IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

FORTIS ADVISORS LLC, solely in 

its capacity as representative of former 

stockholders of Auris Health, Inc.,

Plaintiff,

v.

JOHNSON & JOHNSON, ETHICON, 

INC., ALEX GORSKY, ASHLEY 

MCEVOY, PETER SHEN, and 

SUSAN MORANO,

Defendants.

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C.A. No. 2020-0881-LWW

MEMORANDUM OPINION

Date Submitted: May 22, 2024

Date Decided: September 4, 2024

Bradley R. Aronstam, Roger S. Stronach & Dylan T. Mockensturm, ROSS 

ARONSTAM & MORITZ LLP, Wilmington, Delaware; Philippe Z. Selendy, 

Jennifer M. Selendy, Sean P. Baldwin & Oscar Shine, SELENDY GAY PLLC, New 

York, New York; Counsel for Plaintiff Fortis Advisors LLC

William M. Lafferty, Susan W. Waesco, Elizabeth A. Mullin Stoffer & Kirk C. 

Andersen, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, 

Delaware; Joshua A. Goldberg, Muhammad U. Faridi, Diana M. Conner & Lauren 

S. Potter, PATTERSON BELKNAP WEBB & TYLER LLP, New York, New York; 

Counsel for Defendants Johnson & Johnson, Ethicon Inc., Alex Gorsky, Ashley 

McEvoy, Peter Shen, and Susan Morano

WILL, Vice Chancellor 
1

Earnout provisions are common risk allocation tools in merger agreements, 

particularly involving private company sellers. The buyer pays an upfront sum and 

an additional amount if the seller’s business achieves specific targets by a deadline. 

This contingent approach lessens the buyer’s risk of overpaying where the seller’s

future performance is uncertain. The seller, however, risks losing the earnout 

payment along with operational control after closing. A seller may be loath to agree 

to an earnout structure without contractual assurances from the buyer and a strong 

belief in the value of its business.

The seller in this case had both. Auris Health, Inc. was a venture-backed 

startup on a path to bring life-changing technologies to market. Led by Dr. Frederic 

Moll, the visionary architect of robotic surgery, Auris had developed two novel 

surgical robots in record time: Monarch and iPlatform. Monarch had unmatched 

capability to diagnose and treat lung cancer. And iPlatform took Moll’s original 

market-leading surgical robot to new heights with innovative features for 

laparoscopic and endoscopic procedures.

While Auris was making strides, Johnson & Johnson was attempting to 

develop its own surgical robot called Verb. Entering the surgical robotics market 

was vital for J&J. Yet Verb was falling increasingly behind the schedule J&J had 

announced to the market, despite J&J’s colossal investments. J&J looked to Auris 

as a solution. 
2

Auris was well funded and had strong prospects. It was wary of an 

acquisition, especially by J&J since Verb was a potential competitor of iPlatform. 

J&J understood Auris’s hesitations and put together a proposal it would not refuse.

J&J offered to pay $3.4 billion up front and another $2.35 billion upon the 

achievement of two commercial and eight regulatory milestones—five for iPlatform, 

two for Monarch, and one that could be satisfied by either robot. The regulatory 

milestones were ambitious, but corresponded to approvals for procedures that the 

Auris robots were on track to complete. Auris agreed to an earnout component after 

securing J&J’s commitment to devote commercially reasonable efforts befitting a 

“priority medical device” in furtherance of the milestones.

J&J’s promise to Auris was broken almost immediately after closing. Instead 

of providing efforts and resources to achieve the regulatory milestones, J&J thrust

iPlatform into a head-to-head faceoff against Verb called “Project Manhattan.” Verb 

and iPlatform were forced to complete a series of procedures to be ranked against

one another. Auris feared that a poor performance would be the end of iPlatform

since it had learned J&J’s robotics budget left no room for Verb and iPlatform to be 

developed in parallel. J&J would either combine the robots or kill one.

The iPlatform alpha robot was months old. Verb was in its beta iteration after 

years of development. For iPlatform to survive a surgical showdown against the 

more advanced robot, the Auris team spent countless hours creating engineering and 
3

software workarounds. Progress toward iPlatform’s regulatory milestones ceased 

while technical debt from shortcuts in its development amassed.

Both robots successfully completed the assigned procedures. J&J decided that 

iPlatform was the better bet. But for iPlatform, winning Project Manhattan was 

losing. To salvage its years of investment in Verb, J&J directed that Verb’s 

hardware and team be added to iPlatform. The iPlatform robot effectively became 

a parts shop for Verb.

J&J knew Project Manhattan would hinder, rather than promote, iPlatform’s 

achievement of the regulatory milestones. It also knew that combining iPlatform 

and Verb would cause further complications. But J&J viewed the resulting delays 

as beneficial since it could avoid making the earnout payment. When J&J’s actions 

put the first iPlatform milestone out of reach, the other milestones fell like dominos.

J&J wrote off the iPlatform milestones under the pretext of an unforeseen

policy change that would require the robot to achieve regulatory clearance through 

a different pathway than the one listed in the merger agreement. J&J then

implemented an employee incentive plan with different targets. Auris’s former 

stockholders proceeded to sue for breach of contract, breach of the implied covenant 

of good faith and fair dealing, and fraud.

J&J’s defenses to these claims take two main forms. First, J&J asserts that 

the merger agreement gave it broad discretion to use the Auris products in a way that 
4

advanced J&J’s overall robotics strategy without regard to the milestones. The 

merger agreement says otherwise. Second, J&J blames the missed milestones on 

iPlatform’s technical problems. This defense is dubious; it was concocted after J&J 

was sued. The record indicates that the technical issues were both expected and 

solvable.

After weighing an abundance of evidence, I find that J&J breached its 

contractual obligations. The bespoke earnout provision negotiated by the parties 

required J&J to treat iPlatform as a priority device, to provide efforts in support of

the regulatory milestones, and to avoid making decisions based on the contingent

payment. J&J violated each obligation—most blatantly when iPlatform was made

to compete against and combine with Verb. J&J also breached the implied covenant 

of good faith and fair dealing when it failed to devote efforts to achieve the revised 

regulatory pathway. But J&J did not breach the merger agreement in relation to the 

Monarch regulatory milestones.

Additionally, Auris claims that J&J fraudulently induced it to merge by 

promising vast resources and a “light touch” integration. For the most part, the 

challenged statements are fluffy, forward-looking, and aspirational. There is an

exception. One Monarch milestone involved regulatory clearance by a near-term 

deadline using a J&J-developed catheter. J&J told Auris that this milestone was so 

certain to be met that J&J viewed the associated payment as up front consideration.
5

J&J neglected to mention that it was under a regulatory investigation because a 

patient in a clinical study using the catheter had recently died, which put the 

milestone in doubt.

Auris is entitled to damages for J&J’s breaches of contract and of the implied 

covenant of good faith and fair dealing as they relate to the iPlatform regulatory 

milestones. It is also entitled to damages for fraud concerning the Monarch 

milestone. Damages with interest exceed $1 billion, which compensates Auris’s 

former stockholders for the earnout payment they would have received absent J&J’s 

failed efforts and fraud. What remains irretrievably lost is the transformative 

potential of Auris’s robots.
6

I. BACKGROUND

The following facts were stipulated to by the parties or proven by a 

preponderance of the evidence at trial.1 The record supporting these findings of fact 

includes the testimony of 23 fact and 9 expert witnesses over 10 trial days, 78 

deposition transcripts, and 6,209 joint exhibits.2

A. Dr. Moll and the da Vinci Robot

Robotically assisted surgery allows physicians to perform minimally invasive 

operations with computer-assisted equipment.

3 Surgical robots, or Robotically 

Assisted Surgical Devices (RASDs), are used to perform these procedures. RASDs 

typically comprise several components and subsystems, including a surgeon 

console, a computing tower, and a surgical bed or cart with mounted robotic arms

attached to instruments.4

Dr. Frederic Moll first witnessed early progress in robotic surgery as part of a 

Stanford Research Institute (SRI) project funded by the United States Department of 

1

Joint Pre-trial Stipulation and Order (Dkt. 523) (“PTO”).

2 Facts drawn from exhibits jointly submitted by the parties are referred to by the numbers 

provided on the parties’ joint exhibit list and cited as “JX –” unless otherwise defined. See 

Dkt. 575. Pin cites for joint exhibits refer to the page of the exhibit as marked rather than 

internal or Bates pagination, unless otherwise noted. Deposition transcripts are cited as 

“[Name] Dep.” See Dkt. 509. Trial testimony is cited as “[Name] Tr.” See Dkts. 545-54.

3 PTO ¶ 75.

4

Id. ¶ 76.
7

Defense several decades ago.

5

 SRI’s objective was to create a means for surgeons

to operate remotely on patients in the battlefield.

6

 Though rudimentary, the device 

SRI developed could transmit a surgeon’s hand movements from a computer to 

actuators in the field that controlled a robotic instrument.7

Moll saw the “potentially transformative” promise of robotic-assisted surgery 

as having “enormous implications in laparoscopy.”

8

 Laparoscopy is a minimally 

invasive surgical technique in which narrow tubes are inserted into the abdomen or 

pelvis through puncture wounds.

9

 Moll had been exposed to emerging laparoscopy 

techniques during his medical residency and turned his focus to developing safe 

laparoscopic tools and methods.

10

 He observed that a trade-off to minimal openings 

in the body is the difficulty surgeons face in reaching the relevant anatomy.11 Using 

the insights gained at SRI, Moll imagined that computer replication of hand 

movements outside the body to robotic hands inside the body could resolve 

laparoscopic access barriers.

12

5 Moll. Tr. 9-10.

6

Id.

7

Id. at 10.

8

Id.

9

Id. at 6-7.

10 Id. at 6.

11 Id. at 10.

12 Id.
8

In 1995, Moll founded Intuitive Surgical, Inc. to pursue the objective of 

making laparoscopic surgery intuitive.

13

 He developed a product called the da Vinci 

robot—a cart-based system with two arms to hold surgical instruments and a third 

arm for a viewing laparoscope.

14

 Moll’s vision was to “mimic the capabilities of 

open surgery inside the body” by using a computer interface to transmit movements 

to tiny tools inside the abdomen in a “systematic and controlled way.”15

Developing the da Vinci robot was no small feat. The Intuitive team 

encountered many technical challenges, including problems with tool function, 

software stability, arm collisions, and intra-device heat distribution.16 The issues

were addressed with mitigation strategies now typical to robotic surgery.

17

 Dr. Barry 

Gardiner, a physician who pioneered laparoscopy in general surgery, contributed 

vital clinical knowledge to solve these issues and develop the robot.

18

The da Vinci system was not Moll’s only innovation at Intuitive. He also 

instituted the minimally viable product (MVP) approach, which has become the 

13 PTO ¶ 77; Moll Tr. 11-12.

14 Moll Tr. 11-12.

15 Id. at 13.

16 Id. at 16-17.

17 Id. at 17-19 (discussing the use of surgical assistants to move and adjust the robot during 

a procedure, which remains standard today).

18 Moll Tr. 14; see JX 2598 at 3.
9

industry standard for bringing new, complex medical devices to market.19 The MVP 

development strategy involves creating a functional prototype to gain feedback from 

an engineering and clinical standpoint before adding more complex features.

20

 This

method increases efficiency by allowing for testing of a lower-risk device before 

making further investments.

21

 Regulatory approval is sought for the stripped-down 

version, ensuring that it meets patient safety and effectiveness requirements.

22

Intuitive followed an MVP strategy with the da Vinci system. It first sought 

regulatory approval for a basic three-arm version of the device.

23

 In 2000, the Food 

and Drug Administration (FDA), which regulates the sale of medical devices in the 

United States and monitors their safety and effectiveness, approved the minimally 

viable da Vinci robot through the 510(k) process.

24

 

The 510(k) (or Premarket Notification) process is one of three regulatory 

pathways through which high or moderate risk medical devices obtain FDA 

approval.

25

 The 510(k) pathway is for low to moderate risk devices with a legally 

19 Moll Tr. 15-17; see Gompers Tr. 1935-36; Grennan Dep. 71-72; Shen Tr. 1169.

20 Moll Tr. 15-16.

21 Id. at 16; see Khan Tr. 3041-3042.

22 Moll Tr. 16.

23 JX 14; see Moll Tr. 15-16.

24 Moll Tr. 19; PTO ¶ 79.

25 PTO ¶ 81.
10

marketed predicate device.26 It involves a comprehensive review of appropriate 

safety and performance data to determine if a new device is substantially equivalent 

to an approved predicate.

27

 The second pathway is a De Novo Classification 

Request, which is used when a novel low to moderate risk device lacks a legally 

marketed predicate.28 De Novo approval often requires clinical testing data to 

demonstrate a device’s safety and effectiveness.

29

 The third pathway, called 

Premarket Approval (PMA), is the most onerous and required for high risk devices.

30

Consistent with its MVP strategy, Intuitive went on to pursue and receive

510(k) clearance for a four-arm version of the robot in 2002.31 The da Vinci robot 

was rapidly adopted by customers and Intuitive became focused on manufacturing 

and selling the system. Moll, having achieved his objective, moved on to “continue 

down a path of innovation.”32

Today, Intuitive is considered the market leader in RASDs.33 It has a market 

capitalization of over $100 billion and controls a majority of the surgical robotics 

26 Id.

27 Id. ¶ 82; see JX 4492 (“Wittwer Rep.”) ¶ 137. 

28 PTO ¶ 81.

29 Wittwer Rep. ¶ 137.

30 PTO ¶ 81; see Wittwer Rep. ¶ 148.

31 See JX 4511 (“Tillman Rep.”) ¶ 94.

32 Moll Tr. 21.

33 PTO ¶ 77.
11

market.34 Intuitive’s robots have performed hundreds of thousands of procedures 

worldwide, cementing Moll’s legacy as the “father of robotic surgery.”

35

B. Auris and the Next Generation of Surgical Robots

Moll set out to start a new RASD innovation company called Auris Health, 

Inc. In 2009, Moll raised Auris’s seed funding.

36

 Early investors included venture 

capital funds such as J&J Innovation, a subsidiary of Johnson & Johnson.37 

Moll intended that Auris would advance RASDs beyond the base architecture 

of da Vinci to match strides in minimally invasive surgery—specifically in 

endoscopy.38 Endoscopy involves inserting a flexible tube called an endoscope 

into the body through its natural openings.39 He hoped to improve endoscopic 

technique with robotics as he had done for laparoscopy.

40

 

Early-stage Auris was a “vision-oriented, mission-oriented” company.

41

 Its 

visionary leaders included not only Moll but also Gardiner, who remained 

34 Moll Tr. 21; see JX 711 at 19-22; Royan Tr. 1376-77.

35 JX 1868; see Moll Tr. 21; JX 1868; Shen Tr. 1106; Grennan Tr. 2555.

36 PTO ¶ 87.

37 Id. ¶ 88.

38 Moll Tr. 22-23.

39 Id. at 23. 

40 Id. at 23-24.

41 DeFonzo Tr. 316, 319.
12

instrumental in providing clinical expertise.42 A combination of leadership and 

dynamism gave Auris the momentum to rapidly develop its first RASD, called 

ARES, and secure FDA clearance.

1. ARES

Auris began developing the ARES robot in 2012.

43

 It was designed for 

endoscopic procedures.44 David Mintz, an engineer who had worked alongside Moll 

since Intuitive’s early days, was tapped to spearhead the project.45 

After 18 months of development, Auris began using ARES in overseas 

clinical studies for endourology (or urology) and bronchoscopy.46 Endourology 

involves the use of endoscopic surgical techniques to treat conditions affecting the 

urinary tract.47 Bronchoscopy is a procedure in which a flexible tube called a 

bronchoscope is passed through a patient’s throat to view or treat the lungs and 

airways.48

42 Moll Tr. 27.

43 Mintz Tr. 554-55.

44 Id.

45 Moll Tr. 24-25.

46 Mintz Tr. 555. 

47 See Moll Tr. 64; see also PTO ¶ 154. 

48 See Moll Tr. 33; see also PTO ¶ 147. 
13

ARES received 510(k) clearance for bronchoscopy in May 2016, using 

Intuitive’s da Vinci robot as its predicate device.49 It was never commercialized. 

ARES was, instead, a step in Auris’s MVP strategy. Auris assessed ARES’s clinical 

capabilities first before building commercial RASDs with the benefit of that 

knowledge.

50

2. Monarch

Auris’s Monarch robot was the “commercial embodiment” of ARES.51 In 

2016, Moll hired Richard Leparmentier, an experienced engineering manager, to 

lead the Monarch project.52

Monarch is a revolutionary RASD. It can send a flexible endoscope through 

lung airways to locate, identify, and biopsy lesions found on preoperative computed 

tomography (CT) scans.

53

 Its initial iteration, called Monarch Bronch 1.0, could 

navigate the outer lung non-invasively. In March 2018, it became the first in the 

Monarch device line to receive 510(k) clearance.54 The next iteration of Monarch—

49 JX 275.

50 Moll Tr. 25.

51 Id. at 26.

52 Id. at 32-33.

53 JX 5054; Moll Tr. 33.

54 PTO ¶ 91; JX 334; JX 331; see Leparmentier Tr. 979.
14

an endourology-focused device called Monarch Uro—received pre-submission 

feedback from the FDA in November 2018.55 

3. iPlatform

In 2016, Auris began to create another robot in parallel with Monarch: the 

iPlatform surgical system. Mintz was put in charge of the iPlatform project.56 Josh 

DeFonzo was hired as Auris’s head of operations to oversee both the iPlatform and 

Monarch programs.57

iPlatform was devised as a bed based RASD with integrated surgical arms, a 

physician console, and a control tower.

58

 It would be differentiated from da Vinci 

in several ways. Unlike the cart-based da Vinci system, which could only fit in large 

or custom-built operating rooms, iPlatform had “zero footprint” since its robotic 

arms were mounted beneath a surgical bed.59 Though iPlatform would first be 

developed for laparoscopic applications (like da Vinci), it would eventually gain

concomitant (laparoscopic and endoscopic) capabilities.

60

 iPlatform had six robotic 

arms versus da Vinci’s four.

61

 

55 JX 858; see JX 637.

56 Moll Tr. 26.

57 Id. at 27.

58 PTO ¶ 99; Moll Tr. 26-31; JX 5064.

59 Mintz Tr. 566.

60 Mintz Tr. 567; Moll Tr. 32; see JX 1347 at 5.

61 Mintz Tr. 567; see JX 1347 at 5.
15

Within a year, the iPlatform prototype was completing labs on human 

cadavers using three robotic arms.

62

 Cadaver labs are considered the ideal, ethical

way to test a RASD’s safety and effectiveness before live experimentation.

63

 By 

summer 2017, iPlatform was completing cadaver lab procedures using five robotic 

arms.

64

 

In December 2017, iPlatform reached “concept freeze”—a “critical step” 

where a design concept is deemed viable.

65

 The design included iPlatform’s bedbased architecture, six so-called “Silverton” robotic arms, insertion tools, and 

more.66 Mintz presented its risk case and solutions to Auris’s executive team for 

approval.67 The conceptual design was approved, and iPlatform proceeded to the 

next stage of product development.

Auris began to work iteratively with the FDA on a plan for regulatory 

approval for iPlatform. In August 2018, Auris made its first 510(k) pre-submission 

to the FDA, listing a cart-based da Vinci RASD as the predicate device.

68

 Auris’s 

pre-submission form discussed a bronchoscopy indication for iPlatform. 

