Amyris Inc. lost an appeal to keep its call recording lawsuit against Lavvan Inc. in California and must transfer its claims to New York, where Lavvan is suing for $880 million over alleged intellectual property and contract violations stemming from a cannabis chemicals deal.
Amyris’s claims aren’t excluded from the parties’ research, collaboration, and license agreement requiring “any dispute arising out of” the agreement to be submitted to any state or federal court in New York County because California courts have repeatedly construed “arising out of” language broadly, the California Court of Appeal, First District, ruled Tuesday.
The US Court of Appeals for the Second Circuit examined the same agreement last year, holding that Amyris couldn’t force Lavvan to arbitrate its trade secrets and patent infringement lawsuit.
Amyris and Lavvan, both biotech companies, entered into the agreement in 2019 to develop chemicals found in cannabis plants, cannabinoids, for commercial use, according to the unpublished opinion. Amyris, which lost $342 million in 2021, formed the partnership to secure a “much-needed multi-million-dollar cash influx” with no intention “to honor the contract at all,” Lavvan said in its US District Court for the Southern District of New York complaint.
Amyris CEO John Melo allegedly told Lavvan that it was looking for a way out of the deal and threatened to violate the RCL agreement and commercialize the valuable cannabinoids on its own unless Lavvan accepted new terms. Lavvan sued Amyris in September 2020, and the case was stayed in February pending arbitration before the International Chamber of Commerce.
Amyris sued Lavvan in March 2022 in California state court, alleging that eight meetings, including three described in Lavvan’s complaint, were recorded without the consent of Amyris and its employees in violation of the California Invasion of Privacy Act. The trial court granted Lavvan’s motion to dismiss the suit pursuant to the RCL’s forum selection provision because it involved allegations about the parties’ conduct during the course of their business relationship resulting from the agreement.
Amyris appealed, arguing that the forum selection clause is inapplicable to the CIPA claim and that its enforcement would foreclose any justice.
“California courts have consistently given a broad interpretation to the terms ‘arising out of’ or ‘arising from’ in various kinds of” legal agreements,
The court further noted that Amyris failed to allege that Lavvan recorded any conversations outside the scope of their contractual relationship, “thus making clear that the recorded conversations arose from the RCL Agreement.”
Richman also rejected the substantial justice argument, pointing to a previous case holding that “the fact that California law would likely provide plaintiffs with certain advantages of procedural or substantive law cannot be considered as a factor in plaintiffs’ favor in the forum non conveniens balance.”
Gibson, Dunn & Crutcher LLP represents Amyris. ArentFox Schiff LLP and Cyrulnik Fattaruso LLP represent Lavvan.
The case is Amyris Inc. v. Lavvan Inc., Cal. Ct. App., 1st Dist., No. A165829, unpublished 5/23/23.
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