VT Shareholder Representative, LLC v. Edwards Lifesciences Corporation ( 2023 )

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
VT SHAREHOLDER )
REPRESENTATIVE, LLC, in its capacity )
as the Shareholders’ Representative for the )
former Participating Holders of Valtech )
Cardio Ltd., )
) C.A. No. 2023-0316-MAA
Plaintiff, )
)
v. )
)
EDWARDS LIFESCIENCES )
CORPORATION and VALTECH )
CARDIO LTD., )
)
Defendants. )
Submitted: September 28, 2023
Decided: December 12, 2023
MEMORANDUM OPINION
Defendants’ Motion to Dismiss Plaintiff’s Verified Complaint - GRANTED.
C. Barr Flinn, Esquire, and Lauren Dunkle Fortunato, Esquire, of YOUNG
CONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware, and Jeffrey
B. Korn, Esquire (Argued) and Philip F. DiSanto, Esquire, of WILLKIE FARR &
GALLAGHER LLP, New York, New York, Attorneys for Plaintiff.
Jon E. Abramczyk, Esquire, Ryan D. Stottmann, Esquire, and Alec Hoeschel,
Esquire, of MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington,
Delaware, and Michele D. Johnson, Esquire, of LATHAM & WATKINS LLP,
Costa Mesa, California, and Eric F. Leon, Esquire, (Argued) and Sarah Burack,
Esquire, of LATHAM & WATKINS LLP, New York, New York, Attorneys for
Defendants.
Adams, J.1
1
Sitting as a Vice Chancellor of the Court of Chancery of the State of Delaware by designation of
the Chief Justice of the Supreme Court of Delaware pursuant to In re Designation of Actions Filed
I. INTRODUCTION
This is a breach of contract action between Plaintiff VT Shareholder
Representative, LLC (“VT Shareholder” or “Plaintiff”) and Defendants Edwards
Lifesciences Corporation (“Edwards”) and Valtech Cardio Ltd. (“Valtech”)
(collectively “Defendants”). Plaintiff entered into an Agreement and Plan of Merger
(the “Merger Agreement”) wherein Edwards acquired Valtech from the former
Participating Holders of Valtech. The Merger Agreement provided for an Earn-Out
Period of ten years from the closing date of January 23, 2017.
Plaintiff now seeks a declaratory judgment that Defendants have breached the
Merger Agreement. Plaintiff alleged Defendants failed to use “commercially
reasonable efforts” to achieve four delineated milestones in the Merger Agreement.
Defendants move to dismiss, arguing: (1) the claims are not yet ripe for
consideration; and (2) Plaintiff failed to state a claim for which relief can be granted.
For the reasons that follow, the Court finds that Plaintiff’s claims are not yet ripe for
adjudication. Therefore, the Court grants Defendants’ Motion to Dismiss pursuant
to Court of Chancery Rule 12(b)(1). As such, Defendants’ Motion to Dismiss
pursuant to Court of Chancery Rule 12(b)(6) is moot.
Pursuant to In re: DESIGNATION OF THE HONORABLE MEGHAN A. ADAMS under Del.
Const. art. IV § 13(2) dated March 16, 2023.
2
II. FACTS2
A. THE PARTIES
Plaintiff VT Shareholder serves as the representative for the Former
Participating Holders of Valtech Cardio Ltd. (the “Sellers”).3 Defendant Edwards
develops and manufactures structural heart therapies4 and is “self-described” as a
“global leader” in innovative structural heart disease treatments.5 Defendant Valtech
was a private company specializing in heart valve disease treatments and is now a
subsidiary of Edwards.6 Valtech is responsible for developing the Cardioband
System (“Cardioband”), which repairs mitral and tricuspid valves through a
catheter.7
B. THE CARDIOBAND PRODUCT
The Cardioband product is unique for its ability to “combine direct adjustable
annuloplasty (i.e., tightening or reinforcing a leaky heart valve with a ring) with a
transcatheter approach to the heart.”8 Cardioband provides an alternative for patients
who are ineligible for open-heart surgery.9 The procedure can be a “life-saving”
2
The facts are drawn from the Complaint and the exhibits attached thereto, which includes the
Agreement and Plan of Merger (Ex. A), and Edwards’ Letter of Intent (Ex. B).
3
Compl. ¶ 15.
4
Id. ¶ 1.
5
Id. ¶ 7.
6
Id. ¶ 1.
7
Id.
8
Id. ¶ 2.
9
Id.
3
treatment for patients who have particular complications.10 Cardioband has not yet
been approved for use in the United States, but it has been sold in Europe to treat
mitral regurgitation since 2015.11 Cardioband presents a “several-billion dollar
market opportunity” considering the number of patients affected by these heart
issues in the United States.12
Cardioband has products that treat two common heart diseases: mitral
regurgitation and tricuspid valve regurgitation.13 Mitral regurgitation (“MR”) “is a
heart condition in which the mitral valve leaflets (small flaps of tissue) fail to close
properly, allowing blood to backflow from the left ventricle (the lower chamber of
the heart) into the left atrium (the upper chamber).”14 In 2015, approximately 4.2
million Americans were affected by MR.15 Cardioband developed an MR product
(“Cardioband MR”) that can treat patients who are ineligible for open-heart
surgery.16 Tricuspid regurgitation (“TR”) “is a heart condition in which blood leaks
from the right ventricle into the right atrium due to the tricuspid valve leaflets’ failure
to close properly.”17 In 2018, there were approximately 1.6 million Americans with
10
Id. ¶ 3.
11
Id.
12
Id. ¶ 23.
13
Id. ¶ 22.
14
Id. ¶ 23.
15
Id.
16
Id. ¶ 26.
17
Id. ¶ 30.
4
moderate-to-severe TR.18 Cardioband has a similar product to Cardioband MR,
(“Cardioband TR”) that treats TR using a transcatheter delivery system.19
C. THE MERGER
On August 1, 2016, Edwards signed a Letter of Intent “outlining the principal
terms and conditions on which it would acquire Valtech and the Cardioband product
line from the Sellers.”20 On November 26, 2016, the parties entered into the
Agreement and Plan of Merger (the “Merger Agreement”)21 wherein Edwards
acquired Valtech from the Sellers.22 Edwards paid the Sellers $340 million up-front,
and the parties agreed to an additional $350 million in potential earn-out payments
(the “Earn-Out Payments”).23 Upon completion of development targets for
Cardioband, Edwards and Valtech agreed to pay the Earn-Out Payments.24 The
Merger Agreement delineates four Earn-Out Payments:
(i) a one-time payment of $50 million to the Sellers in the event
Edwards or any of its subsidiaries ‘receives written CE Mark for
a Cardioband Product25 for reconstruction or repair of the
18
Id.
