Medimpact Healthcare Sys. v. IQVIA Holdings Inc.

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MEDIMPACT HEALTHCARE SYSTEMS, INC., a California corporation, MEDIMPACT INTERNATINAL LLC, a California limited liability company, MEDIMPACT INTERNATIONAL HONG KONG LTD., a Hong Kong company, Plaintiff, v. IQVIA HOLDINGS INC., a Delaware corporation, IQVIA INC., a Connecticut corporation, IQVIA AG, a Swiss company, OMAR GHOSHEH, individually, and AMIT SADANA, individually, Defendant.

No. 19cv1865-GPC(DEB)

United States District Court, S.D. California

March 10, 2022

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT [DKT. NO 377.]

HON GONZALO P. CURIEL, UNITED STATES DISTRICT JUDGE.

Before the Court is Plaintiffs' motion for partial summary judgment based on issue preclusion. (Dkt. No. 377.) Defendants filed an opposition. (Dkt. No. 394.) Plaintiffs filed their reply. (Dkt. No. 399.) The Court finds that the matter is appropriate for decision without oral argument pursuant to Local Civ. R. 7.1(d)(1). Based on the reasoning below, the Court GRANTS in part and DENIES in part Plaintiffs' motion for partial summary judgment.

Procedural Background

On April 7, 2020, Plaintiffs Medimpact Healthcare Systems, Inc. (“MHSI”), Medimpact International LLC (“MIL”), and MedImpact International Hong Kong Ltd. (“MI-HK”) (collectively “Plaintiffs” or “MedImpact”) filed the operative first amended complaint^[1] (“FAC”) against Defendants IQVIA Holdings, Inc., IQVIA Inc., IQVIA AG, Omar Ghosheh (“Dr. Ghosheh”) and Amit Sadana (“Mr. Sandana”) (collectively “Defendants”). (Dkt. No. 93, FAC.) Relevant to the instant motion, one remaining claim is the eighth cause of action for misappropriation of trade secret under the Defend Trade Secrets Act (“DTSA”).^[2] (Dkt. No. 130.)

On December 3, 2020, Defendants moved for partial summary judgment arguing claim and issue preclusion barred re-litigation of the already adjudicated claims, in their favor, by a prior international arbitration between MIL and MI-HK and non-party Dimensions Healthcare LLC (“Dimensions”) with the Dubai International Financial Centre-London Court of International Arbitration on (1) the “PBM Claims Data Theft” claim; and (2) the “account-based damages” claim. (Dkt. No 144.) On March 2, 2021, the Court denied Defendants' motion for partial summary judgment on issue and claim preclusion because they failed to demonstrate privity, an element of both theories of preclusion, between Dimensions and each IQVIA Defendant. (Dkt. No. 195.) On May 14, 2021, the Court granted in part Defendants' motion for reconsideration and found that Defendants had demonstrated privity only as to Defendants IQVIA AG and IQVIA Inc. and not as to IQVIA Holdings, Inc. (Dkt. No. 222.) Subsequently, Defendants IQVIA AG and IQVIA Inc. renewed their motion for partial summary judgment on claim and issue preclusion. (Dkt. No. 228.) On August 19, 2021, the Court denied Defendants' renewed motion concluding that they failed to demonstrate that there was an “identity of claims” on the PBM Claims Data Theft and the account based damages claims between this case and the arbitration. (Dkt. No. 294 at 11-12; 16-19.^[3]) Specifically, the Court found, on claim preclusion, that Defendants failed to “explain, parcel out, and provide specifics that the Claims Data Theft claims in this case and in the arbitration arise from the same transactional nucleus of facts.” (Id. at 12.) Therefore, the Court also concluded that issue preclusion did not apply because that claim was not actually litigated in the arbitration. (Id. at 16.) As to the account-based damages issue, on claim and issue preclusion, the Court concluded that Defendants failed to demonstrate that the damages for a breach of contract claim would render the same relief as a misappropriation of trade secrets claim. (Id. at 16-17.)

Now before the Court is Plaintiffs' fully briefed motion for partial summary judgment seeking issue preclusion on two elements of a claim for misappropriation of trade secret under the DTSA that the Arbitrator made in Plaintiffs' favor. (Dkt. Nos. 377, 394, 399.)

Background

According to the FAC, MHSI spent more than 30 years and invested hundreds of millions of dollars developing its proprietary PBM platform. (Dkt. No. 93, FAC ¶ 14.) A PBM platform determines, in real time, whether a pharmacy claim should be dispensed to the patient or whether the claim should be rejected. (Id. ¶¶ 1, 32.) Through its features, the PBM platform provides access to unparalleled data related to prescription drug transactions as well as business, financial, operational, technical and clinical know-how. (Id.) Non-Party Dimensions Healthcare LLC (“Dimensions”) is a United Arab Emirates (“UAE”) company and has extensive regulatory contacts and presence in the Middle East. (Id. ¶¶ 5, 30.)

On February 1, 2012, MIL, Dimensions and MedImpact Arabia Limited^[4] (“MIA”) entered into a Joint Venture Agreement (“JVA”) and Services and License Contract (“SLC”) in order to expand Plaintiffs' PBM services to the Middle East. (Dkt. No. 396, Bennett Decl., Exs. 13, 14 (UNDER SEAL).) The JVA and SLC were mutually beneficial as MedImpact brought its PBM technology to the joint venture and Dimensions contributed its knowledge of the local market. (Dkt. No. 93, FAC ¶¶ 5, 30.) On January 1, 2014, MIL assigned its rights and interest in the JVA to Plaintiff MI-HK. (Id. ¶ 32.)

