Genesis Bio-Pharmaceuticals, Inc v. Chiron Corporation

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
Nos. 00-2893 & 00-2981
___________
GENESIS BIO-PHARMACEUTICALS, INC.,
Appellant in No.
v.
CHIRON CORPORATION; BEHRINGWERKE A.G.; CHIRON
BEHRINGWERKE GMBH & CO.; BIOLOGICAL AND POPULAR CULTURE,
INC.; CHIRON BEHRING GMBH & CO.; HOECHST A.G.
___________
GENESIS BIO-PHARMACEUTICALS, INC.
v.
CHIRON CORPORATION; BEHRINGWERKE A.G.; CHIRON
BEHRINGWERKE GMBH & CO.; BIOLOGICAL AND POPULAR CULTURE,
INC.; CHIRON BEHRING GMBH & CO.; HOECHST A.G.
CHIRON CORPORATION; CHIRON BEHRING GMBH & CO.,
Appellants in No. 00-2981
___________
On Appeal from the United States District Court
for the District of New Jersey
District Court Judge: The Honorable Katharine S. Hayden
(D.C. Civil No. 98-02445)
___________
Argued November 26, 2001
Before: ROTH, FUENTES and WEIS, Circuit Judges.
(Filed: January 10, 2002)
W. Michael Garner, Esq. (Argued)
Cheryl A. Stanton, Esq.
Dady & Garner
80 South Eighth Street
4000 IDS Center
Minneapolis, MN 55402
Counsel for Appellant/Cross-Appellee,

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Genesis Bio-Pharmaceuticals, Inc.
Robert C. Epstein, Esq. (Argued)
Jacqueline Greenberg, Esq.
Porzio, Bromberg & Newman
100 Southgate Parkway
Morristown, NJ 07962
Counsel for Appellees/Cross-Appellants,
Chiron Corporation and Chiron Behring GMBH & Co.
________________________
MEMORANDUM OPINION
________________________ FUENTES, Circuit Judge:
In this matter, plaintiff Genesis Bio-Pharmaceuticals, Inc. ("Genesis"), a New
Jersey-based distributor of pharmaceutical products alleges that defendants Chiron
Corporation ("Chiron"), a California company and Chiron Behring, a German company,
breached an oral agreement for the distribution of a rabies vaccine in the United States.
Genesis claims that the oral agreement was made between itself and Hoechst A.G
("Hoechst"), at a meeting in Frankfurt, Germany and that, at the time the agreement was
made, Chiron, a joint venturer with Chiron Behring, had authorized Hoechst to act in its
behalf.
Following a series of motions, the District Court, among other decisions: (1)
dismissed the complaint against Hoechst for lack of personal jurisdiction, (2) denied
Chiron Behring’s motion to dismiss for lack of personal jurisdiction, and, (3) dismissed
the complaint against Chiron and Chiron Behring, holding that the Parol Evidence Rule
barred Genesis’ claims. The parties cross-appeal. Discerning no error, we will affirm the
rulings of the District Court.
I.
The relevant facts are as follows. Hoechst, a German health care company, is the
manufacturer of RabAvert, a rabies vaccine. Sometime between 1989 and 1990, Genesis
began to perform marketing consulting work for Hoechst, for the purpose of becoming
the exclusive U.S. distributor of RabAvert.
In February, 1996, Hoechst entered into a joint venture agreement with Chiron. As
part of this agreement, Hoechst transferred its entire vaccine business, including the
right to produce and distribute RabAvert, to "Chiron Behring," the joint venture entity.
Chiron Behring was incorporated and located in Germany. The joint venture agreement
gave Chiron ultimate decision-making power with regard to all business decisions
concerning the distribution of RabAvert. Shortly thereafter, Hoechst informed Genesis
that Chiron was taking over the distribution of RabAvert in the U.S. At this time, Genesis
began to demand compensation for its consulting services.
On April 30, 1996, Genesis’ president Jerrold Grossman met with representatives
from Chiron to discuss a potential distributor relationship. No agreement was reached at
this meeting.
