IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
ABBVIE ENDOCRINE INC., ) ) Plaintiff, ) ) v. ) C.A. No. 2020-0953-SG ) TAKEDA PHARMACEUTICAL ) COMPANY LIMITED, ) ) Defendant. )
MEMORANDUM OPINION
Date Submitted: August 3, 2021 Date Decided: September 7, 2021
A. Thompson Bayliss and Joseph A. Sparco, of ABRAMS & BAYLISS LLP, Wilmington, Delaware; OF COUNSEL: Paul J. Loh, Jason H. Wilson, Peter Shimamoto, Ashley L. Kirk, Lika C. Miyake, Amelia L.B. Sargent, and Kenneth M. Trujillo-Jamison, of WILLENKEN LLP, Los Angeles, California, Attorneys for Plaintiff AbbVie Endocrine Inc.
Kevin R. Shannon, Christopher N. Kelly, and Daniel M. Rusk, IV, of POTTER ANDERSON & CORROON LLP, Wilmington, Delaware; OF COUNSEL: Fred A. Kelly, Jr., Joshua S. Barlow, and Tiffany Jang, of HAUG PARTNERS LLP, Boston, Massachusetts; David A. Zwally and Mark Basanta, of HAUG PARTNERS LLP, New York, New York; and Christopher Gosselin, of HAUG PARTNERS LLP, Washington, DC, Attorneys for Defendant Takeda Pharmaceutical Company Limited.
GLASSCOCK, Vice Chancellor This brief Memorandum Opinion addresses the Plaintiff’s request for
expedited injunctive relief. The Plaintiff is a Delaware corporation, AbbVie
Endocrine Inc. (“AbbVie”), a drug distributor. It receives its supply of a particular
drug, Lupron, a leuprorelin product, used to treat, among other things, pain
associated with cancer, from the Defendant, Takeda Pharmaceutical Co. Ltd.
(“Takeda”), a large drug manufacturer located in Japan. Specifically, Takeda is the
only source for Lupron in the world; AbbVie is accordingly entirely dependent on
Takeda for its supply. AbbVie purchases its supply of Lupron through a
requirements contract with Takeda and distributes it in Canada and the United States.
Takeda, meanwhile, also markets similar leuprorelin products outside the U.S.,
notably in Japan and Asia.
Takeda manufactures the product to the specifications required by the U.S.
Food and Drug Administration (the “FDA”) in its plant in Hikari, Japan. Starting in
2019, both Takeda and the FDA inspector at the Hikari plant found protocol
violations relating to the production of Lupron. Ultimately, this caused Takeda, with
the consent of AbbVie, to agree to third-party quality control oversight. That, in
turn—along with remediation efforts aimed at resolving the identified protocol
violations, including a “hold” that disrupted manufacturing for multiple weeks—
caused delays in manufacturing and distribution, resulting in a world-wide shortage
of leuprorelin products, including Lupron, that continues today. Takeda was thus
1 unable to satisfy demand and was unable to fill AbbVie’s firm orders as required by
contract.
AbbVie brought this action, seeking, in addition to a declaratory judgment
and damages, positive injunctive relief. The matter was expedited due to the
Plaintiff’s allegations of irreparable harm to its business reputation and goodwill,
although the pace of the litigation has not always seemed to reflect expedition. In
April and May, a four-day trial was held on the request for injunctive relief.
The relief sought by AbbVie has changed over the course of the litigation. It
originally sought specific performance in addition to an order that all Lupron
production be diverted to satisfy its contractual requirements. Currently, it seeks an
order holding Takeda to supply AbbVie with one of three modification options to
Takeda’s projected leuprorelin production schedule as of April 2021. Because the
evidence at trial convinces me that such an injunction would be unworkable, would
lead to the necessity for the oversight of Takeda’s operations by the Court, and would
inevitably lead to contempt hearings at which Takeda’s ability to comply with the
injunction would be at issue, I conclude I cannot in equity grant the proposed
injunctive relief. In other words, even if I find that Takeda has breached its contract
with AbbVie, and that as a result AbbVie faces irreparable harm, the injunctive relief
sought is unavailable. Accordingly, in light of the expedited nature of the requested
injunctive relief, I issue this Memorandum Opinion denying the relief requested.