19
Id. ¶ 32.
20
Id. ¶ 34 (citing Ex. B at 1).
21
Id. (citing Ex. A).
22
Id. ¶ 4.
23
Id.
24
Id.
25
The Merger Agreement defines “Cardioband Product” as, “collectively, (a) any transcatheter
system, device or technology for reconstruction or repair of the mitral valve or tricuspid valve by
direct adjustable annuloplasty, which is or is derived from the Cardioband product that received
CE Marking in 2015 (the ‘CE Marked Product or Derivative Product’) and (b) any transcatheter
system, device or technology for reconstruction or repair of the mitral valve or the tricuspid valve
by direct adjustable annuloplasty, covered by, derived from, using or that infringes or would
5
tricuspid valve by direct adjustable annuloplasty on or prior to
the last day of the Earn-Out Period’ (the ‘CE Mark Milestone’);26
(ii) a one-time payment of $150 million to the Sellers in the event
Edwards or any of its subsidiaries ‘received written FDA
approval for a Cardioband Product for reconstruction or repair of
the mitral valve by direct adjustable annuloplasty on or prior to
the last day of the Earn-Out Period’ (the ‘FDA Mitral
Milestone’);
(iii) a one-time payment of $50 million to the Sellers in the event
Edwards or any of its subsidiaries ‘receives written FDA
approval for a Cardioband Product for reconstruction or repair of
the tricuspid valve by direct adjustable annuloplasty on or prior
to the last day of the Earn-Out Period’ (the ‘FDA Tricuspid
Milestone’); and
(iv) a one-time payment of $100 million to the Sellers in the event
Edwards and its subsidiaries ‘generate Net Sales during any four
(4) consecutive fiscal quarters during the period beginning on the
first day of the first calendar month following the calendar month
including the Effective Time and ending on the last day of the
Earn-Out Period, of the Cardioband Product in excess of six
hundred fifty million dollars ($650,000,000) in the aggregate
over such four (4) consecutive fiscal quarters’ (the ‘Net Sales
Milestone,’ collectively the ‘Milestones’ and each a
‘Milestone’).27
The Merger Agreement requires Edwards and Valtech to use “commercially
reasonable efforts (including with respect to manner and timeframe) to . . . satisfy
the conditions of and achieve each of the FDA Mitral Milestone, the FDA Tricuspid
Milestone and the Net Sales Milestone (including by using commercially reasonably
efforts to Commercialize the Cardioband Product in order to achieve the Net Sales
infringe upon, any Company Intellectual Property used in or related to the CE Marked Product or
Derivative Product.” Merger Agreement at A-2.
26
This milestone is not at issue because it was already met in 2018. Compl. ¶ 4 n.2.
27
Id. ¶ 38 (citing Merger Agreement § 1.11(k) & Ex. A to Merger Agreement).
6
Milestone) . . . .”28 The Merger Agreement outlines factors to determine if actions
are “commercially reasonable” including:
(A) developments in the market of such Cardioband Product, (B) the
expected size of the market for such Cardioband Product, (C) profit
margins, (D) the level of regulatory approval that may be available for
such Cardioband Product (including the extent of the indications for
which such Cardioband Product may be approved), (E) the level of
reimbursement that may be available for the Cardioband Product, (F)
the cost and outcome of any clinical trials, (G) the safety and efficacy
of the Cardioband Product, (H) the Intellectual Property protection of,
and known third party infringement by, such Cardioband Product, (I)
the known presence of third-party Intellectual Property that may impact
the marketability of such Cardioband Product, (J) the presence or
absence of particularly difficult manufacturing issues, (K) the expected
competitive position of such Cardioband Product vis-à-vis other
therapies that have been or are developed, marketed and sold (or that
have been or are developed and that have received all required
regulatory approvals necessary for the marketing and sale of such other
therapies) for the same or similar indications, including with respect to
the expected or actual efficacy and cost of such Cardioband Products
when compared to such other products, (L) the cost of development,
and (M) Parent’s and its Affiliates overall portfolio of products
(provided that, in no event, will any products competitive to any of the
Cardioband Products that are or become part of Parent’s or its
Affiliates’ portfolio of products be a determinative factor in such
assessment) . . . .29
The Merger Agreement also requires Edwards and Valtech to use
“commercially reasonable efforts (including with respect to manner and timeframe)
to receive approval for and conduct the FDA trial (or such other FDA trial as Parent
determines is reasonably practicable following further discussion and investigation
28
Merger Agreement § 1.11(k)(i).
29
Id.
7
with the FDA) during the Earn-Out Period.”30 Prior to signing the Merger
Agreement, the Sellers rejected a provision that would have given Edwards “‘sole
and complete discretion in its determination as to when or whether to seek or
achieve’ the FDA mitral and tricuspid milestones.”31 If the § 1.11(k) provisions are
breached by Edwards or its subsidiaries, “the unearned Contingent Payments that
are affected by such breach will become immediately due and payable regardless of
whether the related Milestones have been achieved.”32
The Merger Agreement provides a ten-year window called the “Earn-Out
Period” as the “date all Contingent Payments have been paid to the Participating
Holders.”33 The Earn-Out Period concludes on the tenth anniversary of the closing
date: January 23, 2027.34
D. CARDIOBAND DEVELOPMENT EFFORTS
1) Cardioband MR
In September of 2015, Valtech obtained CE Mark approval35 for Cardioband
MR which allowed for the medical device to be sold in European Union countries.36
30
Id. § 1.11(k)(ii)(B).
31
Compl. ¶ 37.
32
Merger Agreement § 1.11(k)(v).
33
Id. at A-6.
34
See Compl. ¶ 48.
35
“The Conformite Europeenne Mark (‘CE Mark’) is a European Union prerequisite for a medical
device to be sold in member countries. CE Mark indicates that a product has been assessed by the
manufacturer and deemed to meet EU safety, health, and environmental protection requirements.”
Id. ¶ 27.
36
Id.
