Gave you a thumbs up for your comment "I wouldn't stay in a job or role where it compromised my integrity.....well, except for that one time, but I needed the money!!" Made me chuckle.
No, you have to order it. Here's the instructions from the SA article, I just got the excerpts for my post from the article.
"My report is based on the transcript of the meeting, which you can order by calling 302-255-0523, asking for the June 26, 2013 transcript for Civil Action No. 2627-VCP, and paying $4/page during the first week, and $2.50/page thereafter. The meeting provided food for thought with respect to the five issues described below."
I slogged through the new SA article today written by the Pip pumper. Parsons is supposed to go by contract law, yet look at what he says in the transcript:
"I'll look at all the damages information again and decide whether I think that there's enough there that I should award money damages. Just a set number, money damages. If I conclude that I . . . (can't) because it's too speculative, then I'll have to decide whether I'm going to award some equitable relief similar to what I already did, or give nothing, which is . . . you know, what SIGA wants" (p. 5)."
"As far as I'm concerned, I am completely unconstrained, and I could award money damages of whatever number I set. What did . . . (PharmAthene) ask for? Between $400 million and a billion dollars. . . . Maybe it could be nothing, because you say it's too speculative. . . . (That's) a serious issue, the speculative nature of it, and I've made comments before relating to it. . . . So, number one, I think I have to look at what the Supreme Court said, and go back and address in the context solely of a breach of contract. . . . I'm taking a fresh look at expectation damages. And if I conclude that I can't do expectation damages, I'll take a fresh look at what equitable relief, if any, I can grant in the circumstances. (pp. 12-13)"
Yes, he did use the words "or give nothing" and "what equitable relief, IF ANY [my emphasis] I can grant." But if he can't award expectation damages then it seems that rather than just award reliance damages, he will do what he did before (despite getting reversed on it once already) and rely on equity law to give Pip what they want (although he will come up with some justification other than promissory estoppel). Pip wants to submit new evidence of what is now known regarding the BARDA contract. Siga will be allowed to respond, but given Parsons' obvious anti-Siga bias, he will probably allow it and that's how he will get around the "speculative" issue. My q is, can he do this?
I like that Golong, "if any at all." :) I do have a question for you about contract law. So is Parsons supposed to restore the parties to how they were before the contract was breached, or to put the parties in a position that they would have been in had Siga negotiated in good faith and they came to an agreement "in accordance with the terms of the LATS"? If the former, then I think that points to reliance damages; and if the latter, then a reduction of the 50% profit split to the 8-12% that is in the LATS. Thanks!
I am just hoping that it means Parsons will have to change the damages to just reliance damages only since his "the parties would have come to an agreement" method for determining an award doesn't meet the "can't be speculative" requirement. I also think Golong's guess that Parsons could reduce the award to something like 7% instead of 50% to be more in line with the LATS is a possibility too, since the SC said to "look to the contract."
I also noticed another important (I think) subtlety in wording. Whenever the SC is saying “yes, you can award expectation damages,” they were always careful to phrase it such that it would be applicable to cases in general for purposes of establishing precedent, not only this Siga case. From page 37: “Because we had not previously addressed whether Delaware recognizes Type II preliminary agreements and permits A PLAINTIFF to recover expectation damages…” and from page 2: “"Where A TRIAL JUDGE makes a factual finding, supported by the record, that THE PARTIES would have reached an agreement but for THE DEFENDANT’s bad faith negotiation, we hold that A TRIAL JUDGE may award expectation damages.” (caps are my emphasis) They were very careful not to explicitly direct or allow “the Vice Chancellor” to award expectation damages.
I only thought to look at the wording more closely because I was revisiting the Guzzetta case I posted about in an earlier thread. And in there, when the SC reversed and remanded Parsons, I noticed that their wording was specifically in reference to only the case being decided. For example: “the trial court's decision to set the bond at $10,000 remains problematic” and “it does not appear from the record that the Guzzettas' remaining estimated damages are unreasonable.” So from this it must have been clear to Parsons that he had to change the amount of the award given that the SC thought it was too low.
From Page 37: "...because it is unclear to what extent the Vice Chancellor based his damages award upon a promissory estoppel holding rather than upon a contractual theory of liability predicated on a Type II preliminary agreement, we reverse the Vice Chancellor’s damages award and remand the case for reconsideration of the damages award consistent with this opinion." This wording seems to suggest the possibility of Parsons giving his same damages award but merely changing the justification, which Pipsters are really hoping for.
