United States District Court, District of Columbia
E. BOASBERG United States District Judge
don't need to be a venture capitalist to know that an
early investment in the development of a new drug may never
pay off. Plaintiff Jurriaan Strobos, though, claims that he
was stricken with more than a bad bet when Defendant RxBio,
Inc., shortchanged him nearly $700, 000 for his work on
developing its flagship drug. The Company, in turn,
acknowledges that it came down with a nasty case of the
financial woes in 2014, but rejoins that it was Strobos who
violated his employment contract and disclosed certain of its
parties, hoping for a swift tonic to these alleged ills, now
cross-move for summary judgment on all counts. As the Court
concludes that factual findings are needed to put many of
their maladies to rest, it will largely deny both Motions.
the Court is dealing with Cross-Motions, it cannot set forth
the facts in the light most favorable to the non-moving
party. Instead, it will offer only the undisputed background
to this squabble and then detail specific relevant facts
within the corresponding analysis subsections. It also
provides a procedural history of the litigation here in a
Employment and Resignation
is an early-stage Tennessee company that is developing a drug
- RxlOO - to prevent and treat acute radiation syndrome.
See ECF No. 38 (RxBio Statement of Issues) (SOI),
¶ 2. On October 1, 2011, its President and CEO, W.
Shannon McCool, verbally agreed to finalize the hiring of
Plaintiff as its sole Vice President. Id., ¶¶ 4-5.
A trained medical doctor and lawyer, Strobos brought with him
particular expertise in navigating the regulatory gantlet
required for the approval of new drugs. LI, ¶ 1.
no coincidence, then, that he officially came on board just
days after the Company secured an important three-year deal
to develop RxlOO with the financial assistance of the U.S.
Biomedical Advanced Research Development Authority (BARDA).
Id., ¶¶ 19-21. In fact, RxBio's "decision
to hire [him], as well as the amount of [his] salary, "
was directly tied to this deal, and the Company's initial
pitch to the federal agency "included proposed labor
costs for [him] at a rate of $385, 000 peryear." ECF No.
47-1 (Strobos SOI), ¶34. By the contract's terms,
moreover, RxBio had to track the time that Strobos worked on
the development of RxlOO and submit this log to BARD A for
monthly reimbursements. See RxBio SOI, ¶ 21; ECF 47-2
(Deposition of W. Shannon McCool) at 16:1-12.
arrangement worked well for more than two years. In January
2014, though, a government audit flagged concerns about
RxBio. See RxBio SOI, ¶¶ 35-37. BARD A
immediately began withholding its monthly checks in response.
LI Forced to turn its microscopes inward, the Company soon
realized that it had another potential problem with its books
- namely, it did not have a current employment contract for
Strobos (or other top executives). Id., ¶ 38. Plaintiff
and Defendant quickly executed an agreement in mid-2014 with
an effective date relating back to start of his tenure in
October 2011. See RxBio SOI, ¶ 38; ECF No.
11-1, Exh. B (2014 Employment Contract).
months later, the government's pause on the RxlOO project
became more permanent when BARD A let its contract expire
without exercising a lucrative option. See RxBio
SOI, ¶¶ 39-40. This decision left Defendant in a
serious financial bind as the agency was still withholding
its earlier reimbursements. LI, ¶ 40. CEO McCool and his
brother, who served as RxBio's Chief Information Officer,
consequently decided to slash their annual salaries in order
to keep the project moving forward over the course of 2014.
See Strobos SOI, ¶¶ 54-55.
more bad news was just around the bend. In mid-2014, an
independent study at the University of Maryland failed to
show RxlOO effective for use in non-human primates.
See RxBio SOI, ¶¶51-52. With its flagship
project now in serious peril, Strobos, McCool, and others at
RxBio agreed to review the study for potential design
defects. LI, ¶ 52; see also ECF No. 23-6
(Deposition of Gabor Tigyi) at 43:10-44:3. Strobos, in
particular, discussed possible issues with the study's
rehydration of its test animals with two outside clinicians:
Dr. Nisha Chandra-Strobos, his wife and a well-regarded
clinician in her own right, and Dr. William Greenough, an
expert in diarrheal medicine. See RxBio SOI,
fall of 2014, however, the Company was still in rather dire
financial straits. With no other options on the table, in
September, Strobos and McCool resolved to make additional
spending cuts. See Strobos SOI, ¶ 59. More
specifically, the men agreed that RxBio would no longer pay
Strobos - its highest paid employee at the time at $385, 000
- his full salary each month. See id, ¶¶59-60;
RxBio SOI, ¶¶43-44; ECF No. 41-1 (Declaration of W.
