FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 INDEX NO. 657373/2019 RECEIVED NYSCEF: 12/11/2019 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ------------------------------------------------------ x Jones Day, ) ) Plaintiff, ) ) -against) ) Serenity Pharmaceuticals, LLC, Samuel ) Herschkowitz, and Alain Kodsi, ) ) Defendants. ------------------------------------------------------ x Index No. Date Purchased: Plaintiff designates New York County as the place of trial SUMMONS New York, New York TO THE ABOVE-NAMED DEFENDANTS: Serenity Pharmaceuticals, LLC 105 Hawk Lane Milford, Pennsylvania 18337 Dr. Samuel Herschkowitz 122 Willow Street Brooklyn, New York 11201 Alain Kodsi 96 Pierrepont Street, Apartment 1 Brooklyn, New York 11201 YOU ARE HEREBY SUMMONED and required to serve upon Plaintiff’s attorneys an answer to the complaint in this action within twenty (20) days after the service of this summons, exclusive of the day of service, or within thirty (30) days after the service is complete if this summons is not personally delivered to you within the State of New York. In case of your failure to answer, judgment will be taken against you by default for the relief demanded in the complaint. Plaintiff designates New York County as the place of trial. New York County is designated as the proper venue because a substantial part of the events giving rise to the -11 of 20 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 INDEX NO. 657373/2019 RECEIVED NYSCEF: 12/11/2019 complaint occurred here and Plaintiff’s offices are located in New York County. See CPLR §§ 503(a) and 509. Dated: December 11, 2019 New York, New York By: /s/ Rebekah E. Blake Rebekah E. Blake Nina P. Sudarsan JONES DAY 250 Vesey Street New York, New York 10281-1047 Telephone: (212) 326-3939 reblake@jonesday.com nsudarsan@jonesday.com Michael R. Shumaker (upon pro hac vice) JONES DAY 51 Louisiana Avenue, NW Washington DC 20001-2113 Telephone: (202) 879-3939 mrshumaker@jonesday.com Attorneys for Plaintiff Jones Day -22 of 20 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 INDEX NO. 657373/2019 RECEIVED NYSCEF: 12/11/2019 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ------------------------------------------------------ x Jones Day, ) ) Plaintiff, ) ) -against) ) Serenity Pharmaceuticals, LLC, Samuel ) Herschkowitz, and Alain Kodsi, ) ) Defendants. Index No. COMPLAINT ------------------------------------------------------ x Plaintiff Jones Day (“Jones Day” or the “Firm”), by and through its undersigned attorneys, brings these claims against defendants Serenity Pharmaceuticals, LLC (“Serenity”), Dr. Samuel Herschkowitz, M.D. (“Dr. Herschkowitz”), and Alain Kodsi (“Mr. Kodsi”) (collectively “Defendants”). NATURE OF THE ACTION 1. Jones Day brings this suit as a result of Defendants’ continuing failure to pay Jones Day for legal services rendered. Jones Day provided Defendants over $5 million dollars in legal services, pursuant to a proper and valid engagement letter, in connection with two patent-related lawsuits. Defendants’ failure to pay constitutes a clear breach of the contract that Defendants entered into with Jones Day through the engagement letter. Jones Day now seeks relief. PRELIMINARY STATEMENT 2. In July 2017, Serenity engaged Jones Day to represent Serenity in two patent litigations. The scope of Jones Day’s engagement is set forth in an executed engagement letter dated July 6, 2017 (the “Engagement Agreement”). In the Engagement Agreement, Serenity confirmed, among other things, Jones Day’s billing arrangement, including its attorneys’ hourly rates, and Serenity’s responsibility to pay Jones Day for its services. -13 of 20 INDEX NO. 657373/2019 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 3. RECEIVED NYSCEF: 12/11/2019 Defendants are involved in the research and development of patented pharmaceutical products that address urinary conditions and voiding disorders. The inventorship and other patent issues arising from such work involving antidiuretic products containing the active ingredient desmopressin form the basis of both of the lawsuits for which Jones Day represented Defendants. 4. Following execution of the Engagement Agreement, Jones Day zealously represented Serenity in both lawsuits. Over the life of both lawsuits, nearly a dozen Jones Day attorneys and staff contributed more than 15,000 hours to the representation. Jones Day represented the parties through complex fact and expert discovery and extensive motion practice, including the successful defense of two summary judgment motions, and the filing of a motion to dismiss. Jones Day also represented Defendants through a preliminary injunction hearing and bench trial, as well as post-trial briefings, and appellate proceedings. Defendants often praised Jones Day for its work related to the representation. 