UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

Francis M. Reynolds

v. Civil No. 16-cv-384-JL Opinion No.

InVivo Therapeutics Holdings Corp., et al.

MEMORANDUM ORDER

This defamation action turns on whether this court has

specific personal jurisdiction over several Massachusetts

citizens and a Nevada corporation that has its principal place

of business in Massachusetts. Plaintiff Francis Reynolds, a New

Hampshire businessman, brings claims of defamation, conspiracy,

and tortious interference with prospective contractual relations

against his former corporation, InVivo Therapeutics Corp., and

several of its officers. This court has subject-matter

jurisdiction under

(a) (diversity).

Moving to dismiss this action, the defendants challenge

this court’s personal jurisdiction over them. See Fed. R. Civ.

P. 12(b)(2). They also move to dismiss for failure to state a

claim for relief. See Fed. R. Civ. P. 12(b)(6). After holding

oral argument, the court grants the defendants’ motion. The

plaintiff has failed to establish that defendants have the

minimum contacts with New Hampshire required for this court to exercise personal jurisdiction over them in this action

consistent with the Fourteenth Amendment’s Due Process Clause.

Specifically, the plaintiff has not demonstrated relatedness

between his claims and the defendants’ forum-based activities or

that the defendants engaged in purposeful contact with the forum

such that they could expect to be haled into court to answer for

their actions here.

Applicable legal standard

“Personal jurisdiction implicates the power of a court over

a defendant . . . . [B]oth its source and its outer limits are

defined exclusively by the Constitution,” namely, the due

process clause of the Fourteenth Amendment. Foster–Miller, Inc.

v. Babcock & Wilcox Can.,

, 143–44 (1st Cir. 1995)

(citing Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de

Guinee,

(1982)); U.S. Const. Am. XIV. “To

establish personal jurisdiction in a diversity case, a plaintiff

must satisfy both the forum state’s long-arm statute and the Due

Process Clause of the Fourteenth Amendment.” C.W. Downer & Co.

v. Bioriginal Food & Sci. Corp.,

(1st Cir.

2014). Where, as here, the applicable long-arm statute is

coextensive with federal due process limitations, the court

proceeds directly to the due process inquiry. See Phillips

2 Exeter Acad. v. Howard Phillips Fund,

(1st

Cir. 1999).

Due process requires that a defendant have sufficient

“minimum contacts” with the forum “such that the maintenance of

the suit does not offend traditional notions of fair play and

substantial justice.” Int’l Shoe Co. v. Washington,

(1945) (internal quotations omitted). Consistent with

those requirements, a court may exercise either general or

specific jurisdiction over the defendants. Reynolds invokes

only this court’s specific jurisdiction over the defendants.1

Specific jurisdiction “is confined to adjudication of issues

deriving from, or connected with, the very controversy that

establishes jurisdiction.” Goodyear, 131 S. Ct. at 2851

(internal quotations omitted). “[T]he constitutional test for

determining specific jurisdiction . . . has three distinct

components, namely, relatedness, purposeful availment (sometimes

1 Appropriately so. The criteria for general jurisdiction over the defendants are not satisfied here. “For an individual, the paradigm forum for the exercise of general jurisdiction is the individual’s domicile; for a corporation, it is an equivalent place, one in which the corporation is fairly regarded as at home.” Goodyear Dunlop Tires Operations, S.A. v. Brown,

(2011). A corporation is “fairly regarded at home” for general jurisdiction purposes in its “place of incorporation and principal place of business.” Daimler AG v. Bauman,

(2014). The defendants -- three Massachusetts residents and a Nevada corporation headquartered in the Commonwealth -- have no such ties to New Hampshire.

3 called ‘minimum contacts’), and reasonableness.” Adelson v.

Hananel,

, 80–81 (1st Cir. 2011) (internal quotations

and citations omitted).

The plaintiff bears the burden of demonstrating that these

three components are satisfied by “proffer[ing] evidence which,

if credited, is sufficient to support findings of all facts

essential to personal jurisdiction.”2 A Corp. v. All Am.

