Court Opinion

ID: 4567795
Source: CourtListenerOpinion
Date Created: 2020-09-22 20:00:26.044156+00
Date Added: 2024-06-11T09:27:00.894644
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        SEP 22 2020
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

ICONLAB, INC., a California corporation;        No.    19-55683
et al.,
                                                D.C. No.
                Plaintiffs-Appellants,          8:16-cv-01321-JLS-KES

 v.
                                                MEMORANDUM*
BAUSCH HEALTH COMPANIES, INC.,
FKA Valeant Pharmaceuticals International,
Inc., a Canadian corporation; et al.,

                Defendants-Appellees.

                   Appeal from the United States District Court
                       for the Central District of California
                   Josephine L. Staton, District Judge, Presiding

                           Submitted August 14, 2020**
                              Pasadena, California

Before: CALLAHAN, BUMATAY, and VANDYKE, Circuit Judges.

      Iconlab, Inc., Icon Lab GmbH, and Reper-NN, Co., Ltd. (collectively,

“Iconlab”) appeal from the grant of Bausch Health Companies, Inc.’s motions to

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
dismiss for lack of personal jurisdiction and for failure to join indispensable parties.

We affirm.

      1. We review personal jurisdiction determinations de novo, Dole Food Co. v.

Watts, 303 F.3d 1104, 1108 (9th Cir. 2002), and factual questions involved in the

application of alter ego and agency tests for clear error. Towe Antique Ford Found.

v. I.R.S., 999 F.2d 1387, 1391 (9th Cir. 1993); Penthouse Int’l, Ltd. v. Barnes, 792

F.2d 943, 947 (9th Cir. 1986). We apply state law to questions of jurisdiction.

Williams v. Yamaha Motor Co., 851 F.3d 1015, 1020 (9th Cir. 2017). In this case,

the district court, after months of jurisdictional discovery, granted Bausch’s Federal

Rule of Civil Procedure 12(b)(2) motion to dismiss Bausch’s foreign subsidiaries,

Valeant Ireland and B&L Saglik, for lack of jurisdiction over both Iconlab’s alter

ego and agency theories. The district court did not err.

      To support personal jurisdiction under an alter ego theory, Iconlab must show

(1) “such unity of interest and ownership” between parent and subsidiary “that the

separate personalities of the two entities no longer exist” and (2) the “failure to

disregard” the separate entities “would result in fraud or injustice.” Ranza v. Nike,

Inc., 793 F.3d 1059, 1073 (9th Cir. 2015) (simplified) (quoting Doe v. Unocal Corp.,

248 F.3d 915, 926 (9th Cir. 2001)). Iconlab argues there is sufficient unity of interest

between Bausch and its two foreign subsidiaries because Bausch approved their

large purchases, financed their activity, issued collective media releases, and

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submitted consolidated earnings reports. The district court was correct that none of

these allegations show Bausch’s day-to-day involvement in its subsidiaries’

governance. See Ranza, 793 F.3d at 1073 (recognizing that the “test envisions

pervasive control over the subsidiary, . . . from broad policy decision to routine

matters of day-to-day operation”) (simplified). Instead, these activities reflect

routine operations between a parent and its subsidiary.1 Furthermore, Iconlab fails

the second part of the test: it has not shown that injustice would result here from

“recognition of the corporate form.” Tomaselli v. Transamerica Ins. Co., 31 Cal.

Rptr. 2d 433, 443 (Ct. App. 1994) (finding “inadequate capitalization, commingling

of assets, [and] disregard of corporate formalities” can satisfy the standard).

      The district court also correctly rejected Iconlab’s effort to support

jurisdiction under an agency theory.          Iconlab asserted that the two foreign

subsidiaries are Bausch’s agents, but it relies on a theory of agency, Bowoto v.

Chevron Texaco Corp., 312 F. Supp. 2d 1229, 1238–46 (N.D. Cal. 2004), that was

rejected by the Court in Daimler AG v. Bauman, 571 U.S. 117, 136 (2014). See also

Yamaha Motor, 851 F.3d at 1021 (recognizing that the test for general jurisdiction

1
  See, e.g., Unocal Corp., 248 F.3d at 927, abrogated on other grounds by Williams
v. Yamaha Motor Co., 851 F.3d 1015 (9th Cir. 2017) (financing and approval of
large purchases); Sonora Diamond Corp. v. Superior Court, 99 Cal. Rptr. 2d 824,
844 (Ct. App. 2000) (consolidated reporting); Kramer Motors, Inc. v. British
Leyland, Ltd., 628 F.2d 1175, 1177 (9th Cir. 1980) (guarantor); F. Hoffman-La
Roche, Ltd. v. Superior Court, 30 Cal. Rptr. 3d 407, 422 (Ct. App. 2005) (collective
media releases).