5. Throughout the life of the representation, Jones Day regularly sent Serenity invoices for the Firm’s services. With the exception of the invoices identified below, Jones Day’s invoices were paid in full through the Fall of 2018. But starting in December 2018, Serenity stopped paying Jones Day for services rendered, even though it continued to receive the benefit of those services. 6. As of the date of this Complaint, Serenity incurred fees and costs totaling $5,298,178.60 that remain unpaid. Serenity has never disputed that it owes this sum in full. Because Serenity still has not paid what it owes, Serenity is in breach of the Engagement Agreement and Jones Day now brings this action. THE PARTIES 7. Jones Day is a law firm that conducts business as a partnership in 43 offices around the world, including New York. Jones Day’s New York office is located at 250 Vesey Street, New York, NY 10281. 8. Upon information and belief, Defendant Serenity is a limited liability company organized and existing under the laws of the State of Delaware, whose principal place of business -24 of 20 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 INDEX NO. 657373/2019 RECEIVED NYSCEF: 12/11/2019 is located at 105 Hawk Lane, Milford, PA 18337. Upon information and belief, Serenity routinely transacts business in New York, including the transactions giving rise to this claim, and maintains an office at 122 Willow Street, Brooklyn, New York 11201. 9. Upon information and belief, Defendant Dr. Herschkowitz is a citizen of the United States and resides at 122 Willow Street, Brooklyn, New York 11201. Upon information and belief, Dr. Herschkowitz is a principal, equity participant, and cofounder of Serenity, and has served as its Chief Executive Officer and Chairman since 2007. 10. Upon information and belief, Defendant Mr. Kodsi is a citizen of the United States and resides at 96 Pierrepont Street, Apartment 1, Brooklyn, New York 11201. Upon information and belief, Mr. Kodsi is a principal of and equity participant in Serenity, and has served as its President and Director since at least 2016. JURISDICTION AND VENUE 11. This Court has personal jurisdiction over Defendants, as Defendants are either domiciliaries of New York, pursuant to CPLR § 301, and/or have a place of business and/or transact business in the State of New York, pursuant to CPLR § 302. 12. Jones Day has filed suit in New York County, as authorized by CPLR § 503(a), because the acts and omissions giving rise to this action occurred predominately in New York County and CPLR § 509, which allows the plaintiff of an action to designate the place of trial. FACTUAL ALLEGATIONS The 2012 and 2017 Actions 13. In 2012, Ferring B.V., Ferring International Center S.A., and Ferring Pharmaceuticals, Inc. (collectively “Ferring”) brought suit in the Southern District of New York against Serenity, Reprise Biopharmaceutics, LLC (“Reprise”), Dr. Seymour Fein, Dr. Ronald V. Nardi, and Allergan, Inc., Allergan USA, Inc., and Allergan Sales, LLC (collectively, “Allergan”) among others, case caption Ferring B.V., et al. v. Allergan Inc., et al., No. 12 Civ. 2650 (S.D.N.Y.) (the “2012 Action”). In the 2012 Action, Ferring alleged inventorship claims over certain patents related to desmopressin and various state law claims. By 2017, the only remaining claims in the -35 of 20 INDEX NO. 657373/2019 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 12/11/2019 2012 Action were Serenity’s and Reprise’s counterclaims against Ferring, whose claims had all been dismissed. The 2012 Action concluded at the District Court level in September of 2019. 14. In 2017, Ferring brought a separate suit against Allergan, Inc., Serenity, and Reprise in the United States District Court of Delaware seeking a declaratory judgment of patent invalidity, unenforceability, and non-infringement with respect to three patents (the “2017 Action”). That case was subsequently transferred to the United States District Court for the Southern District of New York, case caption Ferring Pharmaceuticals Inc. et al v. Serenity Pharmaceuticals, LLC et al., No. 17 Civ. 9922 (S.D.N.Y.). In June 2018, Avadel Specialty Pharmaceuticals, LLC (“Avadel”), an exclusive sublicensee of two of the patents at issue, was added as a counterclaimant and, along with Serenity and Reprise, asserted various counterclaims against Ferring. Engagement Agreement Between Jones Day and Serenity 15. Serenity and Reprise initially engaged the law firm Zuckerman Spaeder LLP and then-partner of that firm, James Sottile, to represent them in the 2012 Action. When Mr. Sottile left Zuckerman Spaeder and became a partner at Jones Day in 2016, he continued his representation of Serenity and Reprise in the 2012 Action, at which time they became clients of Jones Day. After the 2017 Action was filed, Jones Day also represented Serenity, Reprise, and eventually Avadel in the 2017 Action. 