2 The remainder of the relief sought at this stage in the proceeding, a declaratory
judgment that Takeda is in breach, requires no expedition in light of the fact that
relief here will be limited to damages. Accordingly, I will issue a post-trial decision
on breach in due course. An additional phase of trial on damages will follow, if
required. The balance of this Memorandum Opinion explains my decision to deny
injunctive relief.
I. BACKGROUND
The facts in this post-trial Memorandum Opinion are either stipulated to in
the parties’ pre-trial stipulation or were proven by a preponderance of evidence at
trial.1
A. The Parties and their Relationships
Plaintiff AbbVie is a Delaware corporation that distributes a drug under the
brand name Lupron Depot (“Lupron”). Lupron is a leuprolide acetate product
“approved by the FDA for the palliative treatment of advanced prostatic cancer, the
management of endometriosis, to improve anemia due to vaginal bleeding from
uterine fibroids, and the treatment of children with central precocious puberty.”2
1 Where the facts are drawn from exhibits jointly submitted at trial, they are referred to according to the numbers provided on the parties’ joint exhibit list and with page numbers derived from the stamp on each JX page (“JX __, at ___”). 2 Joint Pre-Trial Stipulation ¶¶ 1, 3, Dkt. No. 156 [hereinafter “Stip”].
3 Defendant Takeda is a Japanese corporation headquartered in Tokyo, Japan
that manufactures drug products containing leuprolide acetate, including Lupron.3
The parties have a supplier-distributor relationship. The Defendant produces
Lupron, supplies Lupron to the Plaintiff, and the Plaintiff finishes and packages
Lupron for sale in Canada and the United States.4 Takeda manufactures Lupron at
two facilities, one in Hikari, Japan (the “Hikari Facility”) and one in Osaka, Japan
(the “Osaka Facility”).5
On or around April 30, 2008, Takeda and the predecessor entity to AbbVie
entered into a supply agreement regarding the Plaintiff’s and the Defendant’s rights
and obligations regarding the manufacture, supply, and sale of Lupron (the “Supply
Agreement”).6 The Supply Agreement was amended on September 4, 2009 and July
17, 20197 and the parties agree that it is a valid and enforceable contract.8
B. Factual Background
As the reader may have, by this point, surmised, the central dispute here arises
from a disruption to Takeda’s supply line that sharply decreased the amount of
Lupron that Takeda is able to supply to AbbVie. The disruption constitutes, per the
Plaintiff, a breach of the Supply Agreement. The Plaintiff seeks injunctive relief
3 Id. ¶¶ 2, 6. 4 Id. ¶ 6. 5 Id. ¶ 7. 6 Id. ¶¶ 8–9. 7 Id. ¶ 8. 8 Id. ¶ 10.
4 crafted to mitigate the irreparable harm allegedly caused by the breach. Crafting
such relief is difficult, however, even if the balance of the equities weighed in favor
of an injunction. To illustrate the difficulty, a recitation of the factual background
of the alleged breach and the factors related to the equities is helpful.
1. The Hikari Plant Failure
Lupron is distributed in syringes;9 accordingly, it cannot be sterilized once it
is assembled.10 Instead, its many components must be individually sterilized and
assembled in a sterile environment in order to avoid introducing bacteria, mold, or
viruses into the drug.11 That sterilization—of both Lupron’s components and
equipment that is used in the assembly rooms, such as gowns and utensils—is done
in a piece of equipment called an autoclave.12
On October 28, 2019, an autoclave at Takeda’s Hikari Facility—one of two
facilities at which Takeda produces Lupron—failed its annual requalification test.13
Takeda informed AbbVie of the issue by November 6, 201914 and kept AbbVie
updated as to its investigation.15 From November 18, 2019 through November 26,
2019, the FDA conducted its planned inspection of the Hikari Facility.16 During the
9 Trial Tr. 10:15–17, Dkt. No. 165. 10 Id. at 210:21–211:4. 11 Id. at 211:1–4. 12 Id. at 211:5–11. 13 Stip. ¶ 38; JX 390. 14 JX 396. 15 Id. 16 Stip. ¶ 39; JX 434.