Plumbing, Inc.,

(1st Cir. 2016) (quoting

Phillips v. Prairie Eye Ctr.,

(1st Cir. 2008)).

“To satisfy the prima facie standard in a specific jurisdiction

case, a plaintiff may not rest on mere allegations but, rather,

must submit competent evidence showing sufficient dispute-

related contacts between the defendant and the forum.” Carreras

v. PMG Collins, LLC,

(1st Cir. 2011). The

court “view[s] this evidence, together with any evidence

proffered by the defendant[s], in the light most favorable to

2 The First Circuit Court of Appeals has recognized three standards under which a district court may evaluate personal jurisdiction. See A Corp.,

& n.5. Where, as here, the parties agree that the prima facie standard is appropriate and the defendants have not requested an evidentiary hearing, the court may -- and does -- require the plaintiff only to make a prima facie showing that defendants are subject to personal jurisdiction. This is “the least taxing of these standards from a plaintiff’s standpoint, and the one most commonly employed in the early stages of litigation.”

(quoting Rodriguez v. Fullerton Tires Corp.,

, 83–84 (1st Cir. 1997)).

4 the plaintiff and draw[s] all reasonable inferences therefrom in

the plaintiff’s favor,” albeit without “credit[ing] bald

allegations or unsupported conclusions.”

The following

factual summary takes this approach.

Background

Reynolds founded InVivo, a medical device company, in

November 2005. He served as the company’s CEO, CFO, CSO,

President, and Chairman of the Board of Directors from that time

until August 22, 2013.3 Though InVivo established its

headquarters in Cambridge, Massachusetts, in 2012, Reynolds

largely worked out of his home in Salem, New Hampshire, between

October 2012 and his departure from the company in August 2013.

That August, Reynolds resigned from his position as Chairman,

CEO, and CFO of InVivo.4

One week after resigning from InVivo, Reynolds formed a new

company, PixarBio, which focused on developing non-opioid pain

relief products. PixarBio operated out of Reynolds’ Salem home

3 Reynolds Aff’t (doc. no. 9-2) ¶¶ 4-5. 4 Reynolds contends that he did not voluntarily resign, but was forced to do so after “the Defendants made false allegations that [he] misappropriated corporate funds” -- a charge that he denies. Id. ¶ 16.

5 until it moved to Medford, Massachusetts, in early 2014.5 In

March 2016, it obtained additional office facilities in Salem.6

Following Reynolds’ resignation from InVivo, Reynolds

alleges, the defendants made several allegedly defamatory

statements about his work at that company. First, the company

issued two press releases. In one, dated August 22, 2013,

InVivo announced that Reynolds had resigned from the company due

to his medical condition.7 The next press release, issued

August 27, 2013, announced “an update on the clinical timeline

for its biopolymer scaffolding to treat acute [spinal cord

injuries]. The Company now expects that, based on the judgment

of new management, it will enroll the first patient during the

first quarter of 2014.”8 Following the press releases, Reynolds

alleges that defendant Luque made certain statements to

investors. Specifically, in September 2013, defendant Luque

allegedly told an InVivo investor that Reynolds “had been forced

to resign because the NeuroScaffold clinical studies were

‘bogus’ and their result had been ‘fudged’ by [Reynolds],” and

that “Plaintiff misrepresented the timeline for InVivo to obtain

5 Reynolds Aff’t (doc. no. 9-2) ¶ 18; Reynolds Aff’t Ex. E (doc. no. 9-7) at 1. 6 Reynolds Aff’t (doc. no. 9-2) ¶ 19. 7 Reynolds Aff’t, Ex. F (doc. no. 9-8) at 1. 8 Reynolds Aff’t, Ex. G (doc. no. 9-9) at 1.