Under the Licensed Technology provision, Article 10.1 of the JVA provides that “ XXXXX .” (Dkt. No. 396, Bennett Decl., Ex. 13, JVA, Art. 10.1 (UNDER SEAL).) On Confidentiality, Article 11.1 of the JVA provides, XXXXX

XXXXX

(Id. JVA, Art 11.1(a) (UNDER SEAL).) The XXXXX (Id., JVA, Art 11.1(b)(iii) (UNDER SEAL).)

Similarly, the Confidentiality provision of the SLC under Article 9 provides, XXXXX

(Dkt. No. 396, Bennett Decl., Ex. 14, SLC, Art. 9.1 (UNDER SEAL).) In turn, XXXXX (Id., SLC, Art. 9.2 (UNDER SEAL).) According to the FAC, beginning in 2015 and continuing until at least to late 2017, Plaintiffs claim that Dimensions secretly developed the Adjudication Insurance Management System (“AIMS”), a competing platform similar to MedImpact's PBM, using Medimpact's trade secret and confidential information. (Dkt. No. 1, FAC ¶¶ 55, 56.) Prior to terminating the JVA, IQVIA AG and Dimensions stole a number of joint venture clients, including Oman Insurance, the joint venture's largest client, by offering AIMS to replace the PBM product. (Id. ¶¶ 58, 60.) Once Defendants successfully developed and sold AIMS, Dimensions terminated the JVA on July 23, 2017. (Id. ¶ 60.)

A. International Arbitration in Dubai

Due to Dimensions' conduct in developing AIMS and selling it to the joint venture clients and pursuant to the arbitration clause in the JVA and SLC, on January 23, 2018, Plaintiffs MIL and MI-HK filed claims in arbitration against Dimensions with the Dubai International Financial Centre-London Court of International Arbitration (“DIFC-LCIA”) seeking relief against Dimensions for a number of breaches of the JVA and SLC, including Articles 10.1 and 11.1(b) of the JVA and Article 9.2 of the SLC, and misappropriation of trade secret under U.S., English and UAE Law. (Dkt. No. 396, Bennett Decl., Ex. 16, Statement of Claim ¶¶ 1.4, 5.9-5.32, 7.5 (UNDER SEAL); see also id., Ex. 1, Partial Final Award on Liability (“Partial Final Award”) ¶¶ 89(5) & (6)^[5] (UNDER SEAL).)

The Arbitration Tribunal (“Tribunal”) referred to the claims for breaches of Articles 10.1 and 11.1 of the JVA and Article 9.2 of the SLC as the “Contractual IP Claim” and the misappropriation of MedImpact's intellectual property rights under U.S., English and UAE law as the “Statutory IP Claim.” (Dkt. No. 396, Bennett Decl., Ex. 1, Partial Final Award ¶¶ 97(2)(iii) & (iv) (UNDER SEAL).)

Pursuant to the JVA and SLC, XXXXX (Dkt. No. 396, Bennett Decl. Ex. 1, Partial Final Award on Liability ¶¶ 27, 28 (UNDER SEAL).) On April 16, 2019, after extensive discovery and an evidentiary hearing, the Arbitrator made numerous legal and factual findings in a 75-page order entitled Partial Final Award on Liability. (Id., Ex. 1 (UNDER SEAL).)

Relevant to the instant motion, on the Contractual IP Claim, the Arbitrator found that Dimensions XXXXX (Id. ¶¶ 178(1), 203(2) (UNDER SEAL).) On the Statutory IP Claim, the Arbitrator ruled:

XXXXX

(Id. ¶ 179 (internal footnotes omitted) (UNDER SEAL).)

On July 24, 2019, the Arbitrator issued a 34-page order on damages entitled Final Award. (Dkt. No. 396, Bennett Decl., Ex. 2, Final Award (UNDER SEAL).) He XXXXX (Id., Final Award ¶ 107 (UNDER SEAL).) On April 20, 2021, pursuant to the parties' joint motion for entry of judgment, this Court confirmed the international arbitration award pursuant to 9 U.S.C. § 207 and final judgment was entered. (Case No. 21cv193-GPC(DEB), Dkt. No. 22.) Dimensions has fully paid the damages to MIL and MI-HK.

Because the Tribunal ruled that MedImpact's trade secrets are “protectable intellectual property” and “Dimensions misappropriated the Trade Secrets in the course of developing AIMS”, Plaintiffs move for partial summary judgment arguing issue preclusion bars re-litigation of two elements of the DTSA claim that “MedImpact trade secrets that were used to build AIMS are protectable” and “AIMS uses Plaintiffs' misappropriated trade secrets.” (Dkt. No. 377-1 at 30.) They also seek partial summary judgment that IQVIA AG misappropriated trade secrets in the course of providing AIMS to NUPCO-Wasfaty. (Id.) Defendants oppose arguing that judicial estoppel applies to bar Plaintiffs' inconsistent arguments made in this motion and the prior motion for partial summary judgment, and the Tribunal explicitly stated it would not rule on the statutory misappropriation claim under the DTSA. (Dkt. No. 394 at 21-23.) They also claim that there are genuine...