Mikhail v. Amarin Corp.

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KARIM MIKHAIL, Plaintiff, v. AMARIN CORPORATION, PLC, et al., Defendants.

Civil Action No. 23-01856 (GC) (JBD)

United States District Court, D. New Jersey

February 29, 2024

NOT FOR PUBLICATION

OPINION

GEORGETTE CASTNER UNITED STATES DISTRICT JUDGE

This matter comes before the Court upon Defendants Amarin Corporation plc (Amarin plc), Amarin Pharma, Inc. (Amarin Inc.),^[1] and Amarin Switzerland GmbH's (Amarin Switzerland) Motion to Dismiss Plaintiff Karim Mikhail's Amended Complaint, under Federal Rules of Civil Procedure (Rules) 12(b)(2) and 12(b)(6). (ECF Nos. 23, 26.) Plaintiff opposed, and Defendants replied. (ECF Nos. 29, 31.) The Court has carefully considered the parties' submissions and decides the motion without oral argument pursuant to Rule 78(b) and Local Civil Rule 78.1(b). For the reasons set forth below, and other good cause shown, Defendants' motion is DENIED without prejudice, to allow for jurisdictional discovery.

I. BACKGROUND

A. Factual Background

Plaintiff Mikhail, a New York citizen and resident, sues Defendants Amarin plc, a foreign corporation incorporated in England and Wales, with a principal office in Ireland; Amarin Inc., a Delaware corporation based in New Jersey; and Amarin Switzerland, a Swiss corporation headquartered in Switzerland. (ECF No. 23 ¶¶ 1-4.) Mikhail seeks unpaid compensation under two agreements: first, his Contract of Employment with Amarin Switzerland, and second, Amarin plc's Executive Severance and Change of Control Plan. (Id. ¶¶ 7, 12; ECF No. 26-5 (Employment Agreement); ECF No. 26-6 (Severance Plan).)^[2]

1. The Agreements

The Employment Agreement, which is governed by Swiss law, details Mikhail's appointment as “Chief Executive Officer (‘CEO') of the Company,” as “President and CEO of Amarin Corporation plc,” and to “the Board of Directors of Amarin Corporation plc.” (ECF No. 26-5 §§ 2.2, 2.3, 2.6.) In those capacities, Mikhail agreed to “faithfully and diligently perform such job duties and exercise such powers in relation to the Company and the business of the Group.” (Id. § 3.1(a).) The Company, as used in the Employment Agreement, means Amarin Switzerland, including “any person acting on behalf of the Company within his proper authority.” (Id. at 2, § 1.2.) The Group means “the Company and its associated companies.” (Id. § 1.1.) And associated companies includes “Amarin Pharmaceuticals Ireland Ltd, Amarin Corporation plc and Amarin Pharmaceuticals Inc.” (Id. § 1.1.)

Mikhail alleges that Amarin plc's Severance Plan is incorporated into section 18 of the Employment Agreement,^[3] which provides that “[t]he Executive will be eligible for severance pay and benefits under terms and conditions that are no less favourable than pursuant to Amarin Corporation plc's Executive Severance and Change of Control Plan ....” (ECF No. 23 ¶ 12; ECF No. 26-5 § 18.7.)

The Severance Plan establishes “the conditions under which Eligible Executives will receive severance pay and benefits if employment with the Company (or its successor, following a Change of Control) terminates under” specific circumstances. (ECF No. 26-6 § 1.) For one, the employee must be an Eligible Executive: a “United States employee of the Company or any of its Subsidiaries at the level of Vice President or above at the time of the Date of Termination (or, if applicable, at the time of a Change of Control).” (Id. § 2(n).) Another condition is a Change of Control, which the contract provides may occur in any of several listed events whose common thread is “a ‘change in the ownership or effective control' of the Company or a ‘change in the ownership of a substantial portion of the Company's assets' for purposes of Section 409A of the [Internal Revenue] Code.” (Id. § 2(e).) And Control means “the ownership of more than 50 percent of the issued share capital or other equity interest of the Company or the legal power to direct or cause the direction of the general management and policies of the Company.” (Id. § 2(k).)

To be eligible for severance payments and benefits, the Eligible Executive must terminate employment for “Good Reason” within 24 months after the Change of Control. (Id. §§ 2(f), 2(g), 4(a).) A Good Reason includes, for instance, “a material diminution in the Eligible Executive's authority, duties or responsibilities” or “a material breach by the Company of an Employment Agreement.” (Id. § 2(o).) Pursuant to section 18.4 of the Employment Agreement, “[t]ermination with immediate effect for a justified cause pursuant to Article 337 Swiss Code of Obligations (CO/OR) is reserved.” (Id. § 18.4.)