Shannon McCool), ¶ 53. The Company began instead to pay
him at a rate of $20, 000 per month and accrued the unpaid
portions of his original salary and any bonuses on its books.
See RxBio SOI, ¶¶ 43-44; ECF No. 11
(Amended Counterclaim), ¶¶ 24-25. Then, in
November, Strobos and McCool again agreed verbally to reduce
this monthly check further still, while they also coordinated
similar sacrifices from other RxBio employees. See
RxBio SOI, ¶¶ 13, 46-49; Strobos SOI, ¶¶
months ticked by under the Company's obvious financial
strain, the relationship between Strobos and McCool rapidly
deteriorated. By early 2015, the two seem to have come to a
particularly contentious stalemate over the Company's
potential pursuit of animal-modeling projects. See
Strobos SOI, ¶¶ 113-16. Animal modeling involves
the design of studies that use animals as test subjects
"to demonstrate, among other things, the efficacy of
[drugs] in animals [as] satisfactorily predictive for use
with humans." LI, ¶ 17. Strobos, for his part, felt
that a separate entity should be formed to handle this work,
while McCool thought the endeavour properly housed within
RxBio's existing research framework. LI, ¶¶
3, 2015, this disagreement reached a boiling point when the
two men debated the issue over the phone. Id., ¶¶
114-18. During this conversation, Strobos expressed that the
animal-modeling endeavor would be much better off if he could
solicit funding from BARD A directly in a new venture so as
to avoid any residual RxBio "baggage" from the
ill-fated RxlOO deal. LI This message was not well received
by McCool, who began to question Strobos's loyalty to the
Company. See McCool Dep. at 139:25-140:9.
result of what Strobos then perceived to be actions taken by
McCool to sideline his influence and authority, Plaintiff
resigned from the Company just two weeks later on July 17,
2015. See Strobos SOI, ¶ 214; RxBio SOI, ¶ 71.
months thereafter, Strobos brought this suit seeking to
recover nearly $700, 000 in expenses, salary, bonuses, and
severance that he claimed RxBio unjustly refused to pay him.
See ECF No. 1 (Complaint), ¶¶ 31-36, 41.
In Count I for breach of contract, he asked for several types
of damages: the funds that Defendant had accrued on its books
as his salary and bonuses, certain costs that he had fronted
the Company during his tenure, and a large severance payment
provided for in his 2014 Employment Contract. LI,
¶¶37-41. He further alleged, in Count II, that
RxBio's failure to pay his full salary and bonuses on at
least a monthly schedule violated the D.C. Wage Payment and
Collection Law. Li, ¶¶ 42-47. Defendant, in
response, denied all his claims and pressed four
counterclaims of its own, alleging: (1) Strobos breached his
contract "by failing to devote his full-time attention
to his employment with RxBio"; (2) he breached his
contract "by failing to return all RxBio records ... to
RxBio on the date of his termination"; (3) a further
breach occurred via his "fail[ure] to keep RxBio
promptly and fully informed of the identity and nature of any
current or subsequent entity or individual" for whom he
later worked; and (4) Strobos violated his contract and the
Tennessee Uniform Trade Secrets Act by delivering RxBio's
"trade secrets to third parties without such third
parties entering into non-disclosure agreements with
RxBio." Am. Counterclaim, ¶¶ 61, 65, 69, 75.
the current summary-judgment briefing could be completed,
BARDA released at least some of the reimbursements that it
had been withholding. See RxBio SOI, ¶ 83.