62 JX 292 at 7; Gardiner Tr. 743-47; see also JX 5012 at 1.

63 Gardiner Tr. 745.

64 JX 292 at 7; see JX 1347. 

65 Mintz Tr. 557-59; JX 1347.

66 JX 292 at 5-6, 30, 35-37, 57, 84.

67 Mintz Tr. 560-6; JX 292 at 20, 141.

68 JX 545 at 34.
16

In October 2018, the FDA provided feedback to Auris, including that it would 

require clinical testing and data to be presented with iPlatform’s application.69 The 

FDA also explained that the listed indication was a mismatch for the predicate 

device.70 Because the cited predicate device lacked a bronchoscope and did not 

perform the bronchoscopic procedures iPlatform’s application contemplated, the 

FDA said that it was “unclear if the 510(k) pathway [wa]s appropriate.”

71

 In 

response, Auris withdrew bronchoscopy from iPlatform’s 510(k) application and

changed the predicate device to a more apt da Vinci robot.72 Auris believed that if 

it addressed the FDA’s feedback and provided appropriate clinical data, iPlatform 

would receive 510(k) clearance.73

Auris continued to refine its iPlatform prototype. Prostatectomy and Nissen 

fundoplication cadaver procedures were successfully completed in the fall of 2018.74 

69 JX 743 at 5.

70 Id. at 4.

71 Id. at 3.

72 JX 2468 at 5; Mintz Tr. 604-06.

73 JX 743 at 3; Mintz Tr. 605-06; see also JX 2468.

74 JX 699; Gardiner Tr. 748-49. A prostatectomy is a procedure to remove all or part of 

the prostate. A Nissen fundoplication is an upper abdominal procedure that treats 

gastroesophageal reflux disease. See Prostatectomy, Mayo Clinic, https://www. 

mayoclinic.org/tests-procedures/prostatectomy/ about/pac-20385198 (last visited Aug. 31, 

2024); Nissen Fundoplication, Cleveland Clinic, https://my.clevelandclinic.org/ 

health/treatments/ 4200-nissen-fundoplication (last visited Aug. 31, 2024); see also 

Gardiner Tr. 728-30; Mintz Tr. 580. 
17

By December 2018, the “alpha” version of iPlatform had been built, roughly a year 

after the concept freeze stage.75 

C. J&J’s Verb Robot

As robotic surgery gained momentum, Johnson & Johnson desired RASD

market share. A significant portion of J&J’s revenue came from its subsidiary 

Ethicon, Inc.’s sales of surgical instruments.76 J&J recognized an “existential threat”

to its instrument business as Intuitive-branded instruments were sold for the growing 

number of da Vinci robots in hospitals.77

In 2012, with new Chief Executive Officer Alex Gorsky at the helm, J&J 

partnered with SRI to develop a RASD to compete with da Vinci.78 Pablo Garcia 

Kilroy was the lead engineer on the project.79 When the RASD showed commercial 

potential in 2015, J&J formed a joint venture called Verb Surgical Inc. with Verily 

Life Sciences LLC (a subsidiary of Alphabet Inc.).80 Kilroy became Verb’s lead 

engineer.81

75 Mintz Tr. 569-70; PTO ¶ 99.

76 JX 1529 at 7 (2018 tax form showing the largest portion of J&J’s revenues was from 

surgical and medical instruments sales, totaling over $4.149 billion). This decision refers 

to Ethicon and Johnson & Johnson as “J&J.”

77 JX 215 at 4; Morano Tr. 1435; see also JX 5019 at 23.

78 Kilroy Tr. 2139; Shen Dep. 10-12; JX 2661 at 6.

79 Kilroy Tr. 2078.

80 PTO ¶ 72; Kilroy Tr. 2078.

81 Kilroy Tr. 2079.
18

Verb’s robotic surgery system had three main structures: a table-mounted 

center component with four robotic arms, a user console for the surgeon to operate 

the robot, and a tower containing the controller for the robot and a vision system.82 

The user input devices for controlling the Verb robot were novel. Instead of using 

physical controls, magnetics tracked the surgeon’s hand movements in an open 

console and reproduced them to guide the robot.83

Like iPlatform, Verb encountered challenges during the design process. They 

included dexterity issues both inside the body (like suturing and tying knots) and 

outside the body (involving arm collisions and maneuverability).

84

 Dexterity came 

with a trade-off in stiffness, which allowed for control of flexible apparatuses and 

surgical tools.85 Verb also faced user interface issues, impairing the surgeon’s ability 

to complete a procedure with ease in the open console.

86

 

But unlike iPlatform, Verb was plagued by delays. By fall 2017, Gorsky 

learned that Verb had fallen significantly behind schedule.87 J&J nonetheless aimed 

82 Id. at 2082.

83 Id. at 2084.

84 Id. at 2085, 2087-88; see also JX 912 at 13-18; Kilroy Dep. 62:4-17.

85 Kilroy Tr. 2084-85

86 Id. at 2087.

87 See JX 224 at 21 (J&J Sept. 28, 2017 Digital Surgery Update to Gorsky: “Verb launch 

is delayed, increasing hurdles to achieving the plan . . .”); id. at 33 (“Verb is our largest bet 

to establish a leading robotics presence. However, we do not believe it is currently on a 

path to deliver this.”); id. at 41 (reflecting that since Q1 2015 to the present (3Q 2017), 
19

for a 2020 commercial release. During an earnings call in January 2018, Gorsky 

said that Verb was “on track” for a 2020 launch date.88 

The next month, Gorsky asked J&J’s Board of Directors for an additional 

$400 million of funding for Verb to advance a “Gen 1 system towards launch in 

2020.”

89

 While preparing for the meeting, Gorsky recognized the “significant 

importance of the project” and questioned whether J&J had the “right capabilities” 

to deliver the robot.90 Susan Morano, J&J’s Vice President of Business 

Development for the Medical Devices group who reported to Gorsky, conveyed to 

her colleagues that Gorsky had asked her “[h]ow did we get this so wrong (internally 

and with Verb)[?]”91

In June 2018, Ashley McEvoy became J&J’s Executive Vice President, 

Worldwide Chairman of MedTech (f/k/a Medical Devices).92 She reported directly 

to Gorsky during his tenure.

93

 As the head of MedTech, McEvoy appreciated the 

Verb had fallen two years behind schedule for a U.S. launch date and required pre-launch 

funding of $430 million versus the anticipated $200 million).

88 JX 290 at 18 (Gorsky: “I got a chance to visit see the prototype. I would say overall that 

it[’]s on track and we’re continuing to make refinements in it . . . So overall the project 

remains on track with our timelines and we’re excited about it.”).

89 JX 647 at 2, 17.

90 JX 295 at 2-3.

91 Id. at 2.

92 McEvoy Tr. 2565.

93 Id.
20

need for J&J to disrupt the RASD market before more competitors could enter the 

space.94 Gorsky told McEvoy to “take lead” on the Verb initiative and tackle risks 

to the project’s announced 2020 launch date.95 

Two months later, in August 2018, McEvoy sent Peter Shen to visit Verb for 

a “deep dive.”

96

 Shen, a mechanical engineer by training with limited robotics

experience, was J&J’s Global Head of MedTech Research & Development.97 After 

his visit, Shen told McEvoy that despite some progress, the Verb team had yet to 

“declare [a] design concept” and suffered from “[c]hurning and lack of focus.”98 

J&J’s internal consulting group, Accelerando, was then asked to assess Verb’s 

status. Its conclusions resulted in a revised launch date of 2022, which was given 

an 85% probability of success.99 In October 2018, J&J set a reduced scope for the 

Verb RASD with a planned initial release outside the United States.

100

 

94 Id. at 2567.

95 JX 504; JX 711.

96 JX 533; see McEvoy Tr. 2573.

97 Shen Tr. 1102.

98 JX 533.

99 JX 711 at 3 (“Accelerando process was initiated resulting in revised delivery timelines 

of 2022 (vs. 2020).”); id. at 9 (“85% confidence date: Q4 2022”).

100 Id.
21

D. J&J’s Interest in Auris

While Verb’s setbacks compounded, J&J began to consider other ways to 

enter the RASD market. In early 2017, it evaluated investing in Auris, which J&J 

personnel had been aware of and impressed by since 2015.101 Morano visited Auris 

and described it as a “key hedge” for J&J.102 

In May 2017, J&J invested $45 million in Auris’s Series D round and secured 

a board observer seat.103 The investment followed extensive due diligence by J&J

into the Monarch platform, including technical assessments by third-party product 

development consultant Sagentia Innovation.

104 By late 2017, J&J (including 

Morano) had learned about iPlatform and worried it could “take the wind out of 

Verb.”

105

In May 2018, J&J’s Chief Scientific Officer William Hait, who led the 

company’s Lung Cancer Initiative, visited Auris. After seeing Monarch’s potential 

to diagnose and treat cancer in otherwise inaccessible areas of the lung, he became 

101 JX 142; JX 186; Morano Tr. 1438-40.

102 Morano Tr. 1438-40; JX 186 at 3-4.

103 JX 195; PTO ¶ 107.

104 JX 475; Kozak Tr. 1579.

105 JX 261 (“Big learning is that [Auris has] been quietly developing a mainframe [with] 

the potential to really disrupt as it combines their arms with their endoluminal . . . And 

they say it will launch in 2 years which if true will completely take the wind out of Verb.”).
22

“maniacally focused” on gaining access to the robot.106 Hait returned to J&J and 

gave a presentation to its executive committee on Monarch’s unique potential to

advance the Lung Cancer Initiative.

107

 Gorsky asked Hait to be a point of contact 

for a J&J team exploring a deeper relationship with Auris.108 Sagentia was charged 

with conducting additional technical due diligence into Auris’s technology.109 

In July 2018, Morano recommended to Gorsky that J&J invest another $200 

million in Auris (called “Antwerp” internally at J&J).110 Although the initial focus 

was on accessing Monarch given Hait’s enthusiasm, iPlatform became a crucial 

factor. Shen expressed to Morano that he was “very concerned” Verb was 

“significantly behind” and suggested “explor[ing]” “iPlatform as a backup plan” for 

Verb.111 At the same time, Gorsky told Morano that he “want[ed] [A]ntwerp added 

to [V]erb” with the “back end tech” shared.112 To address this directive, Morano and 

her team prepared a presentation for Gorsky that outlined Auris’s “‘hybrid’ 

106 Hait Tr. 921-23; see Hait Dep. 266-68.

107 Hait Tr. 922-23; see JX 95.

108 JX 95.

109 JX 447; JX 487; Kozak Tr. 1580-82.

110 JX 495 at 9.

111 JX 481.

112 JX 485 (Morano reporting her conversation with Gorsky to McEvoy: “He wants antwerp 

added to verb – which I told I don’t think makes sense but that it could absolutely be a 

separate endoluminal system . . . which he was ok with but wants the ‘back end tech’ shared 

– which I believe is our strategy.”).
23

laparoscopic/[e]ndoluminal opportunity,” including a “potential partnership with 

Verb.”113

At Gorsky’s request, Hait and Shen began collaborating on a plan to “mesh”

Verb and iPlatform.114 Gorsky felt the need to be “fully engaged” beyond his typical 

involvement with an investment because of Auris’s importance to J&J’s “future 

surgical and digital/robotics platform.”

115

E. J&J’s Acquisition Strategy

By August 2018, J&J hoped to obtain a controlling interest in or outright 

acquire Auris. McEvoy approved an acquisition assessment but asked that it be 

“done VERY quietly” since “Verb [was] in a fragile state.”116 Due diligence 

continued.117 J&J’s engineers visited the Auris site, spending hours asking Mintz 

113 JX 495 at 10. 

114 JX 507 (Hait to Shen: “I am now more fully aware of Antwerp in the context of your 

broader robotic/digital surgery initiative and would be happy to work closely with you to 

plan a strategy where we can mesh the two.”); see Hait Tr. 941; see also JX 598 (Hait to 

McEvoy: “I reviewed VERB with the Med Device team and was impressed with the 

passion and progress but also heard significant challenges. Auris will likely be best inclass endoluminal robotic surgery and have a competitive laparoscopic instrument whereas 

VERB is likely to have the most sophisticated data analytics. Alex has challenged us to 

find a way to ‘mesh’ the two projects.”).

115 JX 506.

116 JX 527 at 1.

117 See JX 557.
24

“good, hard, technical questions, challeng[ing] [Auris] on the right points,” and 

examining the robot.

118

 Sagentia participated in J&J’s technical diligence.119 

Given the sensitivities with Verb, J&J proceeded cautiously. In September, 

Hait wrote to Shen: “[W]hat if we combine the engineering expertise of Auris and 

the iPlatform laparoscopic and endoluminal device with the data analytics of 

VERB[?] In this way, we will have hedged out bets in robotics, take[n] the lead in 

endoluminal, and protect[ed] at least some of our investment in VERB.”120 Shen 

responded that “there [were] major complexit[ies] and implications to this 

discussion” and asked to keep “the conversation within a small group for now.”121 

Shen asked to talk when the two were together in Shanghai later that month.122

In the interim, J&J learned that Medtronic—a competitor—was interested in 

acquiring Auris.123 The news prompted “a critical moment that require[d] [J&J] to 

accelerate.”124 Auris falling into a competitor’s hands was a “doomsday scenario” 

for J&J.125 In considering next steps, Shen told Morano that “iPlatform c[ould] be a 

118 Mintz Tr. 575-77.

119 JX 557 at 3.

120 JX 600.

121 Id.

122 Id.

123 JX 619. 

124 Id.

125 JX 670 (Hait to Shen); see also JX 679.
25

plan B for [J&J]” but questioned whether J&J could “do both (Verb and 

iPlatform).”

126

In late September, Shen and Hait met in Shanghai and discussed plans for

Auris.

127

 Shen later recapped the meeting for McEvoy, highlighting a 

“complementary” approach where Verb would focus on general surgery and 

iPlatform would have “combo capabilities” including endoluminal surgery.

128

 He 

believed this was a “‘Fail Safe plan for [J&J’s] robotic strategy.”

129

 With the “go” 

from McEvoy, Shen and Hait presented their plan to Gorsky, who was “pleased.”130

F. J&J’s Acquisition Strategy

Hait was tasked with initiating acquisition discussions with Moll.131 In his 

first outreach on October 1, 2018, Hait praised Monarch’s unmatched capability to 

screen for lung cancer. He also shared that “[J&J’s] medical device group ha[d] 

become increasingly impressed with iPlatform, as [the Auris] team makes 

126 JX 619.

127 JX 664. 

128 JX 660.

129 Id.

130 Id.; JX 664.

131 JX 661 at 2.
26

extraordinary progress.”132 Hait told Moll that J&J was interested “in exploring a 

more substantial relationship.”

133

Auris was, at the time, considering a new investment round to support the 

independent development of its robots. It was not searching for a buyer.

134

 Auris’s 

leadership felt that a merger, particularly with a large company, could cause a loss 

of the autonomy that had made its success possible.135 With J&J in particular, Auris 

feared that Verb could displace iPlatform.

136

 

J&J understood these concerns and strategized on finding “what matter[ed] 

most” to Auris.

137

 Given the “criticality” of this issue, McEvoy and Gorsky “le[d] 

from the top” on strategy.138 They—with Shen, Hait, Morano, and other senior 

leadership—prepared for an in-person meeting at Auris’s Redwood City, California 

headquarters by assessing Auris’s “[v]ision and [i]nterests.”139 These interests 

included Auris’s desire to understand J&J’s “vision [on] how Antwerp and Verb 

132 JX 661 at 2.

133 Id. at 2.

134 See Hebert Tr. 1398-99; Salehizadeh Tr. 1345.

135 Moll Tr. 38-40.

136 Id. at 40.

137 JX 736 at 1.

138 Id.

139 JX 838 at 4.
27

coexist.”140 Gorsky’s talking points for the Redwood City meeting said: “We see 

the Verb and Antwerp programs as complementary.”141 Gorsky represented as much 

to Moll during dinner in California, emphasizing that Verb and iPlatform would be 

developed in parallel and that iPlatform was a priority for J&J.142 

On November 28, Gorsky called Moll to propose acquiring a 51% equity stake 

in Auris.143 Auris had no interest in selling a majority of its business.

144

 By midDecember, J&J began preparing a full acquisition proposal, including an earnout 

component based on regulatory and sales milestones.145

On January 2, 2019, Gorsky presented Moll with an offer to acquire Auris for

a $3 billion upfront payment and $2 billion in potential earnout payments.

146

 Gorsky 

represented that J&J would “spend multiples” of what Auris alone could invest in 

developing its robots.

147

 Further diligence and negotiations ensued, with Auris 

140 Id.

141 Id. at 7.

142 Moll Tr. 42; see also JX 838 (prepared talking points for Auris meeting); Morano

Tr. 1517; DeFonzo Tr. 326-331.

143 Gorsky Dep. 210-13; Morano Tr. 1458; JX 852; JX 837 at 28; JX 5100 at 4.

144 See JX 929; Huffines Dep. 426-27.

145 JX 934.

146 PTO ¶ 110.

147 JX 1004 at 6; Moll Tr. 45.
28

continuing to question whether J&J would expect iPlatform to compete with Verb,

and J&J assuring Auris that it planned to fund and launch both products.

148

G. The Ashley Challenge

Meanwhile, J&J was exploring a budget for its entire robotics division. 

McEvoy decided that the total robotics budget including “[V]erb, instruments, IT, 

[and] Antwerp” would be capped at “$500-$600” million per year.149 This budget 

cap would later be called the “Ashley Management Decision” or “Ashley 

Challenge.”150 At J&J, a “management decision” is a top-down “budget challenge” 

for a division.

151

On January 10, 2019, McEvoy’s team sent her an estimated profit and loss 

statement for the robotics program.152 The total expenses for Verb, Auris, and 

“Orthopedics” for 2019 through 2022 were projected to be $3.167 billion.

153

 Hours 

later, a revised draft was circulated reflecting McEvoy’s feedback.154 A line item 

called “AAM RISK ADJUSTMENT” was added, which reduced total projected 

148 JX 1028; JX 1032; see DeFonzo Tr. 480; Morano Dep. 218.

149 JX 846.

150 Id.; see JX 1090; McEvoy Tr. 2603-06.

151 See Lenard Tr. 1787; Shen Tr. 1247.

152 JX 1118 at 5.

153 McEvoy Tr. 2610-15.

154 JX 1119 at 1.
29

expenses for 2019 through 2022 to $2.296 billion.

155

 McEvoy explained that the 

“AAM risk adjusted line-item” was “in reference to a proposed synergy between 

Verb/[iP]latform.”156 She felt these “synergies” were “potentially achiev[able]” 

once J&J brought “both platform teams together,” after J&J had “more time to 

understand the synergy opportunities.”157

H. Negotiations Progress.

J&J continued to conduct diligence throughout January. It learned about

trade-offs in iPlatform’s design and other system issues that the Auris team was 

working to resolve.158 Both parties agreed to a three-stage diligence process and to 

defer further technical due diligence.159

Negotiations on deal terms progressed. On January 18, Auris sent J&J a 

counteroffer for $3.9 billion in upfront consideration and $3.5 billion in contingent 

payments based on regulatory and sales milestones for iPlatform and Monarch.

160

 

The regulatory milestones would be tied to 510(k) approval, which was the expected 

155 Id. at 6.

156 JX 1139 at 1; see McEvoy Tr. 2607-16.

157 JX 1135 at 1.

158 JX 1141; JX 1145; JX 1284.

159 Morano Tr. 1477; JX 1077; JX 1052.

160 JX 1210.
30

pathway.

