Stimwave Technologies Incorporated v. Laura Tyler Perryman ( 2020 )

COURT OF CHANCERY
OF THE
SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
VICE CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
November 17, 2020
Richard P. Rollo, Esq. Brandyn Perryman,
Kevin M. Gallagher, Esq. Elizabeth Greene,
Travis S. Hunter, Esq. Graham Greene, Benjamin Speck,
Nicole K. Pedi, Esq. Patrick Larson, Richard LeBaron,
Angela Lam, Esq. and Marlene Peña
Christian C.F. Roberts, Esq.
RICHARDS, LAYTON & FINGER, P.A. Steven L. Caponi, Esq.
One Rodney Square Matthew B. Goeller, Esq.
920 North King Street K&L GATES LLP
Wilmington, Delaware 19801 600 King Street, Suite 901
Wilmington, Delaware 19801
RE: Stimwave Technologies Incorporated v. Laura Tyler Perryman,
C.A. No. 2019-1003-SG
Dear Counsel:
Having considered the parties’ positions at oral argument and the briefing of
the ten Motions to Dismiss before me in this matter, I write briefly to address seven
of those ten Motions—specifically, those Motions to Dismiss submitted by pro se
defendants Elizabeth Greene, Graham Greene, Benjamin Speck, Patrick Larson,
Richard LeBaron, Brandyn Perryman, and Marlene Peña (collectively, the
“Individual Defendants”). This Letter Opinion dismisses all seven Individual
Defendants without prejudice. My reasoning follows a brief recitation of the facts
as they pertain to the Individual Defendants.
Facts1
Background Dispute
This litigation follows a protracted struggle between Plaintiff Stimwave
Technologies Inc. (“Stimwave” or the “Company”) and Defendant Laura Perryman
for control of Stimwave and its assets. Perryman founded Stimwave in 2010 “for
the purpose of treating patients who have chronic pain with modern, minimally
invasive, implantable medical technology.” 2 The Company develops and
manufactures medical devices that alleviate chronic pain.3 In 2013, Perryman also
founded Micron Devices, LLC (“Micron”). Micron allegedly served as a centralized
support team for other operating companies, including Stimwave, and it licensed the
relevant intellectual property to Stimwave. 4 After Stimwave attracted “[s]ignificant
[o]utside [i]nvestments,”5 Perryman caused Micron to assign its intellectual property
rights and related contracts to Stimwave, signing the patent assignments on behalf
of Micron and Stimwave herself.6 After the assignments, Micron served no
1
The facts, except where otherwise noted, are drawn from the Verified Amended Complaint
(“Compl.”), Dkt. No. 88, and exhibits or documents incorporated therein, and are presumed true
for the purposes of these Motions to Dismiss.
2
Compl. ¶ 26.
3
Compl. ¶ 27.
4
Compl. ¶ 28.
5
Compl. ¶ 9.
6
Compl. ¶¶ 41–42.
2
remaining purpose, and on December 28, 2018, Perryman allegedly executed and
filed a Certificate of Cancellation with the Delaware Secretary of State.7
A year later, on December 16, 2019, Stimwave filed a verified complaint,
alleging, among other things, that Perryman had used Company assets to pay for her
son’s apartment, to further her personal interests, and to pay bonuses to her close
friends.8 According to the Complaint, Perryman hid these activities by ordering
accounting staff to doctor invoice references on customers’ checks.9 Upon
discovering the alleged misconduct, Stimwave’s board of directors removed
Perryman as CEO.
After her removal, Perryman allegedly engaged in various actions to
undermine Stimwave and wrest control of its property from the Company—actions
that are the subject of this case, though not this Letter Opinion. For example,
Perryman allegedly spread “a false narrative that Micron never assigned” its
intellectual property to Stimwave. 10 To facilitate this narrative, Perryman executed
and filed a Certificate of Correction of the Certificate of Cancellation with the
Secretary of State. 11 This Certificate of Correction purported “to render the
Certificate of Cancellation ‘null and void’ on the basis that ‘[d]ue to a clerical error,
7
Compl. ¶ 43.
