### Celanese Canada ULC v Mithra Pharms. SA 2024 NY Slip Op 32632(U) July 30, 2024 Supreme Court, New York County Docket Number: Index No. 652087/2024 Judge: Lyle E. Frank Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York State and local government sources, including the New

York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication.NYSCEF DOC. NO. 58 INDEX NO. 652087/2024 RECEIVED NYSCEF: 07/30/2024 

### SUPREME COURT OF THE STATE OF NEW YORK NEWYORK COUNTY PRESENT: HON. LYLE E. FRANK Justice

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CELANESE CANADA ULC, Plaintiff,

- V - MITHRA PHARMACEUTICALS SA, NOVALON SA Defendant.

---------------------------------------------------------------------------------X PART
INDEX NO.
MOTION DATE 11M 652087/2024 04/24/2024, 06/11/2024 MOTION SEQ. NO.
__ 0_0_1_0_0_2
__ DECISION 

### + ORDER ON MOTION

The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 24, 25, 26, 28, 29, 30, 31 were read on this motion to/for INJUNCTION/RESTRAINING ORDER The following e-filed documents, listed by NYSCEF document number (Motion 002) 34, 35, 36, 37, 38, 39,40,41,42,43,44,45,46,47,49,50,51,52,53,54,55,56 were read on this motion to/for DISMISS This action arises out ofan allegedbreach ofa commercial sales agreement (the "Contract"). 1Plaintiff, Celanese Canada ULC ("Celanese"), now moves for a preliminary injunction enjoining defendants, MithraPharmaceuticals SA ("Mithra") and Novalon SA ("Novalon") (collectively, the "Defendants"), from: (1) disclosing or disseminating any confidential information provided to Defendants by Celanese to any otherperson, partnership, company, corporation or otherentity, (2) utilizing anyunusedmaterials given to Defendants by Celanese, (3) utilizing any ofthe aforementioned confidential information for the production, manufacture, or sales ofDefendants' products, and (4) selling products manufactured with or containing anymaterial providedby Celanese. Defendants also move to dismiss the complaint pursuant to CPLR 3211, the principles ofcomity, and for improper service. Upon the foregoing

1 The Court would like to thank Sophia Hartman for her assistance inthis matter.

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### documents and following oral argument, for the reasons indicated below, plaintiff's motion for a preliminary injunction is denied, with exception to the sealing ofNYSCEF Docs. No. 4, 5, 6, 7, and 8, which is granted. Defendants' motion to dismiss is similarly denied to the extent that this action is stayed, pending the results ofDefendants' foreign bankruptcy proceedings. Background Celanese is a Canadian company that has developed aproprietarypolymer (the "Material"). Defendant Novalon is a Belgian company, notablyresponsible for the manufacture and distribution ofa vaginal contraceptive ring called "Myring" (or, in the United States, "Haloette"), which uses Celanese's Material for its production. Defendant Mithra is also a Belgian company that develops and manufactures overthe counterproducts for women's health, among other applications, and is Novalon's parent through sole or majority ownership. In November 2017, Celanese and Mithra entered into the Contract, wherein Celanese agreed to provide the Materials for use solely as a raw material in Mithra's contraceptive rings. This Contractwas reassigned to Novalon in 2020 with Celanese's approval. Mithra subsequently entered into a guarantee agreement (the "Guarantee") with Celanese, in which Mithra agreed to be liable for and indemnify Celanese "againstlosses, damages, costs and expenses, whatsoever which [Celanese] may incurby reason or in consequence of' Novalon's failure to perform under the Contract. NYSCEF Doc. No. 13. Celanese alleges thatDefendants' have breached the Contractby failing to pay the July 2023 invoice in full, claiming that $1,180,000 is still left outstanding, andby disclosing Celanese's Confidential Information to Third Parties, among other claims. In theirpapers and at oral argument, Defendants have shown thatboth Novalon and Mithra are in the beginning stages ofBankruptcyproceedings in Belgium. Defendants further assert that, to the extent Celanese has

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a claim, it shouldberequired to seekreliefalongside those other creditors in the Belgian proceedings, rather than being permitted to pursue this action, as it threatens to disrupt Novalon and Mithra's business, while also complicatingDefendants' efforts to negotiate with creditors or potential buyers. Notably, this Court has granted a past 

### TRO on the topic ofDefendants' dissemination of Celanese's Confidential Information, which was vacated. In his ruling to vacate, Appellate Division Justice Martin Shulmanreasoned thatthe allegations in Celanese's Complaint didnot show a risk ofirreparable harm and expressed concern that comity be given toNovalon's Belgianreorganization proceedings. Discussion It is well established that "[a] movant's burden ofproofon a motion for a preliminary injunction is particularly high" 

### Council of the City of NYv Giuliani, 248 AD2d 1, 4 [1st Dept 1998]. A party seeking a preliminaryinjunction must clearly demonstrate (1) the likelihood of ultimate success on the merits; (2) the prospect ofirreparable injury ifthe injunction is not issued; and (3) a balance ofthe equities in the movant's favor. 

### See Doe vAxelrod, 73 NY2d 748 [NY 1988];

### Housing Works, Inc. v City of New York, 255 AD2d 209 [1st Dept 1998]. Ifthe movant fails to meetits burden to establish each and every element, the request for injunctive reliefmustbe denied. 