161

 J&J offered that net sales milestones include sales of not only iPlatform 

and Monarch but also Verb “to address [Auris’s] concerns about Verb.”162 

On January 24, Gorsky called Moll to deliver J&J’s formal counteroffer. It 

included upfront cash consideration of $3.4 billion and a total potential earnout of 

$2.2 billion.163 J&J spread the contingent payments across six milestones—four 

regulatory and two sales based.164 One of the proposed milestones provided Auris 

with $100 million upon Monarch receiving FDA 510(k) approval for lung tissue 

ablation. Gorsky told Moll that this milestone was so “high[ly] certain[]” of being 

achieved that J&J viewed it as “effective ‘up front’” consideration.

165

I. The NeuWave Patient Death

The Monarch lung tissue ablation milestone required the use of an Ethicon 

device called the NeuWave FLEX Microwave Ablation System. The NeuWave 

FLEX is a catheter-based instrument that delivers microwave energy to ablate or 

destroy tissue.166 At the time of J&J’s January 24 offer, FLEX had regulatory 

approval for soft tissue ablation but not a lung-specific use.

167

 Monarch, by contrast,

161 JX 1072 at 4; DeFonzo Tr. 363-64; Moll Tr. 58-59.

162 JX 1072; JX 1027; JX 1077; JX 1145. 

163 JX 1215 at 5.

164 Id.

165 Id. at 6; see also JX 1249 at 3; Moll Tr. 51.

166 Moll Tr. 50.

167 JX 161 at 3.
31

had already attained FDA clearance for bronchoscopy and was approved only for 

lung procedures.

168

In June 2018, NeuWave Medical (a subsidiary of J&J’s Ethicon subsidiary) 

initiated a ten-patient study using FLEX to treat lung lesions.169 On December 4, 

2018, a study participant died weeks after being treated with FLEX.

170

 J&J 

immediately reassigned leadership of the study to Hait, who suspected that the FDA 

would place the study on hold for some period.

171

Hait was right. Nine days after the patient death was reported to the FDA, the 

FDA launched a for-cause inspection into whether the study violated FDA rules

because NeuWave had not obtained an investigation device exemption (IDE) in 

advance.

172 An IDE provides FDA approval to perform a clinical trial of a device 

that has not been cleared for marketing or the intended indication.173 The FDA 

investigation involved an in-person investigation at Ethicon’s “sponsor site from 

December 13, 2018 to December 19, 2018.”174 

168 See supra note 54 and accompanying text.

169 JX 1901 at 25; see JX 4511 at 88.

170 JX 1901 at 30.

171 Hait Tr. 961-63.

172 JX 1673; JX 1550 at 157; see JX 2648 at 35, 36; JX 2313 at 8-9, 13.

173 Wittwer Rep. ¶ 87.

174 JX 1673 at 2; see also Wittwer Tr. 1964-65.
32

On January 14, 2019, J&J’s Auris deal team was briefed on the NeuWave 

patient death.

175

 They sought to understand whether the “patient death was going to 

affect the overall value of Auris.”176 Team members preparing talking points for 

Gorsky to deliver to Moll were mindful of the “nuances” to the Monarch lung tissue 

ablation milestone “and what will be required for the FDA approval (still in 

discussion).”177 As of January 22, J&J’s team believed that a to-be-offered year-end 

2022 target for the Monarch lung tissue ablation milestone remained “achievable.”

178

 

On March 20, the FDA sent J&J a letter stating that it had concluded the use 

of FLEX on lung lesions posed a “significant risk” to participants and that J&J 

should have applied for an IDE before launching the study.

179

 J&J received the 

FDA’s letter on April 3.180 J&J would need to conduct a new clinical study under 

an IDE, then obtain a lung-specific approval for FLEX—a process that could take 

several years.181 Only then could Monarch obtain clearance for use with FLEX.182

175 JX 1182; JX 1171.

176 Kozak Tr. 1572; see JX 1182 at 1.

177 JX 1239.

178 JX 1220; see also JX 1239; JX 6028.

179 JX 1673 at 2.

180 Id. at 1; Bryant Tr. 2490-91.

181 Wittwer Tr. 1966-68; Wittwer Rep. ¶¶ 95-101.

182 Wittwer Tr. 1967-68.
33

Moll was not told about the NeuWave patient death until shortly after the 

merger closed in early April 2019.

183

 

J. The Merger Agreement

J&J’s preliminary draft merger agreement included ten potential earnout 

milestones.

184

 Two Monarch-specific milestones concerned 510(k) approval for 

certain indications, including lung tissue ablation.

185

 Six milestones concerned

iPlatform regulatory approvals for general surgery, a gastrointestinal (GI) surgery, 

and four to-be-determined “umbrella” procedures that Auris was to fill in.

186

 There 

were also two net sales milestones.187

Auris sent back a revised draft of the merger agreement with revisions to the 

proposed milestones.188 The Monarch lung tissue ablation milestone was changed 

to “soft tissue ablation,” which Auris believed would not require clinical testing.189 

As for iPlatform, Auris proposed milestones in line with its MVP strategy that began 

with less complex procedures and built to more complex procedures.

190

 

183 JX 1730; Moll Tr. 174.

184 JX 5016 § 2.07.

185 Id. § 2.07(a)(i)-(ii); see supra note 165 and accompanying text.

186 JX 5016 § 2.07 (a)(iii)-(vii); DeFonzo Tr. 366-68.

187 Id. § 2.07 (a)(ix)-(x).

188 JX 1278; JX 1285. 

189 JX 1278 at 227; DeFonzo Tr. 361-63; JX 1334.

190 DeFonzo Tr. 369; see JX 1620 (the “Merger Agreement”) § 2.07(a).
34

All of the iPlatform milestones were for laparoscopic procedures, rather than 

more complex concomitant ones.

191

 Auris insisted that approval of any “upper 

abdominal” and “lower abdominal” procedures by year end 2021 would satisfy the 

first iPlatform regulatory milestone.192 This was in contrast to the “general surgery” 

indication suggested by J&J, which would have required Auris to demonstrate the

safety and effectiveness for the most complex procedure in the “general surgery” 

umbrella.

193 The subsequent milestones matched specific umbrella procedures that 

Auris was targeting.194 J&J accepted these changes.

The agreed-upon regulatory milestones for iPlatform were:

1. General Surgery Milestone: $400,000,000 if iPlatform obtained

“510(k) premarket notification(s) allowing marketing and sale of 

an iPlatform Product offering, with a specific indication for one 

upper abdominal surgical procedure and one lower abdominal 

procedure” by the end of 2021 (the “General Surgery 

Milestone”);

195

2. Upper Abdominal Umbrella Milestone: $150,000,000 if 

iPlatform obtained “510(k) premarket notification(s) allowing 

marketing and sale of an iPlatform Product offering(s) for . . . 

191 Merger Agreement § 2.07(a)(i)-(viii); see Moll Tr. 49-50.

192 See JX 5016 at 3-4; Merger Agreement § 2.07(a)(iii); DeFonzo Tr. 365-67.

193 DeFonzo Tr. 364-65; compare JX 5016 § 2.07(a)(iii) (J&J draft proposing regulatory 

approval on iPlatform “for general surgery procedures”), with Merger Agreement 

§ 2.07(a)(iii) (final version requiring iPlatform regulatory approval for “one upper 

abdominal surgical procedure and one lower abdominal surgical procedure”).

194 DeFonzo Tr. 366-68; compare JX 5016 § 2.07(a)(iv)-(vii) (J&J leaving brackets for 

umbrella milestones for Auris to fill in), with Merger Agreement § 2.07(a)(iv)-(vii) (listing 

specific indications).

195 Merger Agreement § 2.07(a)(iii).
35

upper abdominal Umbrella Procedure(s)” by the end of 2023 (the 

“Upper Abdominal Milestone”);

196

3. Colorectal/Lower Abdominal Umbrella Milestone: 

$150,000,000 if iPlatform obtained “510(k) premarket 

notification(s) allowing marketing and sale of an iPlatform 

Product offering(s) for . . . urological Umbrella Procedure(s)” by 

the end of 2023 (the “Lower Abdominal Milestone”);

197

4. Urologic Umbrella Milestone: $150,000,000 if iPlatform 

obtained “510(k) premarket notification(s) allowing marketing 

and sale of an iPlatform Product offering(s) for . . . 

colorectal/lower abdominal Umbrella Procedure(s)” by the end 

of 2023 (the “Urologic Milestone”);

198 and

5. Gynecologic Surgery Umbrella Milestone: $150,000,000 if 

iPlatform obtained “510(k) premarket notification(s) allowing 

marketing and sale of an iPlatform Product offering(s) for . . . 

gynecological Umbrella Procedure(s)” by the end of 2023 (the 

“Gynecologic Milestone”).

199

The Monarch-related milestones were:

6. Endourology Milestone: $100,000,000 if Monarch obtained

“510(k) premarket notification(s) allowing marketing and sale of 

a Monarch Product offering, with a specific indication for 

endourology procedure(s)” by the end of 2020 (the 

“Endourology Milestone”);

200 and

7. Robotic Soft Tissue Ablation Milestone: $100,000,000 if 

Monarch obtained “510(k) premarket notification(s) allowing 

196 Id. § 2.07(a)(iv). “Umbrella Procedure” is defined as “any procedure or procedure 

category within a specialty, which represents higher complexity or risk and when cleared 

by the FDA includes covered procedures of less complexity or lower risk within that 

specialty.” Id. § 10.03(uuu).

197 Id. § 2.07(a)(v). 

198 Id. § 2.07(a)(vi). 

199 Id. § 2.07(a)(vii). 

200 Id. § 2.07(a)(i). 
36

marketing and sale of a Monarch Product offering, with a 

specific indication for robotically driven (or controlled) soft 

tissue ablation” by the end of 2022 (the “Soft Tissue Ablation 

Milestone”).

201

An additional regulatory milestone could be satisfied by either iPlatform or 

Monarch:

8. Robotic GI Endoluminal Milestone: $150,000,000 if either 

iPlatform or Monarch obtained “510(k) premarket notification(s) 

allowing marketing and sale of an iPlatform Product offering (or, 

alternatively . . . a Monarch product offering), with a specific 

indication for procedure(s) specifically including Endoscopic 

Submucosal Dissection (ESD)” by the end of 2023 (the “GI 

Milestone”).

202

Finally, there were two commercial milestones that could be satisfied by either Verb 

or Auris products:

9. First Step Net Sales Milestone: $500,000,000 if Robotics Net 

Sales before the end of 2022 reached or exceeded “$575 million 

in the aggregate”; 203 and

10. Second Step Net Sales Milestone: $500,000,000 if Robotics Net 

Sales before the end of 2022 reached or exceeded “$575 million 

in the aggregate.”

204

Auris’s markup of the draft merger agreement proposed a one-way antireliance clause favoring Auris. It also included a provision that would obligate J&J 

to take efforts to develop and commercialize the Auris robots consistent with “a 

201 Id. § 2.07(a)(ii). 

202 Id. § 2.07(a)(viii). 

203 Id. § 2.07(a)(ix). 

204 Id. § 2.07(a)(x). 
37

company in the medical devices industry of comparable size and resources to 

J&J.”

205

 Auris had Intuitive in mind as the measure of industry standard efforts.206 

J&J accepted the one-way anti-reliance clause but proposed an inward-facing 

efforts provision.

207

 The efforts supplied were to be measured by J&J’s own 

standards, which J&J assured Auris was beneficial since J&J was “the biggest 

healthcare company in the world” with standards exceeding the industry.208 J&J

agreed that these “commercially reasonable efforts” would be to the end of achieving 

the iPlatform and Monarch regulatory milestones.209 As a residual assurance, Auris 

negotiated for language that tied J&J’s efforts to its “usual practice” for “priority 

medical device products.”

210

 

The final Merger Agreement was executed on February 12, 2019 by Ethicon, 

Antwerp Merger Sub, Inc., Auris, and Fortis as the Auris stockholders’ 

representative.

211

 At the time, Auris had a high level of confidence in achieving 

regulatory clearance via the 510(k) pathway, in iPlatform’s and Monarch’s ability to 

205 JX 1278 at 159, 232; see DeFonzo Tr. 381-82.

206 DeFonzo Tr. 381.

207 Id. at 381-83; see also Hinchliffe Tr. 3145-46; Hinchliffe Dep. 206-07.

208 DeFonzo Tr. 382.

209 Merger Agreement § 2.07(e)(i), (ii); see Shen Tr. 1152.

210 Merger Agreement § 2.07(e)(ii); see DeFonzo Tr. 382-83; Hinchliffe Tr. 3145-46.

211 PTO ¶ 111.
38

deliver on the milestones, and a shared vision with J&J for the robots.

212

 The merger 

was set to close on April 1.

K. Pre-Closing Preparations

Verb continued to struggle. McEvoy told Gorsky as much on March 10, 

prompting Gorsky to ask why Verb’s timelines “continue to change with multiple 

explanations for delays and issues.”213 To address Gorsky’s concerns, Shen 

proposed an “assessment between Verb and iPlatform from a portfolio 

perspective.”214 Celine Martin, who oversaw J&J’s robotics and digital surgery 

program, was “aligned” with the proposal.215

Shen’s “worry” about “Verb vs. iPlatform” was that the “Verb team [would] 

know [the J&J’s leadership team’s] hesitation.”216 As he told McEvoy, they must be 

“all in for Verb.”217 Shen believed that “Verb + iPlatform [wa]s [J&J’s] bullet proof 

strategy to compete.”218 As he wrote on the day the Auris merger closed: 

“Delivering of Verb milestones is our No. 1 priority.”219 

212 DeFonzo Tr. 363-64; Gardiner Tr. 748-61.

213 JX 1581; see also JX 1590 at 2; Shen Tr. 1112-14.

214 JX 1581 at 1.

215 Id.

216 JX 1630.

217 Id.

218 Id.

219 JX 1663; see Shen Tr. 1152, 1308. During his testimony, Shen said that this was “not 

false.” Shen Tr. 1308.
39

L. Project Manhattan

Four days after closing, Shen drafted a “Plan to Technically Assess Verb 

Platform and iPlatform.”220 He wrote that the objective was “to assess the robotic 

system (Digital Surgery) development status from Verb and Auris and recommend 

an optimal path to bring the system(s) to market, considering factors such as launch 

schedule, project risk identification and mitigation, specialty indication launch

cadence, surgeon preference, etc.”221 He described three possible outcomes. First, 

J&J could “[d]evelop both systems in parallel and the[n] make the final 

commercialization decision.” Second, it could “[c]hoose one of the two” systems. 

Or, third, it could “[m]erge them into a single development by combining the best 

of each.”222

Shen sent a draft of the plan to Martin, writing: “I am still thinking about how 

we do this highly sensitive assessment work. We cannot lose [the] Verb team at this 

point.”223 He also sent a draft to Kilroy—Verb’s lead engineer. Kilroy envisioned 

220 JX 1702.

221 JX 1703.

222 JX 1702.

223 JX 1703.
40

that the robots would be merged into a combined system.

224

 He suggested that Shen

revise “framing the project objective in a way that is less controversial.”225 

Shen then edited the document. The new version stated that the objective of 

the assessment was to “find synergies between platforms to decrease project risk and 

accelerate time to commercialization.”

226 He removed the description of the three 

post-assessment “potential scenarios” outlined in his prior draft.227 He titled the 

assessment “Project Manhattan.”228

Shen sent the revised version to Moll on April 9.229 Moll was aghast. During 

negotiations, J&J had told Auris it would perform a post-closing “technology audit” 

to understand Auris’s systems and ways that J&J’s “global candy store” of resources

could be beneficial to Auris.

230

 DeFonzo’s discussions with J&J similarly led him 

to understand that a “technology audit” would be conducted to understand 

“technologies available within Ethicon unrelated to Verb” that could help Auris.”231

224 Kilroy Tr. 2143; Kilroy Dep. 43-44.

225 JX 1710.

226 JX 1725 at 2.

227 JX 1703 at 2; see JX 1725.

228 JX 1725. “Manhattan” was an internal code name for Verb. See JX 2833 (discussing 

“Manhattan” as “Verb”); Lenard Tr. 1799; JX 2658 at 1.

229 JX 1719; JX 1725. The version sent to Martin and Kilroy was never shared with Moll.

230 Moll Tr. 47-48.

231 DeFonzo Tr. 400-01.
41

But a comparative assessment between Verb and iPlatform had not been 

mentioned.

232

On April 22, Shen formally introduced Project Manhattan to the Verb and 

Auris teams, describing it as a “Technical Assessment of Verb Surgical Platform and 

Auris iPlatform.”233 He said that a “deep dive assessment” would be conducted “in 

the following areas” for each platform:

• Master controller or [user input device]

• Robotic components and systems

• Instrumentation

• Visualization system

• Data connectivity

• Machine learning and [d]ata analytics.234

Shen said that Project Manhattan would be “co-le[d]” by Kilroy and Mintz and 

completed over the “next 60-70 days.”

235

Moll promptly told Shen of his concern that “[s]upporting a complex and 

detailed 90 day technical review by all Auris technical heads w[ould] affect [Auris’s] 

ability to stay on schedule.”236 Shen responded that “the system should stay as it is 

(no need to be dressed up) for review.”237 By this point, though, Moll and the Auris 

232 See Moll Tr. 70-72; JX 1500.

233 JX 1813; see Shen Tr. 1158.

234 JX 1813 at 1-2.

235 Id.

236 JX 1830; see Moll Tr. 76.

237 JX 1838.
42

team had learned that J&J capped the robotics budget (i.e., the Ashley Management 

Decision), leading them to doubt that Verb and iPlatform would be developed on 

“parallel path[s].”

238 It seemed to them that Project Manhattan was a “bakeoff” 

between Verb and iPlatform.239 The Auris team feared that only one robot could 

win; the loser would be deprioritized, deemphasized, and cease to exist.240 

Auris’s suspicions were well placed. Amid Project Manhattan, Martin wrote 

that she did not “see [J&J] running parallel path [V]erb-Auris all the way to 510k” 

because “P&L will not support it and it is very inefficient.”241 An internal J&J 

retrospective document from the next year recognized that “[Project Manhattan was 

[a] financial necessity[]” given the significant expense of “[d]eveloping 2 complex 

robots at the same time.”242 The probable end goal was to find ways to “mesh” the 

robots, consistent with Gorsky’s earlier aspirations and the budget set by the Ashley 

Management Decision.243

Auris leadership thus viewed Project Manhattan as an existential threat to 

iPlatform. Because the months-old iPlatform alpha robot would be pitted against a 

238 Moll Tr. 76; id. at 47-48; Mintz Tr. 586-87.

239 Moll Tr. 72; DeFonzo 403-06.

240 Moll Tr. 72.

241 JX 1947.

242 JX 2774 at 5. 

243 See supra notes 114, 156-57 and accompanying text; JX 2656; Lenard Day 2 Dep. 

23-24.
43

Verb post-beta robot that had been through years of iterations, Auris had to quickly 

prepare to “survive.”