8
Compl. ¶¶ 65, 146, 172, 174–176.
9
Compl. ¶ 3.
10
Compl. ¶ 191.
11
Compl. ¶ 192.
3
the entity was voluntarily cancelled when it should not have been.” 12 Perryman then
caused Micron to assign the intellectual property that had previously been assigned
to Stimwave to a different entity. 13
The Individual Defendants
The Individual Defendants are all former employees of Stimwave who have
since left the Company and are now employed by companies allegedly controlled by
Perryman. 14 None of the Individual Defendants are alleged to have been officers or
directors of the Company. 15
According to the Complaint, on December 14, 2019, Perryman entered the
Company’s headquarters in Pompano Beach, Florida, along with five of the seven
Individual Defendants, and removed property. The parties do not dispute that the
aforementioned Defendants entered Company headquarters and removed property;
rather, they dispute whether the removed property was Company property or
individual property.
The Complaint alleges that the Individual Defendants aided Perryman in this
“raid” of the Company’s headquarters, accepted funds from the Company for
personal use, or assisted Perryman in attempting to contest Stimwave’s ownership
12
Compl. ¶ 193.
13
Compl. ¶ 192.
14
Compl. ¶¶ 10–21.
15
Compl. ¶¶ 15–21.
4
of the intellectual property. 16 They are accordingly allegedly liable for aiding and
abetting Perryman’s breaches of fiduciary duty. The Individual Defendants initially
each filed Motions to Dismiss,17 and Stimwave filed an Omnibus Answering Brief.18
On November 6, 2020, five of the Individual Defendants—Elizabeth Greene,
Graham Greene, Patrick Larson, Richard LeBaron, and Benjamin Speck
(collectively, the “Voluntary Dismissal Defendants”)—each faxed letters to this
Court, notifying the Court that they “would prefer to have [me] hear this matter . . .
[and] would like to withdraw [their] motion[s] to dismiss so [this Court] can hear
[their] case[s] and [they] will answer [the] complaint and file . . . counterclaims” (the
“Faxed Letters”).19 About an hour and a half after those faxed letters were docketed,
Stimwave filed a Notice of Voluntary Dismissal Without Prejudice, purporting to
dismiss the Voluntary Dismissal Defendants. 20 The morning of November 9, 2020,
16
Pl. Stimwave Technologies Inc.’s Omnibus Answering Br. in Opp’n to Mots. To Dismiss Filed
by Defs. Brandyn Perryman, Benjamin Speck, Richard Lebaron, Patrick Larson, Graham Greene,
Marlene Pena, and Elizabeth Green (“Pl.’s Answering Br.”) 5–8, Dkt. No. 273.
17
Brandyn Perryman Opening Brief in Support of Motion to Dismiss, Dkt. No. 224; Benjamin
Speck Opening Brief in Support of Motion to Dismiss, Dkt. No 225; Richard LeBaron Opening
Brief in Support of Motion to Dismiss, Dkt. No. 226; Patrick Larson Opening Brief in Support of
Motion to Dismiss, Dkt. No. 227; Graham Greene Opening Brief in Support of Motion to Dismiss,
Dkt. No. 228; Marlene Pena Opening Brief in Support of Motion to Dismiss, Dkt. No. 229;
Elizabeth Greene Opening Brief in Support of Motion to Dismiss, Dkt. No. 300.
18
Pl.’s Answering Br.
19
Faxed letter to Vice Chancellor Glasscock from Richard LaBaron filed 11-6-20, Dkt No. 344;
Faxed letter to Vice Chancellor Glasscock from Patrick Larson filed 11-6-20, Dkt No. 345; Faxed
letter to Vice Chancellor Glasscock from Graham Greene filed 11-6-20, Dkt No. 346; Faxed letter
to Vice Chancellor Glasscock from Benjamin Speck filed 11-6-20, Dkt No. 347; Faxed letter to
Vice Chancellor Glasscock from Elizabeth Greene filed 11-6-20, Dkt No. 348.