8
Valtech proceeded with obtaining FDA approval and “projected that the FDA Trial
would be ramping up by the first half of 2017.”37 The Cardioband TR had an
anticipated CE Mark approval date of the second half of 2017.38
“The FDA Trial was originally projected to take place at up to seventy-five
sites beginning in April 2017, with an anticipated ‘Primary Completion’ date of
December 2019 and a final ‘Study Completion’ date of December 2023.”39 Despite
the FDA Trial’s study protocol desiring a pivotal cohort of 375 patients, up to a total
of 600, as of March 2023, Edwards enrolled only twelve patients across twenty-four
study sites.40 Edwards also has not “actively recruited for the FDA Trial since
November 2018.”41 Edwards asserted in SEC filings that patient enrollments were
stalled as a result of the COVID-19 pandemic; however, publicly available
information indicates that Edwards’ recruitment efforts stopped a year prior to the
pandemic’s inception.42 Edwards also noted in correspondence with Plaintiff that
“Cardioband had deficient and undocumented supply-chain and manufacturing
processes,” and that Edwards had to engage with interventional cardiologists to
37
Id. ¶¶ 28–29.
38
Id. ¶ 33.
39
Id. ¶ 52.
40
Id. ¶¶ 51–52.
41
Id. ¶ 52.
42
Id. ¶ 53.
9
undergo a redesign of the Cardioband product.43 In the Complaint, Plaintiff disputed
Edwards’ assertions and instead pled that these deficiencies were merely pretext.44
On December 8, 2016, Edwards introduced PASCAL, a product similar to
Cardioband, and indicated its intentions to initiate a PASCAL CE Mark study in
2017.45 PASCAL and Cardioband are direct competitors,46 but when announced,
PASCAL was not as developed as Cardioband.47 Prior to PASCAL’s introduction
in December 2016, Plaintiff was unaware of its existence, nor Edwards’ plans to
advance it.48 Since closing, Edwards has undergone “significant investments to
develop and commercialize” PASCAL, including taking substantial steps towards
obtaining FDA approval and by enrolling ten times as many patients in PASCAL’s
trial compared to its related Cardioband trial.49 Edwards obtained CE Mark approval
for PASCAL MR in February 2019 and FDA approval to market PASCAL for
treatment of MR on September 14, 2022.50 Plaintiff argues that the development
and success of PASCAL proves Edwards is “well aware of the efforts it must
undertake to conduct clinical trials for, obtain FDA approval of, and commercialize
43
Id. ¶ 54.
44
Id. ¶¶ 54–57.
45
Id. ¶ 59.
46
PASCAL and Cardioband are both designed to treat patients for symptomatic mitral
regurgitation who are high-risk for open-heart surgery. Id. ¶ 61.
47
Id. ¶ 59.
48
Id.
49
Id. ¶¶ 62–63.
50
Id. ¶¶ 65–66.
10
a transcatheter mitral valve repair system” despite Defendants’ failures to do so for
its Cardioband products.51
2) Cardioband TR
Edwards obtained CE Mark approval to sell Cardioband TR in April 2018.52
Since then, Edwards has launched a post-market study for Cardioband TR, but it has
not undertaken additional steps to obtain FDA approval.53 In the same time period,
Edwards obtained CE Mark approval for PASCAL TR and received approval to
conduct clinical trials on PASCAL TR.54 Edwards also devoted resources to other
mitral and tricuspid systems, including by conducting trials and obtaining FDA
approval for these products.55
3) Net Sales
In the past three years, Cardioband’s global annual net sales ranged from
approximately $2.76 million to $4.93 million, falling significantly below the net
sales target in the Merger Agreement of $650 million.56 In comparison, Edwards’
total sales for all transcatheter mitral and tricuspid therapies have “increased
dramatically” thanks primarily to PASCAL’s developments.57 Plaintiff requested
51
Id. ¶ 67.
52
Id. ¶ 69.
53
Id. ¶ 70.
54
Id. ¶ 71.
55
Id. ¶ 72.
56
Id. ¶¶ 74–75.
57
Id. ¶ 75.
11
Edwards to provide information, in compliance with the Merger Agreement,
detailing its efforts to improve Cardioband, but Edwards failed to adequately do so.58
Plaintiff asserted that “Edwards acquired Cardioband to shelve it and eliminate
PASCAL’s main competitive threat”59 despite such a strategy directly violating the
Merger Agreement.60
III. PROCEDURAL HISTORY
On March 14, 2023, Plaintiff filed a complaint alleging four counts of breach
of contract:
• Count I: Failure to Use “Commercially Reasonable Efforts” to Achieve the
FDA Mitral Milestone pursuant to Section 1.11(k)(i) of the Merger
Agreement;61
• Count II: Failure to Use “Commercially Reasonable Efforts” to Conduct the
FDA Trial pursuant to Section 1.11(k)(i) of the Merger Agreement;62
58
Id. ¶¶ 80–83. “As an example, for the past two years, Edwards’ summary report on Cardioband’s
progress has stated that ‘[n]ext generation systems and imaging innovations are in development to
meaningfully shorten procedure time and improve ease of use,’ without providing any explanation
of what those ‘next generation systems’ or ‘imaging innovations’ are, how they will shorten the
time and ease of use or improve the commercial viability of the Cardioband product, or why they
must be implemented before achieving the Milestones.” Id. ¶ 80 (emphasis in original).
59
Id. ¶ 8.
60
Id. ¶ 10.
61
Id. ¶¶ 85–94.
62
Id. ¶¶ 95–103.
12
• Count III: Failure to Use “Commercially Reasonable Efforts” to Achieve the
FDA Tricuspid Milestone pursuant to Section 1.11(k)(ii)(B) of the Merger
Agreement;63
• Count IV: Failure to Use “Commercially Reasonable Efforts” to Achieve the
Net Sales Milestone pursuant to Section 1.11(k)(i) of the Merger Agreement.64
On May 10, 2023, Defendants filed a Motion to Dismiss all claims arguing
that: (1) the claims are not ripe for adjudication; and (2) Plaintiff failed to state a
claim.65 Briefing concluded on August 30, 2023. The Court held oral argument on
September 27, 2023, and reserved decision.
IV. STANDARD OF REVIEW
On a motion to dismiss pursuant to Court of Chancery Rule 12(b)(1), the
burden is on the non-moving party to establish the Court’s jurisdiction.66 Subject
matter jurisdiction requires a ripe issue which is reviewed on a case-by-case basis.67
To determine ripeness, the Court should “view the material factual allegations of the
complaint as true,”68 and “all inferences therefrom should be construed in the non-
63
Id. ¶¶ 104–13.
64
Id. ¶¶ 114–23.
65
Defs.’ Br. in Supp. of Mot. to Dismiss at 11.