244

 Mintz focused on creating “workarounds” for system 

“bugs,” which he described as “the engineering and software equivalent of BandAids, duct tape, and baling wire.”245

 iPlatform incurred a significant “technical debt” 

from going “backwards rather than forwards in development [] to prop up a system” 

for an unanticipated head-to-head evaluation.246 In exchange for short term stability 

to compete against Verb, iPlatform largely suspended its development plan, MVP 

strategy, and beta version progress.247 

Project Manhattan consisted of seven procedures performed by eight “key 

opinion leader” surgeons (“KOLs”). Most of the KOLs were experienced on the 

Verb device but had never used iPlatform.248 Two of the KOLs had worked closely 

on Verb’s development.249 The procedures performed were: Roux-en-Y gastric 

bypass (RYGB), low anterior resection (LAR), ventral hernia, partial nephrectomy,

244 Mintz Tr. 588-89

245 Id. at 589. 

246 Moll Tr. 76; Mintz Tr. 590.

247 See Mintz Tr. 587-88; JX 1793.

248 JX 2125 at 2.

249 These KOLs were Dr. Monika Hagen and Dr. Keith Kim. Hagen Tr. 2282; Hagen Dep. 

16-18; Kim Dep. 28, 28-49. Moll asked that Gardiner, who was experienced with 

iPlatform, be a KOL. His request was rejected. Mintz Tr. 594-95; Moll Dep. 633-34.
44

hysterectomy, and lobectomy.250 After the procedures, the KOLs rated each 

system’s capabilities.251 

Both iPlatform and Verb successfully completed all seven procedures.252 The 

KOLs gave iPlatform positive feedback and rated the system somewhat or nearly 

ready for clinical use, with the exception of lobectomy.

253

 iPlatform’s performance 

in one RYGB lab and the hysterectomy lab were rated equal to that of da Vinci.254

250 JX 2103; JX 2125; JX 2131. RYGB surgery, also called bariatric surgery, reduces the 

size of the stomach and reroutes part of the small intestine. LAR surgery treats rectal 

cancer by removing part of the rectum and reconnecting the rectum to the colon. Ventral 

hernia surgery repairs protrusions of the intestine or other tissue through the abdominal 

wall. Partial nephrectomy involves remoting a portion of the kidney to treat disease or 

injury. A hysterectomy is a procedure to remove the uterus. A lobectomy is a procedure 

to remove a lobe of the lung, including to treat cancer. See Stanford Medicine, General 

Surgery – Common Surgical Procedures, Stanford Health Care, https://stanfordhealthcare

.org/medical-treatments/g/general-surgery/procedures.html) (last visited Aug. 31, 2024); 

Roux-en-Y Gastric Bypass Weight-Loss Surgery, Johns Hopkins Medicine, 

https://www.hopkinsmedicine.org/health/treatment-tests-and-therapies/rouxeny-gastricbypass-weightloss-surgery (last visited Aug. 31, 2024); Timothy J. Ridolfi, MD et al, Low 

Anterior Resection Syndrome: Current Management and Future Directions, 29 Clinics 

in Colon and Rectal Surgery 239, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC49919

69/; Nephrectomy (kidney removal), Mayo Clinic, https://www.mayoclinic.org/testsprocedures/nephrectomy/about/pac-20385165 (last visited Aug. 31, 2024); Lobectomy, 

Johns Hopkins Medicine, https://www.hopkinsmedicine.org/health/treatment-tests-andtherapies/lobectomy (last visited Aug. 31, 2024).

251 Mintz Tr. 594-95.

252 Id. at 592-98; JX 2125; JX 1878.

253 JX 2131.

254 Id. at 26-28.
45

The hysterectomy lab was a breakthrough for the iPlatform team, since it marked the 

first time a surgeon was able to perform a procedure using all six robotic arms.

255

Overall, the KOLs “were confident that both systems w[ould] be clinically 

capable.”256 Although they raised problems with iPlatform (and Verb), the Auris 

team left Project Manhattan feeling encouraged with iPlatform’s performance.

257

 

The first iPlatform milestone (the General Surgery Milestone) was still 2.5 years 

away, with subsequent milestones to be completed in 4.5 years.

M. iPlatform “Wins” the Bake-Off

On June 16, 2019, Martin reported to McEvoy and other J&J leaders that 

iPlatform “performed well and managed to complete” all KOL procedures.258 By

this point, Martin and Shen had agreed that parallel pathing both robots would be an 

unsuccessful strategy.259 They believed that only one system should be brought to 

market. After considering KOL feedback, along with the vision and unique features 

of iPlatform, Shen and Martin recommended to McEvoy that J&J prioritize 

iPlatform.260 

255 Mintz Tr. 596-98; see Pl.’s Trial Demonstrative (“Pl.’s Dem.”) 8 (video of the lab being 

performed).

256 JX 2131 at 18.

257 Moll Tr. 80; Mintz Tr. 598-600.

258 JX 2103.

259 JX 2144.

260 JX 2164; JX 2236.
46

But “go[ing] with iPlatform” did not mean abandoning Verb.261 Consistent 

with J&J’s goals and budget, Shen, Martin, and others discussed combining the 

systems instead.262 Shen thought that “[c]ombining 2 programs into 1 ma[de] all the 

sense from [a] traditional development standpoint – focus, budget, priority” to 

compete with Intuitive.263

The J&J team prepared a recommendation to Gorsky, which projected 

iPlatform 2019, 2020, and 2021 launch dates and a Verb launch date sometime after 

2021.264 A slide showing the technical synergies between iPlatform and Verb 

identified where iPlatform parts could be “plan B option[s]” should Verb’s

development stall.265 Gorsky asked that more elements of Verb be added to 

iPlatform.266 

In late September, Martin recommended to Gorsky that J&J pursue a 

combination system of iPlatform “augmented by incremental [V]erb capabilities 

261 JX 2164.

262 JX 2180.

263 Id.

264 JX 2275 at 32.

265 Id. at 45.

266 DeFonzo Tr. 408-09 (“Celine informed me sometime in mid-July that Alex had asked 

the team to go back and find more elements of Verb to include in the iPlatform.”). Martin 

could not remember this discussion, or most of the other deliberations from this period. 

See Martin Tr. 1684-1689. DeFonzo’s testimony was overall credible, supported by 

Gorsky’s hope of meshing the robots, and the subsequent events.
47

incl[uding] the Verb surgeon console.”267 Gorsky questioned why the financial 

valuations for Verb and iPlatform were higher separately than when the systems 

were combined and noted that the combination would “lead[] to some delay.”

268

 

When McEvoy asked for clarification, J&J Chief Financial Officer Flavia Pease 

explained that the lower valuation “still assumes all Auris milestones being paid in 

full” and offered to “discuss further live.”269 McEvoy subsequently told Gorsky that 

the combined Verb/iPlatform valuation improved “when you consider what will also 

happen with contingent payment”—meaning the earnout.270 Gorsky gave the team 

the “green light” to proceed with next steps.271

N. The FDA’s New Pathway Guidance 

Despite the challenges of Project Manhattan, Auris strove to get iPlatform

back on track for regulatory approval. On June 28, Auris sent the FDA a presubmission for iPlatform with RYGB and inguinal hernia repair indications.

272

 

267 JX 2594 at 20; Martin Tr. 1683-84.

268 JX 2599.

269 Id.

270 JX 2606; McEvoy Tr. 2637; McEvoy Dep. Day 2 207-08; see also JX 2584 at 26.

271 Martin Tr. 1693.

272 JX 2328 at 43. A laparoscopic inguinal hernia procedure repairs a hernia in the groin 

area through small incisions. See Inguinal hernia, Mayo Clinic, https://www.mayoclinic. 

org/diseases-conditions/inguinal-hernia/diagnosis-treatment/drc-20351553 (last visited 

Aug. 31, 2024).
48

Auris also selected a different da Vinci predicate device than the one it had listed in 

its prior submission to address the FDA’s initial feedback.

273

In a Verb-related meeting with the FDA on August 5, J&J learned that “going 

forward,” the agency believed that the 510(k) pathway would be closed for any new 

RASD.

274

 The FDA reached this decision due to the systems’ “complexity” and 

difficulties “mak[ing] a substantial equivalence determination” for a predicate 

device.275 The FDA “indicated” that the “De Novo pathway [wa]s still a potential 

option” versus the more complex PMA pathway.276 In assessing the effect of this 

pathway change on Verb’s launch schedule, J&J’s regulatory team concluded that 

De Novo review would yield “[n]o significant timeline differences compared to a 

510(k)” review.277

The next month, the FDA notified J&J that the 510(k) pathway was likewise 

closed to iPlatform.278 On January 6, 2020, the FDA confirmed that iPlatform could 

seek approval through the De Novo pathway instead of PMA.

279

 This was seen as a 

273 JX 2328 at 46; see supra notes 70-72 and accompanying text.

274 JX 2512 at 5.

275 Id.

276 Id.

277 JX 2396 at 12-13.

278 JX 6116 at 4; see also JX 2620; JX 6117.

279 JX 2951 at 6; Shen Tr. 1174; see also JX 2396 at 2; Bryant Tr. 2514-16.
49

positive outcome.

280

 It was still within the five-month buffer built into iPlatform’s 

timeline to achieve its 2021 General Surgery Milestone, not to mention the longer 

timelines for the 2023 milestones.281 And once iPlatform obtained De Novo 

approval, it could use the 510(k) pathway for future indications by serving as its own 

predicate device.282

O. Manhattan

On December 5, 2019, J&J management recommended to the J&J Board that 

the company proceed with “a combined platform where Auris’ iPlatform is 

augmented by Verb assets including the open surgeon console, intra-procedure data 

capabilities and the surgeon portal.”283 The combination robot, called “iPlatform+,”

was described as a “[n]ext generation robotic platform designed with more 

flexibility, more control, and more information to elevate [the] surgeon experience 

[and] improve patient care.”284

As part of the combination plan, the J&J Board approved a full acquisition of 

Verb by buying out residual assets from Verily.

285

 On December 19, J&J “signed 

280 See Shen Tr. 1174.

281 JX 1689 at 13.

282 JX 2396 at 12.

283 JX 2732 at 4; see Martin Tr. 1693.

284 JX 2800 at 4.

285 JX 2732 at 4.
50

the Manhattan (Verb) option agreement.”286 J&J “execute[d] Manhattan” on 

February 19, 2020 for a purchase price of approximately $155 million.287

Afterward, J&J worked to integrate Verb’s resources into Auris. The Auris 

leadership team was largely sidelined. A “[f]ull [s]peed [m]igration” of more than 

“200 [Verb] employees” to the iPlatform team commenced.288 A calamity of excess 

and redundancy resulted.

289

 Hostility abounded between the two factions, which had

just faced off in Project Manhattan for the survival of their respective projects.

290

 

J&J soon announced layoffs on both teams.291 

Within a year of the integration, every engineer from legacy Auris’s iPlatform 

clinical engineering team left the company—a “devastating” loss for the program.292 

Meanwhile, Verb software engineers insisted on re-writing iPlatform’s code.

293

 

Significant attrition of legacy Auris software engineers followed.

294

286 JX 2833 (“Manhattan signed!”).

287 JX 3407; JX 2656 at 1. 

288 JX 2743 at 11; see Mintz Tr. 609-11.

289 JX 3094.

290 JX 2743 at 11; DeFonzo Tr. 425-427; see also JX 2991 at 4.

291 JX 3272 at 12; JX 3280.

292 Mintz Tr. 616-17.

293 Id. at 613-14; JX 3194.

294 Pl.’s Dem. 7; Mintz Tr. 612-615.
51

P. The Milestone Write-down

In April 2020, J&J internally wrote down the value of the iPlatform and GI 

regulatory milestones to zero.295 J&J also wrote down the net sales milestones.

296

 

These write-downs created an on-the-books profit of $983.6 million for J&J.

297

 An 

internal memo stated that the write-down was prompted by the FDA’s shift from the 

510(k) to the De Novo pathway for iPlatform.298 

J&J publicly announced the write-down on April 14.

299

 Auris leadership 

learned about the write-downs around that time.

300

 McEvoy and Shen told Moll that 

change was a result of the FDA’s pathway change.301 Fortis sent J&J an information 

request, and J&J issued a litigation hold on April 24.

302

With the milestones written off and litigation looming, J&J instituted a “new 

reality” for Auris.

303

 Martin and her team rolled out an employee incentive plan that 

295 JX 3139; Shen Tr. 1171; Lenard Tr. 1827-28. Internal communications suggest that 

J&J finance leaders had been considering the potential effects of writing down the 

milestones since October 2019. See JX 2675.

296 JX 3139.

297 Id.; see also JX 5149 at 26.

298 JX 3139. Draft talking points for a first quarter earnings call referred to the milestonerelated profit as a “material” amount of money to the company. JX 3112 at 9.

299 JX 3168; PTO ¶ 161.

300 Moll Tr. 95-96; Mintz Tr. 617. DeFonzo learned about the milestones from Martin a 

day before the announcement. DeFonzo Tr. 428.

301 JX 3193; Moll Tr. 95-96, 195, 198; see also JX 3253; Lenard Tr. 1830; JX 3392 at 15.

302 JX 5015; Shen Tr. 1174-75; JX 4490 at 9-10. 

303 Moll Tr. 95.
52

had been first discussed in late 2019.304 The revised employee “milestones” included 

bonuses upon iPlatform receiving FDA approval for “general surgery,” which was 

different from the first iPlatform regulatory milestone in the Merger Agreement.305 

The new incentive plan lacked any incentives for umbrella procedures and all GIrelated incentives were removed.306

 

Two months after the write-down of the iPlatform regulatory and GI 

milestones, J&J announced the formation of a “Tiger Team” to simplify iPlatform’s 

reporting structure.307 The iPlatform operational team was to report to Steve 

Joachim, who effectively replaced Mintz.308 Joachim was a leader of the Ethicon 

instrument development group that supported J&J’s robotics program.309 A systems 

engineer by training, he lacked prior experience with RASDs.

310

J&J also invested significant financial resources into the iPlatform/Verb 

program.311 By the end of November, McEvoy had requested $200 million to 

304 JX 2675 at 1; Moll Tr. 95-97; Mintz Tr. 617-18.

305 JX 3641 at 3-4; DeFonzo Tr. 430-32; Pl.’s Dem. 6.

306 See Pl.’s Dem. 6. 

307 JX 3363 at 5; JX 3391 at 9.

308 JX 3391 at 10.

309 JX 2233 at 2; Joachim Tr. 2156-57.

310 Joachim Tr. 2157, 2241; Mintz Tr. 618-19.

311 JX 3417 at 6, 8-9; JX 3465 at 13; Lenard Tr. 1858-62. 
53

develop the combined system.

312

 J&J’s allocation of resources to iPlatform 16 

months post-merger proved too little, too late.

Q. This Litigation

On October 12, 2020, Fortis Advisors LLC filed a Verified Complaint against 

J&J, Ethicon, Gorsky, McEvoy, Shen, and Morano.313 Fortis brought the suit in its 

capacity as the representative of former Auris stockholders. It advanced 12 causes 

of action, including equitable fraud, common law fraud, breach of the Merger 

Agreement, reformation, mutual mistake, civil conspiracy, breach of the implied 

covenant of good faith and fair dealing, and specific performance. 

R. J&J’s New Narrative

The iPlatform beta prototype—the second iteration of the full system—came 

online at the end of 2020.314 Auris had planned to go to clinical trials with, obtain 

FDA clearance for, and launch the beta version of iPlatform.315 The system 

experienced technical complications, including thermal, stability, and workspace 

issues.316 These were issues Auris had been aware of during the alpha iteration and 

viewed as “imminently solvable” until progress was derailed by Project 

312 JX 5231 at 20.

313 Dkt. 1.

314 JX 4181.

315 Mintz Tr. 662-63.

316 Id. at 619-20; Khan Tr. 3021; JX 3764 at 10-11, 21, 66, 83.
54

Manhattan.

317

 The integration of the Verb system created an added layer of stability 

complications for iPlatform.

318

 

A new account of the Auris acquisition began to emerge at J&J. In March 

2021, Shen sent Joachim an email titled “Very important thinking” that attached a 

“narrative document” outlining Shen’s own “reflection” on iPlatform.319 Shen wrote

that the “original plan was to launch the Verb system first, giving [iPlatform] [a] 3-

year time[line] to fully prove concept feasibility.”320 Shen noted that J&J’s “current 

challenge” with iPlatform was due to “design problems,” including “Work Space 

(Reach, Access and Collision Prevention, etc.).”321 

In early May, Joachim circulated a deck to J&J leadership citing technical 

issues as the reason for iPlatform program delays.322 Joaquin Duato, who replaced 

Gorsky as CEO in early 2022, asked why Shen had been unaware of iPlatform 

workspace issues sooner.323 Joachim began searching old due diligence files, 

317 Mintz Tr. 619-22.

318 Id. at 686.

319 JX 3814 at 1. The presentation referred to iPlatform as “Ottava,” which was the robot’s 

name at this point. 

320 Id. at 5.

321 JX 3814 at 5.

322 JX 5036.

323 JX 5247 at 1.
55

focusing on reports about arm design.324 The pre-merger design choice Auris 

engineers made between so-called “Silverton” and “Superton” style robotic arms 

was cast as evidence of Auris’s deceit during due diligence.

325

By the end of 2021, iPlatform was shelved.326 J&J pivoted to a system 

utilizing Verb’s bed-based architecture combined with certain iPlatform components

and accessories.327 

S. Litigation Continues

While iPlatform sat idle, Fortis’s litigation proceeded apace.

On December 13, 2021, Fortis’s equitable fraud, reformation, and civil 

conspiracy claims were dismissed.

328

 Individual defendants Gorsky, McEvoy, Shen, 

and Morano were also dismissed for lack of personal jurisdiction.329 

324 JX 3960.

325 JX 6149; Shen Tr. 1289-90; McEwen Dep. 161-62; Joachim Tr. 2218-19; Mintz Tr. 718.

326 JX 4322 at 2.

327 Id.

328 Dkt. 102.

329 Id.
56

A ten-day trial began on January 16, 2024.330 Just before trial began, Fortis 

voluntarily dismissed its mutual mistake and unjust enrichment claims.

331

 Post-trial 

briefing and argument were completed on May 22, 2024.332 

II. ANALYSIS

Fortis advances both contract and fraud claims against J&J. Its contract-based 

contentions include that J&J repudiated and breached the Merger Agreement and 

breached the implied covenant of good faith and fair dealing. As to fraud, Fortis 

argues that J&J deceived Auris into merging and accepting a contingent payment for 

the Monarch Soft Tissue Ablation Milestone.

I begin with the contract theories. Fortis proved that J&J breached its efforts 

obligation and the implied covenant regarding the iPlatform regulatory milestones 

but not the Monarch-related or net sales milestones. It did not prove that J&J 

repudiated the Merger Agreement. 

As to its fraud theories, Fortis met its burden regarding J&J’s statements about 

the Monarch Soft Tissue Ablation Milestone. It did not prove that J&J’s more 

general statements about future intentions for Auris amount to fraud.

330 Dkt. 539.

331 Dkts. 527-28.

332 Fortis Advisors LLC’s Opening Post-trial Br. (Dkt. 561) (“Pl.’s Opening Post-trial 

Br.”); Defs.’ Answering Post-trial Br. (Dkt. 562); Fortis Advisors LLC’s Reply Post-trial 

Br. (Dkt. 566); see also Dkts. 571-72.
57

Fortis is entitled to damages for the breach of contract, implied covenant, and 

fraud claims on which it prevails. Damages total $1,011,271,21.009, inclusive of 

pre-judgment interest for milestones that expired before trial and exclusive of prejudgment interest owed since then.