20
Notice of Voluntary Dismissal Without Prejudice, Dkt. No. 349.
5
the day on which the Court was to hear oral argument, the Court received copies of
the Voluntary Dismissal Defendants’ Answer and Verified Counterclaims. As of
the writing of this letter, that Answer has not been filed on the docket.
Two of the Individual Defendants, Brandyn Perryman (Laura Perryman’s son,
whose apartment is alleged to be partly funded by the Company’s assets) and
Marlene Peña, did not file anything purporting to withdraw their Motions to Dismiss.
I heard oral argument on, among other things, the Individual Defendants’
Motions to Dismiss (focusing primarily on the Motions of Brandyn Perryman and
Marlene Peña) and the issue of whether the Voluntary Dismissal Defendants had, in
fact, withdrawn their Motions to Dismiss, exposing them to voluntary dismissal
under Court of Chancery Rule 41(a)(1). During the oral argument, the Voluntary
Dismissal Defendants made clear that they would prefer to remain in this case, but
if unable to, would like to be dismissed with prejudice.
This Letter Opinion addresses only the Motions to Dismiss filed by the
Individual Defendants and the Rule 41(a)(1) issue; the remaining outstanding
Motions will be addressed in a subsequent opinion.
6
Analysis
The Voluntary Dismissal Defendants withdrew their Motions to
Dismiss and have been dismissed without prejudice under Rule
41(a)(1).
The issue presented here may strike the reader as an Erewhon-like inversion
of this Court’s typical consideration of motions to dismiss. The Voluntary Dismissal
Defendants filed Motions to Dismiss, then decided they would rather litigate
Stimwave’s claims against them—as well as their own counterclaims against
Stimwave—in this forum. They accordingly withdrew their Motions to Dismiss,
which suited Stimwave, which itself regretted its choice of forum against these
Defendants. Therefore, Stimwave immediately purported to dismiss its claims
against the Voluntary Dismissal Defendants, without prejudice, upon receiving their
withdrawal of the Motions to Dismiss. The following business day, the Voluntary
Dismissal Defendants provided the Court with a purported Answer and
Counterclaims. As a result, those Defendants, who are pro se, are in the odd position
of asking me to disregard their withdrawal of the Motions to Dismiss pending
docketing of their Answer to the Complaint, so that they may continue to litigate
here. Conversely, the Plaintiff is in the odd position of opposing that request. I find
that Stimwave’s voluntary dismissal of these Defendants was effective; nothing
prevents the Voluntary Dismissal Defendants from recasting their defunct Answer
7
and Counterclaim as a new action or including these issues in a motion to intervene,
however.21
Rule 41(a)(1) allows plaintiffs to, without permission of the Court, dismiss an
action “by filing a notice of dismissal at any time before service by the adverse party
of an answer or of a motion for summary judgment” as long as the complaint is not
subject to a motion to dismiss where the plaintiff has chosen to file an answering
brief. 22 In short, if a defendant has not filed an answer or a motion for summary
judgment, and there is no outstanding motion to dismiss in opposition to which the
plaintiff has filed an answering brief, the plaintiff may dismiss the action without
prejudice.
Stimwave notes that the Voluntary Dismissal Defendants each withdrew their
Motions to Dismiss on November 6 and attempted to file their Answer on November
9. Thus, between November 6 and November 9, Stimwave was able to voluntarily
dismiss the Voluntary Dismissal Defendants without prejudice under Rule 41(a)(1).
Accordingly, Stimwave argues, its voluntary dismissal on November 6 was valid
and the Voluntary Dismissal Defendants have been dismissed without prejudice.
These Defendants nonetheless seek to remain parties-defendant here.
21
While these Defendants, like all litigants, have the right to proceed pro se, they would, I think,
find counsel a wise investment should they seek to either file a new action or attempt to intervene.
22
Ct. Ch. R. 41(a)(1).