66
de Adler v. Upper New York Inv. Co. LLC, 2013 WL 5874645, at *7 (Del. Ch. Oct. 31, 2013).
67
B/E Aerospace, Inc. v. J.A. Reinhardt Hldgs., LLC, 2020 WL 4195762, at *1 (Del. Super. July
21, 2020).
68
Diebold Comput. Leasing, Inc. v. Com. Credit Corp., 267 A.2d 586, 588 (Del. 1970) (citing
DuPont v. DuPont, 85 A.2d 724, 726 (Del. 1951)).
13
moving party’s favor.”69 The Court should dismiss the claim if “future events may
‘obviate the need for judicial intervention.’”70
V. ANALYSIS
A. RIPENESS
The Declaratory Judgment Act authorizes Delaware courts to “declare rights,
status and other legal relations whether or not further relief is or could be claimed.”71
The Court has discretion as to whether to grant a declaratory judgment so long as
there is an “actual controversy.”72 Despite this discretion, courts “should be
especially cautious when the request for relief in a declaratory judgment raises
‘novel and important [issues] to Delaware Corporate Law.’”73 The Supreme Court
of Delaware established a four-part test for determining an “actual controversy:”
(1) It must be a controversy involving the rights or other legal relations
of the party seeking declaratory relief; (2) it must be a controversy in
which the claim of right or other legal interest is asserted against one
who has an interest in contesting the claim; (3) the controversy must be
between parties whose interests are real and adverse; (4) the issue
involved in the controversy must be ripe for judicial determination.74
69
de Adler, 2013 WL 5874645, at *7 (internal citations omitted).
70
B/E Aerospace, Inc., 2020 WL 4195762, at *2 (quoting XL Specialty Ins. Co. v. WMI Liquidating
Tr., 93 A.3d 1208, 1218 (Del. 2014)) (emphasis in original).
71
10 Del. C. § 6501.
72
XL Specialty, 93 A.3d at 1216 (citing Gannett Co., v. Bd. of Managers of the Del. Crim. Just.
Info. Sys., 840 A.2d 1232, 1237 (Del. 2003)).
73
Energy P’rs, Ltd. v. Stone Energy Corp., 2006 WL 2947483, at *11 (Del. Ch. Oct. 11, 2006)
(quoting Bebchuck v. C.A., Inc., 902 A.2d. 737, 740 (Del. Ch. 2006)).
74
Rollins Int’l Inc. v. Int’l Hydronics Corp., 303 A.2d 660, 662–63 (Del. 1973).
14
If there is no “actual controversy” between the parties, then the Court must decline
to issue a declaratory judgment.75
The Declaratory Judgment Act authorizes the court to “adjudicate a
controversy prior to the time when a remedy is traditionally available and, thus, to
advance the stage at which a matter is traditionally justiciable.”76 The Act is
“remedial in character and [] the term ‘actual controversy’ should be liberally
interpreted.”77 Declaratory judgments allow for “preventive justice”78 because
“legitimate legal interests are sometimes cast into doubt by the assertion of adverse
claims and that, when this occurs, a party who suffers practical consequences ought
not to be required to wait upon his adversary for a judicial resolution that will settle
the matter.”79 Declaratory judgments allow parties to solve questions about a
contract’s construction or validity, clarify legal rights, and other legal matters.80
“[R]ipeness is a critical element of a declaratory judgment action.”81 For an
issue to be “ripe for judicial determination” the court must find that the “material
facts are static and that the rights of the parties are presently defined rather than
75
Stone Energy Corp., 2006 WL 2947483, at *6.
76
Rollins Int’l Inc., 303 A.2d at 662 (citing Diebold Comput. Leasing, Inc., 267 A.2d at 591–92).
77
Id.78
Schick Inc. v. Amalgamated Clothing & Textile Workers Union, 533 A.2d 1235, 1237–38 (Del.
Ch. 1987) (quoting Stabler v. Ramsay, 88 A.2d 546, 557 (Del. 1952)).
79
Id. (citing Diebold Comput. Leasing, Inc., 267 A.2d at 591).
80
See Tygon Peak Cap. Mgmt., LLC v. Mobile Invs. Investco, LLC, 2022 WL 34688, at *9 (Del.
Ch. Jan. 4, 2022). See also Town of Cheswold v. Cent. Del. Bus. Park, 188 A.3d 810, 816 (Del.
2018) (determining the effect of a town ordinance).
81
Shevock v. Orchard Homeowners Ass’n, 621 A.2d 346, 348 (Del. 1993).
15
future or contingent.”82 “A ripeness determination requires a common sense
assessment of whether the interests of the party seeking immediate relief outweigh
the concerns of the court in postponing review until the question arises in some more
concrete and final form.”83 “Plaintiffs must allege that present harms will flow from
the threat of future action.”84 The burden of establishing the court’s subject matter
jurisdiction is with the party seeking the court’s intervention.85 The ripeness
requirement for judicial opinions prevents courts from rendering advisory opinions
or adjudication of hypotheticals.86 “[A] dispute will be deemed not ripe where the
claim is based on uncertain and contingent events that may not occur, or where future
events may obviate the need for judicial intervention.”87
If a declaratory judgment is issued when a case is not ripe, there are “two
principal dangers—squandering scarce judicial resources, and intervening in a
controversy where the specific facts do not necessitate judicial intervention.”88 To
determine whether a case is ripe, courts make a practical determination of “whether
the parties’ conflicting contentions present a genuine and substantial controversy
82
Stroud v. Milliken Enters., Inc., 552 A.2d 476, 481 (Del. 1989) (citing Stabler, 88 A.2d at 550).
83
S’holder Representative Servs. LLC v. Alexion Pharms., Inc., 2021 WL 3925937, at *5 (Del.
Ch. Sept. 1, 2021) (quoting XL Specialty, 93 A.3d at 1217–18).
84
Stone Energy Corp., 2006 WL 2947483, at *7 (internal citations omitted).
85
B/E Aerospace, Inc., 2020 WL 4195762, at *1.
86
See Stone Energy Corp., 2006 WL 2947483, at *6 (citing Stroud, 552 A.2d at 480); Rollins Int’l
Inc., 303 A.2d at 662 (citing Stabler, 88 A.2d at 550).
87
Alexion, 2021 WL 3925937, at *5 (quoting XL Specialty, 93 A.3d at 1217–18).
88
B/E Aerospace, Inc., 2020 WL 4195762, at *5 (citing Schick Inc., 533 A.2d at 1239).
