Mush brought up a critical point that has helped clarify my thinking. In all the other cases cited by the SC in their opinion where Type II expectation damages were allowed, the key argument in crafting the remedy was the ability to determine, with reasonable certainty, the value of the lost contract expectation. All the other cases involved something that there was some sort of MARKET with multiple potential buyers so the value was always in some range, say in a range of $150 million to $200 million for a piece of land for example. There is nothing in the record to support the existence of a market for ST-246 or the rights surrounding it.... and it's not in the record because there was no way to reasonably value st-246 in 2006.
The absurd argument Parsons made is that a single customer, the government, would start making purchases 4 years after the breach with a certain probability and would fail to make any purchases with another probability. So Parsons is really making the argument that the outcome of a SINGLE spin of a roulette wheel is not a speculative event. He is arguing that, for example, if you have $100 million on red, and therefore you will either get nothing or you win another $100 million, that prior to the spin, the expected result of $50 million in winnings would be a reasonable basis on which to award damages. Unfortunately for PIP, there is no certainty as to where that little bouncing roulette ball will land.
As to the matter of law that Parsons ignored in his ruling, Parsons argues that once the fact of damages are proven, a basis in the record to determine the amount of damages is not necessary; he actually argues there are no limits on what a chancery judge can award in that situation. His argument flies in the face of hadley v baxendale and literally every case cited by the SC in their reversal of his original opinion. It is well settled contract law that the value of the expectation in a contract expectation case cannot be made up through pure speculation! Parsons himself in his original ruling said an award of lump sum expectation damages would be speculative and unavailable, and then he reverses himself and makes the arguement that the value of the expectation is still completely speculative but now that’s ok. Sorry Parsons, it’s not OK and there is no question that the SC is not going to accept your argument that the chancery court has unlimited power in that regard.
Had there been a path in the record where PIP had an opportunity to sell its supposed rights to st-246 at the time—lets say it was in the record that Pfizer came to PIP and said “we will give you $1 billion to take over manufaturing and distribution of siga-246”, then I think pip might have a legitimate argument for a lump sum award based on Parsons finding because they would be able to point to a MARKET and a non-speculative value for their expectation. However, a future hypothetical contract involving uncertain terms with the federal government (a notoriously fickle partner) several years down the road and requiring peformance is obviously not an adequate basis on which to calculate the value of the parties expectation at the time of breach. No market existed for PIPs supposed rights at the time of the breach by which to value st-246. So by definition, the vaue of pip’s supposed rights to st-246 are speculative and cannot form the basis of a contract expectation damages award.
My expectation is that this will 100% be reversed by the SC on appeal. Is it speculative to say that?
You and the other clueless Wikipedia lawyers here just don't comprendo do you?
If we a take 100% of what you just said, and wrote TRUE next to each sentence, Siga still loses the appeal.
It was up to Siga's EXPERT to refute the testimony of PIP's EXPERT on the issue of resonable projected courses of sales, and the cost per course. Siga's expert(s) didn't even bother to do that. So as a matter of
fact, PIP's expert testimony was accepted over Siga's on those issues.
You don't get an extra swing at the pitch five years later in 20-20 hindsight. It's three strikes and you're out. The time to refute expert testimony is at the time of the trial itself, not four years later It's a moot point now.
The measurement is not what the value was than but rather the value of how much PIP expected to earn, as seen from 2006.. Everything is in the order and any moron co do the calculations. If you haven't done so and you still own the stock of either company, you are a gambler, not an investor. If you pushed the pencil you will arrive at present value of $250,000,000 or more.. At 5.75% simple interest this amount grows by over $39,000 daily. Unless SIGA gets a 2nd BARDA order very soon they are doomed. Unfortunately, so are all of SIGA's shareholders. Their only hope is that PIP will have mercy on them and cut a deal for a lot of cash now and the lions share of future profits. The tables have turned and now its PIP that has nothing to lose.
If it is that simple it surely isn't reflected in PIP's market cap. There are gaping holes in Parsons' logic. For example, he does not even consider the possibility of toxicity in humans and how that would have impacted any orders, he does not address competitive concerns, there's no mention of the pitfalls of facing a safety audit for manufacturing, he assumes BARDA would be formed and funded and "bad faith" or not he really hasn't punished PIP for "failing to protect their interests." Also, PIP was ready to fire Hruby. How would that have impacted the future?
How this level of incompetence by PIP could be potentially rewarded is beyond the scope of reason.
at that time it was a stage 1 drug with possible and likely adverse effects otherwise PIP or other investors would have spent more and shares would have been higher, risk reward ratio in all investment is balanced
it can go either way, but i think we are at a point SIGA needs to finalize this and see if there is a potential for a merger or something. The only winners so far are all the lawyers. They are making so much money that they love the appeals. How about someone at SIGA find a way to end this and stop paying so much in lawyer fees.
Thanks for this breakfast of champions.
I understand your point that there was no tangible means of valuing potential market. There was no contract, no RFP, nothing of substance upon which to solidly base market expectation. But at the same time the absence of a current market does not disprove the future market potential. If that were true, our nation and our world would be devoid of innovation and entrepreneurship.
To your point about the roulette wheel and setting expectation damages. I would agree and argue Parsons has done this, but the wording of the Memorandum Opinion does not spell this out as clearly as it could. Instead of 50/50 as you give in your example, Parsons set 85% probability of success (expectation) and 15% probability of failure ($0). In other words the valuation of the expectation damages calculated by the expert will be reduced to reflect this weighting. If expectation was $100 million, then it will be reduced to $85 million.
As to the point about Hadley v. Baxendale, the damages should be based on what was known to both parties and could be foreseeable at the time the parties entered into their contract. Both SIGA and PIP knew that the government had a keen interest in the development, manufacture and stockpile of a more effective smallpox antiviral. They understood and contemplated that given the funds necessary to complete testing to confirm effectiveness (recall that early animal study had already demonstrated 100% effectiveness in monkeypox challenge study) there was a very high probability they would receive a contract to manufacture and complete development of ST-246 (U.S. government had already done this with the smallpox vaccine). SIGA secured those funds to confirm effectiveness in the form of development contracts from the NIH in September 2006. I understand the frustration with the reversal speculative value. He argues Supreme Court asked him to reconsider and he did, question is whether SC will agree.
I guess I would feel better if you could have Baliban calculate with reasonable certainty the future profits the all the Ebola drugs will have in the future. Also, use the probability of success he used in the model that generated the $10 million answer in your calculation. Hence the problem with your conclusion. We cannot be sure any Ebola drug will make to market so there is no reasonable certainty - much like ST-246. Baliban put forth six models and the $10 million one shots down any chance of reasonable certainty.
"My expectation is that this will 100% be reversed by the SC on appeal. Is it speculative to say that?"
Pls submit your bill for legal services to SIGA's GC!
You saved him considerable effort!
Sentiment: Strong Buy