5 inspection, the FDA inspector flagged the autoclave issue.17 By November 21, 2019,
Takeda had issued a hold for several Lupron batches produced in the Hikari
Facility.18 On November 22, 2019, the FDA inspector requested that Takeda put all
lots of Lupron on hold, which communication Takeda promptly forwarded to
AbbVie.19
On November 26, 2019, the FDA inspector issued a “Form 483.”20 Per the
FDA website, “[a]n FDA Form 483 is issued to firm management at the conclusion
of an inspection when an investigator(s) has observed any conditions that in their
judgment may constitute violations of the Food Drug and Cosmetic (FD&C) Act and
related Acts.”21 The Form 483 describes itself as listing “observations made by the
FDA representative(s) during the inspection of your facility. They are inspectional
observations, and do not represent a final Agency determination regarding your
compliance.”22 Takeda’s Form 483, issued November 26, 2019, included seven
observations.23 One of these observations was that “[p]rocedures designed to
prevent microbiological contamination of drug products purporting to be sterile did
17 JX 434. 18 JX 407. 19 JX 412. 20 Stip. ¶ 40; JX 434. 21 FDA Form 483 Frequently Asked Questions, U.S. Food & Drug Administration (Jan. 9, 2020), https://www.fda.gov/inspections-compliance-enforcement-and-criminal- investigations/inspection-references/fda-form-483-frequently-asked-questions. 22 JX 434. 23 Id.
6 not include adequate validation of the aseptic and sterilization process.” 24 In other
words, the autoclave failure that Takeda had identified not a month earlier had also
caught the eye of the FDA, and all Lupron batches at the Hikari facility were placed
on an indefinite hold.25 That hold lasted three weeks, ending in the third week of
December 2019.26
The parties, however, did not thereafter receive much reprieve. On March 11,
2020, the FDA issued an Official Action Indicated letter (“OAI Letter”), indicating
that the Hikari Facility was “considered to be in an unacceptable state of compliance
with regards to current good manufacturing practice (CGMP).”27 On or about May
8, 2020, Takeda discovered that an autoclave at the Hikari Facility, which was used
in the production of leuprolide products, was operated in a way that deviated from
standard operating procedures.28 That deviation, according to Takeda employees,
had existed for approximately five years.29 And on June 9, 2020, the FDA issued a
warning letter to Takeda regarding the November 2019 inspection of the Hikari
Facility as well as Takeda’s responses to the Form 483.30
24 Id. at 2. 25 Trial Tr. 100:18–22, Dkt. No. 165. 26 Id. at 100:23–101:3. 27 JX 623. 28 Stip. ¶ 41. 29 Id. ¶ 42. 30 Id. ¶ 43.
7 In response to and concurrently with these discoveries, Takeda took remedial
steps, including shutting down the Hikari Facility for periods of time in spring of
2020.31 Takeda also, in June of 2020, approved a plan to allocate its remaining
production capacity of leuprorelin products at the Hikari Facility between production
for AbbVie and production for itself.32 That allocation went into effect once the
Hikari Facility came back online in July 2020.33 Takeda’s June 2020 allocation
schedule includes allocations for itself so that leuprorelin products can be marketed
in Japan and elsewhere in Asia.34 Notably, the dosages produced for leuprorelin
product sales in Japan differ from the Lupron dosages produced for use in the United
States, such that the end result is a different product.35 In other words, the leuprorelin
product sold by Takeda in Asia is not wholly interchangeable with the Lupron
provided to AbbVie by Takeda.
Takeda is the world’s only supplier of Lupron;36 accordingly, due in part to
the allocation, AbbVie experienced shortages of Lupron and, by the end of August,
AbbVie had run out of its stock of certain dosages of Lupron.37 That shortage was
exacerbated by further remedial steps necessitated by the Hikari Facility’s
31 JX 1020; Trial Tr. 103:5–8, Dkt. No. 165; Stip. ¶ 45. 32 Stip. ¶ 44. 33 Id. ¶ 45. 34 Id. ¶ 44. 35 Trial Tr. 628:19–21, Dkt. No. 167. 36 Trial Tr. 12:22–23, Dkt. No. 165. 37 Id. at 102:22–103:19.