6 regulatory approval for the NeuroScaffold.”9 Reynolds further

alleges that Luque made similar statements during an August 2014

telephone conference with a second InVivo investor, to the

effect that Reynolds had “misled people” about clinical trial

results and “deliberately manipulated the release of test

results to distort the beneficial effects of the

NeuroScaffold.”10 These allegations, Reynolds contends, were

then circulated in the biotechnology community via, among other

media, “a crowd-sourced service for financial markets” called

“Seeking Alpha.”11

On July 22, 2016, Reynolds filed this action in

Hillsborough County Superior Court, asserting claims for

defamation, conspiracy, and tortious interference with

prospective contractual relations against all defendants, and a

claim based in the doctrine of respondeat superior against

InVivo. Defendants subsequently removed the case to this court

in light of the parties’ diversity of citizenship. See

(c).

9 Compl. (doc. no. 1-1) ¶ 29. 10 Id. ¶ 30. 11 Id. ¶ 33-37.

7 Analysis

As discussed supra, “the constitutional test for

determining specific jurisdiction . . . has three distinct

components, namely, relatedness, purposeful availment (sometimes

called ‘minimum contacts’), and reasonableness.” Adelson, 652

F.3d at 80–81 (internal quotations and citations omitted). The

court addresses these components in that order, see United

States v. Swiss Am. Bank, Ltd.,

(1st Cir.

2001) (quoting Phillips Exeter Acad.,

), and

concludes that the plaintiff has not established this court’s

personal jurisdiction over the defendants.12

A. Relatedness

“To satisfy the relatedness prong, the plaintiff must show

a nexus between [his] claims and the defendants’ forum-based

activities. Although this is a ‘relaxed standard,’ it

nevertheless requires [the court] to hone in ‘on the

relationship between the defendant and the forum.’” A Corp.,

(1st Cir. 2016). “[A] defendant need not be

physically present in the forum state” for such a nexus to

12The defendants also argue that the complaint fails to state a claim for relief. See Fed. R. Civ. P. 12(b)(6). Because the court concludes that it lacks personal jurisdiction over the defendants and dismisses this action on that basis, it need not -- and therefore does not -- address the defendants’ Rule 12(b)(6) arguments.

8 exist, N. Laminate Sales, Inc. v. Davis,

(1st

Cir. 2005) (citing Calder, 465 U.S. at 789), and when he is not,

the court “looks for some other indication that the defendant

reached into the forum, such as mail or telephone contacts,”

Swiss Am. Bank,

.

In arguing that a nexus exists between the defendants’

activities and the forum, the plaintiff invokes only his

allegations that he was injured in New Hampshire by the effects

of the defendants’ conduct.13 It is, however, the defendants,

and not the plaintiff or any third parties, who must create the

contacts with the forum state. Walden v. Fiore,

(2014) (minimum contacts analysis “looks to

defendant’s contacts with forum State itself, not the

defendant’s contacts with persons who reside there”). That the

plaintiff felt the effects of the defendants’ activities in the

forum does not, alone, qualify as related contacts. Swiss Am.

Bank,

.

In fact, the First Circuit Court of Appeals has

specifically cautioned against conflating the relatedness

requirement with the effects test for purposeful availment,

13Obj. to Mot. to Dismiss (doc. no. 9-1) at 12-13 (“Plaintiff has alleged facts demonstrating that Plaintiff suffered reputational injury in New Hampshire as a result of Defendants’ defamatory statements. These allegations satisfy the relatedness requirement.”)

9 discussed infra Part III.B, which is what the plaintiff invites

the court to do here. Swiss Am. Bank,

. The

court must, accordingly, decline that invitation. None of the

other cases relied upon by the plaintiffs convince it to do

otherwise. In each of those cases, the defendant acted within

the forum; the plaintiff’s injuries did not constitute the sole

relationship between the forum and the defendants. See R & R

Auction Co., LLC v. Johnson,

(Barbadoro, J.)