Strobos then moved for a preliminary injunction to freeze the
portion of that money that he believed to be his unpaid
salary, and the Company counter-moved to freeze his assets to
pay potential damages on its counterclaims. See ECF
Nos. 25, 32. After a hearing on December 16, 2016, the Court
denied relief to both in a written Memorandum Opinion and
Order. Strobos v. RxBio, Inc., 2016 WL 7442644
(D.D.C. Dec. 27, 2016).
the parties have finished their briefs cross-moving for
summary judgment on all counts in both the Complaint and
Counterclaim. In other words, they each seek an affirmative
judgment on their own claims, as well as a rejection of their
adversary's counts. See ECF No. 23 (Motion); ECF
No. 44 (Cross-Motion). Those Motions are now ripe.
judgment may be granted if "the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986); Holcomb v.
Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). A fact is
"material" if it is capable of affecting the
substantive outcome of the litigation. See Liberty
Lobby, 477 U.S. at 248; Holcomb, 433 F.3d at
895. A dispute is "genuine" if the evidence is such
that a reasonable jury could return a verdict for the
nonmoving party. See Scott v. Harris, 550 U.S. 372,
380 (2007); Liberty Lobby, 477 U.S. at 248;
Holcomb, 433 F.3d at 895.
amotion for summary judgment is under consideration,
"[t]he evidence of the non-movant is to be believed, and
all justifiable inferences are to be drawn in [its]
favor." Liberty Lobby, 477 U.S. at 255; see
also Mastro v. PEPCO, 447 F.3d 843, 850 (D.C. Cir.
2006); Akav. Wash. Hosp. Ctr., 156 F.3d 1284, 1288
(D.C. Cir. 1998) (en banc). On a motion for summary
judgment, the Court must "eschew making credibility
determinations or weighing the evidence." Czekalski
v. Peters, 475 F.3d 360, 363 (D.C. Cir. 2007).
nonmoving party's opposition, however, must consist of
more than mere unsupported allegations or denials and must be
supported by affidavits, declarations, or other competent
evidence, setting forth specific facts showing that there is
a genuine issue for trial. See Fed.R.Civ.P. 56(e);
Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
"Evidence that is 'merely colorable' or 'not
significantly probative' is insufficient."
Chambers v. Burwell, 824 F.3d 141, 145 (D.C. Cir.
2016) (quoting Liberty Lobby, Inc., 477 U.S.
at249-50). The nonmovant must instead provide evidence that
would permit a reasonable jury to find in its favor. See
Laningham v. Navy, 813 F.2d 1236, 1242 (D.C. Cir. 1987).
relatively confined contractual dispute, the record here is
extensive. This is not entirely surprising given that the
parties vigorously (and often needlessly) contest every
fathomable facet of the circumstances that led to their
dispute, including issues seemingly irrelevant to their
causes of action.
untangle these conflicting tales, the Court finds it best to
start with the pure breach-of-contract claims pressed by
RxBio, then moves on to its mixed contract/statutory count,
and wraps up with the causes of action asserted by Strobos.
RxBio's Breach-of-Contract Claims
Company asserts three causes of action that rely purely on a
breach-of-contract theory (Counterclaims I-III). According to
RxBio, Strobos violated specific provisions in his employment
contract when he failed: 1) "to return RxBio's
Property" to it immediately after his resignation; 2)
"to promptly inform RxBio of [his] subsequent
employers"; and 3) "to devote his full time and
attention" to the Company during his employment.
See Cross-Mot. at 15-20. The Court addresses the
first two assertions together, as they share a common
deficiency, and then proceeds to the third.
Return of Property & Notification (Counterclaims II
successfully press its first two breach-of-contract claims,
the Company must offer some evidence that Strobos's
alleged actions in violation of his employment agreement
actually damaged it. The precise nature of the factual
allegations upon which it hopes to hang this showing is not
entirely clear. As to the return-of-property count, it first
points to a provision in the 2014 Employment Contract that
required Strobos, upon his termination, to return all its
records and not retain the originals or copies of any such
documents. LI at 18. It next cites to statements
Strobos's counsel made during discovery in this
litigation about how best to turn over certain copies of
emails that Strobos had retained to litigate this case. LI at
18-20 (identifying records turned over in March 2016 and
general statements in SOI that Strobos "did return all
information to RxBio, and to the extent he retained
electronic copies of such data, he was required to do so
because of this pending action") (emphasis omitted). As
to the count about his subsequent employers, RxBio likewise
only vaguely and briefly asserts that Strobos has not
disclosed any employers since his ...