On June 27, 1996, Grossman and Genesis’ attorney met with Hoechst executives
and attorneys in Frankfurt, Germany and reached a settlement agreement (the "Settlement
Agreement"). The parties agreed that, among other things;
a) Hoechst would pay $380,000 to Genesis to release Hoechst from
"any and all claims which Genesis has... relating in any way to any
and all relationships between the Parties [to the Settlement
Agreement], for all time in which the Parties have had a
relationship."
b) Hoechst would use "reasonable and diligent efforts...to assist
Genesis in ’negotiating and concluding’ an agreement with Chiron
and the Joint Venture [Chiron Behring] for the distribution by
Genesis of ...RabAvert, in the U.S. on terms that are outlined in the
annexed memoranda from Chiron to [Hoechst]...(with the
understanding that Chiron has strategic leadership of the joint
venture [Chiron Behring])," and that,

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c) "[t]his Agreement contains the entire agreement of the parties with
respect to the subject matter hereof, and all prior understandings,
discussions and representations are hereby merged herein." (the
"complete integration clause").
Genesis maintains that it was induced to enter into the Settlement Agreement by
Hoechst’s representation that it had authority to negotiate on behalf of Chiron. In its
complaint, Genesis alleges that the Hoechst representatives began the meeting by
projecting onto a screen, two memos that Chiron sent Hoechst, proposing to grant
Genesis certain distribution rights to RabAvert and other vaccines.
The first memo, dated May 30, 1996, stated that Chiron "would be prepared
to...sell Genesis all Chiron vaccines, including rabies vaccine, at a price equal to the
’best’ distributor price...for a 5 year period," and "[w]ork with Genesis to ’bid’ on
contracts for rabies vaccines."
The second memo, dated June 21, 1996, stated that "Chiron has offered to sell
Genesis...the complete line of Chiron vaccines at the best price offered to vaccine
distributors in the U.S. In addition, we would work with Genesis on "bid requests"...with
Genesis receiving a price...equal to the best price given to any other vaccine
distributor...for that bid."
Soon after the Settlement Agreement meeting, Grossman traveled to California
ostensibly, to close the deal, and to discuss a distributorship with Chiron. Grossman met
only briefly with Chiron’s president, who avoided all discussion of a distribution
agreement. According to Grossman, Chiron refused to meet again with Grossman,
refused to respond to Grossman’s request for confirmation of an agreement with it, and
claimed that Hoechst had "no authority to speak or negotiate on behalf of Chiron or
represent Chiron in any way."
On March 9, 1998, Genesis filed suit in the Superior Court of New Jersey against
Chiron, Hoechst, Chiron Behring, and Bio-Pop. Specifically, the suit sought to enforce
the alleged Distribution Agreement, or alternatively to recover damages for, among other
things, breach of contract, fraud, civil conspiracy and tortious interference. On May 22,
1998, Chiron removed the case to federal district court in New Jersey. Thereafter,
Hoechst moved to dismiss the complaint for lack of personal jurisdiction, and for failure
to state a claim, contending that the Parol Evidence Rule barred Genesis’ claims. Chiron
Behring moved to dismiss the complaint for lack of personal jurisdiction. Chiron and
Chiron Behring also joined in Hoechst’s motion to dismiss based on the Parol Evidence
Rule and filed a separate motion to dismiss on the additional grounds of judicial estoppel
and absence of an indispensable party.
The District Court first disposed of Genesis’ claims against Hoechst by granting
Hoechst’s motion to dismiss for lack of personal jurisdiction, noting that "Hoechst is a
German company, and the settlement agreement was negotiated and executed in
Germany, and no allegation evidence demonstrated that Hoechst ever entered New Jersey
or directed activities there."
After further briefing and oral argument, the District Court denied Chiron
Behring’s jurisdictional motion, determining that Chiron Behring’s "focal role as the
manufacturer of the vaccine" in question, and their close corporate relation with Chiron
allowed the court to exercise personal jurisdiction over Chiron Behring. However, the
court dismissed the complaint against both Chiron and the Chiron Behring, holding that
the Parol Evidence Rule excluded any evidence that Chiron and/or Chiron Behring had
authorized Hoechst to negotiate an exclusive distribution agreement with Genesis on
their behalf. The Court also denied Chiron and Chiron Behring’s motion to dismiss on
grounds of judicial estoppel, and on the absence of an indispensable party claim.