8 deficiencies. In September 2020, the FDA mandated—and the parties agreed—that
Takeda would engage third-party consultants Quantic and Gintegra, with the latter
to perform batch certification until the next FDA inspection.38 That quality control
process is still in place and AbbVie continues to see shortages in Lupron supply to
this day.39
2. Lupron Production Today
The production of Lupron requires a number of technical and precise steps.
Lupron is assembled in “clean rooms” by personnel who must pass equipment and
product through autoclaves for sterilization purposes.40 In order to bring its
manufacturing processes into compliance with FDA and internal standards, Takeda
has increased the number of data entries and procedures attending this process,
necessitating 25 to 30% more time to complete.41 In addition, the manufacturing
arena undergoes a complete disassembly, sterilization and in-depth cleaning and re-
assembly one out of every six days.42 Again, in order to improve its procedures,
Takeda’s performance of this process has increased in length; while Takeda
previously was able to produce half of a batch of Lupron on these disassembly days,
they are now unable to manufacture any product at all.43
38 JX 1536. 39 Tr. Of 8.3.21 Post-Trial Oral Arg., at 9:12–17, Dkt. No. 190 [hereinafter “Posttrial Tr.”]. 40 Trial Tr. 613–614, Dkt. No. 167. 41 Id. at 615:19–23. 42 Id. 43 Id. at 616:1–8.
9 The active ingredient is prepared first, which takes nine days per lot.44 Upon
production, the active ingredient goes through about 36 days of quality tests and
approval, at which time it is approved to be dispensed.45
Lupron then undergoes lyophilization, which is, at a high level, a freeze-
drying process.46 While some lyophilization only requires six steps to complete,
Lupron production requires about 25 steps,47 including, among other things,
dissolution, filtration, sterilization, and filling.48 Lyophilization is a four-day
process. At this point, microspheres have been produced.49
Following the microsphere production are 45 days’ worth of quality testing
comprised of six major tests.50 If the microspheres pass the applicable tests, they are
then dispensed into the final fill process, which occurs over two days.51 Once filled,
the syringes go through another inspection and certain safety devices are
assembled.52
At this time, Takeda’s quality assurance department begins to undertake its
33 quality control tests, which take place over about four weeks.53 In parallel, Takeda
44 Id. at 620:5–7. 45 Id. at 620: 7–10. 46 Id. at 617:5–7. 47 Id. at 617:5–9. 48 Id. at 617–618. 49 Id. at 617:20–21. 50 Id. at 622:5–7. 51 Id. at 622 8–11. 52 Id. at 624:20–22. 53 Id. at 629:21–24, 631:19–22.
10 reviews the batch record associated with the manufacturing process to date, decides
whether to move forward with the batch, and, if so, sends it to inspection.54 The
batch record is finalized, with any deviations, investigations or other matters of
concern being reviewed.55
It is at this juncture that Quantic, a third-party consultant, participates. Quantic
shadows and consults with the Takeda employees completing the batch record
review and undertakes its own final review.56 If the batch is acceptable, Quantic then
provides its final sign-off along with a letter of approval.57 Gintegra, a second third-
party consultant, undertakes a similarly in-depth review following the Quantic
review.58 Gintegra may, and according to Takeda, often does, review the full camera
footage of the manufacturing process to ensure best practices are followed.59
Assuming the batch passes muster, Lupron then undergoes a packaging phase
and associated quality control particular to the packaging.60 All told, the
manufacturing process, including the additional rounds of review and record
production devised to respond to the various recent issues, now takes anywhere from
54 Id. at 630:19–20. 55 Id. at 632:19–24. 56 Id. at 634:4–9. 57 Id. 58 Id. at 634:11–12. 59 Id. at 634:13–22. 60 Id. at 632:7–18.
11 over 100 to over 120 days.61 And any inspection failure may result in a batch being
withheld from timely release to AbbVie.
