United States District Court, D. New Jersey
before the court is defendant Reckitt Benckiser's motion
to dismiss or, in the alternative, transfer venue. (ECF No.
6). Plaintiff Absorption Pharmaceuticals, LLC filed a
response (ECF No. 16), to which defendant replied (ECF No.
before the court is plaintiff's motion to take
jurisdictional discovery. (ECF No. 27). Defendant filed a
response (ECF No. 28), to which plaintiff replied (ECF No.
manufacturers and sells Promescent, an over-the-counter
lidocaine spray that functions to desensitize male genitalia.
(ECF No. 1 at 4). Plaintiff's primary target consumer
base is males who suffer from premature ejaculation
(“PE”),  and the company's stated goal is to
“close the ‘arousal gap' between men and
began selling Promescent in 2011 and alleges a successful
launch due to an “innovative proprietary formula and
unique marketing strategies.” Id. By 2012,
larger companies began to notice plaintiff's success.
Id. Auxilium Pharmaceuticals, Inc.
(“Auxilium”), a pharmaceutical manufacturer who
was since purchased by Endo International plc (ECF No. 6 at
19), approached plaintiff regarding a possible acquisition.
(ECF No. 1 at 4). Plaintiff alleges that on January 27, 2013,
Auxilium offered to acquire plaintiff in a deal consisting of
an upfront cash payment, sales milestone earn-outs, and
future royalties, which plaintiff valued at over $150
million. Id. Plaintiff declined the offer and
decided to remain independent for the time being.
2014, plaintiff hoped to expand its operation, and began
seeking out a “corporate partner with a large global
presence.” Id. Plaintiff alleges that
Auxilium, who was still interested in an acquisition,
re-affirmed its prior offer. Id. In addition,
defendant approached plaintiff to discuss a potential
Initial discussions regarding a potential acquisition
alleges that in March of 2014, defendant acquired the K-Y
Brand from Johnson & Johnson. Id. at 8.
Thereafter, defendant hired Stephen De Pretre as an
acquisition consultant. Id. De Pretre suggested to
defendant that plaintiff was a promising acquisition target.
Id. In May of 2014, Corrie Mueller, then marketing
manager for Durex (one of defendant's brand labels),
ordered eight bottles of Promescent to defendant's
affiliate in Beijing, China. Id.
that month, Mueller set up a telephone conference between
Reckitt Benckiser Household Products (China) Co. Ltd.
(defendant's Chinese affiliate, hereinafter
“RBHP”) and plaintiff. Id. Mueller
generated talking points for the meeting, including
plaintiff's “financial overview, supply and
distribution chain details, and marketing overview.”
Id. The parties executed a “Mutual
Confidentiality Agreement” to facilitate the exchange
of information and the protection of the parties.
Id. Plaintiff proposed an agreement, and RBHP
responded by including two terms: an English choice of law
provision and a permissive arbitration clause providing for
the possibility of arbitration in London. Id.
4, 2014, in New York City, plaintiff's chief executive
officer (“CEO”) met with Volker Sydow, Reckitt
Benckiser global category director for sexual wellness
products. Id. at 9. Sydow expressed initial
reservations regarding the effectiveness of a lidocaine-based
PE spray and the size of the potential market. Id.
Plaintiff alleges that its CEO was able to overcome
Sydow's concerns, and that Sydow left the meeting
impressed by the potential of plaintiff's product.
scheduled a meeting between plaintiff's CEO and Mueller
for the next day. Id. The meeting between
plaintiff's CEO and Mueller took place in Las Vegas,
25, 2014, plaintiff and defendant participated in a
“kick-off” telephone conference, during which
defendant sent plaintiff 60 due diligence questions
regarding 15 topics, including plaintiff's
“business and market, finance and accounting,
intellectual property, regulatory, information technology,
supply, market research and consumer, technology, and
marketing and communication.” Id. at 10.
Plaintiff claims that it initially expressed reservations
about disclosing proprietary information to defendant, but
that assurances from two of defendant's directors
encouraged plaintiff to begin its disclosures. Id.
30, 2014, plaintiff's CEO expressed concern regarding the
lack of a term sheet, and stated that plaintiff was
anticipating beginning due diligence with another company
soon. Id. at 11. Defendant's senior vice
president of corporate development wrote to plaintiff's
CEO, highlighting the strength of defendant's brands and
global presence. Id. The senior vice president
encouraged plaintiff to “bear with us and continue to
help us in our due diligence effort.” Id.
Plaintiff responded by continuing to disclose its proprietary
information to defendant. Id. at 11- 12.
Pretre, who had been employed by defendant, began working for
plaintiff. Id. at 12. In meetings with De Pretre,
Sydow showed him tests defendant conducted regarding
Promescent, including tests on human cadavers that would
monitor the degree of absorption. Id. De Pretre in
turn divulged to Sydow proprietary information regarding
the due diligence process, plaintiff's CEO had numerous
conversations with Sydow. Id. During these
conversations, plaintiff's CEO would explain
plaintiff's business and marketing strategies.
Id. Sydow told plaintiff's CEO about
defendant's power over certain retailers. Plaintiff
alleges that Sydow stated that Reckitt Benckiser's market
power was so strong that it could induce retailers-including
Target-to take shelf space away from other companies'
products to immediately make room for Reckitt Benckiser's
products. Id. Plaintiff also alleges that Sydow
stated that Reckitt Benckiser has significant influence over
Amazon.com. See Id. (“Amazon does not tell us
what to do, we tell Amazon what to do.”).
alleges that it complained to defendant about the lack of a
formal offer. Id. After one such complaint, Sydow
informed plaintiff's CEO that an offer was sitting on the
desk of the CEO for Reckitt Benckiser and waiting for a
the due diligence process, defendant asked plaintiff to send
15 kilograms of bulk product for “condom
testing.” Id. at 13. Plaintiff alleges that
such quantity is far in excess of anything that defendant
would need to perform such testing, although plaintiff did
not know as much at the time of the request. Id.
The market study, stalled negotiations, and ...