A. Breach of Contract

“Under Delaware law, the elements of a breach of contract claim are: 1) a 

contractual obligation; 2) a breach of that obligation by the defendant; and 

3) resulting damage to the plaintiff.”333 Fortis has the burden to prove each element 

by a preponderance of the evidence.334 “Proof by a preponderance of the evidence 

means proof that something is more likely than not.”335

“A contract’s express terms provide the starting point in approaching a 

contract dispute.”336 “Delaware law adheres to the objective theory of contracts,” 

meaning that “a contract’s construction should be that which would be understood 

by an objective, reasonable third party.”337 “When interpreting a contract, [the] 

333 H-M Wexford LLC v. Encorp, Inc., 832 A.2d 129, 140 (Del. Ch. 2003).

334 Narayanan v. Sutherland Global Hldgs. Inc., 2016 WL 3682617, at *8 (Del. Ch. July 

5, 2016) (citing Agilent Techs., Inc. v. Kirkland, 2010 WL 610725, at *13 (Del. Ch. Feb. 

18, 2010)).

335 inTEAM Assoc., LLC v. Heartland Payment Sys., Inc., 2016 WL 5660282, at *13 (Del. 

Ch. Sept. 30, 2016) ), aff’d in part, rev’d in part on other grounds sub nom. Heartland 

Payment Sys., LLC v. Inteam Assocs., LLC, 171 A.3d 544 (Del. 2017).

336 Ostroff v. Quality Servs. Labs., Inc., 2007 WL 121404, at *11 (Del. Ch. Jan. 5, 2007).

337 Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010) (citation omitted).
58

Court ‘will give priority to the parties’ intentions as reflected in the four corners of 

the agreement.’”338 “Absent some ambiguity, Delaware courts will not distort or 

twist contract language under the guise of construing it.”339 These principles guide 

my review of the Merger Agreement.

1. The Earnout Structure

Fortis, on behalf of Auris’s former stockholders, seeks recovery of the 

contingent consideration memorialized in the Merger Agreement. Auris received 

$3.4 billion in cash at closing.340 Its stockholders stood to gain another $2.35 billion 

in earnout payments, $1.15 billion of which was conditioned on iPlatform obtaining 

regulatory approval for increasingly complex procedures by staged deadlines.341 

“An earn-out is a provision in an acquisition agreement that makes a portion 

of the purchase price payable to the seller if/when certain post-closing performance 

targets are achieved.”342 It is a popular means to bridge price gaps between buyers 

338 Salamone v. Gorman, 106 A.3d 354, 368 (Del. 2014) (quoting GMG Cap. Inv., LLC v. 

Athenian Venture P’rs I, L.P., 36 A.3d 776, 779 (Del. 2012)).

339 Allied Cap. Corp. v. GC-Sun Hldgs., L.P., 910 A.2d 1020, 1030 (Del. Ch. 2006). 

Neither party argues that the relevant provisions of the Merger Agreement are ambiguous, 

and I find no ambiguity.

340 Merger Agreement §§ 2.03(a)(ii), 10.03(l), 10.03(w).

341 Id. § 2.07(a).

342 Richard De Rose, The Ins and Outs of Earn-Outs: A Delaware Perspective, ABA 

Business Law Today (Mar. 2022), https://www.americanbar.org/groups/business_law/res

ources/business-law-today/2022-march/the-ins-and-outs-of-earn-outs-a-delawareperspective/.
59

and sellers, with different considerations for each.343 Buyers can mitigate valuation 

risk since the contingent payment is based on the seller’s actual future performance 

rather than its projections. Sellers give up guaranteed cash but stand to gain a greater 

payment overall than they might otherwise receive upfront if defined milestones are 

met.

A key point of tension in negotiating an earnout structure is allocating postclosing operational control.344

 The buyer prefers to freely manage the post-closing 

activities of the business and to minimize earnout payments. For the buyer, a 

favorable approach grants it the right to operate the business in its sole discretion, 

limited only by good faith.345 The seller, by contrast, would rather retain a say in the 

acquired business and to maximize earnout payments. It may bargain for a

contractual assurance that the buyer will devote certain “efforts” toward meeting the 

milestones.346 

343 JX 3955 at 4 (Leonidas G. Barbopoulos & Jo Danbolt, The Real Effects of Earnout 

Contracts in M&As, 44 J. Fin. Rsch., 607, 610 (2010) (citation omitted)).

344 See JX 4046 at 3-4 (Richard Harroch, Understanding Earnouts in Mergers and 

Acquisitions, Forbes (June 26, 2021), https://forbes.com/sites/allbusiness/2021/06/26/und

erstandingearnoutsin-mergers-and-acquisitions/).

345 See, e.g., LaPoint v. AmerisourceBergen Corp., 2007 WL 2565709, at *10 (Del. Ch. 

Sept. 4, 2007) (considering a provision requiring that the buyer “act in good faith during 

the Earnout Period” and not “undertake any actions during the Earnout Period any purpose 

of which is to impede the ability of the [seller’s] [s]tockholders to earn the Earnout 

Payments”). 

346 See Himawan v. Cephalon, Inc., 2024 WL 1885560, at *7 (Del. Ch. Apr. 30, 2024) 

(discussing a buyer-friendly efforts standard where the buyer was given “complete 

discretion with respect to all decisions” related to purchased asset, limited only by an 
60

“Variations on the ‘efforts’ concept include commitments to make: ‘good 

faith efforts,’ ‘commercially reasonable efforts,’ ‘reasonable efforts,’ ‘reasonable 

best efforts’ and ‘best efforts.’”

347

 From a transactional standpoint, these variations 

reflect “a hierarchy from lowest (good faith efforts) to highest (best efforts) level of 

commitment.”348 This is logical as a matter of plain English since the words used 

have different meanings.349 But there is no agreement in case law over whether they 

create different standards. Delaware courts have viewed variations of efforts 

obligation to use commercially reasonable efforts to earnout milestones); see also 

Neurvana Medical, LLC v. Balt USA, LLC, 2020 WL 949917, at *15-16 (Del. Ch. Feb. 27, 

2020) (interpreting an asset purchase agreement that gave the buyer “sole discretion and 

authority post-closing” to make decisions about a product, which discretion was limited by 

an “outward facing” commercially reasonable efforts requirement). 

347 Peter Atkins & Edward Micheletti, “‘Reasonable Efforts’ Clauses in Delaware: One 

Size Fits All, Unless . . . ,” Harvard Law School Forum on Corporate Governance (Nov. 

22, 2018), https://corpgov.law.harvard.edu/2018/11/22/reasonable-efforts-clauses-indelaware-one-size-fits-all-unless/ (last visited Aug. 30, 2024).

348 Id.; see also 1 ABA Mergers and Acquisitions Committee, Model Stock Purchase 

Agreement with Commentary 212 (2d ed. 2010) (describing a “general sense of hierarchy 

of various types of efforts clauses”); 2 Lou R. Kling et al., Negotiated Acquisitions of 

Companies, Subsidiaries and Divisions § 13.06 (2024) (“[M]ost practitioners treat 

‘reasonable efforts,’ ‘commercially reasonable efforts’ and ‘reasonable best efforts’ as all 

different from, and as imposing less of an obligation than, ‘best’ efforts. There is no 

universal agreement, however, as to whether these three standards are, as a practical matter, 

any different from each other; notwithstanding the fact that ‘reasonable best efforts’ sounds 

as if it imposes more of an obligation than ‘commercially reasonable efforts.’”).

349 E.g., Best, Merriam-Webster, https://www.merriam-webster.com/dictionary/best (last 

visited Aug. 31, 2024) (defining “best” as “excelling all others” or “most productive of 

good; offering or producing the greatest advantage, utility, or satisfaction”); Reasonable, 

Merriam-Webster, https://www.merriam-webster.com/dictionary/reasonable (last visited 

Aug. 31, 2024) (defining “reasonable” as “being in accord with reason” or “moderate, 

fair”).
61

clauses—particularly those using the term “reasonable”—as largely 

interchangeable.350

More important, then, is carefully drafting language that delineates the efforts 

expected of the buyer relative to the achievement of the milestones. The parties can 

set an outward facing efforts definition that looks to an industry standard or other 

industry participants as a yardstick.351 This is generally seller friendly because the 

seller can cite external standards by which to measure the buyer’s efforts. 

Alternatively, the parties can set an inward facing definition, which applies the 

350 See Williams Cos., Inc. v. Energy Transfer Equity, L.P., 159 A.3d 264, 272 (Del. 2017) 

(holding that “commercially reasonable efforts” and “reasonable best efforts” both “impose 

obligations to take all reasonable steps to solve problems and consummate the 

transaction”); Akorn, Inc. v. Fresenius Kabi AG, 2018 WL 4719347, at *87 (Del. Ch. Oct. 

1, 2018) (observing the lack of support in case law “for the distinctions that transactional 

lawyers draw” between the various efforts clauses), aff’d, 198 A.3d 724 (Del. 2018) 

(TABLE); Channel MedSystems, Inc. v. Boston Sci. Corp., 2019 WL 6896462, at *37 n.410 

(Del. Ch. Dec. 18, 2019) (noting that a “commercially reasonable efforts” provision is 

functionally the same under Delaware law as a “reasonable best efforts provision” (citing 

Akorn, 2018 WL 4719347, at *87 & n.796)); 1 ABA Mergers and Acquisitions Committee, 

Model Stock Purchase Agreement with Commentary 213 (“[C]ase law offers little support 

for the position that ‘reasonable best efforts,’ ‘reasonable efforts,’ or ‘commercially 

reasonable efforts’ will be interpreted as separate standards less demanding than ‘best 

efforts.’”). 

351 See Kristian A. Werling & Richard B. Smith, “Commercially Reasonable Efforts” 

Diligence Obligations in Life Science M&A, 18 The M&A Lawyer (June 2014); e.g., 

Himawan, 2024 WL 1885560, at *11 (evaluating a merger agreement defining 

“commercially reasonable efforts” as “the exercise of such efforts and commitment of such 

resources by a company with substantially the same resources and expertise as [the buyer], 

with due regard to the nature of efforts and cost required for the undertaking at stake”); 

Neurvana, 2020 WL 949917, at *16-17 (dismissing a claim for breaching a commercially 

reasonable efforts provision that imposed an “outward facing definition” that applied “an 

industry-standard requirement . . . to define the diligence obligations of the buyer” where 

the complaint failed to identify comparators).
62

buyer’s own diligence standards.

352

 This is often more buyer friendly since the buyer 

can compare its past practices in similar situations to its present efforts. 

As the Merger Agreement here demonstrates, however, these generalizations 

are subject to exception given the highly customized nature of earnout structures. 

J&J and Auris agreed to an inward facing provision to measure J&J’s “commercially 

reasonable efforts” in advancing Auris’s products. But Auris bargained for three 

crucial protections. First, J&J’s efforts were to be in furtherance of “achiev[ing]

each of the Regulatory Milestones”—not J&J’s other corporate goals.353 Second, 

J&J was required to devote efforts consistent with its “usual practice” for a “priority 

medical device.”354 This was doubly advantageous to Auris. Efforts to achieve the 

regulatory milestones must be at the high level J&J—a top company in the 

industry—set for itself, and for “priority” devices within J&J.355 Third, J&J was 

352 See Werling, supra note 351; e.g., FMLS Holding Co. v. Integris BioServices, LLC, 

2023 WL 7297238, at *7 (Del. Ch. Oct. 30, 2023) (considering a claim based on an inwardlooking definition of commercially reasonable efforts, which looked to how the business 

was operating pre-merger); Banas v. Volcano Corp., 47 F. Supp. 3d 941, 946 (N.D. Cal. 

2014) (reviewing an inward facing “commercially reasonable efforts” clause requiring the 

buyer to use “efforts, sales terms, expertise and resources normally used by [Volcano] for 

other products, which, as compared with [products developed from the plaintiffs’ assets]; 

are of similar market potential at a similar stage in its development or product life, taking 

into account all reasonable relevant factors affecting the cost, risk and timing of 

development and the total potential of the applicable [developed products], all as measured 

by the facts and circumstances at the time such efforts are due”).

353 Merger Agreement § 2.07(e)(i).

354 Id. § 2.07(e)(ii). 

355 See DeFonzo Tr. 381-82 (recalling that Morano encouraged Auris to accept an inward

facing standard by assuring it that J&J’s standard exceeded industry standards); id. at 382-
63

prohibited from acting “based on taking into account the cost of making any Earnout 

Payment(s).”356 This limitation is more restrictive than the typical requirement that 

a buyer not affirmatively act (or fail to act) for the purpose of thwarting an earnout 

payment.357 The Merger Agreement also lacks language granting J&J complete 

discretion over decisions relating to Auris’s business.358 

With these assurances, Auris agreed to a deal with an earnout component.

359

 

That is, it forewent guaranteed cash in exchange for assurances that J&J would 

promote—not impair—its ability to reach the regulatory milestones. For J&J, this 

83 (discussing the choice of “priority medical device” language as a “residual assurance” 

that iPlatform would be prioritized within J&J). J&J put forth the expert opinion of Peter 

Hinchliffe on whether J&J’s conduct was commercially reasonable. The Fortis expert he 

was rebutting—Dr. Paul Gompers—did not opine on this matter. To the extent that 

Hinchliffe offered any proper rebuttal testimony, much of it verged on legal opinions that 

I decline to accept. But even Hinchliffe acknowledged that the inward facing efforts 

standard in the Merger Agreement favored Auris. Hinchliffe Tr. 3145-46 (agreeing that 

the “inward-facing standard in the contract” favored Auris due to J&J’s “high standards 

relative to the rest of the industry”).

356 Merger Agreement § 2.07(e)(iii).

357 See S’holder Rep. Servs. LLC v. Albertsons Cos., 2021 WL 2311455, at *1 (Del. Ch. 

June 7, 2021) (discussing a “typical” provision in which the buyer “bargained for the right 

to operate [the seller] post-closing in its discretion limited only by its express commitment 

not to operate [the seller] in a manner intended to avoid the obligation to pay the earnout”); 

see also infra note 391 (citing precedent).

358 See supra note 346 and accompanying text (discussing precedent).

359 See JX 278 at 6-7 (Luca Viarengo et al., Enforcement Quality and the Use of Earnouts 

in M&A Transactions: International Evidence, 45 J. Bus. Fin. & Acct., 437, 442-43 (2018) 

(observing that a seller may agree to an earnout clause if the contractual protections are 

“strong,” making the seller “more confident that it will obtain what it is due”).
64

meant that it paid less upfront but lost the ability to exercise unchecked discretion 

over the Auris products.

As discussed below, Auris’s expectations went unmet. J&J did not devote 

commercially reasonable efforts to achieve the milestones consistent with those 

given to a priority device. Instead, it repeatedly impeded and impaired the 

development of Auris’s products. J&J’s efforts might have been beneficial to its 

broader robotics program, its profit margins, or its commercialization strategy. But 

they were wholly inconsistent with J&J’s promises to Auris.

2. Whether J&J Breached the Efforts Provision

The Merger Agreement includes a bespoke “[e]fforts” clause.360 Section 

2.07(e)(i) imposes on J&J an affirmative obligation to use “commercially reasonable 

efforts” to advance the achievement of the iPlatform and Monarch regulatory 

milestones.

From and after the Closing Date until the earlier to occur of the 

latest Earnout Period End Date with respect to the Regulatory 

Milestones or the date on which each of the Regulatory 

Milestones have been achieved in accordance with this 

Agreement, Parent shall, and shall cause its Affiliates (including 

the Surviving Corporation) to, use commercially reasonable 

efforts to achieve each of the Regulatory Milestones (excluding, 

once achieved, any such Regulatory Milestones that may have 

been achieved).361 

360 Merger Agreement § 2.07(e) (“Efforts; Certain Transfers”).

361 Id. § 2.07(e)(i).
65

The express requirement that J&J’s objective be “to achieve each of the Regulatory 

Milestones” stands in stark contrast to J&J’s understanding that it could “make 

whatever decisions needed to be made” about the Auris products “in the context of 

the rest of [J&J’s] business.”362

Delaware courts have interpreted “commercially reasonable efforts” clauses 

as requiring a party “to take all reasonable steps” toward an end.363 Here, the parties 

bargained for a meaning. Section 2.07(e)(ii) of the Merger Agreement defines 

“commercially reasonable efforts” as:

the expenditure of efforts and resources in connection with 

research and development and obtaining and furnishing of 

information to and communications with applicable 

Governmental Entities in connection with obtaining the 

applicable 510(k) premarket notification with respect to the 

applicable Robotics Products consistent with the usual practice 

of Parent and its Affiliates with respect to priority medical device 

products of similar commercial potential at a similar stage in 

product lifecycle to the applicable Robotics Products[.]364 

362 Morano Tr. 1532-34 (“[I]f we were spending $3.4 billion on [Auris], we were going to 

own the company, and we wanted and needed the right to be able to make whatever 

decisions needed to be made appropriately moving forward in the context of the rest of our

business.”); e.g., JX 2339 (Martin to DeFonzo: “As a general note, we will manage the 

milestones to do what is the right for the business. They are meant to be collective 

incentives to drive the business in the right direction in service of maximizing value.”); 

Martin Day 2 Dep. 564-65 (testifying that the goal was to “develop a system to delight the 

customers” because the “marketplace [] was waiting for a system from Johnson & 

Johnson”); see also JX 1663; JX 6206.

363 Williams Cos., 159 A.3d at 273; see also Akorn, 2018 WL 4719347, at *86-88; 

Himawan v. Cephalon, Inc., 2018 WL 6822708, at *7 (Del. Ch. Dec. 28, 2018) (citation 

omitted).

364 Merger Agreement § 2.07(e)(ii); see also id. § 10.03(eee) (defining “Robotics 

Products”).
66

The definition goes on to list ten factors J&J may “take into account” in setting its 

level of efforts for a “priority medical device”:

(A) issues of efficacy and safety, (B) the risks inherent in the 

development and commercialization of such products, (C) the 

expected and actual competitiveness of alternative products sold 

or licensed by third parties in the marketplace, (D) the expected 

and actual patent and other proprietary position of the product, 

(E) the likelihood and difficulty of obtaining FDA and other 

regulatory approval given the nature of the product and the 

regulatory structure involved, (F) the regulatory status of the 

product and scope of any marketing approval, (G) pending or 

actual legal proceedings with respect to the applicable Robotics 

Product, (H) whether the product is subject to a clinical hold, 

recall or market withdrawal, (I) input from regulatory experts and 

any guidance or developments from the FDA or similar 

Governmental Entity, including as it may affect the data required 

to obtain premarket approval from the FDA or any similar 

approval from another Governmental Entity and (J) the expected 

and actual profitability and return on investment of the product, 

taking into consideration, among other factors, the expected and 

actual (1) third party costs and expenses, (2) royalty and other 

payments and (3) pricing and reimbursement relating to the 

product(s).365

Section 2.07(e)(iii) prohibits J&J from making decisions to avoid, or based on, the 

milestones:

Parent shall not, and shall cause its Affiliates (including the 

Surviving Corporation) not to, take any actions, or refrain from 

taking any actions, concerning the business or operations of 

Parent or any of its Affiliates (including the Surviving 

Corporation) (A) with the intention of avoiding any of Parent’s 

obligations to pay any Earnout Payment or (B) based on taking 

into account the cost of making any Earnout Payment(s) made, 

365 Id. § 2.07(e)(ii).
67

or actually or potentially to be made, pursuant to this 

Agreement.366

Together, these provisions provide several layers of protection for Auris.