16
between parties having adverse legal interests.”89 This determination weighs various
interests including the plaintiff’s interest in a prompt response, the plaintiff’s
hardship upon further delay, conservation of judicial resources, and the likelihood
that new facts will impact the determination.90 Courts have found cases ripe for
review when the “eventual litigation appears to be unavoidable;”91 however, a “court
cannot accelerate an embryonic matter to a stage traditionally justiciable if doing so
would produce an advisory opinion along the way.”92 Facts are required to be static
and concrete because if not, “it runs the risk not only of granting an incorrect
judgment, but also of taking an inappropriate or premature step in the development
of the law.”93
Defendants argue that Plaintiff’s allegations are not ripe for judicial review
for three reasons:94 (1) “the claims here are not ‘unavoidable’ or based on a ‘static’
set of ‘material facts[;]’”95 (2) “they are expressly ‘based on uncertain and contingent
events that may not occur[;]’”96 and (3) “‘future events may obviate the need’ for
89
Stone Energy Corp., 2006 WL 2947483, at *6 (citing Anonymous v. State, 2000 WL 739252, at
*4 (Del. Ch. June 1, 2000)).
90
Schick Inc., 533 A.2d at 1239. See also B/E Aerospace, Inc., 2020 WL 4195762, at *5; Shevock,
621 A.2d at 348.
91
Rollins Int’l Inc., 303 A.2d at 662 (citing Stabler, 88 A.2d at 550).
92
Humanigen, Inc. v. Savant Neglected Diseases, LLC, 2021 WL 4344172, at *8 (Del. Super. Sept.
23, 2021).
93
Stroud, 552 A.2d at 480.
94
All four Counts rely on related facts and therefore this Court considers them collectively. While
the Milestones are distinct from each other, the underlying assessment of the facts leading up to
this suit, and potentially throughout the remainder of the Earn-Out Period are related.
95
Defs.’ Br. in Supp. of Defs.’ Mot. to Dismiss at 12–14 (citing XL Specialty, 93 A.3d at 1217).
96
Id. at 14 (citing XL Specialty, 93 A.3d at 1217–18) (internal citations omitted).
17
the very ‘judicial intervention’ Plaintiff seeks.”97 Plaintiff did not dispute the
existence of the ten-year Earn-Out period, but instead argued its claims are ripe
because Defendants have already breached their obligations, regardless of the
ongoing performance period.98
1) It is Not Immediately Clear that Litigation is Probable or Imminent
to Justify a Declaratory Judgment.
Goldenberg v. Immunomedics, Inc.,99 a recent decision from this Court
regarding ripeness, is instructive on the issue of probable or imminent litigation. In
Goldenberg, an employee sought declaratory judgment based on his employment
agreement.100 The employee argued that the company “has a history of failing to
comply with its obligations[,]” thereby making the dispute ripe.101 The court
disagreed.102 The employment provision was tied to a royalties provision that the
97
Id. at 14–15 (citing XL Specialty, 93 A.3d at 1218).
98
Pl.’s Opp’n to Defs.’ Mot. to Dismiss at 36.
99
Goldenberg v. Immunomedics, Inc., 2021 WL 1529806 (Del. Ch. Apr. 19, 2021).
100
Id. at *1. The Court notes Plaintiff’s criticism that Defendants “d[id] not cite a single earnout
case in which a court concluded that claims were not ripe because the earnout period had not yet
expired.” Pl.’s Opp’n to Defs.’ Mot. to Dismiss at 40 n.7. Defendants did not dispute this at oral
argument but noted that it is inconsequential because “the ripeness legal standard is one that applies
regardless of the factual context.” VT S’holder Representative, LLC v. Edwards Lifesciences
Corp., C.A. No. 2023-0316, at 35 (Del. Ch. Sept. 27, 2023) (TRANSCRIPT). This Court agrees.
Ripeness is “far more demanding of the non-movant than Rule 12(b)(6) motions to dismiss.” B/E
Aerospace, Inc., WL 4195762, at *1 (internal quotations omitted). While similar earn-out cases
may be instructive to this Court, such cases are not the only applicable cases that address the
ripeness standard and how it must be applied.
101
Goldenberg, 2021 WL 1529806, at *20.
102
Id.18
court noted may never generate royalties and consequently may never result in a
dispute or litigation.103 Therefore, the issue was not ripe for judicial review.104
Here, Plaintiff provides examples of Defendants’ past failure to proceed to
required trials, and their success with PASCAL, to suggest that Defendants failed to
use “commercially reasonable efforts.” As in Goldenberg, this past behavior is not
sufficient to establish a future breach. Even if the Court accepts as true Plaintiff’s
contentions that Defendants have failed to use “commercially reasonable efforts” so
far, this, like Goldenberg, may never result in a claim if Defendants can achieve the
Milestones by the end of the Earn-Out Period.
The Supreme Court of Delaware’s decision in XL Specialty Insurance Co. v.
WMI Liquidating Trust105 also made clear that in order for a claim to be ripe, it must
“assume[] a concrete or final form.”106 In XL Specialty, the Supreme Court held that
the “[t]rust seeks a judicial determination that, if made, would necessarily be
premised on uncertain and hypothetical facts and that ultimately may never become
necessary.”107 Thus, the plaintiff failed to “establish a ‘reasonable likelihood’ that
coverage under the disputed policies will be triggered.”108 Plaintiff did not plead
103
Id.104
Id.105
XL Specialty Ins. Co. v WMI Liquidating Tr., 93 A.3d 1208 (Del. 2014).
106
Id. at 1211.
107
Id. at 1218.
108
Id. (citing Hoechst Celanese Corp., v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 623 A.2d
1133, 1137 (Del. Super. 1992)).
19
that there was a reasonable likelihood the policies would be implicated, and thus any
judgment would have been too speculative and based on “what-ifs.”109 “The Trust’s
only interest in having its dispute litigated [at the time was] apparently to receive
judicial guidance about how much coverage would be available . . . if the Trust were
to initiate litigation against them.”110 Without additionally pled interests, this was
insufficient to support a finding of ripeness.111
Like in XL Specialty, the facts here are not yet concrete. Plaintiff asserted,
among other things, that the failure to enroll more patients and the focus on PASCAL
sufficiently shows that Defendants breached their ongoing duty to use
“commercially reasonable efforts.” Such activities, however, while potentially
supportive of “unreasonable” efforts, are not completed activities, i.e., the
insufficient enrollment, while presently detrimental to Cardioband, is not static
because the study itself has not yet been cancelled or stopped. Defendants may still
complete the study in time to achieve the Milestone by the end of the Earn-Out
Period in such a way that is “commercially reasonable.”112 Like in XL Specialty,
109
Id. at 1219.
