Court denies Direct Biologics' motion to remand breach of agreement case against Kimera Labs

By Tomas Kassahun | Jan 4, 2019

ST. LOUIS – The U.S. District Court for the Eastern District of Missouri, Eastern Division has denied remanding a breach of agreement case between Direct Biologics LLC and Kimera Labs Inc.

In the ruling dated Dec. 20, Judge Edward Autrey denied plaintiff Direct Biologics’ motion to remand because the amount in dispute exceeds $75,000. 

According to the opinion, the conflict started after defendant Kimera Labs appointed Direct Biologics as its exclusive distributor for all amniotic products.

“When plaintiff placed orders with defendant, defendant was required to ship product to Missouri to be distributed by plaintiff, the said product was required to have a shelf life of at least 10 months,” the opinion stated.

According to the opinion, Direct Biologics alleges that Kimera Labs breached the agreement by providing products with a shelf life of less than 10 months and has refused to replace those products.

Autrey said the lawsuit adds that Kimera Labs failed to get accreditation with the American Association of Tissue Banks as required by the agreement, "and has distributed amniotic products directly to customers rather than selling the products to plaintiff to be sold to the ultimate customer."

Kimera Labs moved the case to the federal court on Dec. 6 from the St. Louis County Circuit Court based on the court’s diversity of citizenship jurisdiction, the opinion stated.

According to the opinion, Direct Biologics filed a motion to remand, arguing that the amount in controversy does not exceed $75,000.

“The agreement requires plaintiff to purchase and therefore receive products from defendant in excess of $75,000,” Autrey wrote. “The amount in controversy requirement has been established to a legal certainty. The court therefore has diversity jurisdiction over this matter.”

According to the parties’ agreement, cited by the opinion, Direct Biologics agreed to purchase goods minimally valued at $50,000 per month, of $150,000 per quarter, for an initial term of five years, beginning on Dec. 8, 2017. 

“These requirements clearly exceed $75,000,” Autrey wrote.

The court said Direct Biologics argues that it was a “burden” on it to purchase this amount "and therefore it would be penalized in using this amount for the amount in controversy determination."  

“Plaintiff’s argument, however, fails to consider the benefit it receives through the purchase,” Autrey wrote. “In purchasing product, plaintiff receives the product valued at $50,000 per month.”

Autrey added that the value of the object of the litigation is $150,000 per quarter, for the term of five years, which equates to $3 million over the course of the five-year term of the initial agreement.

“Thus, defendant has established to a legal certainty that the amount in controversy for this litigation is in excess of $75,000, the requisite jurisdictional amount,” Autrey wrote.

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