8
The inverted nature of this issue is likely the result of the Voluntary Dismissal
Defendants’ lack of representation. It is clear that the Voluntary Dismissal
Defendants could have concurrently filed their Answer together with a notice of
withdrawal of the Motions to Dismiss, thus depriving the Plaintiff of a window of
opportunity to voluntarily dismiss them without Court permission. “[T]his Court
has the discretion to exhibit some degree of leniency toward a pro se litigant, in order
to see that his case is fully and fairly heard.”23 But “self-representation is not a blank
check for defect” and does not permit the Court to ignore its own Rules. Here,
although the Voluntary Dismissal Defendants are dismissed from the case, they are
not without recourse. They may still vindicate their counterclaims in this forum by,
for example, filing a separate pleading that opens a new case against Stimwave.
The Voluntary Dismissal Defendants’ submissions, received on November 6,
clearly withdrew their Motions to Dismiss as of that time. Stimwave thus had the
ability to voluntarily dismiss the Voluntary Dismissal Defendants without prejudice
under Rule 41(a)(1). I find that they have done so and those Defendants are hereby
dismissed without prejudice.
23
Aziz v. Tsappas, 2019 WL 6724426, at *1 (Del. Ch. Nov. 1, 2019).
9
The Court has no personal jurisdiction over Brandyn Perryman and
Marlene Peña, and accordingly they are dismissed from this action.
Neither Brandyn Perryman nor Marlene Peña withdrew their Motions to
Dismiss, and I address their Motions on the merits. Like the Voluntary Dismissal
Defendants, Brandyn Perryman and Marlene Peña both argued that this Court lacks
personal jurisdiction and that the Complaint fails to state a claim. “A dismissal for
lack of jurisdiction or improper venue does not preclude a subsequent action in an
appropriate forum, whereas a dismissal for failure to state a claim upon which relief
can be granted is with prejudice.”24 I must address jurisdictional questions before
reaching substantive issues. 25 “Under Court of Chancery Rule 12(b)(2), the plaintiff
bears the burden of demonstrating this Court's jurisdiction over a nonresident
defendant.”26
Brandyn Perryman and Marlene Peña argue that this Court does not have
personal jurisdiction over them because they were neither officers nor directors of
Stimwave and have no other connection to Delaware. The Plaintiff responds that
personal jurisdiction exists by conspiracy jurisdiction, because Brandyn Perryman
and Marlene Peña both participated in Laura Perryman’s raid on the Company’s
24
Branson v. Exide Elecs. Corp., 625 A.2d 267, 269 (Del. 1993) (quoting Arrowsmith v. United
Press Int’l, 320 F.2d 219, 221 (2d Cir. 1963)).
25
Id. at 268–69 (Del. 1993) (remanding because “the Court of Chancery should have decided the
personal jurisdictional challenge regarding the individual defendants, raised by Exide’s motion to
dismiss, prior to addressing the substantive aspect of that motion with respect to all defendants”).
26
Microsoft Corp. v. Amphus, Inc., 2013 WL 5899003, at *8 (Del. Ch. Oct. 31, 2013).
10
headquarters, thus aiding in a breach of fiduciary duty. The Plaintiff also alleges
that Marlene Peña attempted to “induce Company employees to switch to a new
[email] server . . .; and fir[ed] a new employee who left a good job to join
Stimwave.” 27 And the Plaintiff alleges that Laura Perryman used Company funds
to pay for Brandyn Perryman’s apartment, presumably with Brandyn’s knowing
participation.28 I find that these allegations are insufficient to establish conspiracy
jurisdiction.
There are five elements required for this Court to exercise conspiracy theory
jurisdiction:
(1) a conspiracy to defraud existed; (2) the defendant was a member of
that conspiracy; (3) a substantial act or substantial effect in furtherance
of the conspiracy occurred in the forum state; (4) the defendant knew
or had reason to know of the act in the forum state or that acts outside
the forum state would have an effect in the forum state; and (5) the act
in, or effect on, the forum state was a direct and foreseeable result of
the conduct in furtherance of the conspiracy. 29
“While a valid path to jurisdiction, the conspiracy theory of personal jurisdiction is
very narrowly construed to prevent plaintiffs from circumvent[ing] the minimum
contacts requirement.” 30 “Therefore, application of personal jurisdiction under the
conspiracy theory requires factual proof of each enumerated element.” 31
27
Pl.’s Answering Br. 7–8.
