Ropes & Gray Attorneys Win Dismissal in California for Founders of Novotox

On May 12 the United States District Court for the Northern District of California granted the motion to dismiss for lack of personal jurisdiction of Ropes & Gray clients Mark Chappel, Christopher Marwood, and Hugh Scobie ("our clients" or "Novotox founders").

ChemRisk (a California limited liability company) alleged that our clients had established a competing business (Novotox) in the scientific consulting industry in Ontario, Canada while employed by ChemRisk.  ChemRisk also alleged that it lost its entire investment, clientele and prospective business opportunities associate with its office in Guelph, Ontario as a result of misconduct (including fraud and negligent misrepresentation) by the Novotox founders.  Ropes & Gray successfully argued that our clients were employees of a Canadian-affiliate of ChemRisk - not ChemRisk itself - and thus did not have any legal duties to ChemRisk that would subject them to jurisdiction in California.  Ropes & Gray also successfully argued that the facts alleged by ChemRisk demonstrated that our clients' actions were directed at, and had an effect in, Ontario, Canada - not California.

The District Court’s Order adopted nearly all of Ropes & Gray’s legal and factual arguments.  The District Court held that the Novotox founders – who are Canadian citizens – had not purposefully availed themselves of the benefits of conducting business in California, the alleged injury did not arise out of their California-related activities, and the exercise of personal jurisdiction would be unreasonable.  The District Court further rejected ChemRisk’s heavy reliance on Burger King Corp. v. Rudzewicz on the exact basis that Ropes & Gray distinguished the Supreme Court case in its reply brief.

Our clients also filed a counter-action in Canada at Ropes & Gray's urging, supporting our jurisdictional arguments and now guaranteeing that our clients have secured their chosen forum. This procedural maneuver has allowed the Novotox founders to launch a successful business while the Canadian action is in court.