At trial, Takeda provided extensive evidence of its attempts to comply with
good manufacturing practices and FDA requirements at the Hikari facility. In
addition to the hiring of the two quality control firms discussed above, Takeda made
its own efforts at remediation. Examples include the hiring of additional personnel
and consultants,62 training of employees,63 monthly communication with the FDA,64
fixes and repairs including replacement of equipment,65 facility calibration66 and
simplifying and translating the standard operating procedures at the Hikari facility.67
Takeda estimates that it invested roughly $30 million into the remediation program
last year.68 Still, production of Lupron lags.
3. Impact on AbbVie
The shortage of Lupron has impacted AbbVie in a myriad of ways, including
loss of customers,69 loss of reputation,70 loss of doctors,71 loss of market share72 and
61 Id. at 637:4–6. 62 Id. at 561:22–24. 63 Id. at 562:12–17. 64 Id. at 562:17–19. 65 Id. at 563:5–17. 66 Id. 67 Id. at 611:6–11. 68 Id. at 562:2–4. 69 Trial Tr. 123:11–18, Dkt. No. 165. 70 JX 2522, at 20–21. 71 Trial Tr. 134:2–14, Dkt. No. 165. 72 JX 2349, at Fig. 13.
12 ultimately overall sales.73 For the purposes of this Memorandum Opinion, I will
assume that the loss of customers, including doctors, loss of reputation and loss of
market share experienced by AbbVie led to an injury not wholly repairable by
damages.
C. Procedural History
The Plaintiff filed a Verified Complaint, a Motion for Preliminary Injunction
and a Motion to Expedite on November 6, 2020.74 The Verified Complaint includes
two counts: (I) Breach of Contract for failure to fulfill firm orders placed under the
Supply Agreement and (II) Breach of Contract for allocating manufacturing capacity
for Lupron to Takeda and/or its affiliates.75
On November 16, 2020, the Defendant opposed both the Motion for
Preliminary Injunction and the Motion to Expedite.76 On November 20, 2020, I
granted the Plaintiff’s Motion to Expedite and denied the Plaintiff’s Motion for
Preliminary Injunction.77 Discovery followed. A four-day trial took place April 27
through April 29 and May 3, 2021.78 I heard post-trial argument on August 3, 2021,
and I considered the matter fully submitted at that time.79
73 Id., at Fig. 12. 74 Verified Compl., Dkt. No. 1 [hereinafter “Compl.”]. 75 See id. ¶¶ 113–114, 126. 76 Def.’s Opp’n to Pl.’s Mot. to Expedite, Dkt. No. 9. 77 Telephonic Hr’g re: Pl.’s Mot. to Expedite and the Ct.’s Ruling, Dkt. No. 34. 78 See Trial Tr., Dkt. Nos. 165–168. 79 See Posttrial Tr.
13 II. ANALYSIS
In order to justify consideration by this Court of the extraordinary remedy of
final injunctive relief, a plaintiff must demonstrate a violation of a legal right,
resulting irreparable harm and that the balance of the equities invokes equitable
relief.80 For purposes of this Memorandum Opinion, I assume without holding that
Takeda has breached the Supply Agreement, that AbbVie has suffered irreparable
harm, and that the balance of the equities favors AbbVie. Even assuming those three
elements have been satisfied, however, this Court cannot provide the injunction
AbbVie seeks, because equity will not permit imposition of an order with which a
litigant cannot comply, or one that will require unworkable court involvement to
ensure compliance. The evidence at trial, recounted above, indicates that production
of Lupron is a complex operation currently subject to delay. The delay is due to
detailed oversight required by problems at the manufacturing facility, and Takeda’s
attempts to remedy those problems. Takeda is not presently able to produce the
requested Lupron on a timely basis, and any affirmative injunction requiring it to do
so would necessarily require extensive judicial supervision and enforcement beyond
the purview of the court system. Such judicial intervention, I note, would likely be
80 Vento v. Curry, 2017 WL 1076725, at *2 (Del. Ch. Mar. 22, 2017) (quoting Arnold v. Soc'y for Sav. Bancorp, Inc., 1993 WL 183698, at *4 (Del. Ch. May 29, 1993)).
14 inadequate in any event. Therefore, the requested injunctive relief is not available
in equity.