28
Pl.’s Answering Br. 5–6.
29
Instituto Bancario Italiano SpA v. Hunter Eng’g Co., 449 A.2d 210, 225 (Del. 1982).
30
Morrison v. Berry, 2020 WL 2843514, at *13 (Del. Ch. June 1, 2020) (internal quotation marks
omitted).
31
Werner v. Miller Tech. Mgmt., L.P., 831 A.2d 318, 330 (Del. Ch. 2003).
11
The Plaintiffs do not allege facts sufficient to establish element (3) of the five-
part test. Laura Perryman’s “raid” on the Company’s headquarters did not occur in
Delaware, but rather in Florida. Brandyn Perryman’s apartment, which Laura
Perryman allegedly used Company funds to pay for, is not alleged to be in Delaware.
And Marlene Peña’s actions in attempting to induce Company employees to switch
to a new email server and her firing of an employee were both actions that occurred
at the employees’ locations—presumably in Florida, but, at the very least, the
Complaint does not allege that the employees were located in Delaware.
The Plaintiff’s theory appears to be that Laura Perryman is subject to
Delaware jurisdiction for breaches of fiduciary duty, so aiders and abettors of those
breaches are also subject to Delaware jurisdiction as participants of a conspiracy
against a Delaware corporation. But this would push conspiracy jurisdiction beyond
constitutional limitations, on the facts here. This Court has personal jurisdiction
over Laura Perryman by dint of her statutorily-implied consent as a director of a
Delaware corporation; but a conspirator aiding or abetting a breach of fiduciary duty
that occurred entirely in Florida has not impliedly given his consent and would not
have reasonably expected that his actions would cause him to be subject to
jurisdiction in the company’s state of incorporation.
Here, no contacts are alleged to exist between either Brandyn Perryman or
Marlene Peña and Delaware. Their only connection to Delaware is that the
12
Company happens to be incorporated in this state. Put another way, the Plaintiff’s
argument for conspiracy jurisdiction would have this Court exercise jurisdiction
solely because Laura Perryman was still a fiduciary of the Company at the time of
the “raid”—had she not been, even under the Plaintiff’s theory, personal jurisdiction
would fail. It cannot be that this Court’s jurisdiction over a person hinges on the
status of a conspirator of that person, rather than on the actions of the defendant
himself.32 That conclusion would violate the constitutional requirement of
International Shoe Co. v. State of Washington, 33 which held that a forum state cannot
exercise personal jurisdiction without sufficient minimum contacts between the
defendant and the forum state, such that the exercise of personal jurisdiction would
not offend “traditional notions of fair play and substantial justice.” 34
For the foregoing reasons, this Court has no personal jurisdiction over
Brandyn Perryman and Marlene Peña. They are hereby dismissed without prejudice.
Further, Elizabeth Greene, Graham Greene, Benjamin Speck, Patrick Larson, and
Richard LeBaron are dismissed without prejudice pursuant to the Plaintiff’s
voluntary dismissal under Rule 41(a)(1).
32
See id. (“While [the plaintiff] does allege that a conspiracy existed, and that the Advisory Board
Defendants were parties to that conspiracy, he offers no factual allegation that a substantial act or
effect of the conspiracy occurred in Delaware. Without some showing that some act or effect
occurred in Delaware, [the plaintiff] cannot satisfy the third element of the conspiracy theory test,
and his claim for personal jurisdiction on this ground must also fail.”).
33
326 U.S. 310 (1945).
34
Hart Holding Co. Inc. v. Drexel Burnham Lambert Inc., 1992 WL 127567, at *2 (Del. Ch. May
28, 1992).
13
To the extent the foregoing requires an order to take effect, it is SO
ORDERED.
Sincerely,
/s/ Sam Glasscock III
Sam Glasscock III
cc: All counsel of record (by File & ServeXpress)
14