The Billion Dollar Question (or is it the 400 million dollar question?)
Now that the SC has reversed Parsons on promissory estoppel as a cause of action, we are left only with one cause of action on which PIP has prevailed: SIGAs breach of a binding obligation to negotiate in good faith. With his first attempt at a remedy reversed, what is going to be the structure of his new remedy based on that cause of action? That does seem to be the billion dollar question (or is it the 400 million dollar question?)
Teachers Insurance & Annuity Association v. Tribune Co. may provide the answer. It is the Cadillac of cases involving breach of a binding obligation to negotiate in good faith. In fact, during the SC oral arguments, PIP's lawyer even referenced it, and SIGA's lawyer brought it up as well: "that's a wonderful case for us!"
Teachers says: “Notwithstanding the intention of the parties at the time, if the agreement is too fragmentary,”—in this case, the agreement to negotiate in good faith in accordance with the terms of the LATS—“in that it leaves open terms of too fundamental importance, it may be incapable of sustaining binding legal obligation.” And: “The conclusion that a preliminary agreement created binding obligations may leave open the further question of the nature, scope and extent of the binding obligations.” And especially: “A preliminary contract with binding force occurs when the parties have reached complete agreement, including the agreement to be bound, on all the issues perceived to require negotiation.”
But didn't the SC already get by Teachers in deciding there is a binding contract? Also, all of the economic items in the LATS were agreed to. The only open items were juristiction (decided by the SC to be Delaware) and issues about development, which the passage of time made moot. With the binding contract decision Parsons may have to give greater weight to PIP's argument for specific performance of the profit share and economic ownership issues. As he is obviously already biased towards PIP there is less likelyhood that he is going to give them less this time around. Given that this will take over a year to go through the court and another appeal (regardless who Parsons next favors) SIGA would be smart to acquire PIP, stock for stock, while its price is depressed with market focus on this lawsuit instead of the value of its current pipeline. This would make after merger SIGA a $10+ stock and a major player in the Biodefense industry.
Even though Parsons determined that PIP and SIGA would have reached an agreement if not for SIGA’s bad faith, Teachers makes clear that this finding alone is not sufficient to enforce such an agreement; Parsons would also need to find that “the parties have reached complete agreement, including the agreement to be bound, on all the issues perceived to require negotiation.” And Parsons, in his ruling, says: “In particular, I find that a reasonable negotiator in the position of PharmAthene would not have concluded that the LATS, as attached to the Bridge Loan and Merger Agreements, manifested agreement on all of the license terms that SIGA and PharmAthene regarded as essential. In that context, therefore, such a reasonable negotiator would not have believed that the LATS concluded the parties’ negotiations.” However, instead of relying on the precedent established by Teachers and properly concluding that the missing essential terms rendered the preliminary agreement non-binding, Parsons, in desperation, decided to pull the missing essential terms out of his @&$.
I have little faith that Parsons won’t attempt another ridiculous way to measure damages that is not based in reality (he really doesn’t like SIGA) but I am confident that if he does, the Delaware SC is going to reverse him again.
...welcome to the world of SIGA, once a lead bio weapon solution pharma, now a career junkie for the legal system to become enriched by. Parsons WILL screw it up again! The legal clerks in Delaware are depending on it not to mention the legal teams on both sides of this legal conundrum.