However, look at the wording from the summary on page 2: "We also reverse the Vice Chancellor’s equitable damages award BASED ON HIS FACTUAL CONCLUSION THAT THE PARTIES WOULD HAVE REACHED AN AGREEMENT [my emphasis], so that he may reconsider the award in light of this opinion." To me this seems to be focusing more on the way the award was arrived at rather than on the legal basis, and suggests that Parsons actually has to change the actual award, not just the justification. So, while the SC never challenged Parsons’ “factual conclusion,” they seem to be saying that it can’t be used to come up with the damages award. And in footnote 99 to their statement “the plaintiff is entitled to recover contract expectation damages” they explain why it can’t – the “reasonable certainty” and “can’t be contingent, conjectural, or speculative” requirement.
Guzzetta v. Service Corp. of Westover Hills
SC reversed and remanded Parsons' $10,000 damages award: "a proper exercise of discretion would then require that the court explain its rationale for setting a bond at an amount well below the enjoined party’s credible estimate of potential damages. The trial court did not provide such an explanation, and it does not appear from the record that the Guzzettas’ remaining estimated damages are unreasonable."
I looked up what Parsons did for the remand. Now that he had to provide a full explanation, he wound up entering a new damages award in the amount of $26,353 complete with an itemization of the components, in a 22-page decision (the SC decision was 7 pages). I further note that since this award was more reasoned, there were no further appeals to the SC that I could find (even though Service Corp had to more than double the amount they had to pony up, and the Guzzettas actually were hoping for $93,351.32).
A few more thoughts:
- Makes me sort of hopeful that when the SC tells Parsons to do a damages award over, they don't just mean "you can give the exact same award, but provide a different justification this time."
- Parsons does seem to care about avoiding another appeal to the SC and the potential to be reversed twice.
- I noted the dates of the SC case and the remand back to Parsons. SC decided November 9, 2010. Parsons decided the remand July 21, 2011, more than 8 months later. :(
Appreciate your reply Mush. I think your second paragraph is required reading for those people who say a future profit split isn't speculative because if there are no profits then the injured party doesn't get anything. It points out how if there are losses instead of profits, then the injured party doesn't have to participate in any of that. There is only potential upside for the injured party and no downside. So it speculates a profitable rather than a unprofitable future which is even more speculative considering it is a new business.
When Parsons made that comment about one side getting nothing, correct me if I'm wrong but this may have been in the context of admonishing Pip for not protecting themselves by writing up a more ironclad agreement instead of a term sheet with "non-binding" stamped on it. I'm really hopeful now he will have to revisit this whole idea of Pip getting nothing or at least minimal damages. The SC said they were unclear how much of his award was based on promissory estoppel and how much was on breaching type ii. But Parsons has shown both in his original decision and in his denial of Siga's motion for reargument (see my "Reasonable certainty thread") that he mostly if not entirely based it on equity law rather than on contract law. Remember in his decision, he acknowledged that Pip was only able to show about $600k in actual costs they incurred but that this would be "de minimis" for a drug with billion dollar potential. So that's why he had to use promissory estoppel in order to be able to award Pip more even though they chose to leave "non-binding" on the LATS.
Frwd, I found this earlier analysis I did of Parsons' denial of Siga's motion for reargument, where Siga disputed his finding that the parties would have agreed to the 50/50 profit split after the first $40m. Here is a copy and paste:
[JP says "PharmAthene would have accepted the use of a 50/50 profit split. Nothing in SIGA's motion indicates I misapprehended any fact
material to that conclusion." That's right, but the problem is JP didn't show that _Siga_ would have accepted this! Here was Siga's point in its motion: "the Court's finding that the parties would have agreed to a 50/50 split of profits [my emphasis] is likewise unfounded in the record. There is no evidence that SIGA ever offered, considered, or would have accepted a 50/50 profit split without other economic consideration."
Next, Siga's contention that "there was no record basis for the...$40m... "...again he says "PharmAthene would have agreed to increase the aggregate amount of payments to SIGA by a corresponding multiple, from $16 million to $40 or $45 million" and fails to show that _Siga_ would have agreed to this. All he does is to reiterate his explanation from the decision: "Just as the LATS fully provided for ST-246's then estimated development costs, the $40 million payment suggested by Dugary would be sufficient to cover all of ST-246's newly estimated development costs. Accordingly, it is reasonable to infer from the evidence that,as of October 2006, SIGA would have considered an aggregate payment of $40 million adequate to support a 50/50 split of future profits from ST-246."]
It is very telling that in the SC's decision where they reiterate Parsons' so-called "factual" finding, _they do not footnote this at all_ unlike with other footnotes that referenced supporting testimony and evidence from the original decision! "Reasonable to infer" - yeah that isn't speculative or conjectural at all! With contract law, there's no "inferring" to be had, you gotta be explicit!
