court does not consider the third requirement, and grants the
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`LegitScript Motion.
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`A. The Clayton Act
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`Section 12 of the Clayton Act contains a venue provision: a corporation may be sued
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`under the antitrust laws “in the judicial district whereof it is an inhabitant, but also in any district
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`wherein it may be found or transacts business.” 15 U.S.C. § 22. Section 12 also contains a
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`service of process provision: “all process in such cases may be served in the district of which
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`[the corporation] is an inhabitant, or wherever it may be found.” Id.5 The Second Circuit has
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`held that “the plain language of [§] 12 indicates that its service of process provision applies (and,
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`therefore, establishes personal jurisdiction) only in cases in which its venue provision is
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`satisfied.” Daniel v. Am. Bd. of Emergency Med., 428 F.3d 408, 423 (2d Cir. 2005). Thus,
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`5 The Court assumes without deciding that § 12 can serve as a basis for jurisdiction over
`LegitScript, even though it is an LLC rather than a corporation. See Budicak, Inc. v. Lansing
`Trade Grp., LLC, No. 19-CV-2449, 2020 WL 758801, at *2–3 (D. Kan. Feb. 14, 2020) (applying
`§ 12 analysis to LLC defendant).
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`whether the Court has jurisdiction under the Clayton Act hinges on whether LegitScript is “found
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`or transacts business” in the district.6 The Court finds that it does not.
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`LegitScript is an LLC organized under the laws of Oregon, which maintains its principal
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`place of business in Oregon. (AC ¶ 9; Horton Decl. ¶ 3–4.) It is not and has never registered as
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`a foreign corporation in New York; it does not and has never maintained offices in New York;
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`and it does not own property or possess a bank account in New York. (Horton Decl. ¶¶ 5–6, 8–
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`9.) LegitScript employs one person who resides in New York. (Id. ¶ 7.) Half of his time is
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`spent traveling outside New York, and his job is not focused on New York residents or
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`businesses. (Id.) In addition, LegitScript certifies certain pharmacies and mental health
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`providers in New York. (Id. ¶ 11.)
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`In Daniel, the Second Circuit held that a similarly situated company did not “transact
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`business” in the district. 428 F.3d at 429–30. This company “certified an unspecified number of
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`physicians in New York State and . . . communicated with them in the state.” Id. at 429.
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`Further, “application fees constitute[d] 99% of [this company’s] revenue, and [it] received an
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`unspecified amount of that revenue from the application fees of physicians in New York . . . .”
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`Id. Finally, that company “mailed a copy of its application form to [the] plaintiff . . . in the
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`district.” Id. In finding these facts “insufficient to show that [the company] ‘transacts business’”
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`in the district, id., the Second Circuit observed the following. First, the company “neither
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`develop[ed] its standards nor administer[ed] its certification examinations” in the district. Id. at
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`430. Second, the company did not “own or lease any real estate in the district,” nor did it
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`“maintain an office, telephone, bank account, or mailing address there.” Id. Third, the company
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`6 Here, the relevant district is the Southern District of New York. See Daniel, 428 F.3d at
`430 (holding, where cited contacts are with the State of New York, and not the Western District,
`that “[o]nly the latter contact is relevant to [§] 12 venue”).
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`did not “advertise or solicit applicants for its certification examination in the district.” Id.
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`Fourth, the record suggested “no finding as to how much of [its] fee revenue derived from
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`applicants” in the district. Id. The AC suggests that identical findings are appropriate here, as
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`does the Horton Declaration. (See generally AC; Horton Decl.)
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`The one factor that distinguishes LegitScript from the defendant in Daniel is that
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`LegitScript has an employee in New York. Compare Daniel, 428 F.3d at 430 (“[The defendant]
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`employs no agent to carry on its operations or promote its activities in the [district].”) with
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`(Horton Decl. ¶ 7 (“LegitScript currently employs one (1) individual who is a resident of the
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`State of New York.”)). However, the Second Circuit in Daniel focuses not on the absence of an
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`employee present in the district, but on the absence of an employee “to carry on its operations or
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`promote its activities in the [district].” Daniel, 428 F.3d at 430. Here, LegitScript’s employee in
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`New York “is not focused on New York residents or New York businesses.” (Horton Decl. ¶ 7.)