1 Jones Day’s representation of these parties continued after Mr. Sottile left the Firm on September 1, 2018. 16. On behalf of Serenity and as its Chief Executive Officer, Dr. Herschkowitz signed the Engagement Agreement dated July 6, 2017 memorializing Serenity’s representation by Jones Day in the 2012 and 2017 Actions. 2 The Engagement Agreement constitutes a binding contract between Jones Day and Serenity. 17. The Engagement Agreement sets forth the terms and conditions of Jones Day’s representation of Serenity, including the billing rates of certain Jones Day attorneys and the billing 1 Avadel engaged Jones Day pursuant to a separate engagement letter dated May 15, 2018. 2 Dr. Herschkowitz signed a previous Engagement Agreement with Jones Day dated July 19, 2016 memorializing Serenity’s, Reprise’s, Dr. Nardi’s, and Dr. Fein’s joint representation by the Firm in the 2012 Action. -46 of 20 INDEX NO. 657373/2019 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 12/11/2019 and payment obligations of the parties. The Engagement Agreement also encompasses the Firm’s representation of Reprise. In that Engagement Agreement, Serenity assumed full responsibility for payment to Jones Day in both the 2012 and 2017 Actions and expressly stated “Reprise shall have no responsibility for payment of such fees, charges and disbursements.” 18. Pursuant to the Engagement Agreement, Serenity agreed to pay Jones Day its usual and customary fees, subject to a 10% discount, together with the out-of-pocket costs and disbursements, incurred for both Serenity and Reprise. Jones Day’s Zealous Representation of Serenity 19. Jones Day’s representation of Serenity and Reprise in both the 2012 and 2017 Actions has been specialized and extensive, with nearly a dozen lawyers and staff devoting in excess of 15,000 hours to the representation. The Jones Day attorneys who contributed to the representations have extensive experience in complex patent litigation. Jones Day lawyers and staff worked tirelessly on Serenity’s behalf, including nights, weekends, and holidays, devoting significant resources to its representation of Serenity as described herein. And they did so even though the unpaid bills mounted because Defendants continually maintained that the outstanding legal bills would be paid. 20. In the 2012 Action, Jones Day prepared for and represented Serenity and Reprise during two bench trials, involving complex questions of patent inventorship. During the first trial in February 2018, Ferring moved to dismiss Serenity’s and Reprise’s counterclaims for lack of standing. Trial was then adjourned to address Ferring’s renewed motion for an alleged lack of standing for Serenity and Reprise. Jones Day prepared Serenity’s and Reprise’s responsive papers on the standing issue and represented the parties at oral argument. In a vital victory for Serenity and Reprise, the court denied Ferring’s motion for judgment on partial findings, and found that Serenity and Reprise had presented evidence to establish Article III standing sufficient to maintain their counterclaims at trial. The Court of Appeals for the Federal Circuit then denied Ferring’s petition for an interlocutory appeal and its subsequent combined petition for panel rehearing and rehearing en banc. -57 of 20 INDEX NO. 657373/2019 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 21. RECEIVED NYSCEF: 12/11/2019 With trial set to begin on July 23, 2019, the only claims remaining in the 2012 Action were Serenity’s and Reprise’s counterclaims seeking to correct certain of Ferring’s patents by adding Dr. Fein as a co-inventor. Despite Defendants’ failure to pay Jones Day’s legal fees, Jones Day prepared trial briefs and accompanying witness affidavits on behalf of Serenity and Reprise, which were filed on June 10, 2019. Jones Day represented Serenity and Reprise through the bench trial in July 2019 and prepared and submitted findings of fact and conclusions of law on August 30, 2019. As discussed further below, prior to the July 2019 trial, Jones Day sought to withdraw from the representation on the basis of nonpayment of legal