(plaintiff met relatedness requirement because defendant made

allegedly false statements to “someone he knew to be a New

Hampshire-based reporter”); New Eng. Coll. v. Drew Univ.,

(Laplante, J.) (defendant university’s agent acted

within New Hampshire to interfere with plaintiff’s business

relations); Sindi v. El-Moslimany, No. 13–cv–10798–IT,

, at *8 (D. Mass. Dec. 5, 2014),

, at *8

(finding relatedness where defendant “came to Needham,

Massachusetts and . . . allegedly followed [the plaintiff]

around” and defendant’s conduct “affected [plaintiff's]

relationship with Massachusetts organizations”).

B. Purposeful availment

Even had the plaintiff satisfied the relatedness

requirement, the court would still be unable to exercise

specific personal jurisdiction over the defendants because the

10 plaintiff has not shown purposeful availment. The Supreme Court

has adopted, and the First Circuit Court of Appeals has

employed, “an effects test for determining purposeful availment

in the context of defamation cases.” Noonan v. Winston Co.,

(1st Cir. 1998) (citing Calder v. Jones,

(1984)). This test, unlike that for relatedness,

focuses on the location at which the effects of the alleged

defamation are directed and where they are felt.

It is

ordinarily “to be applied only after the relatedness prong has

already been satisfied.” Swiss Am. Bank,

.

In Calder, two Florida reporters for the National Enquirer

wrote a libelous article about a California entertainer. The

Supreme Court found that the California court could exercise

jurisdiction over the reporters because they “had aimed an act

at the forum state, knew the act would likely have a devastating

effect, and knew the injury would be felt in the forum state,

where Jones lived and worked ‘and in which the National Enquirer

[had] its largest circulation.’” Noonan,

(quoting Calder,

). “The knowledge that the

major impact of the injury would be felt in the forum State

constitutes a purposeful contact or substantial connection

whereby the intentional tortfeasor could reasonably expect to be

haled into the forum State’s courts to defend his actions.”

Hugel v. McNell,

(1st Cir. 1989), cert. denied,

11

(1990). “The crux of Calder was that the

reputation-based ‘effects’ of the alleged libel connected the

defendants to California, not just to the plaintiff.” Walden,

134 S. Ct. at 1123–24.

Applying this test in Noonan, the First Circuit Court of

Appeals found that the District Court for the District of

Massachusetts could not exercise personal jurisdiction over a

French advertising agency because the agency “did not direct

[its] actions toward Massachusetts” when its advertisement was

aimed at the French consumer market. Noonan,

.

The fact that some magazines containing the advertisement

circulated in Massachusetts did not satisfy this element; their

small number indicated, instead, a lack of purposeful contact.

. The plaintiff’s lack of injury in Massachusetts also

supported a finding that he failed to satisfy this element.

.

Looking at this case under the lens of Calder and Noonan,

it resembles the latter more than the former. It does not

appear to the court that the defendants purposefully directed

the allegedly injurious statements at New Hampshire or that

Reynolds suffered any injury in New Hampshire.

The plaintiff alleges that the defendants injured him, and

his new company, by circulating a series of “false and

defamatory statements . . . to discredit [him] in the

12 biotechnology community and financial marketplace.”14 These

include:

 unspecified statements concerning alleged

misappropriation of funds by Reynolds that the

defendants made within InVivo, including to company

employees15;

 a September 2013 conversation between defendant Luque

and an investor, in which Luque allegedly informed the

investor that the plaintiff had “fudged” the results

of the NeuroScaffold clinical studies, that the

studies were “bogus,” and that the plaintiff had

misrepresented the timeline to obtain regulatory

approval16;

 an August 5, 2014 telephone conference between

defendant Luque and a second investor, in which Luque

allegedly made the same or similar representations,

14 Compl. (doc. no. 1-1) ¶ 26. 15Compl. (doc. no. 1-1) ¶ 28; Reynolds Aff’t (doc. no. 9-2) ¶ 16. 16Compl. (doc. no. 1-1) ¶ 29; Reynolds Aff’t (doc. no. 9-2) ¶ 28.