Although the ten factors J&J could consider in expending efforts and 

resources gave it some measure of discretion, the mandate that J&J follow its “usual 

practice” for “priority medical device[s]” cabined it.367 The phrase “priority medical 

device” is undefined in the Merger Agreement. Based on its usual meaning, a 

“priority” device is one given “superiority in rank, position, or privilege.”368 J&J 

identified a single comparator “priority medical device at a similar stage in product 

lifecycle” to iPlatform and Monarch: an orthopedic RASD called Velys.369 

Velys was developed through an MVP strategy starting with simple, buildable 

functionality and a single indication.370 It lacked perfect performance statistics 

before receiving its first FDA clearance in January 2021 and was not superior (or 

366 Id. § 2.07(e)(iii).

367 Id. § 2.07(e)(ii). 

368 Priority, Merriam-Webster, https://www.merriam-webster.com/dictionary/priority (last 

visited Aug. 30, 2024); Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728, 738 

(Del. 2006) (“Under well-settled case law, Delaware courts look to dictionaries for 

assistance in determining the plain meaning of terms which are not defined in a contract.”).

369 See Heda 30(b)(6) Dep. 29-32; PTO ¶ 164; cf. Banas, 47 F. Supp. 3d at 947 (applying 

Delaware law; discussing the importance of considering a relevant comparator device by 

which to measure commercially reasonable efforts where no adequate comparator was 

identified).

370 See PTO ¶ 164; JX 4246 at 3; Waterson Dep. 98-99; Shen Tr. 1227-28.
68

even equivalent) to its market-leading rival upon launch in August 2021.

371

 Velys 

employees were given cash incentives to achieve rapid FDA clearance.372 

iPlatform received starkly different treatment than Velys. Instead of being 

prioritized, J&J subjected iPlatform to efforts that impaired its development and 

ability to secure planned clearances. J&J’s efforts benefitted another device—

Verb—at iPlatform’s expense. It is obvious from the record that J&J’s efforts 

toward the iPlatform regulatory milestones were not commercially reasonable, as 

defined in the Merger Agreement. J&J’s breaches are, instead, reasonably certain 

to have caused iPlatform to miss its regulatory milestones.

I reach a different conclusion regarding Monarch. J&J diminished aspects of 

the Monarch program while prioritizing others. Fortis did not prove that these 

actions reflect a breach of J&J’s efforts obligation.

a. Efforts Towards the iPlatform and GI Milestones

The Merger Agreement required J&J to use “commercially reasonable 

efforts,” as defined in Section 2.07(e)(ii), to achieve the regulatory milestones.373 

Six regulatory milestones are tied to FDA clearance of iPlatform for increasingly 

371 See Waterson Dep. 180-81; JX 3717; JX 3963; JX 4481 at 19-20; see also PTO ¶¶ 165-

66.

372 Waterson Dep. 103-106.

373 Merger Agreement § 2.07(e)(ii); see Shen Tr. 1150-51 (confirming his understanding 

that J&J had an obligation to “exercise priority efforts to achieve the regulatory milestones 

in the merger agreement”).
69

complex laparoscopic procedures.374 A seventh—the GI Milestone—concerned 

clearance for an endoluminal procedure and could be satisfied with either iPlatform 

or Monarch.375 J&J did not bestow on iPlatform the efforts and resources to achieve 

these milestones that would befit a “priority” device.376 

Instead, J&J thrust iPlatform into a showdown with Verb. The fallout from 

Project Manhattan grew when the iPlatform robot and team were forced to merge 

with Verb. Compounding iPlatform’s challenges, the iPlatform and GI regulatory 

milestones were deprioritized when they were written off and different incentives 

were imposed. This is the antithesis of the commercially reasonable efforts expected 

for a “priority” device. 

i. Project Manhattan

Within weeks of closing, iPlatform was pitted against the Verb robot for the 

Project Manhattan competitive assessment.377 To prevail, Auris had to prepare for 

a series of in-house surgical challenges rather than progress iPlatform’s 

development. Auris’s engineering team scrambled to gain functional system 

stability so that the fledgling iPlatform alpha robot could face the post-beta Verb—

374 Merger Agreement § 2.07(a)(iii)-(vii).

375 Id. § 2.07(a)(viii).

376 Id. § 2.07(e)(ii).

377 See supra Section I.L; see also JX 1702 (“Plan to Technically Assess Verb Platform 

and iPlatform”).
70

taking on extensive “technical debt” in the process.378 The legacy Auris team saw 

no alternative, since both iPlatform and Verb were “fighting for their lives.”379 Over 

80 Auris personnel were diverted to “support a 25-day lab period.”380 Many of the 

Project Manhattan procedures assigned to iPlatform were more advanced than those 

Auris intended to use to satisfy Regulatory Milestones.

J&J insists that imposing Project Manhattan on iPlatform did not breach its 

efforts obligation because the exercise was meant to “identify synergies in order to 

accelerate the development of the robots.”381 But Project Manhattan had no upside 

for Auris. It did not advance iPlatform’s development, provide it with resources, or 

bring it closer to regulatory approval. Quite the opposite.

For iPlatform, Project Manhattan caused needless setbacks and resource 

drains. To make matters worse, J&J delayed making resource decisions for Auris 

378 See Mintz Tr. 589-91 (describing how the workarounds to prepare for Project Manhattan 

eliminated any “firm foundation” to fix problems in a “measured, controlled way” 

necessary for a complex robot and created problems to solve later); Moll Tr. 254 

(explaining that Shen did not understand “all of the work that needed to be done just to get 

ready for any sort of technical assessment” and the “technical debt” Auris incurred “just to 

show up for this evaluation”); see also JX 4207.

379 DeFonzo Tr. 406 (“[W]e were in a fight for our lives. . . . Verb us, and us Verb.”); see 

also Moll Tr. 72 (“So we quickly characterized this as a bakeoff because the pitting of two 

systems against each other was – couldn’t have been more different than the description of 

a technology audit that had nothing to do with Verb, that had everything to do with 

iPlatform and Monarch and how it could be – progress could be accelerated by resources 

from J&J.”).

380 JX 2389 at 9; see also JX 2444 at 8; JX 2330.

381 Defs.’ Answering Post-trial Br. 6 (emphasis removed).
71

until the assessment was complete.382 For Verb, though, it was a boon. Through the 

assessment, J&J identified synergies between the robots so that iPlatform could 

optimize Verb.383 Doing so gave J&J something to show the market and its Board 

for years of substantial investments in Verb while staying within the Ashley 

Management Decision budget. This result might be appropriate if I were considering 

whether J&J had used commercially reasonable efforts to develop Verb as a priority 

device. But J&J agreed to devote such efforts to iPlatform in pursuing the regulatory 

milestones. The iPlatform milestones were sacrificed to aid the Verb program.

384

382 See JX 2103 (“July is a critical month with Manhattan project concluding. Auris’s 

future needs to be assessed against the outcome of these strategic decisions.”); Moll Tr. 86; 

see also JX 2403; JX 2019.

383 E.g., JX 6206 (Shen: “My original thought is to get Verb to market asap, and then 

iPlatform. Leverage as much as possible behind the scene. The overall consolidation of 

both platforms will take 5-10 years. The Tech Assessment will take us to the final 

decision.”); Lenard Day 2 Dep. 23-24 (“If there are ways for us to take those two–and 

combine them to optimize what would eventually be our value–I never heard about [Project 

Manhattan] as a comparison between the two.”). Lenard was J&J’s Vice President of 

Finance for J&J’s Robotics and Digital Solutions Group from 2019 until October 2022. 

Lenard Tr. 1785-1786.

384 JX 1630 (Shen to McEvoy: “[i]Platform is exciting, but there is so much we do not 

know. Verb has challenges, but we already have a working prototype which can perform 

preclinical surgeries. Instrument is also developed. We need to be all in for Verb. Verb 

+ iPlatform is our bullet proof strategy to compete.”); see also JX 1820 (Shen: “The Tech 

Assessment is the No. 1 priority at this point for all of us.”); JX 1703. 
72

Project Manhattan alone is sufficient to find that J&J breached its efforts 

obligation in Section 2.07(e) of the Merger Agreement. A “priority” device would 

not have to endure a costly battle merely to remain operative.

385

 But there is more.

ii. The Verb Combination and Integration

iPlatform’s success in Project Manhattan came at a crippling cost. It led to 

the iPlatform system being meshed with Verb components, including certain 

hardware.386 The complete integration of Verb into Auris followed.

Combining the RASDs hampered iPlatform’s launch and milestone 

achievement.387 Contemporaneous documents reflect that J&J knew pursuing the 

“[s]ingle, [o]ptimizied [p]latform” would negatively affect iPlatform’s development 

schedule.388 Worse, J&J anticipated that the delay would frustrate the iPlatform 

385 Nothing of the sort was required of Velys. See supra notes 370-72 and accompanying 

text.

386 JX 2594 at 20 (recommending “[g]o to market with Combination platform defined as 

‘iPlatform’+ (6-arm robotic architecture) augmented by incremental Verb capabilities incl. 

Open Console, Verily scope, Digital Assets at launch, followed by further iterations 

including UID integration”).

387 See Mintz Tr. 686 (discussing the difficulties faced by iPlatform’s beta version due to 

“integration challenges”); see also Gardiner Tr. 822 (recounting that beta’s software 

“crashed” when it was brought online).

388 See JX 2566 at 10 (Sept. 2019 Manhattan Financials Update: “Single, Optimized 

Platform launching in 2024 (+1 Year Delay to Combine)”); McEvoy Tr. 2635 

(acknowledging that combining the systems would mean a longer time to market for 

Auris); Lenard Tr. 1802-04; JX 2584 at 26 (draft investor presentation discussing “[l]onger 

time to market for Auris impacting retention” and “[m]ilestone [r]evisions for Auris 

employees” as considerations for combining Verb and iPlatform); see also JX 2554 at 23 

(J&J Sept. 2019 deck suggesting two year delay for combination); JX 5122 at 19-20 (J&J 

employee texts expressing concern that a deck indicating delay from the combination could 
73

regulatory milestones.389 Gorsky endorsed the combined system after understanding 

that J&J had a “good overall value case” from a fair market value perspective 

considering “what [w]ould also happen with the contingent payment.”390 This was 

not only inconsistent with J&J’s obligation to use commercially reasonable efforts 

to achieve the milestones. It was also contrary to J&J’s promise not to act “based 

on taking into account the cost of making any Earnout Payment(s).”391

be “used against us in litigation”); compare Dougherty Dep. 400-02, 404-05 (testifying that 

he was concerned Auris would learn about “scenario planning” to form a single platform),

with Dougherty Tr. 3170-72 (attempting to walk back his deposition testimony).

389 Unfortunately, Gorsky declined to attend trial and shed light on this exchange. Other 

potentially relevant evidence was lost because Gorsky failed to turn off auto-delete on his 

cell phone after receiving a litigation hold notice (in this and other litigation). Fortis moved 

for sanctions in October 2022. See Pl.’s Mot. to Compel Discovery and for Sanctions (Dkt. 

214). I reserved judgment on the motion until trial. With the benefit of a full record, I 

conclude that Gorsky’s failure to retain text messages is far from ideal, but it was neither 

reckless nor intentional. See Seibold v. Camulos P’rs LP, 2012 WL 4076182, at * (Del. 

Ch. Sept. 17, 2012) (explaining that “dispositive sanctions are “only appropriate where a 

party acts to intentionally or recklessly destroy evidence” (citation omitted)). Upon 

receiving the hold memo, Gorsky asked his assistant to ensure that he complied. Aff. of 

Alex Gorsky in Supp. of Defs.’ Opp’n to Pl.’s Mot. to Compel Discovery and for Sanctions 

(Dkt. 226) Ex. A. This instruction shows an intention to comply. He also testified during 

his deposition that he had enabled auto-delete on his phone years ago and simply forgot. 

Gorsky Dep. 323-24. Gorsky was negligent. He did not, however, spoliate evidence. 

390 JX 2606 at 1-2 (Oct. 1, 2019 email from McEvoy to Gorsky, in response to his inquiry 

about why the combined system had a lower valuation); see also JX 2599 at 2 (CFO Pease 

explaining, before McEvoy emailed Gorsky, that the lower valuation was based on 

assuming that the iPlatform milestones were paid); McEvoy Tr. 2636-37 “Q: [T]he 

contingent payment you wrote about there included the milestones that you were 

contemplating writing down; correct? A: I presume so.”).

391 Merger Agreement § 2.07(e)(iii). This provision lacks an intent requirement. Cf. 

Lazard Tech. P’rs, LLC v. Qinetiq N. Am. Operations LLC, 114 A.3d 193, 194 (Del. 2015) 

(discussing a provision in a merger agreement prohibiting a buyer from “taking any action 

to divert or defer [revenue] with the intent of reducing or limiting the Earn-Out Payment”); 

id. at 195 (explaining that the Court of Chancery “properly held that [a] buyer’s action had 
74

The detrimental effects of the combination on iPlatform intensified when the 

entire Verb group was thrust upon Auris, which was trying to regain its footing after 

Project Manhattan.392 In J&J’s view, the integration is indicative of commercially 

reasonable efforts because Verb’s resources were being devoted to iPlatform.393 In 

reality, it was “highly disruptive,” as J&J had predicted.394 The Verb team, which 

had just learned it lost Project Manhattan, suddenly had to support a competitor 

robot. The iPlatform team went from nimble and focused to redundant and 

divided.395 The “devastating” departure of the entire legacy iPlatform clinical 

to be motivated at least in part by [an] intention” to avoid an earnout and was not required 

to find that avoidance was the buyer’s sole purpose).

392 I do not necessarily view the integration as a separate breach. It was a continuation of 

the injury from Project Manhattan and the robot combination. iPlatform could no longer 

pursue its development and commercialization strategy. It, instead, had to battle, merge, 

and integrate with a competitor device. 

393 See Defs.’ Answering Post-trial Br. 98-99.

394 JX 2743 at 11 (J&J presentation describing the integration strategy as a “[o]ne time, 

highly-disruptive change”); see DeFonzo Tr. 425-27 (describing the integration as a 

“horrible experience” for both Auris and Verb since they had been “pitted against one 

another,” which created a “toxic culture where, essentially, one program wins and the other 

program loses . . . [a]nd now, all of a sudden, it’s, like, let’s integrate these things”); JX 

2921 at 1 (DeFonzo expressing his concern to J&J that the directive to “integrate as quickly 

as possible” is “unreasonable if we expect it not to disrupt development activities and core 

business unit objectives”).

395 See JX 3094 (J&J’s Lenard: “After the Verb acquisition, I REALLY need to initiate 

layoffs – not just for my budget . . . but also for the good of the business. We have so many 

people now that we don’t know what do to with everyone and it’s slowing down our 

progress.”); Mintz Tr. 613 (“Verb’s software team at this point was almost twice the size. 

So now we have a situation where the team that sort of lost their baby was brought in to 

join this team, and they outnumbered them two to one. There’s a dynamic there, even in 

the best of times.”); see also JX 4495 (“Gompers Rep.”) ¶ 69 (describing the importance 

of “firm-specific” human capital for entrepreneurial endeavors).
75

engineering team, and a number of Auris software engineers, resulted.396 With Verb 

tethered to iPlatform, the swift pace Auris had once achieved was disrupted.397

J&J also argues that the combination and integration of Verb with iPlatform 

was a “commercially reasonable business decision[]” falling “well within J&J’s 

discretion under the contract.”398 This reflects a fundamental misreading of the 

Merger Agreement. J&J could consider various factors in assessing the level of 

efforts to devote. But the end goal of those efforts was to achieve the iPlatform 

regulatory milestones—not to further J&J’s robotics program.399 A “priority” device 

would not have its system, technology, and team diluted to fix another device’s 

problems.400

iii. Thwarting of iPlatform’s MVP Strategy

The milestone structure that J&J and Auris agreed upon reflected an MVP 

strategy, albeit not explicitly. The first iPlatform regulatory milestone—the General 

Surgery Milestone—could be satisfied by any upper and any lower abdominal 

396 See Mintz Tr. 612, 614-15 (explaining the “step back” to engineering and system 

stability caused by the integration and “significant” attrition that resulted); JX 3194.

397 See JX 2991 at 4 (Feb. 2020 internal J&J presentation stating “[w]e can’t underestimate 

the impact the ‘non bake-off bake-off’ has had on both companies”); Gompers Rep. ¶ 112 

(opining that by “impos[ing] integration burdens on Auris management,” J&J “impeded 

Auris’ ability to achieve the Acquisition milestones”).

398 Defs.’ Answering Post-trial Br. 103.

399 Merger Agreement § 2.07(e)(i).

400 Velys was never forcibly combined with another program. See Thomson Dep. 85-87; 

Waterson Dep. 328-39.
76

procedures.401 From there, iPlatform would build towards more specialized 

procedures to achieve the 2023 umbrella and GI regulatory milestones J&J had 

allowed iPlatform to select.

402

 The milestones proceeded iteratively from relatively 

simple to complex, without regard to architecture (e.g., number of arms used).403

At first, Auris considered pursuing either five-arm Nissen fundoplication or 

RYGB for the upper abdominal procedure and inguinal hernia repair for the lower 

abdominal procedure to satisfy the General Surgery Milestone.404 Choosing RYGB 

for the upper indication was ambitious yet ideal, since Auris would have met two 

milestones at once (the General Surgery and Upper Abdominal Milestones).405 But 

after Project Manhattan caused delay, Auris worried that RYGB was out of reach 

for 2021. It sought to simplify iPlatform’s initial indications and features for 

regulatory approval purposes.406 

401 Merger Agreement § 2.07(a)(iii).

402 Id. § 2.07(a)(iv)-(viii); see supra note 186 and accompanying text; supra note 194.

403 See Khan Tr. 3039-40.

404 JX 1729 at 21-22; Mintz Tr. 691-93 (explaining that Moll initially preferred to work 

towards five-arm procedures); JX 824 at 29; see supra notes 74, 250, 270. 

405 Sheehy Dep. 110-11 (Auris clinical engineer testifying: “If we could get two milestones 

at the same time with the same set of activities, that would have been more efficient than 

sequentially going from milestone 1 to milestone 2.”). Auris was confident at the time, 

based on its lab results, that iPlatform could perform RYGBs. See infra notes 541-43 and 

accompanying text.

406 JX 2199 (Moll suggesting to Shen and Martin that iPlatform “go with [the] smallest and 

most efficient clinical effort to achieve desired regulatory clearances –> ie work to and 

only to FDA defined clinical activities” to “accelerate [its] momentum”); Moll Tr. 86-90; 

see also JX 6206.
77

Moll’s requests to pursue an MVP version of iPlatform for its initial regulatory 

clearance, using simplified procedures that iPlatform was “very capable” of 

performing, were rebuffed by J&J.407 J&J continued to insist that iPlatform focus 

on RYGB—a procedure that would promote Ethicon instrument sales and broad 

commercialization while putting achievement of the General Surgery Milestone in 

peril.408 When Shen learned in May 2019 that Mintz planned to make “instrument 

trade-offs” to pursue 510(k) with a simplified indication, he asked a colleague to 

“intervene.”409

J&J believes that the ten factors listed in the Merger Agreement’s definition 

of commercially reasonable efforts allowed it to drive iPlatform towards the more 

complex procedure.410 For example, “expected and actual profitability” would be 

furthered by an RYGB indication using high margin Ethicon instruments.411 

407 Moll Tr. 88 (“RYGB is a more complex procedure. There are more questions with 

regard to port placement. There was more questions with regard to arm movement. We 

had lots of success in the lab with the single-quadrant procedures of gallbladders and 

Nissens and hernias and hysterectomies. We knew that we were very capable in those 

procedures.”); id. at 89-91.