110
Id. at 1220.
111
Id.112
As Defendants pointed out during oral argument, “Your Honor, there is a world in which we
litigate this case before Your Honor, we prevail on summary judgment, and in three or three and a
half years from now, we are back before this court litigating the same issues of commercial
reasonableness. That’s inefficient. That’s why this case is not ripe. That’s why Edwards should
get the ten-year earn-out period that it bargained for.” VT S’holder Representative, LLC v.
Edwards Lifesciences Corp., C.A. No. 2023-0316, at 81 (Del. Ch. Sept. 27, 2023)
(TRANSCRIPT).
20
Plaintiff here has not shown that there is a reasonable likelihood the Milestones will
not be met.
Finally, the facts here are evolving, as evidenced by the number of changes to
both Cardioband and PASCAL products that have occurred so far. Plaintiff asks the
Court to make a premature decision and “inappropriately draw the [C]ourt into a
granting of an advisory opinion” while the facts continue to change. 113 Of note,
while the Milestones are targets, there is no guarantee that these Milestones will be
met, even if Defendants consistently used “commercially reasonable efforts.”114
Defendants assert that they still may achieve the Milestones in the time remaining
and thus this issue would never need to be litigated.115 If Defendants fail to do so,
then it would be appropriate for the Court to review all of Defendants’ efforts to
determine if they were “commercially reasonable”—to do so now would be
premature.116
113
Stroud, 552 A.2d at 481.
114
Merger Agreement § 1.11(a) (“Each Contingent Payment made hereunder will, in each
instance, be paid only once (if at all).”).
115
Defs.’ Br. in Supp. of Defs.’ Mot. to Dismiss at 15.
116
See Stroud, 552 A.2d at 481. In Stroud, the court found a challenge to proposed charter and
bylaw amendments were not ripe because the facts were not concrete, nor in any final form. Id.The court determined that the parties had “inappropriately drawn the trial court into the granting
of an advisory opinion upon a significant question of corporation law.” Id. at 481. Given the
changing facts, and the facts’ impact on any legal determination, the court held that the issue was
not yet ripe. Id.21
2) Plaintiff has Not Presented a Current or Immediate Future Harm
that Would Merit the Court Issuing a Declaratory Judgment.
In the context of assessing a complaint for ripeness, the court will also
consider the immediate or future harm suffered by plaintiff, and whether that harm
outweighs the possibility of waiting until new facts arise, or changed circumstances
occur.
Two cases from this Court, albeit in different contexts, provide guidance. In
MPT of Hoboken TRS, LLC v. HUMNC Holdco, LLC,117 plaintiff sought a
declaratory judgment to declare a breach of an LLC’s operating agreement.118
Defendant argued that the claim was not ripe because plaintiff did not allege any
current or imminent harm as a result of challenged operating procedures.119 The
court found that there was a sufficient risk of future harm, given that the dispute
“places a cloud over the management” of the LLC.120 Because of this risk, the court
held that the claim was ripe.121
In Solak v. Sarowitz,122 the stockholders sought a declaratory judgment to
deem invalid certain fee-shifting bylaws.123 Defendant argued that declaratory
117
MPT of Hoboken TRS, LLC v. HUMNC Holdco, LCC, 2014 WL 3611674 (Del. Ch. July 22,
2014).
118
Id. at *8.
119
Id.
120
Id. at *8–9.
121
Id.
122
Solak v. Sarowitz, 153 A.3d 729 (Del. Ch. 2016).
123
Id. at 733.
22
judgment was not ripe because there was no action filed to trigger the challenged
bylaws, and there was no indication of plaintiff’s intention to file such a suit.124
Despite no pending litigation, the court determined that the stockholders did face an
immediate harm as a result of the fee-shifting bylaws.125 The bylaws created a
personal liability that would render it “highly unlikely that any rational stockholder”
would challenge the bylaw.126 When challenged procedures have a substantial
deterrent effect, like the fee-shifting bylaws did, they are ripe for review.127 The
court further noted that declining review could also “encourage other corporate
boards to adopt similar bylaws to take advantage of their potent deterrent effect on
stockholders without regard to whether such provisions are legally permissible.”128
This case is distinguishable from HUMNC Holdco and Solak, where the
existence of present or future harm created an issue ripe for judicial determination.
Unlike in Solak, where the court found the present harm of the problematic bylaws
was to create a deterrent effect on the shareholders asserting their rights, here, there
is no present harm facing plaintiff. In HUMNC Holdco, the court found that the lack
of clarity surrounding the LLC’s operating agreement created a sufficient “risk of
future harm” because the dispute impacted management capacity.129 Here, there is
124
Id. at 737.
125
Id. at 738–39.
126
Id. at 737–38.
127
Id. at 738.
128
Id.129
HUMNC Holdco, 2014 WL 3611674, at *8–9.
23
no present or immediate future harm other than the Plaintiff will not receive its Earn-
Out Consideration immediately. This “harm” is insufficient because even if
Defendants are using “commercially reasonable efforts,” the Merger Agreement
created the risk that Plaintiff would wait ten years before receiving the Milestone
payouts, if ever. Without additional harm alleged, Plaintiff fails to show why they
are entitled to declaratory relief.
Here, Plaintiff requests damages in the amount it would be owed if the
Milestones had been completed.130 If the Court does not find the issue ripe, there
are two potential outcomes. One, Defendants could achieve all the Milestones and
pay the consideration, rendering any challenge for damages moot.131 Two,
Defendants could fail to achieve some or all the Milestones and Plaintiff could then
claim Defendants failed to use “commercially reasonable efforts.” At that time, the
Court may find that, despite not meeting the Milestones, Defendants did use
“commercially reasonable efforts” and therefore Plaintiff has no grounds to recover.
Alternatively, if the Court finds Defendants failed to use “commercially reasonable
efforts” then Plaintiff would recover the exact same damages sought in the present
130
Compl. at 48–50.
131
See, e.g., Klein v. ECG Topco Hldg., LLC, 2022 WL 2659096, at *4 (Del. Ch. July 8, 2022)
(“Regardless of the internal inconsistency of having to pay off the principal balance of a note
before its issuance, the plaintiffs have not been harmed by any non-payment of the Triggering
Event Purchase Price—however defined—because payment is not yet due. . . Judicial intervention
may ultimately prove unnecessary.”).