I remembered that I talked about this in an earlier thread where I analyzed Parsons' denial of Siga's motion for reargument so I dug it up and reread. Now I am getting a little more hopeful that he will have a hard time saying that now his award can be entirely based on contract law instead of promissory estoppel (where a judge would not be constrained from imposing things like constructive trusts). Reason being the language Parsons used. "Authority," "remedial flexibility," and "broad discretion" sound more like they belong to the world of equity law than contract law to me. Here's a copy and paste from my analysis:
[JP says "Siga's second ground for seeking reargument is that the Court misapprehended the law in awarding an equitable remedy that fails to comport with the requirement at law that damages be proven with reasonable certainty [my emphasis]." Again JP trots out the court's "authority" and "remedial flexibility" from previous Chancery cases. He conveniently fails to acknowledge the numerous examples that Siga brought up WHICH WERE FROM APPELLATE CIRCUIT COURTS. The fact that JP continually relies on his "broad discretion" to back up his decision and ignores cases from higher non-Chancery courts is very telling!! If he was so confident that his decision will hold up on appeal then why not be out in the open in refuting Siga's examples? He even ignores the Chancery examples that Siga threw back in his face that illustrated this point about needing certainty in order to award damages!]
Of course now with 20/20 hindsight we see that the SC did shoot down his damage award and did indeed bring up the "reasonable certainty" requirement that Siga had previously. Now this time Parsons can't say that he has almighty powers and can do whatever he wants according to equity law; he has to, as the SC said, "look to the contract."
Bingo, that was the main thing Parsons relied on, Pip's testimony that Drapkin said "if you don't get a merger then you'll get the license." Pip saying they provided such and such assistance without showing any proof or itemization of costs they incurred to provide said assistance. These are the kinds of things that Parsons considers are "facts." Not things in writing like "non-binding" stamped on the LATS.
Thanks frwd for your posts. I respectfully disagree with you though on Parsons and totally agree with Amln that as a person "whose career is focused on providing justice" he has proven to fall short. In past threads I have posted how his cases have been appealed on several occasions to the SC and he has been reversed and remanded. I had even found another one so far in 2013 and we are not even halfway done with this year. And more than once the SC has found that he has "abused discretion." Back to the Drapkin issue, I feel even if Parsons did not accept his "just a jumping off point" explanation (which as CS mentioned offends common understanding of what term sheets typically are), this doesn't mean he can go and just dismiss everything else about Siga's case wholesale. In another past thread where I offered up an analysis of Siga's motion for reargument which Parsons denied, I pointed out how he _flat out ignored_ many of Siga's points and case law examples, while just parroting whatever Pip said. If Parsons were a fair judge and confident in the way he applied the law, then why wouldn't he tackle each point Siga brought up? To just not address these points at all was patently dishonest.
Thanks everyone for your replies! CS, really appreciate you taking the time to read the case I found and distinguishing it from Siga's case. In fact the way I found out about the Columbia case was that I was actually looking for expert opinion and reaction from the appeal ruling, and this case was mentioned in one newsletter how Siga was actually not the first time expectation damages were awarded for a breach of a type ii agreement. However the newsletter did add that "One key factor...is the specificity of the underlying term sheets. Each term sheet was extremely detailed and left little to the imagination or to future negotiation. An extremely detailed term sheet is indispensable... but often less is more if you intend the term sheet as merely a starting point for negotiations." Of course that's exactly what Drapkin said the LATS was, just a jumping off point, but Parsons thought everything that came out of Drapkin's mouth was rubbish. With another judge, Drapkin's same testimony could have been given actual consideration. Here is another analysis written by the law firm Morrison and Foerster that also points out the Parsons-boxing-himself-in dilemma: "Actually obtaining expectation damages may be difficult because it requires proof that ...the amount of expectation damages can be calculated with reasonable certainty. ... especially challenging ... require predictions about the future. Indeed, the lower court had previously found that PharmAthene’s claimed damages were too speculative."
Most of the expert analysis I was finding was focusing more on Siga being liable for bad faith and saying stuff like "be very careful when drafting your term sheets!" and "avoid agreeing to negotiate in good faith!" and "don't do business in Delaware!" I only found the above two that were willing to go out on a limb to address the damages part of the ruling, but it's interesting that both are acknowledging the difficulty Pip has due to the "too speculative" issue.