13 including that Reynolds had “misled people” about the

results of the clinical trials17;

 statements made by defendants DiPietro, Roberts,

and/or McCarthy at a September 2013 meeting of the

company’s employees announcing the plaintiff’s

resignation18; and

 allegedly defamatory press releases concerning

projected timeline for obtaining FDA approval.19

These statements can be grouped into three categories: those

made internally to InVivo employees, those made to investors,

and those published by InVivo. The court concludes that the

defendants did not aim any of these statements at New Hampshire.

The first category of statements includes those made to

InVivo employees. InVivo maintains its principal place of

business is Cambridge, Massachusetts, and for a time during

Reynolds’s employment, maintained an office in Salem, New

17Compl. (doc. no. 1-1) ¶ 30; Reynolds Aff’t (doc. no. 9-2) ¶ 29. 18Compl. (doc. no. 1-1) ¶ 31. Reynolds does not address these alleged statements in his affidavit. 19Compl. (doc. no. 1-1) ¶ 32; Reynolds Aff’t (doc. no. 9-2) ¶¶ 20-22. Though not accompanying the complaint, copies of the purportedly offending press releases are attached to the defendants’ motion to dismiss and the plaintiff’s objection thereto. See Defendants’ Exs. A, B (doc. nos. 2-7, 2-8); Reynolds Aff’t Exs. F, G (doc. nos. 9-8, 9-9).

14 Hampshire.20 There is no allegation or evidence that any

employee besides Reynolds himself worked out of InVivo’s Salem,

New Hampshire office. There is therefore no indication that any

of the defendants directed the statements made to InVivo

employees toward New Hampshire.

The second category of statements contains those made by

Luque to investors. The plaintiff does not indicate the

location of those investors. Plaintiff does allege that these

statements were disseminated “throughout the biotechnology

community and among investors” via an August 23, 2013 article in

“Seeking Alpha,” a “crowd-sourced service for financial

markets.”21 While the plaintiff “believe[s] the Defendants were

the source of these allegations,”22 the plaintiff has offered no

20Id. ¶¶ 8. InVivo disputes whether Reynolds’s home office constituted an InVivo office in New Hampshire. The evidence favors Reynolds’s interpretation. InVivo informed him that his “principal place of work [was] at [his] office in Salem New Hampshire.” Reynolds Aff’t Ex. A (doc. no. 9-3). InVivo also furnished and equipped that office and, after Reynolds left InVivo, the company offered to sell that equipment to Reynolds. Reynolds Aff’t Ex. D (doc. no. 9-6). Reynolds also avers that InVivo’s primary data center for research and development was installed in his New Hampshire office. Reynolds Aff’t (doc. no. 9-2) ¶ 9. This evidence, taken in the light most favorable to Reynolds, see Carreras,

, suggests that InVivo considered Reynolds’ New Hampshire office as its own during the term of his employment. 21Id. ¶¶ 34-36. The parties have also submitted a copy of this article. See Defendants’ Ex. C (doc. no. 2-9); Plaintiff’s Ex. K (doc. no. 9-13). 22 Id. ¶ 32.

15 evidence beyond his subjective belief that would connect the

defendants to Seeking Alpha or the author of the offending

posts, “Biotech Sage.” Nor does the plaintiff suggest that

Seeking Alpha is a publication or service that directs

information specifically at New Hampshire in any manner.

Accordingly, there is no indication that the defendants directed

these statements toward New Hampshire, either.

The allegedly defamatory press releases comprise the final

category. As with the others, there is no indication that the

defendants directed the statements at New Hampshire. The

releases indicate they were made in Massachusetts and appear to

have been posted on the company’s website.23 Statements posted

to the internet at large, even if read by non-plaintiff

residents of the forum state, do not appear to this court to

have been specifically directed at the forum absent some

indication that they were directed at those residents. See A.

Corp.,

(use of passive website “accessible

from everywhere in the world,” absent any specific direction to

the forum, “is not enough to show purposeful availment.”); cf.

Abiomed, Inc. v. Turnbull,

(D. Mass.

2005) (purposeful availment when defendant specifically directed

internet postings to known Massachusetts residents).