408 Id. at 89-90.

409 JX 6206 at 1 (Shen: “We cannot do the wrong things for the sake of [the] timeline.”);

see also JX 2172 at 1 (June 2019 email from Shen to Martin: “Another thing that bothers 

me is our milestone incentives. That may not drive the right behaviors.”); Shen Tr. 1164-

65.

410 E.g., Shen Tr. 1170-71 (stating that he believed the Auris team was too focused on the 

milestones as “opposed to a great product” with commercial viability); see also Defs.’ 

Answering Post-trial Br. 44 (“Pursuing RYGB made commercial sense.”).

411 Merger Agreement § 2.07(e)(ii)(J); see Moll Tr. 89-91.
78

iPlatform’s “expected and actual competitiveness” versus da Vinci could also 

improve using a five or six-arm architecture.412 Still, J&J’s insistence that 

iPlatform’s foray into regulatory approval involve a complex five-arm procedure 

impeded the achievement of the 2021 milestone. It did not provide “efforts and 

resources . . . in connection with obtaining the applicable 510(k) premarket 

notification . . . consistent with the usual practice of [J&J] with respect to [a] priority 

medical device.”413

Although J&J was entitled to consider certain factors in devoting efforts and 

resources to iPlatform, its discretion was not free floating. J&J was not, for example, 

permitted to prioritize commercialization, product differentiation, or short-term 

profitability at the expense of achieving the milestones. 

Even if it could, those considerations were promoted through an MVP 

approach for regulatory approval. Auris proved that:

• “[I]ssues of efficacy and safety” counsel in favor of starting with 

a basic device and simple procedures before adding complexity 

in later iterations.414 

412 Merger Agreement § 2.07(e)(ii)(C).

413 Id. § 2.07(e)(ii).

414 Id. § 2.07(e)(ii)(A); see Shen Tr. 1168-69; Moll Tr. 16.
79

• “[T]he risks inherent in [] development” are lower with an MVP

strategy. It simplifies the system to ensure speed, flexibility, and 

reliability, which reduces development risk.415 

• “[T]he likelihood and difficulty of obtaining FDA and other 

regulatory approval” favors starting with a narrow indication 

before seeking to expand the device’s approval.416

• Commercial considerations—including “profitability and return 

on investment,” the “competitiveness of alternative products,” 

and the “risks inherent in . . . commercialization”—support an 

MVP strategy.

417

 An MVP approach would have allowed J&J to 

assess the valuable aspects of iPlatform before investing in the 

development of a fully featured product.418 Even a minimally 

viable version of iPlatform using fewer arms would have “plenty 

of differentiation” from da Vinci to drive adoption.419

Numerous witnesses at trial confirmed that it is industry standard to follow an 

MVP strategy for the development and regulatory approval of complex medical 

415 Merger Agreement § 2.07(e)(ii)(B); see Khan Tr. 3042 (J&J’s technical expert 

confirming that an MVP strategy promotes system speed, flexibility, and reliability); see 

also Khan Day 1 Dep. 214 (“The simpler the system at the initial stages, the easier it is to 

ensure system stability and solve other problems.”); Grennan Dep. 112-14 (J&J’s rebuttal 

economics expert testifying about MVP); Gompers Rep. ¶ 62 (“[T]he MVP approach 

accelerates time to market relative to the product-development model used by established 

companies to enter known markets.”).

416 Merger Agreement § 2.07(e)(ii)(E); see Tillman Tr. 2825-27 (J&J’s regulatory expert 

acknowledging that it is a common regulatory practice to seek clearance of an early device 

with limited functionality, which can be a predicate for future iterations); accord Wittwer 

Tr. 1959; see also Shen Tr. 1166-67; Moll Tr. 293-94; Khan Day 1 Dep. 209.

417 Merger Agreement § 2.07(e)(ii)(B), (C), (J); see Gompers Tr. 1935-36; Grennan Dep. 

112-14.

418 E.g., Shen Tr. 1169; Grennan Tr. 2545; Gompers Tr. 1916-18, 1935-36; Khan Tr. 3041-

42; Lopes Tr. 2444.

419 Moll Tr. 90; id. at 294-95; see also Shen Tr. 1167; Grennan Dep. 58.
80

devices.420 For RASDs in particular, the approach is highly efficient.421 In terms of 

priority devices, J&J’s own practice for Velys was to follow an MVP strategy.422 

Gorsky also had asked that an MVP approach be used for Verb.423 Thus, J&J’s 

insistence that iPlatform focus on a complex umbrella procedure to satisfy the 

General Surgery Milestone was not commercially reasonable in view of J&J’s 

obligation to devote efforts befitting a priority medical device. 

iv. The New Incentives

In April 2020, J&J wrote down the iPlatform and GI regulatory milestones to 

$0.424 This was an accounting measure; it did not eliminate J&J’s contractual 

obligation to fund earnout payments if Auris timely met milestones.425 But the write420 See Shen Tr. 1164, 1169; Khan Tr. 3041-42; Khan Day 1 Dep. 207, 209; Moll Tr. 15-

16.

421 See supra notes 19-22 and accompanying text.

422 See JX 4246 at 3 (“As part of the deal model, it was agreed that we would do a true 

MVP with the objective to enter the US market as quickly as possible.”); Waterson Dep. 

98-99; Shen Tr. 1227-28.

423 See JX 255 at 1 (“Alex has asked us to . . . make sure we hit the goals and deliver the 

first general ‘minimally viable product’”); JX 711 at 3 (targeting “1 indication” for a 

“[r]educed program scope” to accelerate launch); Shen Tr. 1167.

424 JX 3139 at 2; PTO ¶ 161.

425 Defs.’ Answering Post-trial Br. 111-12.
81

down was accompanied by an employee incentive program with targets different 

from the milestones in the Merger Agreement.426 

In contrast to the General Surgery Milestone that Auris had bargained for, the 

new regulatory approval incentive was based on FDA approval of iPlatform for a 

“general surgery” indication (like RYGB).427 The program set a target date for 

iPlatform’s initial FDA approval at the end of 2023—two years later than the 

deadline in the Merger Agreement.428 All other regulatory milestones for iPlatform 

and GI-related incentives were absent from the program.

429

 

These different inducements, coupled with J&J’s communications to Auris 

that the milestones were “canceled,”430 negatively affected employees’ motivation 

to work towards the iPlatform and GI regulatory milestones in the Merger 

Agreement.

431

 J&J was not using “commercially reasonable efforts” toward meeting 

426 JX 2675 at 1 (discussing, in October 2021, the potential need to “construct an employee 

specific plan to ‘restore’ milestone achievability through creating a new separate retention 

program”); Moll Tr. 95-97; Mintz Tr. 617-18.

427 Compare JX 3641 at 5, with Merger Agreement § 2.07(a)(iii); see also supra note 193 

and accompanying text.

428 Compare JX 3641 at 5, with Merger Agreement § 2.07(a)(iii).

429 Compare JX 3641 at 5, with Merger Agreement § 2.07(a)(iv)-(viii). It also replaced 

gross revenue-based sales milestones with incentives based on profitability and overseas 

expansion. Compare JX 3641 at 5, with Merger Agreement §§ 2.07(a)(ix)-(x).

430 See Moll Tr. 95-96, 195, 198; see also JX 3193.

431 See Gompers Rep. ¶ 117.
82

the regulatory milestones “consistent with [J&J]’s usual practice” for a “priority” 

device.432 It was redirecting efforts toward different goals.

This is not to say that J&J had to pursue the milestones without any regard to 

commercial reasonableness. But though J&J could reasonably calibrate its efforts, 

it could not try to re-write or deprioritize the milestones themselves. Velys never 

received similar treatment.433

* * *

J&J was required to utilize commercially reasonable efforts to meet the 

iPlatform and GI regulatory milestones, consistent with those given to a priority 

medical device. Its actions beginning with Project Manhattan were anything but. A 

priority device benefitting from such efforts by J&J would not be embattled, 

derailed, and enmeshed with another. Velys was not. 

Regardless, J&J insists that the efforts devoted to iPlatform were 

commercially reasonable because iPlatform’s funding vastly exceed that of Velys 

(or any other medical device program at J&J).

434

 J&J invested over $2.25 billion in 

the Auris program (broadly speaking) from 2019 to 2022.435 It also purchased a 

432 Merger Agreement § 2.07(e)(ii).

433 See supra notes 370-72 and accompanying text.

434 Defs.’ Answering Post-trial Br. 102. J&J makes similar arguments about staffing, which 

fail for the same reasons as its financing arguments and those discussed above regarding 

the post-integration debacle.

435 See JX 4516 (“Malackowski Rep.”) 283-84; Defs.’ Answering Post-trial Br. 102.
83

company called Vytronus for $20 million to buttress Auris’s capabilities, at Moll’s 

request.436 

It is an oversimplification to view these funds as furthering the achievement 

of the iPlatform regulatory milestones. For example, $112 million of the funds J&J 

claims were for iPlatform were spent on the Verb robot and instrument R&D, $89 

million was spent on Ethicon legal fees (including this litigation), and $90 million 

was spent to acquire the remaining interest in Verb.437 Much of the investment came 

post-write-down, and one-third of the cited total was spent after J&J abandoned 

iPlatform in 2022.438 An obligation to use commercially reasonable efforts in pursuit 

of the iPlatform regulatory milestones is not equivalent to spending large sums on 

J&J’s robotics program. J&J fell short of the promise it made in Section 2.07(e) of 

the Merger Agreement.

b. J&J Efforts Towards the Monarch Milestones

The Merger Agreement includes two regulatory milestones for Monarch: one 

focused on soft tissue ablation and the other on endourology. J&J’s contractual 

436 JX 2825 at 1; Martin Tr. 1767-68; Leparmentier Dep. 210-12.

437 See Malackowski Rep. 283-84; see also Defs.’ Trial Demonstrative (“Defs.’ Dem.”) 10. 

Other expenditures included $214 million for additional instruments R&D, $60 million for 

marketing products other than iPlatform and Monarch, and $75 million for standalone 

“Digital Solutions” software products. See Malackowski Rep. 283-84; Kilroy Dep. 263-

64; see also Defs.’ Dem. 10.

438 See Malackowski Rep. 283-84; see also Defs.’ Dem. 10.
84

obligations extended to these milestones.439 Fortis contends that J&J failed to use 

commercially reasonable efforts to achieve them. 

Monarch’s story is distinct from iPlatform’s. Monarch was not subjected to 

Project Manhattan. Its system was not joined with another robot. It was largely 

permitted to follow an MVP strategy. And its regulatory milestones were not written 

down until September 2020.440

Fortis’s arguments regarding the Monarch milestones are, at bottom, 

disagreements with how J&J engaged with the FDA and prioritized aspects of the 

Monarch program. Funding was allocated towards some Monarch indications 

instead of others, there were hiring gaps, and J&J’s actions towards solving the 

NeuWave FLEX problem were bungled. These actions, or lack thereof, were flawed

and may prompted unintended delays, but they are not commercially unreasonable 

under Section 2.07(e). 

i. Soft Tissue Ablation

The Monarch Soft Tissue Ablation Milestone contemplated 510(k) approval 

for a “specific indication for robotically driven (or controlled) soft tissue ablation,” 

439 Merger Agreement § 2.07(e)(i); id. § 10.03(zz) (defining “Regulatory Milestones” to 

include “the Monarch Endourology Milestone” and the “Monarch Soft Tissue Ablation 

Milestone”).

440 JX 3504 at 3. The new employee incentive plan did, however, prioritize reusable 

bronchoscopes rather than the Soft Tissue Ablation Milestone and lacked any endourology 

incentives. See JX 3641 at 5.
85

including “instruments and accessories required to perform such ablation” by the 

end of 2022.441 To meet the milestone, Monarch would need to use the NeuWave 

FLEX catheter.442 But FLEX was in regulatory limbo after the patient death during 

its lung tissue study.443 A “microwave pole” being developed by another company, 

which could have replaced FLEX to perform the ablation procedure, became 

unavailable after its developer was acquired.444

Fortis argues that J&J’s efforts obligation required it to promptly conduct a 

new clinical study on FLEX.445 It disagrees with J&J’s initial strategy of advocating 

to the FDA that an IDE was unnecessary.446 Fortis—with the benefit of hindsight—

may be correct that J&J’s strategy flopped. That does not mean, however, that J&J’s 

attempts were commercially unreasonable in real time. 

J&J engaged in multiple discussions with the FDA to find the shortest path to 

regulatory clearance for FLEX, consistent with the Soft Tissue Ablation 

Milestone.447 That the FDA continued to insist J&J conduct clinical trials and seek 

441 Merger Agreement § 2.07(a)(ii).

442 Moll Tr. 51. 

443 See supra notes 172-74 and accompanying text.

444 Leparmentier Tr. 995.

445 Pl.’s Opening Post-trial Br. 122 (citing Wittwer Tr. 1968-69).

446 Id. at 80 (arguing that “J&J squandered a meeting with the FDA”); see JX 2313 at 8-10; 

JX 2648 at 35-36.

447 See Bryant Tr. 2500-01. 
86

an IDE for FLEX related to lung tissue ablation is no fault of J&J. In 2020, at the 

FDA’s encouragement, J&J obtained a Breakthrough Device Designation for 

FLEX.448 The Breakthrough Device Program is a priority FDA program for devices 

offering a public health benefit with “significant regulatory advantages.”449 By the 

end of 2020, the FLEX team made several regulatory submissions, held multiple 

meetings with the FDA, and completed pre-clinical animal studies.450 As a result of 

those efforts, in November 2021, the FDA conditionally approved an IDE for FLEX 

in lung treatment.451 Despite that, the remaining clinical data and regulatory 

submissions for final approval meant that Monarch could not meet the 2022 

milestone.

Setting aside whether J&J should have told Auris about the patient death 

sooner,452 J&J’s efforts were commercially reasonable. The delay caused by the 

patient death and the resulting requirements imposed by the FDA were not in J&J’s 

control. Although Velys never faced a similar regulatory hurdle, J&J’s iterative and 

consistent engagement with the FDA for Monarch reflects the sort of efforts one 

448 JX 3294; see also JX 2313 at 10.

449 Tillman Rep. ¶ 29.

450 See JX 3657 at 11.

451 See Tillman Rep. ¶ 288.

452 As discussed below, Auris is entitled to recover for this milestone due to fraud. See 

infra Section II.B.4.
87

would expect it to undertake for a priority device. In setting the level of its efforts, 

J&J was entitled to consider “the regulatory status of the product and scope of any 

marketing approval, . . . whether the product is subject to a clinical hold, recall or 

market withdrawal, [and] input from regulatory experts and any guidance or 

developments from the FDA.”453 Had J&J succeeded in persuading the FDA that an 

IDE was not needed for FLEX, it would have saved time for Monarch to meet the

Soft Tissue Ablation Milestone. 

ii. Endourology

The Endourology Milestone required Monarch to obtain 510(k) approval “for 

endourology procedure(s)” by the end of 2020.454 Auris had solved major scientific 

problems with the procedure and planned to satisfy the milestone with an MVP 

approach.455 Fortis argues that J&J failed to provide adequate resources to do so.456 

Instead, to address a “known budget gap” in 2020, J&J decided that the “[p]rimary 

Monarch focus” would be bronchoscopy rather than endourology.

457

453 Merger Agreement § 2.07(e)(ii)(F), (H)-(I).

454 Id. § 2.07(a)(i).

455 Leparmentier Tr. 983-84, 1017-18.

456 Pl.’s Opening Post-trial Br. 81.

457 JX 3091 at 3.
88

Velys received requested funding, space, and personnel.458 By comparison,

endourology was 15% understaffed and partially underfunded.459 But even if 

Monarch’s endourology team had proportionately less resources than Velys, it is not 

apparent that J&J’s efforts deviated from its usual practice in supporting research, 

development, and regulatory interactions for a priority device. J&J logically 

prioritized a staged approach to Monarch’s development. 

Monarch Uro’s planned 510(k) submission depended upon the to-beapproved Monarch Bronch 2.0 three-arm cart first receiving 510(k) clearance.

460

 

Monarch could not seek approval for Uro until after Bronch 2.0 obtained it in April 

2020.461 J&J’s efforts and resources in furtherance of bronchoscopy necessarily 

advanced Monarch’s chance of achieving the Endourology Milestone. The Merger 

Agreement permitted J&J to consider “the likelihood and difficulty of obtaining 

FDA and other regulatory approval” in setting the level of its efforts, which would 

reasonably include focusing on an indication necessary for a subsequent 

clearance.462

458 See JX 356; Thomson Dep. 55; Waterson Dep. 130-31, 341.

459 See Leparmentier Tr. 1019-21; JX 3195; JX 3091 at 3.

460 See JX 975 at 4 (communicating this plan to the FDA); see also JX 637 at 9-12; JX 673 

at 5. Bronch 1.0, which already had 510(k) clearance, only had two arms. Monarch Uro 

required the Bronch 2.0 three-arm version to be cleared.

461 Tillman Rep. ¶¶ 223-25.

462 Merger Agreement § 2.07(e)(ii)(E).
89

3. Whether Fortis Was Damaged

Fortis must next prove with “reasonable certainty” that J&J’s breaches of the 

Merger Agreement caused it injury.463 Fortis contends that J&J’s failure to use 

commercially reasonable efforts prevented Auris from achieving the iPlatform 

regulatory, GI, and net sales milestones.464 J&J, for its part, asserts that Fortis cannot 

prove that its injury “flowed from [J&J’s] violation of the contract” rather than 

“other intervening causes.”465 I consider these arguments for iPlatform milestone by 

milestone.

466

a. iPlatform Regulatory Milestones

The Merger Agreement outlines six regulatory milestones for iPlatform: the 

General Surgery Milestone, four umbrella procedure milestones (the Upper 

Abdominal Milestone, the Lower Abdominal Milestone, the Urologic Milestone, 

463 Siga Techs., Inc. v. PharmAthene, Inc. (“Siga II”), 132 A.3d 1108, 1111 (Del. 2015) 

(“[W]hen a contract is breached, expectation damages can be established as long as the 

plaintiff can prove the fact of damages with reasonable certainty.” (emphasis removed)); 

see also Cura Fin. Servs. N.V. v. Elec. Payment Exch., Inc., 2001 WL 1334188, at *19-20 

(Del. Ch. Oct. 22, 2001) (“[R]easonable certainty is not equivalent to absolute certainty; 

rather, the requirement that plaintiff show defendant’s breach to be the cause of his injury 

with ‘reasonable certainty’ merely means that the fact of damages must be taken out of the 

realm of speculation.” (quoting Tanner v. Exxon Corp., 1981 WL 191389 (Del. Super. July 

23, 1981))).

464 See Pl.’s Opening Post-trial Br. 121-26.

465 Defs.’ Answering Post-trial Br. 112 (quoting LaPoint, 2007 WL 2565709, at *9). 

466 Because Fortis did not prove a breach of contract as to J&J’s Monarch-focused efforts, 

I do not consider whether Fortis suffered damages related to Monarch.
90

and the Gynecologic Milestone), and the GI Milestone.467 Pre-merger, J&J 

estimated an 85% probability of meeting the General Surgery Milestone and an 75% 

probability of meeting the umbrella and GI milestones.468 J&J insists that its 

predictions were misguided for two overarching reasons: technical issues and 

regulatory challenges.

469

 

On the technical front, J&J points to evidence of “problems with workspace, 

thermal issues, system stability, emergency patient access, and instrument 

performance.”470 To be sure, these were challenges that the iPlatform team would 

need to solve. J&J obstructed Auris’s ability to do so by imposing Project Manhattan 

shortly after closing, and then combining iPlatform with Verb. 