Genesis appeals the District Court’s dismissal of its claims under the Parol
Evidence Rule. Chiron and Chiron Behring appeal the District Court’s denial of their
motion to dismiss against Chiron Behring for lack of personal jurisdiction decision and
the denial of their judicial estoppel and indispensable party motions.
II.
A.
We must first consider the District Court’s denial of Chiron Behring’s motion to
dismiss based on lack of personal jurisdiction. We review a District Court’s decisions
regarding personal jurisdiction de novo. See, Vetrotex Certainteed Corp. v. Consolidated

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Fiber Glass Products Co. 75 F.3d 147, 150 (3d Cir. 1996) (holding that "whether
personal jurisdiction may be exercised over an out-of-state defendant is a question of
law, and this court’s review is therefore plenary.").
New Jersey’s long-arm statute, N. J. Court Rule 4:4-4, has been interpreted as
extending jurisdiction over non-residents "to the uttermost limits permitted by the U.S.
Constitution." Charles Gendler Co. v. Telecom Equity Co. 102 N.J. 460, 469 (1980).
Under the Due Process Clause of the Fourteenth Amendment, personal jurisdiction
depends upon "the relationship among the defendant, the forum, and the litigation."
Shaffer v. Heitner 433 U.S. 186, 204 (1977).
Here, we find that Chiron Behring is subject to New Jersey personal jurisdiction
because of the nature of its corporate relationship with Chiron Corporation. New Jersey
courts have determined that a parent corporation’s contacts with the forum state may
justify exercise of personal jurisdiction over its (wholly-owned) non-resident subsidiary.
See, Moon Carrier v. Reliance Insurance, 379 A.2d 517 (N.J. Super. 1977). The relevant
jurisdictional inquiry is "whether the [subsidiary] and the parent...so operate as single
entity, or unified and cohesive economic unit, that when the parent is within venue of
court, the [subsidiary] is also within court’s jurisdiction; [this] ’single entity’ test requi
that a parent over which the court has jurisdiction so control and dominate a subsidiary as
in effect to disregard the latter’s independent corporate existence." Moon Carrier v.
Reliance Insurance, 379 A.2d 517 (N.J. Super. 1977). This court has also used the single
entity test. See, e.g., Lucas v. Gulf & Western Industries, Inc., 666 F.2d 800 (Cir. 3,
1981).
Chiron is a multi-national health care company that does business within the State
of New Jersey. On the basis of these extensive contacts with the state, Chiron has waived
any claims it might have with regards to personal jurisdiction. As the attorney for both
Chiron and Chiron Behring admitted at oral argument, Chiron Behring is a wholly-
owned subsidiary of Chiron Corporation. There is ample evidence in the record that
Chiron dominates Chiron Behring and that the two are acting as a single entity, at least in
this matter. For instance, Chiron has ultimate decision making power with regard to all
business decisions concerning Chiron Behring (including the distribution of RabAvert).
Additionally, both share the same legal counsel in this litigation. Therefore, because of
the nature of the relationship between the parent corporation, Chiron, and its wholly-
owned subsidiary, Chiron Behring, attributional jurisdiction attaches, and the New Jersey
District Court acted properly in exercising personal jurisdiction over Chiron Behring.
See, Lucas v. Gulf & Western Industries, Inc., 666 F.2d 800 (Cir. 3, 1981) (indicating
factors that may have a bearing on attributing the jurisdiction of a subsidiary to a parent
corporation); Kuehne & Nagel v. Geosource, Inc., 874 F.2d 283 (5th Cir. 1989) (same).
B.
We next consider the District Court’s determination that Genesis failed to state a
claim upon which relief could be granted under FRCP 12(b)(6). The district judge
granted the defendant’s motion to dismiss, finding that the parol evidence rule barred
Genesis’ evidence of a completed distribution agreement. For the reasons stated below,
we agree with the district judge and will affirm her ruling.