A. Any potential injunctive relief could not practicably be enforced.
The injunctive relief AbbVie has sought throughout this case has undergone
many evolutions. Originally, AbbVie sought both specific performance of the
Supply Agreement, which would have required Takeda to perform its obligations
under the Supply Agreement in full, and an injunction enjoining the Defendant from
allocating either the supply or production capacity for Lupron to itself or to others.81
AbbVie then retreated from both prongs of this original request; their Corrected Trial
Brief called for solely specific performance.82 At trial, the Plaintiff indicated that
what they intended to seek was an order requiring that “Takeda meet their own plan,”
referring to an April 2021 update to the original June 2020 allocation schedule
designed by Takeda (the “April 2021 Schedule”).83 This plainly differs from specific
performance; adherence to the April 2021 Schedule would not require strict
compliance from Takeda under the terms of the Supply Agreement.84 Later in the
course of the trial, AbbVie proposed three different modification options to the April
2021 Schedule (collectively, the “AbbVie Post-Trial Proposal”).85 They renewed
81 Compl. ¶¶ 117, 128. 82 Pl.’s Corrected Tr. Br. 71. 83 Trial Tr. 33:3–11, Dkt. No. 165; see also JX 2981. 84 See JX2981; see also JX 96. 85 Trial Tr. 1110–15, Dkt. No. 168; see also Decl. of Stephen Laegeler under 10 Del. C. § 3927 [hereinafter “Laegeler Decl.”].
15 this request in their Post-Trial Brief, although they still call the request one for
specific performance, and characterize the AbbVie Post-Trial Proposal as seeking
“reliable, sufficient, and timely supply” of Lupron.86
This request is no longer one for specific performance. AbbVie alleges at
least three ongoing breaches of the Supply Agreement: that Takeda is failing to fill
contractual “firm orders”; that Takeda has failed to maintain a “safety reserve” of
product sufficient to prevent any supply disruptions; and that Takeda’s failure to
operate the Hikari plant in compliance with good manufacturing practices violates
the agreement. The order the Plaintiff seeks—to compel Takeda to provide it with
a reliable, sufficient, and timely supply of Lupron—would not cure the first breach
and would not address the second and third. But it is quite apparent on the record
created at trial that it is the second and third deficiencies that have led to the disrupted
supply of Lupron. The problems at the Hikari plant will not allow Takeda to create
a contractually compliant safety reserve of Lupron, or fill the firm orders, because
the remediation at the facility and the employment of the outside consultants has led
to a bottleneck in production that Takeda has thus far been unable to overcome. The
various and changing iterations of the relief AbbVie has requested in this litigation
indicate an inability even on the Plaintiff’s part to determine exactly what type of
injunctive relief might be an effective remedy. By no longer seeking strict
86 Pl.’s Post-Trial Br. 41, 46.
16 performance of the Supply Agreement, AbbVie tacitly admits that Takeda cannot
comply with its contractual performance to fulfill all of its firm orders for Lupron.
Instead, they now seek a more limited form of relief, though they note that the
AbbVie Post-Trial Proposal remains subject to revision or modification.87
Takeda maintains that it would be willing to fulfill all contractual
requirements if it could;88 it has demonstrated at trial that it cannot comply at this
time, given the recent manufacturing setbacks it has experienced and the attendant
delays imposed as it implements a more rigorous quality assurance and quality
control program.89 Takeda predicts that, should the Court order performance, even
the more modest mandatory injunctive relief sought would end in failure and non-
compliance.90 These failures would likely result in a series of contempt hearings at
which Takeda defends based upon impossibility.91
In response, AbbVie posits that Takeda is “choosing” to deny AbbVie
reliable supplies of Lupron,92 and suggests that with a Court order and Court
supervision Takeda could comply with any requirement so ordered. At oral
argument, AbbVie posited that the current employees simply lacked the “will”
87 Laegeler Decl., Ex. A, 1 n.1. 88 Trial Tr. 656:1–5, Dkt. No. 167. 89 Id. at 636:20–638:2. 90 Def.’s Post-Trial Answering Br. 37–38. 91 Id. at 3. 92 Pl.’s Post-Trial Answering Br. 46.