24
lawsuit: the amount of the Earn-Out Consideration, together with costs, prejudgment
interest, and reasonable attorneys’ fees.
If the Court were to review this issue as it is currently presented and find that
Defendants have failed to use “commercially reasonable efforts,” it is unclear how
paying the consideration early would impact the Merger Agreement and the parties’
ongoing relationship. The Court need not predict or consider future business
decisions. If the Defendants are proceeding toward completing the Milestones and
must pay the consideration early, Defendants may be vulnerable to another challenge
in the future, should their strategy change as a result of the reduced capital available.
These hypotheticals reinforce that there are still too many contingent and changing
circumstances for the Court to deem the issue ripe.132
3) Despite Some Factual Similarities, Alexion is not Dispositive of All
Ripeness Challenges in Earn-Out Cases.133
Plaintiff relies heavily on this Court’s recent decision in Shareholder
Representative Services, LLC v. Alexion Pharmaceuticals, Inc.134 In Alexion,
132
The Court in Hexion Specialty Chemicals, Inc. v. Huntsman Corp. noted that when there are
many possible outcomes the issue is not ripe because of the many possibilities that could occur
without necessitating judicial intervention. Hexion Specialty Chems. Inc. v. Hunstman Corp., 965
A.2d 715, 758 (Del. Ch. 2008). See also B/E Aerospace, Inc., 2020 WL 4195762, at *6 (finding
unripe a claim for remediation damages wherein multiple possibilities could occur, including the
need for remediation, and the lack of need).
133
The depth at which the Court reviews Alexion should not suggest any priority or importance of
this case over others, but instead the Court addresses the distinctions between the present case and
Alexion because of the amount Alexion was addressed in both briefings and during oral argument.
134
2021 WL 3925937 (Del. Ch. Sept. 1, 2021).
25
Alexion Pharmaceuticals (“Alexion”) and Syntimmune Inc. (“Syntimmune”)
entered into a merger agreement wherein Alexion acquired a pharmaceutical
candidate to treat rare autoimmune diseases.135 The merger agreement included
“Milestone Events” wherein Syntimmune was entitled to Earn-Out Payments when
and if Syntimmune achieved certain targets.136 Alexion agreed to use “commercially
reasonable efforts” to achieve the Milestones within the first seven years of the
closing.137 Two years after the closing date, Syntimmune’s pre-merger stockholders
(the “Shareholders”) asserted that Alexion failed to use “commercially reasonable
efforts” to achieve the milestones.138 Alexion responded that the claim was not yet
ripe because there were five years remaining.139 Alexion also raised a claim against
Shareholders for indemnification for “allegedly defective batches of drug product it
received from Syntimmune.”140
The court found that despite the seven-year agreement, the claim for breach
of contract was ripe because “the claim depends only on Alexion’s past conduct.”141
The court found unpersuasive Alexion’s argument that they could still achieve the
Milestone Events despite their previous lapse because that “conflates [Alexion’s]
135
Alexion, 2021 WL 3925937, at *1.
136
Id.137
Id. at *2.
138
Id. at *3.
139
Id. at *4.
140
Id. at *3–4.
141
Id. at *6 (emphasis in original) (noting that the breach of a contract accrues at the time of the
breach).
26
obligation to pay upon certain results, at any time, with its obligation to pursue those
results with a certain amount of diligence for a period of time.” 142 The failure to
meet the “commercially reasonable efforts” could “be determined on a record
developed from currently available evidence.”143 Unlike a long-term result, the
“commercially reasonable efforts” clause of the merger agreement required
“persistent efforts for the entire contractual seven-year period.”144 Alexion’s past
failure to exercise “commercially reasonable efforts” could not be cured by future
efforts that met the standard. “Alexion’s substandard past efforts are static, and that
breach can be adjudicated now.”145
Here, Plaintiff relied on Alexion to show that a claim can be ripe prior to the
end of an agreed-upon Earn-Out Period.146 While true that the court in Alexion held
that there can be a ripe claim prior to the end of the Earn-Out Period, the Court is
not required to find ripeness if the relevant facts suggest otherwise. Delaware takes
142
Id.
143
Id. (quoting Williams v. Ji, 2017 WL 2799156, at *4 (Del. Ch. June 28, 2017)).
144
Id.145
Id. (basing this determination, in part, on the concession by Alexion that they had already failed
to use “commercially reasonable efforts”).
146
Pl’s. Opp’n to Defs.’ Mot. to Dismiss at 40–41 (“Defendants do not cite a single case in which
a court concluded that claims were not ripe because the earnout period had not yet expired. They
also conspicuously ignore that the Court rejected the same ripeness argument in an earnout case
fewer than two years ago.”).
27
an objective approach to interpreting contracts,147 and consistently gives great
weight to the language to which the parties negotiated.148
Similar to Alexion, the Parties here entered into a Merger Agreement with
specific milestones, with identified pay-out amounts for if, and when, those
milestones were met, and a requirement to use “commercially reasonable efforts.”
Both Defendants here and the defendants in Alexion were sued for their conduct prior
to the completion of the Earn-Out Period. The court in Alexion held that even if
there was time remaining, the court could consider the past conduct of the
Defendants to determine if they used “commercially reasonable efforts” up until that
point.149 Therefore, the fact that the earn-out period had not ended was not
determinative of ripeness.
There are four crucial distinctions between this case and Alexion. First,
Alexion did not dispute that a breach of the “commercially reasonable efforts”
provision had occurred prior to the suit.150 The Court can assume that Alexion’s
concession regarding the breach of “commercially reasonable efforts” assisted the
147
Neurvana Med., LLC v. Balt USA, LLC, 2020 WL 949917, at *15 (Del. Ch. Feb. 27, 2020)
(“The objective theory of contracts requires that a court ‘give priority to the parties’ intentions as
reflected in the four corners of the agreement, construing the agreement as a whole and giving
effect to all its provisions.’”) (quoting In re Viking Pump, Inc., 148 A.3d 633, 648 (Del. 2016)).
See also S’holder Representative Servs. LLC v. Albertsons Co., 2021 WL 2311455, at *6 (Del. Ch.
June 7, 2021).
148
See Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728, 739 (Del. 2006) (“When
interpreting a contract, the role of a court is to effectuate the parties’ intent.”).
149
Alexion, 2021 WL 3925937, at *6.
150
Id. at *4.
28
court in Alexion in finding the issue ripe—without such a concession here, this Court
cannot take that step. Unlike in Alexion, where the court found promises of future
conduct insufficient to overcome failures in past conduct,151 here, Defendants did
not admit or concede that their past conduct fell below the required threshold.