The Employment Agreement also provides for accelerated vesting of certain equity awards “upon a Change of Control” as defined in Amarin plc's 2020 Stock Incentive Plan. (ECF No. 23 ¶ 63; ECF No. 26-5 § 9.1.) Under the Stock Incentive Plan, a Change of Control occurs when “any person or company (either alone or together with any person or company acting in concert with him or it) . . . obtain[s] Control of the Company.” (ECF No. 26-7 § 7(a)(i).) Control means “the ownership of more than fifty (50)% of the issued share capital or other equity interest of the Company.” (Id. § 2(o).) And there, the Company means Amarin plc. (Id. § 2(l).)

2. The Alleged Change of Control

Mikhail alleges that a Change of Control occurred after Amarin plc's largest shareholder, Sarissa Capital Management LP, a Connecticut-based hedge fund, initiated and on February 28, 2023, won a proxy contest to add seven of Sarissa's nominees as members to Amarin plc's board, expanding the board from eight to 15 members. (ECF No. 23 ¶¶ 72, 89-110.) Immediately after, Mikhail alleges, the Sarissa nominees “bullied the remaining Amarin board members,” including Mikhail, “to resign from the Board.” (Id. ¶¶ 112-118.)

During a March 6 meeting at Sarissa's offices in Greenwich, Connecticut, between Mikhail and Odysseas Kostas, a Sarissa-nominated board member, Mikhail conveyed that based on Sarissa's proxy campaign, Mikhail “was fired already publicly more than 3 times” and the “new Board had already decided to terminate him.” (Id. ¶¶ 119-122.) Mikhail explained that his “transition out of the company” would require a resolution and that, as for his compensation, he wanted only the severance package under his contract. (Id. ¶¶ 123-124.) That same day, Amarin plc announced that “all seven independent non-Sarissa board members . . . will resign from the Board of Directors, effective immediately,” adding that the members were “stepping down to allow Sarissa, as it has requested, to gain immediate control of the Company.” (Id. ¶ 127 (emphasis omitted).)^[4] In consequence of Sarissa's control of the board, Mikhail alleges, Sarissa “gained full and absolute control of Amarin” and “substantially all of its assets and equity.” (Id. ¶ 129.)

On March 9, following the new board's townhall in Bridgewater, New Jersey, Kostas told Mikhail that the board was not interested in a short-term transition, adding that Mikhail should “just resign” if he wanted to leave. (Id. ¶ 133.)

Mikhail alleges that on March 14, he wrote to “Defendant Amarin,” “setting forth such facts and seeking a resolution in good faith with the company.” (Id. ¶ 134.) In response, the company's outside counsel asked if Mikhail had resigned, without addressing the substance of Mikhail's communication. (Id. ¶ 135.) On March 20, Mikhail's counsel tried again to reach a resolution but received no response. (Id. ¶ 136.)

On top of Sarissa's proxy campaign, Sarissa used its effective control of the board to materially diminish Mikhail's duties and responsibilities as a board member and President and CEO. (Id. ¶¶ 137-151.) On March 27, following a series of acts by new board members undermining his positions as CEO and board member, Mikhail notified the board of his “constructive termination from Defendant Amarin.” (Id. ¶ 155.) Mikhail wrote that “justified cause” under Article 337 of the Swiss Code of Obligations existed for termination, as required to trigger section 18.4 of the Employment Agreement. He also wrote that a Change of Control occurred under the Severance Plan, given that a Change of Control event had occurred under section 7(a)(i) of the Stock Incentive Plan^[5] and that Good Reason existed under section 2(o) of the Severance Plan. (Id.) “The reasons supporting Amarin's breach of the Agreement, and the Change of Control Plan,” he added, “are more fully set forth in my March 14 and 20, 2023 letters.” (Id.)

B. Procedural History

On March 31, 2023, Mikhail sued Defendants in the Superior Court of New Jersey, Somerset County. (ECF No. 1-1.) Shortly after, Defendants removed the case to this Court. (ECF No. 1.) Mikhail did not seek to remand the case and eventually amended his complaint.^[6] (ECF Nos. 8, 23.)

The Amended Complaint asserts three contract-based claims: breach of the Employment Agreement (Count One); breach of the Severance Plan (Count Two); and breach of the covenant of good faith and fair dealing under the Severance Plan (Count Three). (ECF No. 23 ¶¶ 156-191.) Defendants' motion to dismiss followed. Defendants argue that this Court lacks personal jurisdiction over Amarin plc and Amarin Switzerland and, even so, Mikhail has no claim against any Amarin entity.

II. LEGAL STANDARDS

A. Rule 12(b)(2) - Personal Jurisdiction

For purposes of a motion to dismiss pursuant to Rule 12(b)(2) “the plaintiff must sustain its burden of proof in establishing jurisdictional facts through sworn affidavits or other competent evidence . . ., not mere allegations.” Patterson v. F.B.I., 893 F.2d 595, 604 (3d Cir. 1990) (citation omitted); see Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir. 2009) (describing plaintiff's burden to prove that...