17 required to overcome Takeda’s production problems.93 Presumably, it sees
injunctive relief as necessary to generate sufficient willpower to overcome Takeda’s
Lupron shortfalls. At the same oral argument, AbbVie’s counsel pointed out that a
late July FDA inspection revealed that the Hikari plant remained out of
compliance,94 despite the extensive efforts to the contrary which Takeda
demonstrated at trial.95
Mandatory injunction is an extraordinary remedy. Nonetheless, as
AbbVie correctly points out, requirements contracts like the one at issue here, where
the buyer has no alternative source for the product, are the quintessential business
contract subject to specific performance.96 In such a situation, the lack of an
alternative source for an essential product threatens irreparable harm, so that
allowing an efficient breach remedied by damages is insufficient in equity.97 If
Takeda were sitting on a mountain of Lupron suitable to the Supply Agreement,
specific performance would be an attractive remedy. I note, however, that the
existence of a requirements contract, the breach of which threatens irreparable harm,
93 Posttrial Tr. 57:12–19. In trial testimony, one of AbbVie’s witnesses suggested that changes in leadership of Takeda might be beneficial to the remediation efforts. See Trial Tr. 1093–94, Dkt. No. 168. 94 Posttrial Tr. at 56:6–10. 95 See supra notes 60–66 and accompanying text. 96 UCC § 2-716 cmt. 2 (“[R]equirements contracts involving a particular or peculiarly available source or market present today the typical commercial specific performance situation. . . .”). 97 See Equitable Trust Co. v. Gallagher, 102 A.2d 538, 546 (“It is elementary that the remedy of specific performance is designed to take care of situations where the assessment of money damages is impracticable or somehow fails to do justice.”).
18 is not sufficient to support injunctive relief where compliance is impossible or
unworkable without extraordinary Court intervention, as the following hypotheticals
attempt to make clear.98
Consider a case where buyer, a bullet-proof vest manufacturer, had
entered a contract with a seller of a new metal, Vibranium. The seller touts the
quality of its product, which is uniquely suited to the task, able to deflect the largest-
caliber projectiles. The parties enter a requirements contract, and buyer makes a
large down payment; subsequently, it enters contracts to supply Vibranium vests to
a number of customers. Seller breaches, and buyer seeks specific performance.
Once it proves that the seller is a fraudster who developed the concept
of Vibranium from reading comic books, a number of remedies are possible. It is
readily apparent, however, that, despite threatened reputational harm to the buyer,
the Court will not attempt to enforce a mandatory injunction to provide the fictional
Vibranium. Equity will not impose a meaningless order or mandate impossible
performance.
98 See, e.g., Wholesale Janitor Supply Co., Inc. v. Diamond Motor Sports, Inc., 1979 WL 6167, at *1 (Del. Ch. Mar. 1, 1979) (“[P]laintiff does not have the absolute right to seek specific performance . . . because such form of relief would, in effect, constitute specific performance of a building contract which a court of equity should not generally have to supervise”); see also In re Diet Drugs (Phentermine/Fenfluramine/Dexenfluramine) Prods. Liab. Litig., 369 F.3d 293, 315 (3d Cir. 2004) (“[I]njunctions must be enforceable, workable, and capable of court supervision.”); Lemon v. Kurtzman, 411 U.S. 192, 200 (1973) (“[E]quitable remedies are a special blend of what is necessary, what is fair, and what is workable.”); Richard A. Lord, 25 Williston on Contracts § 67:22 (4th ed. 2021).
19 Next, consider another example, one closer to the instant facts. A
supplier of automobiles for movies and resorts wishes to provide historically
accurate Model B Fords to its customer for a new series of “Depression Parks” where
visitors get to “vacation like it’s 1939.” It contracts with a manufacturer of replica
cars, which shows the supplier an example of its work, a handmade Model B. The
parties enter a requirements contract for 100 cars per month. But the manufacturer
proves completely incapable of scaling up, and struggles to deliver five per month.
The buyer points out that it will suffer irreparable reputational harm if it cannot
supply its own customers with the promised Model Bs, and also argues that, with a
sufficient expenditure of funds for plant and equipment and labor, the contract is
performable. It seeks specific performance.