Was on vacation while the decision came down and only now had time to read through everything. It seems to boil down to how Parsons is going to deal with the "too speculative" issue. What makes me pessimistic is that the SC didn't challenge his so called "factual" finding that the parties would have come to an agreement that mirrored his damages award had Siga not breached the "Type II" contract to negotiate in good faith. I don't want to take comfort in the fact that the SC remanded it because it still leaves open the possibility of the same award but Parsons just saying that it is now based entirely on contract law and not promissory estoppel. Remember he said in his decision that he was going to kill two birds with one stone by dealing with both the breach of duty to negotiate in good faith AND promissory estoppel at once instead of in two different sections, since both are satisfied with his stupid damages award. So, I don't think this is gonna be a slam dunk case of Parsons not wanting to get reversed twice and reducing the award to just reliance damages or other nominal amount.
I was trying to find a case where a party was awarded lost profits because of the other party breaching the duty to negotiate in good faith. Actually of course I was hoping I WOULDN'T find one, but unfortunately I did: COLUMBIA PARK GOLF v. City of Kennewick, 248 P. 3d 1067 - Wash: Court of Appeals, 3rd District.
- As the dissenting judge said, the award was not called "lost profits" but really that was just semantics
- Note though how Columbia knew that it would be tough to prove "lost profits" so they didn't explicitly ask for that. However they did get them but just called them something else to get around that difficulty.
- Also note how WA has a "new business rule" for determining expectation damages.
Golong, homebuilder, alibi, any thoughts? Have a good weekend everyone.
Point taken alibi. I was reading the thread about promissory estoppel on the SIGA thread where you and icehawk were butting heads. I am just curious about why you think that SIGA would not prevail on this point - that PIP could not have detrimentally relied on SIGA's promise to negotiate in good faith since the outcome of future negotiations is unknown. I did see your comments about findings of fact and that since the promise was to negotiate an agreement "in accordance with the LATS" then that was why SIGA lost. Is Parsons' "finding of fact" supposed to stand totally unquestioned by the Supremes and to supercede the promissory estoppel aspect (i.e. this was a future negotiation and thus the outcome unknown and unable to be detrimentally relied upon)?
If this is true and SIGA won't prevail on that point, then do you think this would still preclude the damages being reduced by the Supremes? I noticed in the oral arguments one judge seemed to be in favor of having a specific dollar amount as a remedy rather than the 50-50 profit split that would have to be monitored for 10 years from the date of the first commercial sale.
Hmmm it didn't include the comment from golong: "I think one of our strongest arguments is the fact that this transactions was between two very sophisticated parties who were running multi million dollar publicly traded companies.
The law seems pretty clear that in Del., an equitable lien is inappropriate under those circumstances. Will like to see how the upper courts deal with that issue, but I think it could be the winner for us."
No disrespect to alibi, but reading Parsons' decision on Siga's motion for reargument totally bears out what pawnpower is saying about judges being lazy, already having their mind made up, not reading through everything, etc. I had done a post about it on the SIGA board when he first released his reargument decison. You can search for the thread under my handle with the title "link to reargument decision posted on PIP's website." Basically what I said was that "JP ignores many of Siga's arguments they made in their motion and straight-out parrots much of what PIP said in their rebuttal." If you read the thread then there is a much longer dissection of JP's reargument decision. I'm not a lawyer though, so I would be sincerely interested alibi and homebuilder in your thoughts. Please note though this comment from golong who _is_ a lawyer:
The case law that this is in reference to was from Siga's motion for reargument (which JP completely failed to acknowledge):
imposition of an equitable lien is inappropriate in a case like this where the parties involved are highly sophisticated commercial parties. See generally Scotfoam Corp v. Peddrick...(Del. Ch. 1989) (noting that "[i]n most cases an equitable lien on a particular thing can be created only by contract" and that "in Delaware equitable liens predicated upon unjust enrichment have usually involved unsophisticated and related parties" and denying plaintiff's request for an equitable lien because plaintiff was a sophisicated party and had "cite[d] no authority where a sophisticated party has been awarded an equitable lien")
You're right, not a promise that things were back on track. I am just using June 5 as 90 days from when CJ Steele finally heard the recording of the oral arguments. I noticed that the date of the letter explaining the lack of decision was dated Apr 10 or exactly 90 days since the oral arguments happened on Jan 10, as if waiting until the very last minute to inform the parties. I hope that come June 5, there will be an actual decision and not another letter explaining a further delay.
I posted to the "Delay" thread but it isn't showing up for some reason. Anyway what I tried to post was that with today's convo mainly b/w icehawk and alibi re the case, I wanted to have another listen to the oral arguments. And now I want to retract my "it stinks" comment because right in the very beginning of the recording, they do say (paraphrasing) "...probably at the doctor's as we speak...decided it would be best to proceed with the oral arguments...he will listen to a recording...then the 5 of us will deliberate..." So now I feel a little better that the Supremes will hand down a well-reasoned judgment by the new June 5 90-day deadline.