Second, Alexion discussed the practical benefits of finding ripeness, noting
that “[i]t is also sensible to determine whether Alexion breached the Merger
Agreement before faded memories, lost evidence, or other practical hurdles frustrate
that effort.”152 Such language instructs this Court that similar practical concerns
weigh in favor of a review of the facts now, but these examples are not the only
practical considerations. In Alexion, even if the court found that the Earn-Out issue
was not ripe, the case still would have proceeded on the indemnification claim which
dealt with overlapping factual issues.153 The court held that “[a]djudicating claims
with these overlapping factual issues at one time ma[de] practical sense and
further[ed] the ideals of judicial economy the ripeness doctrine advances.”154 Here,
there are no separate claims to be litigated that are not tied to the Earn-Out provision,
so the practical benefit of dealing with like issues together does not apply. The
Plaintiff has not identified why any other practical limitations, including “lost
151
Alexion, 2021 WL 3925937, at *6. (“The facts supporting SRS’s claim are static because the
claim depends only on Alexion’s past conduct.”).
152
Id. at *7.
153
Id.
154
Id.
29
evidence” or “faded memories,” is of particular concern here if Plaintiff has to
relitigate these issues at the end of the Earn-Out period, nor does the Court see a
reason for such concern.
Third, Alexion “discontinued or abandoned” its efforts to achieve the
milestones at the time of the suit.155 While Plaintiff argued Defendants here failed
to make reasonable progress, they did not plead that Defendants abandoned their
efforts entirely. The act of abandonment creates a definitive point in which a Court
can assess past actions for commercially reasonable efforts—distinct from ongoing
efforts—no matter how deficient those efforts may be. Here, while Plaintiff
compared the minimal effort to improve Cardioband with PASCAL’s
advancements, Plaintiff did not allege that the efforts have been completely
abandoned or ceased. Without complete abandonment by the Defendants, the Court
finds the efforts are ongoing and therefore not yet ripe, especially when the Merger
Agreement provides that the Milestones can be achieved at any point “on or prior to
the last day of the Earn-Out Period.”156
Fourth, the Merger Agreement in this action includes timeliness language
distinct from Alexion. Here, the Merger Agreement includes the provision that upon
completion of the milestones “on or prior to the last day of the Earn-Out Period”
155
Id. at *3.
156
Merger Agreement § 1.11(b)–(d).
30
Defendant will pay the Earn-Out Consideration amount.157 Alexion did not have
comparable language that suggests to this Court that the Defendants had until the
“last day of the Earn-Out Period” to achieve the milestones. Delaware Courts
consistently give high deference to the language of the contract itself; “[w]hen a
contract is clear and unambiguous, the court will give effect to the plain meaning of
the contract’s terms and provisions.”158 Further, “[t]he parties’ steadfast
disagreement over interpretation will not, alone, render the contract ambiguous.”159
Despite the parties’ dispute about the meaning of the provision “on or prior to the
last day of the Earn-Out Period,” the Court determines that it is not an ambiguous
phrase.160 The Court will give attention to all words in a contract, and finds that this
phrase further distinguishes Alexion. The reasoning in Alexion is based on the
concession to a breach and the fact that the breach is based on past conduct; language
specifically allowing completion “on or prior to the last day of the Earn-Out Period”
157
Id.
158
Manti Hldgs., LLC v. Authentix Acq. Co., 261 A.3d 1199, 1208 (Del. 2021) (internal quotations
omitted). See also Ascension Ins. Hldgs., LLC v. Underwood, 2015 WL 356002, at *4 (Del. Ch.
Jan. 28, 2015) (“This jurisdiction respects the right of parties to freely contract and to be able to
rely on the enforceability of their agreements . . . [O]ur courts will enforce the contractual scheme
that the parties have arrived at through their own self-ordering[.]”).
159
Manti, 261 A.3d at 1208 (internal quotations omitted).
160
Compare VT S’holder Representative, LLC v. Edwards Lifesciences Corp., C.A. No. 2023-
0316, at 61 (Del. Ch. Sept. 27, 2023) (TRANSCRIPT) (“[T]hat just simply says you have the earn-
out period, right? It doesn’t—I don’t think the [phrase] is dispositive, because that simply says
you have the whole period to achieve the earn-out, which is always the case when you have an
earn-out.”) (Plaintiff’s interpretation), with id. at 74. (“In light of the time limits that the parties
agreed to in this merger agreement, they’re not ripe. . . . Nobody’s disputing that the parties agreed
we would have until on or prior to the last day of the earn-out period to achieve these milestones.”)
(Defendants’ interpretation).
31
is not considered because it did not exist. Here, this Court cannot ignore the
contract’s explicit language to determine if, and when, a breach can occur.
B. FAILURE TO STATE A CLAIM161
Defendant additionally argues that Plaintiff failed to state a claim pursuant to
Court of Chancery Rule 12(b)(6).162 The Court will not address this argument
because, without a claim ripe for judicial adjudication, the Court does not have
jurisdiction under the Declaratory Judgment Act.163 Because this action may yet
ripen into a justiciable controversy, the Court will not review the merits of any claims
at this time, pending future developments where Plaintiff may proceed under similar
claims.164
161
The Court notes Plaintiff’s assertion in oral argument on October 27, 2023, that by
demonstrating Defendants’ failure to use commercially reasonable efforts—and consequently
stating a sufficient claim on all counts—it has proven that the claim is ripe for review. “If I can
allege a breach, then it should be ripe.” Id. at 49. This Court rejects that argument as circular and
instead finds that it is too soon to determine the case on the merits for the reasons detailed, and
therefore regardless of any well-pled allegations suggesting a potential for future claims of breach
of contract, the fact that the claims are not yet ripe precludes the Court from considering the merits.
162
Ct. Ch. R. 12(b)(6).
163
See, e.g., Tygon Peak Cap. Mgmt., LLC, 2022 WL 34688, at *7 (“I address subject matter
jurisdiction first, as I can only substantively review the pleadings if I have jurisdiction to do so.”);
Stone Energy Corp., 2006 WL 2947483, at *6–7.
164
See, e.g., Bebchuck, 902 A.2d at 745.
32
VI. CONCLUSION
In conclusion, Defendant’s Motion to Dismiss is GRANTED pursuant to Court
of Chancery Rule 12(b)(1). As such, Defendants’ Motion to Dismiss pursuant to
Court of Chancery Rule 12(b)(6) is moot.
IT IS SO ORDERED.
33