The result here will be the same as with the Vibranium case. Although
the contract is theoretically performable, the Court would be unable practically to
enforce an order of specific performance. The complexity of the business judgments
involved, and the involvement of the Court required to differentiate contemptuous
from non-contemptuous failures to comply, would involve the Court in the seller’s
business far beyond the boundaries of equity. Such a request for unworkable
injunctive relief would be denied.
AbbVie, no doubt, would point out that unlike the small replica car
manufacturer, Takeda is a large drug company that has proven capable in the past of
20 supplying Lupron without problems. True. But it became clear at trial that Takeda
has thus far been unable to overcome both the production problems and the
bottlenecks caused by vigorous third-party oversight of the complex production
process, which oversight is required to satisfy FDA concerns and permit shipment
of product to the U.S. market.
In Northern Delaware Industrial Development Corporation v. E.W. Bliss
Company, this Court was asked to grant an order of specific performance that would
have required the defendant to hire 300 workmen to advance the completion of a
construction project which had fallen behind schedule.99 The Court noted that
enforcement would require the Court to become “deeply involved” in the
supervision of a complex project located on the plaintiff’s property, which would be
impracticable, if not impossible.100 As such, the Bliss court declined to grant the
requested relief, reasoning that courts of equity “should not order specific
performance of any building contract in a situation in which it would be impractical
to carry out such an order.”101
Although the case before me today deals with drug production rather than
construction, the factual posture is similar enough for Bliss to be instructive. AbbVie
argues that the production of Lupron has fallen behind schedule and seeks injunctive
99 See N. Del. Indus. Dev. Corp. v. E. W. Bliss Co., 245 A.2d 431 (Del. Ch. 1968). 100 Id. at 433. 101 Id. at 434 (citing Restatement (First) of Contracts § 371 (Am. Law Inst. 1932)).
21 relief that will require, as in Bliss, “speeding up of work at the site by means of a
court-ordered requisitioning.”102 I conclude that, just as this Court in Bliss found it
impractical to supervise the hiring and progress of 300 laborers in order to fulfill a
building contract,103 it would be similarly impractical to supervise and enforce the
detailed and precise work of drug manufacturing overseas. AbbVie suggests that
Takeda could meet its contractual obligations, if only it was ordered to do so,104 but
the facts at trial indicate otherwise.105 If Takeda is objectively unable to produce
Lupron in the amounts AbbVie requests while remaining in compliance with the
applicable quality assurance and quality control metrics, ordering them to produce
and deliver Lupron per AbbVie’s firm orders will not magically resolve the
compliance issues and attendant delays.
The complex nature of the production of Lupron, as complicated by FDA
requirements and the addition of outside quality control monitors (as agreed to by
AbbVie and as promised to the FDA) makes Takeda’s ability to supply AbbVie with
the requested amounts of Lupron, in the short term, problematic. As such, it may be
impossible for Takeda to comply with an affirmative injunction to produce Lupron.
The most likely scenario, should mandatory relief issue, and assuming supply delays
102 Bliss, 245 A.2d at 432. 103 See generally id. 104 Trial Tr. 867:17–24, Dkt. No. 167. 105 Id. at 822:7–823:1.
22 continue, is that a series of contempt hearings would ensue, in which I would be
asked to second-guess Takeda’s operation of its manufacturing process, and to
determine whether any failure to supply Lupron in a timely fashion was
contemptuous or non-contemptuous in nature. This type of relief, requiring as it
would intensive Court oversight and enforcement, is unworkable, and unavailable in
equity.
I note that I have assumed here both contractual breach and resulting
irreparable harm. The latter element is clearly present, as AbbVie’s inability to
comply with demand from its own customers has no doubt caused some quantum of
reputational damage beyond my ability to quantify as damages. Nonetheless, if I
find Takeda in breach of the Supply Agreement, AbbVie is hardly without remedy.
Much of the loss it has suffered may be addressed in damages after the next phase
of trial.
III. CONCLUSION
The Plaintiff’s Request for Injunctive Relief is DENIED. The parties should
submit a form of order consistent with this Memorandum Opinion.