23 Reynolds Aff’t Exs. F, G (doc. nos. 9-8, 9-9).

16 Even had the defendants aimed these statements at New

Hampshire, taking the evidence in the light most favorable to

the plaintiff, Reynolds has not established that the effects of

defendants’ conduct were felt in New Hampshire. See Noonan,

. The plaintiff raises as his damage the fact that

potential investors have declined to fund his new company,

PixarBio, “due to allegations concerning mismanagement and

misconduct while [he] was at InVivo.”24 He cites two specific

failures to obtain funding. First, he attempted to obtain

funding through the New Hampshire Department of Resources and

Economic Development, but did not succeed. Reynolds avers that

he “believe[s]” that “[t]hese efforts have been unsuccessful due

in part . . . to the reputational harm [he] suffered as a result

of Defendants’ defamatory statements,”25 but he offers no

evidence beyond his subjective belief. As a second instance of

failed funding, he outlines his inability to obtain a second

round of funding from the Massachusetts Center for Life

Sciences, which specifically “commented on [his] reputation for

aggressive fundraising.”26 Reynolds asserts that this was a

reference to the defendants’ allegations that he “misled

24 Reynolds Aff’t (doc. no. 9-2) ¶ 24. 25 Id. ¶ 25. 26 Id. ¶ 26.

17 investors by misstating the resulting [sic] of clinical trials

and the FDA timeline for the NeuroScaffold.”27 Taking these

allegations as true, these allegations support a conclusion that

Reynolds suffered reputational damage in Massachusetts, but not

that he did so in New Hampshire.

C. Reasonableness

In assessing reasonableness, the court takes into account

the following considerations:

(1) the defendant’s burden of appearing [in the forum state], (2) the forum state’s interest in adjudicating the dispute, (3) the plaintiff’s interest in obtaining convenient and effective relief, (4) the judicial system’s interest in obtaining the most effective resolution of the controversy, and (5) the common interests of all sovereigns in promoting substantive social policies.

A Corp.,

(quoting Downer,

). Where

the plaintiff fails to satisfy the first two elements of the due

process inquiry -- relatedness and purposeful availment -- the

court “need not dwell on these so-called ‘gestalt’ factors.”

Id.; see also Ticketmaster-N.Y., Inc. v. Alioto,

(1st Cir. 1994) (“[T]he reasonableness prong of the due

process inquiry evokes a sliding scale: the weaker the

plaintiff's showing on the first two prongs (relatedness and

27

18 purposeful availment), the less a defendant need show in terms

of unreasonableness to defeat jurisdiction.”).

While the defendants’ burden of appearing in New Hampshire

may not be overly heavy, all parties have standing connections

to Massachusetts -- the defendants are Massachusetts citizens,

InVivo is headquartered in Massachusetts, and the plaintiff’s

new corporation, PixarBio, is also located in Massachusetts.

The parties are already engaged in a lawsuit in Massachusetts,28

which arose out of the same business relationship. As the

parties conceded at oral argument, the claims asserted in the

Massachusetts action, to a certain extent, overlap the claims

raised in this action; and the defendants’ counsel would not

object to late joinder of these claims as counterclaims in the

Commonwealth. In light of these connections to Massachusetts,

and the dearth of connections to New Hampshire beyond the

plaintiff’s residency in this State, these factors weigh against

finding personal jurisdiction in this court.

Conclusion

Because the plaintiff has failed to demonstrate that this

court may exercise personal jurisdiction over the defendants,

28Compl. (doc. no. 1-1) ¶ 28 n.2; Reynolds Aff’t (doc. no. 9-2) ¶ 11.

19 the defendants’ motion to dismiss the complaint29 is GRANTED,

albeit without prejudice to plaintiff asserting his claims in

another forum.

SO ORDERED.

Joseph N. Laplante United States District Judge

Dated: November 30, 2016

cc: Christopher H.M. Carter, Esq. Gary R. Greenberg, Esq. Cliff Anderson, Esq.

29 Doc. no. 2.

20