Background
Shareholder Representative Services, LLC alleged that Alexion Pharmaceuticals, Inc. breached a merger agreement governing earn-out payments tied to eight development milestones. In an earlier liability opinion, the Court found that Alexion’s fall 2021 HV-108 study satisfied Milestone 1 and that Alexion breached its obligation to make the corresponding payment. The Court separately considered whether Alexion failed to use commercially reasonable efforts to achieve Milestones 2 through 8.
As the parties worked toward a stipulated final order and judgment, they presented two remaining disputes. First, Alexion sought judgment on SRS’s claim that it breached its commercially reasonable efforts obligation as to Milestone 1, while SRS sought dismissal of that claim as moot. Second, the parties disagreed over how to calculate postjudgment interest on the damages award.
The Court’s Holding
The Court directed that judgment on Count I concerning commercially reasonable efforts to achieve Milestone 1 shall be entered in Alexion’s favor. SRS’s theory based on Alexion’s pivot away from an intravenous formulation failed to establish a commercially reasonable efforts breach. SRS had limited its other two theories—Alexion’s 2020 suspension of clinical development and its 2021 termination of the program—to the alleged failure to achieve Milestones 2 through 8, thereby waiving any contention that those actions affected Milestone 1.
On postjudgment interest, the Court held that the contract rate in effect on the date of judgment must apply to each damages amount and to accrued prejudgment interest. It rejected SRS’s proposed milestone-specific calculation using rates tied to different milestone dates. Because postjudgment interest begins only upon entry of judgment, the applicable rate is determined as of that date; applying the contract rate across the award also accords with the Court’s earlier expectation-damages analysis. The letter did not itself enter final judgment, but instructed the parties to notify chambers when they were ready to submit a stipulated final order and judgment with the amounts filled in.
Key Takeaways
- Judgment on the Milestone 1 commercially reasonable efforts claim is to be entered for Alexion because one theory failed on the merits and SRS waived the others as to that milestone.
- The contract rate in effect on the date of judgment will govern postjudgment interest on every damages amount and on accrued prejudgment interest.
- The ruling resolves the parties’ interest-calculation dispute for purposes of determining the bond securing a stay pending appeal, but a stipulated final order and judgment still must be submitted and entered.
Why It Matters
The decision underscores that an earn-out claimant must connect each asserted breach theory and resulting harm to the particular milestone at issue. Arguments confined in briefing to later milestones cannot be repurposed after trial to preserve a claim concerning an earlier milestone.
It also clarifies that postjudgment interest is calculated from the judgment date using the parties’ lawful contract rate, rather than through separate rates keyed to when individual components of damages became due or were projected to become due.