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asks whether a corporation is essentially “at home” in the forum state). Even

assuming Iconlab’s agency theory is still actionable, Iconlab employs a novel

“reverse-agency” theory with no legal support: attributing to the agents (foreign

subsidiaries) the contacts of the principal (Bausch). See Strasner v. Touchstone

Wireless Repair & Logistics, LP, 210 Cal. Rptr. 3d 16, 24 (Ct. App. 2016) (rejecting

jurisdictional imputation through reverse agency). We decline to approve this theory

here.

        2. Next, the district court did not abuse its discretion by dismissing Iconlab’s

lawsuit under Federal Rule of Civil Procedure 19. The Rule 19 inquiry involves: (1)

identifying the necessary absent parties; (2) determining if joinder is feasible;2 and

(3) choosing whether to proceed without them. See Fed R. Civ. P. 19(a)–(b);

E.E.O.C. v. Peabody W. Coal Co., 400 F.3d 774, 779–80 (9th Cir. 2005). The absent

parties consisted of Bausch’s foreign subsidiaries Valeant Ireland, B&L Saglik, and

Valeant International Luxembourg (collectively, “Valeant subsidiaries”), Turkish

company Boyut, and UAE-incorporated Mediworld.

        Under Rule 19(a)(1)(B), a party must be joined if:

        That person claims an interest relating to the subject of the action and
        is so situated that disposing of the action in the person’s absence may:
        (i) as a practical matter impair or impede the person’s ability to protect
        the interest; or (ii) leave an existing party subject to a substantial risk

2
 Iconlab does not challenge this prong of the Rule 19 inquiry and we do not
address it here.

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      of incurring double, multiple, or otherwise inconsistent obligations
      because of the interest.

Fed R. Civ. P. 19(a)(1)(B). Here, the district court ruled that the absent parties were

necessary to determine the ownership of the technology at the heart of the dispute

between Iconlab and Bausch. According to Bausch, the Valeant subsidiaries were

the purported buyers of the commercial technology and Boyut and Mediworld were

the purported sellers. But Iconlab sought damages, declaratory relief naming it the

rightful owner of the technology, and injunctive relief prohibiting the Bausch entities

from misappropriating the technology.

      We agree with the district court that such a claim implicates the absent parties.

As the district court observed, if Iconlab prevails and is declared the proper owner

of the technology, it may require the district court to order the dissolution of

contracts between the absent parties. Without unwinding the contract here, the

parties could be subject to inconsistent obligations—one under the district court’s

order and one under the contract. The absent parties could even obtain a dueling

declaration from a different tribunal. Such parties are, thus, the quintessential

necessary parties. See Lomayaktewa v. Hathaway, 520 F.2d 1324, 1325 (9th Cir.

1975) (holding that “in an action to set aside . . . a contract, all parties who may be

affected by the determination . . . are indispensable”); Dawavendewa v. Salt River

Project Agric. Improvement & Power Dist., 276 F.3d 1150, 1157 (9th Cir. 2002)

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(holding that “a party to a contract is necessary, and if not susceptible to joinder,

indispensable to litigation seeking to decimate that contract”).

      Having found that absent parties have legally protectable interests, the district

court did not abuse its discretion in holding the absent parties indispensable. Rule

19(b)(4) provides four factors to determine whether dismissal is required in an action

in which necessary parties cannot be joined, but Iconlab challenges only the fourth:

whether Iconlab would have a remedy if its suit was dismissed. Fed. R. Civ. P.

19(b)(4). As the district court found, Iconlab could still sue in other jurisdictions,

and, in fact, it was already litigating the dispute in several foreign courts at the time

of dismissal. The district court was thus correct that Iconlab is capable of bringing

its claims elsewhere and properly dismissed Iconlab’s case pursuant to Rule 19.3 See

Creative Tech., Ltd. v. Aztech Sys. PTE, 61 F.3d 696, 702 (9th Cir. 1995) (holding

that when a company has filed suit in an alternate forum, it has generally waived any

argument that it cannot file there).

      AFFIRMED.

3
 Iconlab admits that it does not want to bring suit in Turkey because it would not be
cost effective. But the Federal Rules don’t make an allowance for this concern. See
Ziegler v. Indian River Cty., 64 F.3d 470, 476 (9th Cir. 1995) (explaining that
convenience is not an important concern in the jurisdiction analysis).

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