### See, e.g., Axelrod, 73 NY2d at 750-51. Celanese now alleges that Defendants havebreachedthe Contractin a number ofways, which have prompted Celanese to request a preliminary injunction. The breach issue most pertinentto this Court at this time is the allegation thatDefendants' have, and continue to, disclose Celanese's Confidential Information to a Third Party, namelyto Mithra CDMO

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### ("CDMO"), the manufacturing company owned by Mithra that uses Celanese's Material to make Defendants' contraceptive product. 2 

### As formerly stated, to succeed on a motion for apreliminaryinjunction, a party must show the prospect ofirreparable injury ifthe injunction is not issued. In this case, Celanesehas failed to meetits burden as the dissemination ofConfidential Information to CDMO does not breach the Contract's confidentiality clause(s), and ithas not alleged anything further thatwould lead this Court to believe that the proprietarynature ofthe Confidential Information has been, or will be, disclosedbyDefendants to any otherparties. As a condition for the sale ofthe Material to Defendants, Celanese required Mithra and Novalon to protect Celanese's "Confidential Information." The Contract defines "Confidential Information," and states in clause 17.S(ii) thatDefendants agree that they will not "disclose Confidential Information of [Celanese] to any Third Party without the advance written approval of [Celanese]." This seems to be the nexus ofthe parties disagreement: whether CDMO is a Third Party or an Affiliate. In clause 17.11, the Contract defines "Third Parties" as "a contractor, agent, consultant, expert, or the like in conjunction with a Developmental Purpose...." The gravamen ofthe clause is to instruct Defendants on their obligations should they "needto incorporate a third party, ... and such incorporation will involve the use of [Celanese's] Confidential Information...." In this instance, the Contractnecessitates that Defendants "require any such third party to execute a confidentiality agreement..." before Defendants are authorized to share said Confidential Information.

2 Mithra CDMO has also filed for Bankruptcyproceedings inBelgium.

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The Contract also defines an "Affiliate(s)," in clause 17.l(a), as "any person, corporation, association or other entity that directly orindirectly controls, is controlledby, oris under
common control with such party, either now or at any time during the [Contract] Term." It goes on to define "controls" as "ownership (directly orindirectly and legally orbeneficially) ofmore than 50% ofthe outstanding voting shares, capital stock or other ownership interests entitled to vote for the election ofdirectors or governing body ofsuch person, corporation, association or other entity; or[] the authority, whetherpursuant to contract, ownership ofsecurities or other instruments otherwise, to direct the management orpolicies ofsuch person, corporation, association or other entity; or [] such otherrelationship whichresults in the actual control over the management, policies, business, or affairs ofsuch person, corporation, association or other entity...." Contract clause 17.7 states that Defendants "may, in its sole discretion, disclose Confidential Information of [Celanese] to [Defendants'] Representatives who require the same in the performance ofthis Contractwho have been advised ofthe confidential nature ofthe Confidential Information and the restrictions hereunder on its disclosure and use, and agree to maintain the same in confidence and notto use the same other than expressly permitted herein." The term "Representative(s)," as defined in clause 17.1(e), "means a party's directors, officers, employees, principals, agents, consultants, and subcontractors as well as its Affiliates and their respective directors, officers, employees, principals, and agents." Upon the Court'sreading ofthese relevant clauses, CDMO is necessarily considered an Affiliate, not a Third Party, under the Contract. Therefore, Defendants did not need to obtain advancedwritten approval from Celanese before disclosing Confidential Information to CDMO,
as it is, by the Contract's definition, "controlled" byMithra, and is thereby automaticallybound

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### bythe confidentiality terms ofthe Contract. The Court finds no evidence therefore ofviolation of the contract's confidentialityprovision, and thus no reason to enjoin anyparty. As to Defendants' motion to dismiss on account ofthe proceedings taking place in Belgium, this Court acknowledges that the principles ofinternational comity and a strong public policy favor the administration ofall claims against a debtor in a single forum. These considerations generally preclude American Courts from giving certain creditors preference over others byreleasing them from the obligations imposedby foreign bankruptcylaw. 

### Ecoban Fin. Ltd. v. GrupoAcereroDelNorte, S.A. de C. 

### V, 108 F. Supp. 2d 349, 354 (S.D.N.Y. 2000), 

### aff'd sub nom. Ecoban Fin. Ltd. v. AltosHarnos de Mexico, S.A. de C. 

### V, 2 F. App'x 80 (2d Cir. 2001). The Courthas been provided no reason to believe that the Belgianproceedings are not procedurally fair, nor that they contravene the laws orpublic policy ofthe United States. As such, this Courtwill do whatwouldbe done bythis Courtwith any Americanbankruptcy proceeding running concurrentlywith this action, the instant matter shall be stayed, pending the outcome ofthe Belgian proceedings. As to Defendants' claims that Celanese's initial attempt at service was improper, information given to the Court at oral arguments on July 24, 2024, indicates that there has now been additional service. To the extent that the mostrecent attempt at service is found to be insufficient, the issue ofservice is hereby preserved for Defendants to re-bring the claim. Based on the foregoing, it is hereby ORDERED that the motion to dismiss is denied, and the action is stayed; pending the Belgianbankruptcyproceedings; and it is further

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### ADJUDED thatthe preliminaryinjunction is denied, except as to NYSCEF Docs. No. 4, 5, 6, 7, and 8, whichthe Clerk shall seal, except as to be accessedbythe Court, the parties and their counsel.

7/30/2024

DATE LYLE E. FRANK, J.S.C. CHECK ONE:

# ~ CASE DISPOSED

# ~ NON-FINAL DISPOSITION GRANTED

### □ DENIED GRANTED IN PART APPLICATION: SETTLE ORDER SUBMIT ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT

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