If you are interested in learning why the ridiculous Chancery judgement is certainly going to be reversed on appeal, read Nationwide v Northpointe. It was decided in March by the Del. SC.
I do expect a remand with further instructions on how damages could be calculated. So yes, a few more years at least until this is resolved. SIGA emerges from bankruptcy immediately once damages are remanded.
Let me refine my previous now that I've had some time to process the arguments. I now expect the SC to reaffirm existing Delaware law that both the fact of damages and the amount of damages must be able to be determined with reasonable certainty in order to permit an award of type II expectation damages. I also expect that it will be reaffirmed (again, it's already Delaware law) that there must be some basis such as new evidence, new law, direction from a higher court, something, anything, for a court to be allowed to reverse itself on findings already part of the law of the case. The court must also make it clear that shouting bad faith loudly and over and over again does not alleviate PIP's of the requirement to prove damages with reasonable certainty. I'll also mention that none of these statements are even remotely controversial in the context of existing Delaware law when considered outside the inflamed passions induced by a SIGA PIP discussion.
Sentiment: Strong Buy
I predict the five judge panel will find the lump sum remedy is speculative (because it so obviously is) , perhaps Strine will write a dissent, and the case will yet again be remanded back to the Chancery for another crack at this nut… probably with clarification that an income stream could be appropriate. And on we'll go. I can wait three months to find out for sure.
“Hopes and dreams…”
And that is really bad for PIP. She also got into a good line of questioning with PIP’s lawyer on Parsons’ original finding that expectation damages were speculative and why he flip-flopped. Justice Valihura asking that question was not accidental. Justice Seitz later asked: “how do you respond to Mr. Lamb’s question we’re going to turn these contract cases into good faith battles?” Another excellent question poorly parried by PIP’s lawyer. So those questions are both bad for PIP.
I’m not suggesting that Valihura and Seitz tipped their positional hands as clearly as Strine did. However, they did seem to get the fundamental issue at law that the SC decision will hinge on, and their questions do broadcast that they are actively considering whether the damages award meets the reasonable certainty threshold, and that’s good for SIGA.
Sentiment: Strong Buy
I've now had time to watch the arguments before the Delaware SC twice and I've read the briefs now posted on the SC website. I see that the stock prices of SIGA and PIP are responding. First, I think people are almost certainly going to latch on to Strine's questioning of Lamb and interpret it as beneficial to PIP. Strine makes his position very clear and that’s that expectation damages should be available even if the amount of damages cannot be determined with reasonable certainty… the question is now, how beneficial will that position be for PIP? What is interesting is that Strine’s position is not in conflict with any argument SIGA made; Strine tried over and over again to unsuccessfully to corner SIGA into agreeing that all expectation damages awards are speculative because they rely on future damages, which is obviously untrue, so that was somewhat bizarre. Lamb communicated in response that future damages for unproven products are obviously, and by nature, usually speculative…but there are several situations where expectation damages would not be speculative and could appropriately be awarded, the example he gave was a situation where the agreed upon value of a product is passed to a third party (listen for the hedge fund valuations as of 2006 comment). Anyway, Strine’s overt hostility is certainly bad for SIGA.
However, what is interesting is that both Justices Valihura and Seitz asked excellent questions that exactly hit the key issue under debate, and showed understanding of an issue that weighs heavily in SIGA’s favor; Justice Valihura asked to PIP’s lawyer, and I quote: “isn’t the issue really whether you’ve demonstrated with sufficient certainty, the damages?” This is of course the fundamental question, the only one that matters… and one that PIP really desperately wants to ignore, (see the briefs) and PIP’s lawyer responded by filibustering her without answer her question which is telling. The obvious answer to this question is: “Yes ” and that is
Sentiment: Strong Buy