fees. 3 The Court in the 2012 Action denied Jones Day’s motion to withdraw, finding such withdrawal would be impracticable given the proximity to the upcoming July 23, 2019 trial start date. 22. Following the bench trial and post-trial briefing, the District Court ruled in favor of Ferring on September 27, 2019. The Court based its decision, in part, on its findings that certain aspects of Drs. Fein and Nardi’s testimony lacked credibility. See Ferring B.V., et al. v. Allergan Inc., et al., No. 12 Civ. 2650 (S.D.N.Y. Sep. 27, 2019), Dkt. No. 453, Findings of Fact and Conclusions of Law. (Judgement was entered September 30th.) A Notice of Appeal has been filed in the 2012 Action, but Jones Day’s work in the 2012 Action is complete. 23. Jones Day also conducted significant work and secured several victories for Serenity and Reprise in the 2017 Action. In late 2018, Jones Day litigated a motion for preliminary injunction and Ferring’s motion to dismiss the counterclaims. In January 2019, the Court denied Ferring’s motion for leave to file a second amended complaint and issued an order construing all disputed claim terms according to Serenity’s and Reprise’s proposed constructions. In April 2019, the Court denied Ferring’s motions for summary judgment of invalidity and noninfringement and in May 2019, the Court dismissed all declaratory judgment claims as to one of the disputed patents. Jones Day also prepared additional briefings in support of a motion for judgment on the pleadings on behalf of Serenity, Reprise, and Avadel, which the Court granted in June 2019, dismissing Ferring’s inequitable conduct and derivation claims. 3 Jones Day brought its motion to withdraw in June 2019 because up until and through that time Defendants continued to represent that they would make payment. -68 of 20 INDEX NO. 657373/2019 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 12/11/2019 24. Upon information and belief, the 2017 Action remains pending and is scheduled for trial beginning in 2020. As described below, on August 19, 2019, the Court there granted Jones Day’s Motion to Withdraw from the 2017 Action on the basis of non-payment of legal fees, and accordingly Jones Day no longer represents Serenity and Reprise in the 2017 Action. Jones Day fully cooperated in transferring the 2017 Action to Serenity’s and Reprise’s new counsel. 25. Throughout Jones Day’s representation, Defendants expressed their satisfaction with and gratitude for Jones Day’s work. For example: • On June 12, 2019, the Court in the 2017 Action granted Serenity’s and Reprise’s two Motions for Judgment on the Pleadings, finding that Ferring could not pursue its inequitable conduct charge against Dr. Fein and could not pursue its invalidity defense based on an allegation that Dr. Fein derived the relevant patent inventions from Ferring’s scientists. Following this positive decision for Serenity and Reprise, Dr. Fein stated in an email to Jones Day, Dr. Herschkowitz, Dr. Nardi, and others, that he was “greatly relieved and grateful” to Jones Day, and that he “read [Jones Day’s] motions and briefs with admiration for the clarity of language and cogency of ideas and arguments.” Dr. Nardi responded as well, thanking Jones Day for the “fantastic” and “thoughtful work.” • On July 30, 2019, at the close of the July 2019 trial in the 2012 Action, Dr. Fein wrote to Jones Day partner Christopher Harnett that he “did a great job” and that Dr. Fein was “grateful.” Serenity Received Jones Day’s Invoices, But Stopped Paying 26. Throughout Jones Day’s representation, Jones Day forwarded periodic detailed billing statements (i.e. invoices), usually on a monthly basis, to Serenity care of Dr. Herschkowitz. Those bills reflected the services that Jones Day’s lawyers and staff had rendered, as well as the costs incurred by Jones Day on Serenity’s behalf. Except as specified below, Jones Day received payment for services rendered and costs incurred in the representations through the Fall of 2018. 4 4 Following Avadel’s engagement of Jones Day, Jones Day’s periodic billing statements were addressed to both Serenity and Avadel and sent to both companies. On February 6, 2019, Avadel filed a petition in the United States Bankruptcy Court for the District of Delaware seeking -79 of 20 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 27. INDEX NO. 657373/2019 RECEIVED NYSCEF: 12/11/2019 For the 2012 Action, beginning with the November 15, 2018 invoice through the present, Serenity has failed to make payments sufficient to satisfy its outstanding balance. For the 2017 Action, Serenity failed to make payments sufficient to satisfy its outstanding balance on invoices dated November 14, 2017 through October 25, 2018 associated with the District of Delaware case, and invoices dated December 28, 2018 through the present associated with the Southern District of New York case. 28. The following invoices issued to and received by Serenity for both Actions remain unpaid, for a combined outstanding amount of $5,298,178.60. 