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`Moreover, the case law rejects the proposition that a single employee can create general
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`jurisdiction. See Zibiz Corp. v. FCN Tech. Sols., 777 F. Supp. 2d 408, 419 (E.D.N.Y. 2011)
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`(collecting cases) (“[C]ourts in other jurisdictions have consistently found that the mere presence
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`of an employee within the forum state [is] insufficient to confer general personal jurisdiction
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`over an out-of-state corporate defendant.”). Thus, the Court concludes that this single employee
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`does not materially distinguish LegitScript from the defendant in Daniel, and finds that the AC’s
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`allegations about LegitScript do not “evidence[] the sort of practical, everyday business or
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`commercial concept of doing business or carrying on business of any substantial character that
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`Case 7:19-cv-07577-KMK Document 129 Filed 03/30/21 Page 14 of 72
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`the Supreme Court has equated to ‘transacting business’ for purposes of [§] 12 venue.” Daniel,
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`428 F.3d at 430 (alteration, citation, and some quotation marks omitted).7
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`B. New York C.P.L.R.
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`1. C.P.L.R. § 302(a)(3) – Out-of-State Tort
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`Section 302(a)(3) of New York’s Civil Practice Law and Rules states that its courts have
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`personal jurisdiction over an out-of-state defendant where that defendant:
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`commits a tortious act without the state causing injury to person or property within
`the state, except as to a cause of action for defamation of character arising from the
`act, if he (i) regularly does or solicits business, or engages in any other persistent
`course of conduct, or derives substantial revenue from goods used or consumed or
`services rendered, in the state, or (ii) expects or should reasonably expect the act to
`have consequences in the state and derives substantial revenue from interstate
`or international commerce . . . .
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`N.Y. C.P.L.R. § 302. As discussed supra, the AC does not allege that LegitScript transacts
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`business in New York. Thus, the Court considers only Section 302(a)(3)(ii).
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`Jurisdiction under C.P.L.R. § 302(a)(3)(ii) rests on five elements.
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`First, that [the] defendant committed a tortious act outside the State; second, that
`the cause of action arises from that act; third, that the act caused injury to a person
`or property within the State; fourth, that [the] defendant expected or should
`reasonably have expected the act to have consequences in the State; and fifth, that
`[the] defendant derived substantial revenue from interstate or international
`commerce.
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`LaMarca v. Pak-Mor Mfg. Co., 735 N.E.2d 883, 886 (N.Y. 2000).
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`Regarding the third element, the location of the injury, “[a]n injury . . . does not occur
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`within the state simply because the plaintiff is a resident.” Mareno v. Rowe, 910 F.2d 1043,
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`1046 (2d Cir. 1990) (denying personal jurisdiction where the plaintiff “suffer[ed] the economic
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`consequences of his firing in New York, [but] the location of the original event which caused the
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`7 Indeed, Plaintiff does not suggest in its opposition memorandum that personal
`jurisdiction is proper under the Clayton Act. (See Pl.’s LS Mem. 1–6.)
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`injury [was] New Jersey”). “[W]hen identifying the original event in order to place the situs of
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`injury for the purposes of Section 302(a)(3), courts must disregard the location of the initial tort
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`and focus on the place where the first effect of the tort that ultimately produced the final
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`economic injury is located.” In re Vitamin C Antitrust Litig., No. 05-CV-453, 2012 WL
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`12355046, at *7 (E.D.N.Y. Aug. 8, 2012) (alteration and quotation marks omitted) (citing
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`DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84–85 (2d Cir. 2001)).
