By Jonathan Stempel
Jan 12 (Reuters) – Johnson & Johnson convinced Delaware’s highest court to throw out part of a $1 billion damages award for breaching its 2019 agreement to buy Auris Health, a maker of surgical robots.
In a unanimous decision on Monday, Delaware’s Supreme Court set aside part of the September 2024 award to former Auris shareholders, who accused Johnson & Johnson of failing to support Auris’ iPlatform technology and being too slow to win regulatory approvals to bring devices to market.
The decision means damages, including interest, could decline by a couple of hundred million dollars after being recalculated.
Fortis Advisors, which represents the shareholders, accused J&J of fraudulently inducing Auris to accept payments contingent on achieving certain “milestones,” instead of more money up front to be acquired. The deal valued Auris at $3.4 billion.
In an 87-page decision, Justice Abigail LeGrow rejected a Delaware Chancery Court judge’s finding that Johnson & Johnson had an implied obligation to try winning necessary approval by the end of 2021 for an iPlatform product related to abdominal procedures.
The Supreme Court nonetheless upheld most of Vice Chancellor Lori Will’s findings, and ordered her to recalculate damages.
Johnson & Johnson, based in New Brunswick, New Jersey, said it is evaluating its next steps.
“We are pleased that the court reversed the trial court’s improper substitution of its subjective views for the parties’ carefully negotiated agreement on milestone regulatory requirements,” the company said. “We are disappointed that the court did not similarly follow the language of the contract in permitting the remainder of the trial court’s decision to stand.”
Philippe Selendy, a lawyer for Fortis, said the decision showed that Johnson & Johnson “inexcusably breached the merger agreement and deprived the world of Auris’s transformative and life-saving surgical robot, as well as the separate holding of J&J’s fraud on Auris.”
(Reporting by Jonathan Stempel in New York; Editing by Bill Berkrot and Diane Craft)
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