5 To the extent Jones Day incurs fees and costs in connection with either Action at any future date, Jones Day will invoice Serenity for these amounts in the normal course. 2012 Action: Invoice No. 33213318 33222441 33234908 33241373 33253332 33277799 33288380 33296392 33306466 33313440 3331274 Invoice Date 11/15/18 12/31/18 1/31/19 2/26/19 3/31/19 6/19/19 7/31/19 8/20/19 9/30/19 10/11/19 11/21/19 Outstanding Legal Fees and Costs $235,940.88 $235,637.74 $234,416.35 $66,663.09 $39,219.90 $168,756.70 $245,576.84 $641,706.15 $283,288.88 $4,073.94 $12,435.81 relief under Chapter 11 of the United States Bankruptcy Code. Invoices for fees and costs incurred following Avadel’s Bankruptcy Petition were sent exclusively to Serenity. 5 The amounts listed in the charts herein reflect fees for hours worked by Jones Day attorneys and staff and associated costs incurred by the Firm for this work. The amounts also reflect third party fees and costs that Jones Day paid on Serenity’s behalf in connection with the representations for which Jones Day has not been reimbursed. The amounts do not reflect third party fees and costs owed by Serenity for which Jones Day did not outlay funds. -810 of 20 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 INDEX NO. 657373/2019 RECEIVED NYSCEF: 12/11/2019 2017 Action: Invoice No. 33100097 33107361 33115484 33123979 33131850 33136204 33140182 33160527 33160528 33175076 33178851 33191889 33222440 33234907 33241372 33244143 33253330 33258016 33277798 33288377 33296391 33306465 33313439 3331273 29. Invoice Date Outstanding Legal Fees and Costs Delaware District Court 11/14/17 $10,798.30 12/7/17 $2,366.73 1/12/18 $10,882.51 2/14/18 $25,466.46 3/14/18 $2,146.50 3/29/18 $31,671.00 4/12/18 $43,431.50 6/20/18 $2,938.50 6/20/18 $3,378.96 7/31/18 $64,032.71 8/29/18 $42,189.75 10/25/18 $86,113.26 Southern District of New York 12/28/18 $728,508.89 1/31/19 $890,401.71 2/26/19 $523,539.50 3/7/19 $86,418.19 3/31/19 $143,579.48 4/18/19 $17,364.50 6/19/19 $260,196.43 7/31/19 $20,191.98 8/20/19 $23,139.40 9/30/19 $96,376.23 10/11/19 $11,417.71 11/21/19 $3,912.12 Serenity never raised any objection to the fees and costs listed in Jones Day’s invoices with respect to either the 2012 or 2017 Actions. None of the Defendants ever expressed dissatisfaction with the quality of the Firm’s services. 30. The last payment made by Serenity for Jones Day’s fees in either the 2012 and 2017 Actions was received on December 26, 2018. 6 This payment was received for invoices dated 6 Subsequently, Jones Day received payments for pass through charges for services rendered to Serenity by certain third-party vendors. Jones Day remitted the payments to these third-party vendors upon receiving payment and is not seeking these amounts in this Action. -911 of 20 INDEX NO. 657373/2019 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 12/11/2019 October 25, 2018 (invoice number 33191888) and October 31, 2018 (invoice number 33206890). 31. Serenity also failed to provide payment to third-party service providers in these cases—including experts, a trial graphics vendor, a document management vendor, court reporters and others. The cumulative amount owed to such third parties across both the 2012 and 2017 Actions for which Jones Day did not outlay funds for payment to these third parties is $467,831.95 to date. Except where Jones Day outlaid funds to pay these vendors on Serenity’s behalf (as noted above), Serenity is directly liable to these third parties for these costs. Jones Day’s Discussions with Defendants Regarding Non-Payment 32. Serenity was aware of the extent of Jones Day’s work; Jones Day lawyers consulted with Drs. Herschkowitz and Fein among others at Serenity and Reprise about it regularly. Serenity also remained aware of its obligation to pay Jones Day for the legal services that the Firm had rendered. Between January and June of 2019, Jones Day made numerous, good-faith attempts to reach an agreement with Serenity regarding payment of amounts owed to the Firm and urged Serenity to pay its experts and other third-party service providers, as well as the amounts needed to engage a mediator. 