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`
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`Here, this element is not satisfied, because Plaintiff does not allege an injury in New
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`York beyond economic harm. Plaintiff alleges harm in the form of (1) decreased click-through
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`revenue, (AC ¶ 109), and (2) lost business from online pharmacies, (id. ¶ 113). In an analogous
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`case, a court in this district held that “injuries . . . allegedly suffered from the loss of sales . . . did
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`not occur ‘within the state’ of for the purposes of § 302(a)(3)(ii).” Barricade Books, Inc. v.
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`Langberg, No. 95-CV-8906, 2000 WL 1863764, at *5 (S.D.N.Y. Dec. 19, 2000). Rather, “[t]he
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`sites of these injuries were the locations where the two companies decided not to carry” the
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`plaintiff’s product. Id. Here, the AC does not allege the locations of the lost click-through
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`revenue and business from online pharmacies. (See generally AC.) The location of these
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`customers and pharmacies is the situs of Plaintiff’s injury. Thus, Plaintiff “has not articulated a
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`non-speculative and direct injury to person or property in New York that goes beyond the simple
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`economic losses that its New York-based business suffered.” Troma Entm’t, Inc. v. Centennial
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`Pictures Inc., 729 F.3d 215, 220 (2d Cir. 2013). As a result, Plaintiff has not adequately pleaded
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`personal jurisdiction as to Section 302(a)(3)(ii) against LegitScript.8
`
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`8 The New York Court of Appeals decision in Penguin Grp. (USA) Inc. v. Am. Buddha,
`946 N.E.2d 159 (N.Y. 2011) is not to the contrary. There, the court held that the situs of an
`alleged copyright injury was the plaintiff’s place of business in New York. Id. at 165. It reached
`this conclusion for two reasons. First, the alleged infringement was “online” and thus “dispersed
`throughout the country and perhaps the world.” Id. at 164. Second, because of the “unique
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`2. C.P.L.R. § 302(a)(2) – In-State Tort
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`Section 302(a)(2) states that New York courts have jurisdiction over an out-of-state
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`defendant where that defendant “commits a tortious act within the state, except as to a cause of
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`action for defamation of character arising from the act.” N.Y. C.P.L.R. § 302(a)(2). “Antitrust
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`violations are tortious acts for jurisdictional purposes.” Yellow Page Sols., Inc. v. Bell Atl.
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`Yellow Pages Co., No. 00-CV-5663, 2001 WL 1468168, at *8 (S.D.N.Y. Nov. 19, 2001).
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`“[C]ourts in New York have found that where a plaintiff has presented a sufficient showing that
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`a conspiracy exists, personal jurisdiction may exist over a defendant based on acts that were
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`committed by his co-conspirators.” Laborers Local 17 Health & Ben. Fund v. Philip Morris,
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`Inc., 26 F. Supp. 2d 593, 601 (S.D.N.Y. 1998). For purposes of analyzing jurisdiction, the Court
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`assumes but does not decide that LegitScript participated in the conspiracy alleged by Plaintiff.
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`(See generally AC.)
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`To establish jurisdiction under Section 302(a)(2), Plaintiff must allege in connection with
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`an act in New York “(1) that the out-of-state co-conspirator had an awareness of the effects of
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`the activity in New York, (2) that the New York co-conspirators’ activity was for the benefit of
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`the out-of-state conspirators, and (3) that the co-conspirators in New York acted at the behest of
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`or on behalf of, or under the control of the out-of-state conspirators.” Laborers Local, 26 F.
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`bundle of rights granted to copyright owners,” harm to the plaintiff arose in its domicile in New
`York—i.e. in the form of “diminishment of the incentive to publish or write.” Id. at 164.
`Subsequently, courts have noted that the New York Court of Appeals “carefully cabined its
`holding,” and has declined to extend its reasoning even to copyright cases where the plaintiff
`failed “to allege facts demonstrating a non-speculative and direct New York-based injury to its
`intellectual property rights of the sort Penguin . . . recognized.” Troma Entm’t, Inc. v.
`Centennial Pictures Inc., 729 F.3d 215, 219–20 (2d Cir. 2013). Here, while Plaintiff “allege[s]
`that it was deprived of revenue or potential customers when the [websites] were