Genesis alleges that there were two aspects to their Settlement Agreement with
Hoechst. The first, clearly documented in the Agreement, was Hoechst’s $380,000
payment to Genesis for its past efforts. The second was an alleged distribution agreement
with Chiron and Chiron Behring. Genesis claims that Chiron and Chiron Behring had
[verbally] authorized Hoechst to negotiate at the Frankfurt meeting on their behalf, and
that they left that meeting with the essential terms of a distribution agreement hammered
out. We agree with the district judge that the parol evidence rule prohibits our
consideration of this evidence . See, Genesis Bio-Pharmaceuticals v. Chiron Corp. D.C.
Civil No. 98-2445 (D.N.J. 2000) (determining that if such evidence were allowed into
the record, it would allow for the contradiction of the written settlement agreement by
"the story of the negotiation" of [the] written contract "as told by the litigant" (quoting
Advanced Medical, Inc. v. Arden Medical Sys., Inc., 955 F.2d 188, 195 (3d Cir. 1992))).
The parol evidence rule provides that any previous oral representations or
agreements, offered to "vary, modify, or supersede the written contract, [are]
inadmissible in evidence." Fr. Winkler KG v. Stoller, 839 F.2d 1002 (3d Cir. 1988); See
also, Compton Press, Inc. Employees’ Profit Sharing Retirement Plan v. Granada

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Investments, Inc., 1992 WL 566329 (D.N.J.,1992). (instructing that "the parole evidence
rule bars, as a matter of substantive contract law, any attempt to offer oral evidence to
vary the terms of a fully integrated written contract").
The Settlement Agreement in this matter is clearly fully integrated. See,
Appellant’s Appendix, at A52 (stating that "this Agreement contains the entire agreement
of the parties with respect to the subject matter hereof, an all prior understanding,
discussions and representations are hereby merged within."). Furthermore, the plain
language of the Settlement Agreement requires that Hoechst use "reasonable and diligent
efforts...to assist Genesis in negotiating and concluding an agreement with [Chiron and
Chiron Behring] for the distribution by Genesis of Chiron vaccine products." Later in the
same paragraph there is a disclaimer that Hoechst’s promise to assist Genesis is made
"with the understanding that Chiron has strategic leadership of the joint venture."
If Hoechst had truly been "authorized" to negotiate a distribution agreement on
behalf of the others, as Genesis contends, then the language in the Settlement Agreement
modifying Hoechst’s promise "with the understanding that Chiron has strategic
leadership of the joint venture" becomes meaningless. Furthermore, if the result of the
Frankfurt meeting was "a distribution agreement going forward" between Genesis,
Chiron and Chiron Behring, then the language in the Settlement Agreement that Hoechst
would subsequently further "assist" Genesis in "negotiating (and concluding)" a
distribution agreement with those same parties is superfluous.
The only written evidence that Genesis offers in support of its allegation that it
had negotiated a binding distribution agreement with Chiron are the two memos from
Chiron to Hoechst. However, these documents make no specific mention of any
authorization by Chiron and Chiron Behring for Hoechst to conclude a multi-million
dollar distribution agreement in their absence. Even when viewing these memos in the
light most favorable to Genesis, they require us to draw inferences that are contradicted
by the plain language of the Settlement Agreement. We have previously determined that
this court is not obliged to accept as true, even at this preliminary stage, such
"unsupported conclusions and unwarranted inferences." See, City of Pittsburgh, 147 F.3d
at 263 (3d Cir. 1998). Accordingly, we affirm the ruling of the District Court dismissing
this matter for failure to state a claim upon which relief can be granted. In light of this
determination, we need not reach Chiron and Chiron Behring’s motions to dismiss the
complaint based on the judicial estoppel doctrine or the absence of an indispensable
party.
III.
For the reasons set forth above, we affirm the ruling of the District Court denying
Chiron Behring’s motion to dismiss based on lack of personal jurisdiction. However, we
grant Chiron and Chiron Behring’s motion to dismiss based on the Parol Evidence Rule.
_____________________________
TO THE CLERK OF THE COURT:
Kindly file the foregoing Opinion.
/s/ Julio M. Fuentes
Circuit Judg

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