33. Over the course of these in-person meetings, telephone conferences, and e-mail discussions (with one or more of Drs. Fein, Herschkowitz, Nardi, and Mr. Kodsi), Serenity declined to provide payment for the overdue Jones Day legal fees. Instead, in the wake of Avadel’s bankruptcy, Serenity repeatedly represented that it would pay the unpaid bills after it found a new commercial partner who would be willing to provide a sufficient up-front payment. Jones Day Files Motions to Withdraw as Counsel for Non-Payment 34. On June 25, 2019, Jones Day filed letters to the Court seeking permission to file Jones Day’s motions to withdraw, on the basis of Serenity’s failure to pay legal fees and failure to cooperate, in both the 2012 and 2017 Actions. After the parties’ briefing and a hearing conducted on July 12, 2019, the Court in the 2012 Action denied Jones Day’s motion to withdraw, finding such withdrawal would be impracticable given the proximity to the upcoming July 23, 2019 trial - 10 12 of 20 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 INDEX NO. 657373/2019 RECEIVED NYSCEF: 12/11/2019 start date. The Court’s ruling on the Motion to Withdraw in no way relieved Serenity of its obligation to pay Jones Day. 35. Pursuant to the Court’s directions, Jones Day continued its uninterrupted representation of Serenity and Reprise in the 2012 Action through trial preparation, trial, and posttrial briefing. Defendants were pleased with Jones Day’s work at trial. In an email sent on July 30, 2019, Dr. Fein wrote to Christopher Harnett of Jones Day, copying Drs. Herschkowitz and Nardi, and stated: “You did a great job and I’m grateful to you.” 36. Jones Day continued to send Serenity invoices for its work in connection with the 2012 Action, as described above. 37. On September 30, 2019, the Court in the 2012 Action rendered its judgment in the case, finding in favor of Ferring. Jones Day filed a Notice of Right to Appeal to the Federal Circuit Court of Appeals on Serenity’s and Reprise’s behalf on October 23, 2019, which remains pending. Jones Day has reminded Serenity and Reprise that the Firm’s engagement was limited to matters through the end of the district court proceedings and that the Firm will not represent them in any appeal. 38. As for the 2017 Action, having stayed its consideration of Jones Day’s motion to withdraw until the resolution of the similar motion in the 2012 Action, the Court granted Jones Day’s motion to withdraw in the 2017 Action on August 19, 2019. Pursuant to the Court’s order, Jones Day promptly transferred all case files to Serenity’s and Reprise’s new counsel. As such, Jones Day’s representation in the 2017 Action has now concluded. PIERCING THE CORPORATE VEIL 39. Upon information and belief, Serenity received more than $100 million from its previous commercial partners, Allergan and Avadel. Still, Serenity has repeatedly represented to Jones Day that it does not have the funds to pay the Firm the amounts due and owing to it. Despite its representations that it cannot pay Jones Day, Serenity continues to operate as a business and it should have used the $100 million in funds for Serenity’s business expenses, including attorney’s fees incurred by the company. - 11 13 of 20 INDEX NO. 657373/2019 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 40. RECEIVED NYSCEF: 12/11/2019 Upon information and belief, at all relevant times, Dr. Herschkowitz was an owner and executive of Serenity, and Mr. Kodsi was an owner and executive of Serenity from at least 2016 onwards. 41. Dr. Herschkowitz directed Jones Day’s legal work in the 2012 and 2017 Actions. 42. Upon information and belief, Dr. Herschkowitz and Mr. Kodsi exercised complete domination and control over the operations of Serenity, including the co-mingling of personal funds in the operation of Serenity. 43. At numerous times throughout the representation, Dr. Herschkowitz offered to provide his own funds to pay portions of Jones Day’s fees and/or third-party expenses, including by virtue of mortgaging his private home and/or securing personal loans. 44. Throughout the representation, Dr. Herschkowitz insisted that Jones Day lawyers send e-mails to his personal, rather than to his Serenity account. Dr. Herschkowitz also directed Jones Day lawyers to include Mr. Kodsi—also at his personal e-mail account—in such correspondence. 45. For example, on October 21, 2019, in connection with Jones Day’s work related to filing the Notice of Appeal on behalf of Serenity and Reprise in the 2012 Action, Dr. Herschkowitz sent an email to Jones Day Partner Pablo Hendler where he stated, in relevant part: “I’m glad to pay the filing and work related expenses via my own money. So send me the bill please. Again my thanks, Sam.” 46. On information and belief, Serenity’s New York office is operated out of Dr. Herschkowitz’s home at 122 Willow Street, Brooklyn, New York 11201. 47. At the direction of Dr. Herschkowitz, all of Jones Day’s invoices were mailed to Dr. Herschkowitz at either his Brooklyn, New York or Miami, Florida residences. CONCLUSION 48. In this lawsuit, Jones Day seeks to recover the debts owed to it by Defendants, who by failing to pay the outstanding invoices are in breach of the Engagement Agreement. - 12 14 of 20 INDEX NO. 657373/2019 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 12/11/2019 CAUSES OF ACTION FIRST CAUSE OF ACTION – BREACH OF CONTRACT 49. Plaintiff Jones Day incorporates by reference all the foregoing allegations as if fully stated herein. 50. Serenity and Jones Day entered into a contract under which Jones Day agreed to provide legal representation consistent with the terms and conditions of the parties’ engagement letter (i.e. the contract). 51. Jones Day has performed all of its obligations under the contract when providing Serenity with legal services. 52. Under the terms of the contract, Serenity agreed to pay Jones Day for the Firm’s legal representation and further agreed that payments for Jones Day’s services were due upon presentation of the Firm’s billing statements (i.e. invoices). 53. Serenity breached the contract by failing to pay Jones Day for the legal services that the Firm provided to it. 54. As a result of Serenity’s breach, Jones Day has been damaged. Serenity currently owes Jones Day $5,298,178.60, together with additional interest at the legal rate. SECOND CAUSE OF ACTION – ACCOUNT STATED 55. Plaintiff Jones Day incorporates by reference all the foregoing allegations as if fully stated herein. 56. Jones Day sent detailed monthly statements of account (i.e. invoices) to Serenity for the following amounts that remain unpaid: - 13 15 of 20 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 INDEX NO. 657373/2019 RECEIVED NYSCEF: 12/11/2019 2012 Action: Invoice No. 33213318 33222441 33234908 33241373 33253332 33277799 33288380 33296392 33306466 33313440 3331274 Invoice Date 11/15/18 12/31/18 1/31/19 2/26/19 3/31/19 6/19/19 7/31/19 8/20/19 9/30/19 10/11/19 11/21/19 Outstanding Legal Fees and Costs $235,940.88 $235,637.74 $234,416.35 $66,663.09 $39,219.90 $168,756.70 $245,576.84 $641,706.15 $283,288.88 $4,073.94 $12,435.81 2017 Action: Invoice No. 33100097 33107361 33115484 33123979 33131850 33136204 33140182 33160527 33160528 33175076 33178851 33191889 33222440 33234907 33241372 33244143 33253330 33258016 33277798 33288377 33296391 33306465 33313439 3331273 Invoice Date Outstanding Legal Fees and Costs Delaware District Court 11/14/17 $10,798.30 12/7/17 $2,366.73 1/12/18 $10,882.51 2/14/18 $25,466.46 3/14/18 $2,146.50 3/29/18 $31,671.00 4/12/18 $43,431.50 6/20/18 $2,938.50 6/20/18 $3,378.96 7/31/18 $64,032.71 8/29/18 $42,189.75 10/25/18 $86,113.26 Southern District of New York 12/28/18 $728,508.89 1/31/19 $890,401.71 2/26/19 $523,539.50 3/7/19 $86,418.19 3/31/19 $143,579.48 4/18/19 $17,364.50 6/19/19 $260,196.43 7/31/19 $20,191.98 8/20/19 $23,139.40 9/30/19 $96,376.23 10/11/19 $11,417.71 11/21/19 $3,912.12 - 14 16 of 20 INDEX NO. 657373/2019 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 57. RECEIVED NYSCEF: 12/11/2019 Serenity accepted and retained Jones Day’s monthly statements of account without objection to the fees or costs stated therein and for a time, Serenity caused them to be paid. 58. An account has been stated between Jones Day and Serenity in the amount of $5,298,178.60, which Serenity previously promised and agreed to pay. 59. Despite repeated requests for payment, a balance of $5,298,178.60 remains unpaid. 60. As a result of the foregoing, Jones Day has been damaged by Serenity in the amount of $5,298,178.60, for billed fees and costs, and judgment should be rendered against Serenity in favor of Jones Day in the principal amount of $5,298,178.60, together with additional interest at the legal rate. THIRD CAUSE OF ACTION – UNJUST ENRICHMENT 61. Plaintiff Jones Day incorporates by reference all the foregoing allegations as if fully stated herein. 62. Jones Day conferred a benefit onto Serenity by providing it with legal representation. 63. Serenity expressly authorized Jones Day to represent it, and Serenity knowingly and voluntarily accepted the benefit of Jones Day’s legal services. 64. Serenity materially benefited from the services performed on its behalf. 65. Serenity’s unwillingness to pay for Jones Day’s representation makes it inequitable for Serenity to retain the benefit of those services without paying the value of the benefit conferred. 66. Serenity’s refusal to pay for the benefits conferred onto it has resulted in, and is likely to further result in, unjust enrichment of and/or benefit to Serenity at the expense of Jones Day, requiring restitution. 67. Jones Day has been injured and harmed and is likely to sustain further injury and harm resulting from Serenity’s unlawful actions. - 15 17 of 20 INDEX NO. 657373/2019 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 12/11/2019 68. As a result of the foregoing, Jones Day has been damaged by Serenity in the amount of $5,298,178.60, and judgment should be rendered against Serenity in favor of Jones Day in the principal amount of $5,298,178.60, together with additional interest at the legal rate. FOURTH CAUSE OF ACTION – QUANTUM MERUIT 69. Plaintiff Jones Day incorporates by reference all the foregoing allegations as if fully stated herein. 70. As described above, Jones Day rendered legal services for Serenity in good faith and at Serenity’s direction, for which Jones Day has not been paid. The fair and reasonable value of such services is $5,298,178.60. Serenity has failed to pay Jones Day an unpaid balance of $5,298,178.60. 71. Serenity, without objection, knowingly and willingly accepted all legal services rendered by Jones Day and the benefit of such legal services. 72. Jones Day’s work was highly specialized, performed by competent attorneys experienced in intellectual property and litigation matters. Jones Day’s rates are comparable to rates charged by other New York law firms acting in a similar capacity. 73. Serenity understood that Jones Day expected to be compensated for its services. Accordingly, Serenity paid Jones Day for its services—up to a point. As described above, Serenity has failed to make payment in full to Jones Day. 74. Jones Day, in rendering such legal services and through Serenity’s actions, reasonably expected and continues to expect to be paid for the value of the services rendered; accordingly, Jones Day seeks recovery in quantum meruit. 75. As a result of the foregoing, Jones Day has been damaged by Serenity in the amount of $5,298,178.60, and judgment should be rendered against Serenity in favor of Jones Day in the principal amount of $5,298,178.60, together with additional interest at the legal rate. - 16 18 of 20 INDEX NO. 657373/2019 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 12/11/2019 FIFTH CAUSE OF ACTION – PIERCING OF THE CORPORATE VEIL 76. Plaintiff Jones Day incorporates by reference all the foregoing allegations as if fully stated herein. 77. Upon information and belief, at all relevant times, Dr. Herschkowitz was an owner and executive of Serenity, and Mr. Kodsi was an owner and executive of Serenity from at least 2016 onwards. 78. Dr. Herschkowitz and Mr. Kodsi, exercised complete domination and control over the operations of Serenity, including the co-mingling of personal funds in the operation of Serenity. 79. Dr. Herschkowitz directed Jones Day’s legal work in the 2012 and 2017 Actions. 80. Based on the above facts, the Court should pierce the corporate veil and hold Dr. Herschkowitz and Mr. Kodsi personally liable for Serenity’s debt to Jones Day for the claims asserted in this action. 81. As a result of the foregoing, judgment should be rendered against Dr. Herschkowitz and Mr. Kodsi, and in favor of Jones Day in the principal amount of $5,298,178.60, together with additional interest at the legal rate. DEMAND FOR RELIEF WHEREFORE, Plaintiff Jones Day respectfully requests the following relief: (1) Judgment for Jones Day and against Serenity, Dr. Herschkowitz, and Mr. Kodsi, jointly and severally, in the amount of $5,298,178.60, plus pre-judgement and postjudgment interest accruing from the date of each invoice; (2) awarding Jones Day the expenses that it incurred in bringing this action, including court costs and reasonable attorneys’ fees; and (8) such other and further relief as the Court deems just and proper. - 17 19 of 20 FILED: NEW YORK COUNTY CLERK 12/11/2019 03:23 PM NYSCEF DOC. NO. 1 Dated: December 11, 2019 New York, New York INDEX NO. 657373/2019 RECEIVED NYSCEF: 12/11/2019 By: /s/ Rebekah E. Blake Rebekah E. Blake Nina P. Sudarsan JONES DAY 250 Vesey Street New York, New York 10281-1047 Telephone: (212) 326-3939 reblake@jonesday.com nsudarsan@jonesday.com Michael R. Shumaker (pro hac vice forthcoming) JONES DAY 51 Louisiana Avenue, NW Washington DC 20001-2113 Telephone: (202) 879-3939 mrshumaker@jonesday.com Attorneys for Plaintiff Jones Day - 18 20 of 20