Beyond that, I view J&J’s insistence that technical deficiencies led to the 

failed milestones with skepticism. J&J engaged in multiple rounds of due diligence, 

involving experienced Verb engineers and outside robotics experts at Sagentia.471 

J&J gained direct insight through its Auris board observer seat.472 J&J knew about 

iPlatform’s strengths and weaknesses before projecting that the milestones would 

467 Merger Agreement § 2.07(a)(iii)-(viii).

468 JX 3139.

469 Defs.’ Answering Post-trial Br. 112-13.

470 Id.

471 E.g., JX 447; JX 1076; Mintz Tr. 575-78; see also DeFonzo Tr. 354-57.

472 See PTO ¶ 107; Morano Tr. 1445-47; Mintz Tr. 575-78; McEwen Dep. 71; supra note 

103 and accompanying text.
91

likely be achieved and acquiring Auris.

473

 When J&J wrote down the milestones in 

April 2020, it cited the FDA pathway change to De Novo—not technical issues—as 

the basis.474 

It was only after Fortis sued in October 2020 that J&J began searching for 

diligence files suggesting technical flaws in iPlatform’s system.475 This appears to 

be tactical backfilling.476 One frequently cited example is Auris’s selection of the 

Silverton-style arm for iPlatform rather than the redesigned Superton arm, which 

J&J calls a hasty choice detrimental to iPlatform’s success that was hidden from 

J&J.477 As Mintz explained, though, iPlatform’s choice was neither rash nor 

473 E.g., JX 1284.

474 JX 3139 at 2; see Lenard Tr. 1830. 

475 JX 3814 (Shen telling Joachim to be “THE leader to own the [Auris acquisition] 

narrative”); see supra notes 319-21 and accompanying text. 

476 For instance, J&J argues that “DeFonzo provided J&J with a version of the iPlatform 

team’s January 2019 quarterly program review that had been doctored to remove references 

to significant problems with workspace, thermal issues, and instrument performance” and 

that “Auris similarly altered other technical materials shared with J&J.” Defs.’ Answering 

Post-trial Br. 41. The internal version and external version are of the quarterly update are

different. Compare JX 1130, with JX 1113 at 8, 29-34, 35, 37. But there is no credible 

evidence suggesting that Auris set out to hoodwink J&J or “doctor” documents. Instead, 

Auris’s internal documents were simply cleaned up and revised before being sent to a 

potential outside investor/acquiror. See DeFonzo Tr. 510-14.

477 Defs.’ Post-trial Answering Br. 62; see Defs.’ Dem. 22 at 53-60. J&J relied on the 

expert opinion of Dr. Moiz Khan to support its argument that iPlatform’s design and system 

suffered from fatal flaws. Khan’s critiques of iPlatform were based on his review of a 

subset of documents and videos. He never operated the robot and saw the robot just once 

in passing. Khan Tr. 2971-73. Because of his limited exposure to the robot, I give his 

testimony about specific challenges facing iPlatform little weight.
92

nefarious; it was strategic and evident.

478

 Nevertheless, I weigh specific arguments 

in the context of each milestone despite my overarching cynicism that technical 

problems are to blame for the missed milestones.

On the regulatory front, the primary matter raised by J&J is the FDA’s pivot 

from the 510(k) to the De Novo pathway for RASDs. This change, in J&J’s 

estimation, “doomed any hope of meeting the milestones.”479 The milestone most 

directly affected by the pathway change is the General Surgery Milestone. If 

iPlatform had timely obtained De Novo approval for one upper and one lower 

abdominal surgical procedure, it could follow the 510(k) pathway for the subsequent 

regulatory milestones.480 As such, I mainly consider the effects of the FDA’s 

478 Mintz Tr. 718 (“So this balance of reach, access, stiffness, bandwidth, you have to get 

all of those right. And having gotten the stiffness and bandwidth we did in a long, skinny 

arm was not something to give up lightly. And we were completing procedures.”); id. at 

711 (“None of these risks were hidden.”). Mintz was a compelling witness. He had 

extensive experience developing successful RASDs, including at Intuitive. He was vital 

to iPlatform’s development and has unmatched knowledge of the design and development 

process from its infancy in 2016 through the selection of the beta design in early 2021. Id.

at 711-12. Mintz testified candidly about iPlatform’s technical challenges and what it took 

to solve them. See, e.g., id. at 619-22. Despite Mintz’s passion for the iPlatform system 

and his financial incentives, his testimony was highly credible relative to that of Khan. .

479 Defs.’ Answering Post-trial Br. 111.

480 See Wittwer Rep. ¶ 22 (“If iPlatform had obtained De Novo approval for its general 

surgery application, J&J could have used iPlatform itself as a predicate device allowing 

use of the 510(k) pathway for pre-market clearance of further indications contemplated 

under subsequent ‘umbrella’ regulatory milestones for iPlatform. This would have reduced 

the regulatory approval timelines for these later applications.”); see also Wittwer Tr. 1959.
93

position change in the context of the General Surgery Milestone. It is with that 

milestone that I begin. 

i. General Surgery Milestone

The General Surgery Milestone required iPlatform to receive 510(k) clearance 

“for one upper abdominal surgical procedure” and “one lower abdominal surgical 

procedure” by the end of 2021.481 iPlatform was on track to meet this milestone at 

the time of the merger. Before closing, iPlatform’s pre-alpha prototype had 

completed procedures that would have satisfied it.482 

iPlatform’s program timeline gave it five months to secure an initial 510(k) 

approval.483 This was “ambitious.”484 To reduce risk, Auris built in a “healthy” 

buffer of five additional months, ending on the last day of 2021.485 Based on 

iPlatform’s progress and optionality over which upper and lower clinical indications 

to pursue, the Auris team believed that the iPlatform General Surgery Milestone 

would likely be met.486 

481 Merger Agreement § 2.07(a)(iii).

482 See JX 5012 at 1; JX 699 at 9; JX 2610; Mintz Tr. 579-80; Gardiner Tr. 743-51.

483 JX 1689 at 13-14; Mintz Tr. 579-80.

484 DeFonzo Tr. 505-06.

485 Id.; see also Mintz Tr. 659-60 (explaining that the timelines reflected “when we could 

reasonably, aggressively expect things to go” plus a buffer).

486 JX 1413 at 2 (estimating a 65% probability of success for the first milestone); Mintz 

Tr. 580.
94

The record supports Auris’s assessment. After the merger, iPlatform 

continued to receive high marks from surgeons.487 It performed well in Project 

Manhattan.488 It went on to successfully complete 40 cadaver labs from mid-2019 

to early 2020 in which all milestone procedures were performed—including the most 

complex LAR and RYGB procedures.489 The labs were, at times, imperfect and 

some physicians disliked the iPlatform system.490 But regulatory approval is 

measured by clinical safety and effectiveness—not commercial readiness.491 It is 

487 See generally Pl.’s Dem. 13 (lab results).

488 See supra notes 252-56 and accompanying text; see Wittwer Tr. 1957 (testifying that, 

in her opinion as a regulatory expert, iPlatform’s results in Project Manhattan would be 

“sufficient to . . . proceed to the next stages of product development for certain 

procedures”).

489 Pl.’s Dem. 13, lines 12-51 (showing that iPlatform completed cadaver lab procedures 

including 14 LARS, 10 RYGBs, 6 ventral hernias, 1 inguinal hernia, 2 partial 

nephrectomies, and 1 hysterectomy); Gardiner Tr. 752-53, 772, 800-03. Gardiner 

completed over 30,000 surgeries in his decades-spanning career, with about 30% being 

performed with a RASD. Id. at 722-23. He also instructed other surgeons on how to 

perform robotic surgeries and worked with Moll at Intuitive in developing the da Vinci 

robot. Id. at 724. Despite his financial incentives as an Auris stockholder, his testimony 

was highly credible.

490 E.g., JX 699 at 37; JX 3047; JX 3550. iPlatform was not for everyone. Hagen, one of 

the Project Manhattan KOPs involved with developing Verb, strongly disliked the 

architecture of iPlatform. She preferred a live assistant rather than the fifth robotic arm. 

Gardiner Tr. 768-71; Hagen Tr. 2344-45.

491 See Wittwer Rep. ¶ 179 (“Medical devices do not need to be fully ready to enter largescale commercial distribution before a company seeks regulatory clearance for them.”);

Wittwer Tr. 1954; Grennan Tr. 2547 (acknowledging the difference between regulatory 

maturity and commercial readiness for a complex medical device); see also Gardiner Tr. 

726-28. 
95

often desirable to obtain regulatory clearance for a prototype without the full 

functionality of a planned commercial device.492

In September 2021, J&J acknowledged that iPlatform would be capable of the 

Nissen fundoplication procedure that would satisfy an upper abdominal surgery 

indication.493 For the lower abdominal indication, inguinal hernia labs from 2019 

through 2020 show iPlatform’s capacity to successfully perform the procedure.494 

Surgeons performing those labs rated iPlatform’s performance as “superior to” or 

“competitive with” da Vinci.”495 In September of 2021, J&J again acknowledged 

that iPlatform would be capable of inguinal hernia and appendectomy—both lower 

abdominal procedures that would satisfy the first milestone.496 If the results were 

replicated through the verification and validation phases, there would be sufficient 

492 See Wittwer Tr. 1955-56 (“[I]t’s actually desirable to submit your first application with 

fewer features and focusing on a select procedure or two to obtain that first De Novo 

clearance.”); Wittwer Rep. ¶¶ 179-81. Auris’s ARES robot is one such example. See 

Leparmentier Tr. 977 (explaining that ARES received FDA clearance using an MVP 

strategy and was never intended to be commercially launched); Moll Tr. 293-94.

493 JX 4129 at 27 (“Based on experience with primary procedures, system should [] be 

capable of: . . . Nissen Fundoplication”). As discussed above, Auris initially considered 

pursuing either Nissen fundoplication or RYGB for its first upper abdominal procedure. 

See supra note 404 and accompanying text; JX 1729 at 21-22. 

494 See Pl.’s Dem. 13; JX 1541.

495 JX 2622 at 15 (four 2019 iPlatform inguinal hernia labs completed with “high 

confidence” with ratings of “[b]est in class” and “superior to Da Vinci”); JX 3610 at 2 

(Gardiner in 2020 reporting to Joachim that iPlatform’s inguinal hernia procedure was 

“largely cooked” and “already competitive to the predicate”).

496 JX 4129 at 16 (“Beta will be capable in Inguinal Hernia[.]”); id. at 17 (“Beta system 

should be capable based on experience with primary procedure(s): Appendectomy[.]”).
96

data for the FDA to assess iPlatform’s safety and effectiveness for the proposed 

indication.497 iPlatform could obtain approval for a single successful procedure.498

Overall, the record supports a finding that iPlatform would likely have met

the General Surgery Milestone had J&J fulfilled its promises to Auris. iPlatform

was on track to achieve the milestone before Project Manhattan and the Verb 

integration. J&J’s insistence that iPlatform pursue a five-arm RYGB, instead of 

simpler procedures using a minimally viable device, made matters worse. J&J’s 

adoption of new employee incentives in 2020 that conditioned the first payment on 

achieving a complex general surgery indication further re-directed resources away 

from the General Surgery Milestone. It is reasonably certain that J&J’s breach of its 

efforts obligation (and, as discussed below, an implied term regarding the De Novo 

pathway) damaged Auris by preventing it from timely securing regulatory approval. 

Technical Problems. J&J contends that, regardless of its conduct, iPlatform 

could never have met the General Surgery Milestone because of “fundamental 

technical challenges” with the system’s workspace.499 Workspace relates to the 

architecture of the robot, such as whether the arms experience collisions during 

procedures.500 The record provides little support for J&J’s assertion. Although 

497 Wittwer Tr. 1958.

498 Id. at 1959.

499 Defs.’ Post-trial Answering Br. 59.

500 Moll Tr. 270-71.
97

workspace issues arose, numerous lab reports show that iPlatform had the capability 

to safely and effectively complete procedures to satisfy the milestone.501 

The other technical issues J&J cites were “surmountable.”502 They were 

similar to ones Auris leadership had tackled at Intuitive 20 years earlier.503 Thermal 

issues made the robot hot to the touch.504 iPlatform’s system was sometimes 

unstable.505 And a worst-case scenario persisted since the robot’s arm setup meant 

that a very large patient could not be transported from the operating table to a gurney 

if a hospital lost power mid-procedure.506 Such engineering challenges are expected 

while developing a highly complex medical device.507

501 E.g., Pl.’s Dem. 13; JX 3685 at 7 (reporting “[a]dequate approach and workspace for 4-

arm RYGB to move forward with US IDE” as of November 2020); JX 4129 at 15-19 

(stating that iPlatform would be “capable” in Nissen fundoplication, inguinal hernia, small 

ventral hernia, appendectomy, prostatectomy, and hysterectomy, among other procedures); 

see also Khan Tr. 3004 (testifying that “capable” means safe, effective, and able to 

complete the procedure).

502 Kilroy Tr. 2136-37 (“Other engineering challenges, I saw them as more 

surmountable . . . [T]he real showstoppers for the system were workspace and 

collisions.”); Khan Day 1 Dep. 543 (“I didn’t state many issues being fundamental and 

existential. I only said that to the workspace . . . .”).

503 Mintz Tr. 561.

504 This was known to J&J during diligence. See JX 1284 at 12; Mintz Tr. 716 (Mintz 

recalling J&J’s engineer touching an iPlatform arm during diligence and commenting on 

the temperature).

505 Mintz Tr. 572-73.

506 Joachim Tr. 2233, 2236-38. J&J cites iPlatform’s poor instrument performance as 

another flaw. As Joachim admitted, however, instrument performance would not prevent 

iPlatform from meeting regulatory milestones. Id. at 2173-77.

507 Mintz Tr. 572-73.
98

Many of these issues would not inhibit straightforward procedures that could

satisfy the General Surgery Milestone, such as Nissen fundoplication and inguinal 

hernia, which the pre-alpha robot had successfully performed. Advanced 

capabilities, like using five or six arms, were not necessary to perform these 

procedures safety and effectively for regulatory purposes.

508

 Despite that, the 

iPlatform team had been working to address various technical problems.509 It was 

derailed when iPlatform was forced to participate in Project Manhattan and then 

combine with a separate system. These complications—all imposed by J&J—not 

only delayed iPlatform’s progress but also imposed months of technical debt and 

unanticipated roadblocks.

Regulatory Problems. J&J also argues that the iPlatform General Surgery 

Milestone was unmet due to the FDA’s pathway change. The General Surgery 

Milestone (like all iPlatform regulatory milestones) required iPlatform to obtain 

“510(k) clearance.”510 But in August 2019, the FDA said that the 510(k) pathway 

was unavailable to RASDs.511 iPlatform unexpectedly had to follow the De Novo 

pathway.

508 Id. at 580-81. 

509 Moll Tr. 80-82; Mintz Tr. 550, 582, 620-22.

510 Merger Agreement § 2.07(a)(iii).

511 JX 2512 at 4-5.
99

J&J suggests that this position change meant it was off the hook for the 

General Surgery Milestone. Not so. The obvious goal of the General Surgery 

Milestone was for iPlatform to obtain FDA approval. In contrast to other provisions 

of the Merger Agreement, there is no evidence that 510(k) (versus another pathway) 

was specifically negotiated.512 That is because at the time of the Merger Agreement, 

a “510(k) process” was the “only logical pathway for a robotic device.”513 When 

that understanding changed four month after the merger, J&J viewed the availability 

of De Novo (rather than PMA) as a victory.514 

Yet, the iPlatform General Surgery Milestone expressly contemplates “510(k) 

premarket notification[],” which was no longer an option for iPlatform post-pathway 

shift.515 To address this wrinkle in its breach of contract claim, Fortis presents an 

implied covenant theory.516 It asserts that after the FDA’s pathway change, the 

512 DeFonzo Tr. 363-64 (testifying that the parties “never even discussed” a non-510(k) 

pathway); Moll Tr. 58-59. J&J originally argued that this term was “highly negotiated.” 

Defs.’ Pre-trial Br. (Dkt. 504) 2. It did not press that argument after trial. 

513 Moll Tr. 58-59.

514 Shen Tr. 1174; Wittwer Tr. 1953.

515 Merger Agreement § 2.07(a)(iii). As noted above, the subsequent umbrella milestones 

could be obtained through 510(k) if iPlatform received De Novo clearance. See supra note 

282 and accompanying text; Wittwer Tr. 1949.

516 PTO ¶ 5. Fortis also advanced a mutual mistake claim that was also premised on the 

change in FDA policy regarding the availability of the 510(k) pathway for iPlatform. Id. 

Because documents Fortis sought through a FOIA request were not produced in time for 

trial, Fortis withdrew its mutual mistake claim. See Dkts. 525, 527.
100

implied covenant of good faith and fair dealing required J&J to pursue De Novo 

approval instead.517 I agree.518 

Implied Covenant. “The implied covenant [of good faith and fair dealing] is 

inherent in all contracts.”519 It “embodies the law’s expectation that ‘each party to a 

contract will act with good faith toward the other with respect to the subject matter 

of the contract.’”520 The implied covenant “ensures that parties do not ‘frustrat[e] 

the fruits of the bargain’ by acting ‘arbitrarily or unreasonably.’”521 “The reasonable 

expectations of the contracting parties are assessed at the time of contracting.”522

At the time the Merger Agreement was signed, all parties assumed that 510(k) 

would be an available pathway for iPlatform.523 The FDA had indicated in October 

2018 that iPlatform could receive 510(k) clearance with the appropriate clinical data 

517 Pl.’s Opening Post-trial Br. 130-31.

518 In my decision denying J&J’s motion to dismiss the implied covenant claim, I noted 

that this is precisely the sort of situation where the “implied covenant comes into play.” 

Mem. Op. Regarding the Defs.’ Mot. to Dismiss (Dkt. 44) (“MTD Mem. Op.”) 38. That 

observation remains true after trial.

519 Baldwin v. New Wood Res. LLC, 283 A.3d 1099, 1116 (Del. 2022) (citation omitted).

520 Sheehan v. Assured P’rs, Inc., 2020 WL 2838575, at *11 (Del. Ch. May 2020) (quoting 

Allied Cap., 910 A.2d at 1032).

521 Baldwin, 283 A.2d at 1116 (quoting Dieckman v. Regency GP LP, 155 A.3d 358, 367 

(Del. 2017)).

522 Dieckman, 155 A.3d at 367.

523 See JX 3253 at 1 (contemporaneous notes of meeting about regulatory affairs from a 

May 14, 2020 call where Kozak says: “During acquisition [we] had assumed 510k was 

appropriate.”). 
101

and predicate device.524 It warned only that 510(k) might be unavailable because 

the proposed predicate device (a da Vinci robot) lacked a bronchoscope and Auris 

had listed a bronchoscopy indication for iPlatform.525 Auris resolved this mismatch 

in its subsequent submission by withdrawing bronchoscopy from iPlatform’s 

planned indication and selecting a more apt da Vinci predicate.526 Neither Auris nor 

J&J had reason to believe that a more onerous pathway would be required.527 In 

524 JX 743 at 3 (“While our review of your pre-submission does not imply that your future 

submission will necessarily be approved or cleared, FDA intends that this feedback will 

not change, provided that the information submitted in a future IDE or marketing 

application is consistent with that provided in this pre-submission and that the data in the 

future submission do not raise any important new issues materially affecting safety or 

effectiveness.”); id. at 5-6.

525 Id. at 4 (“You propose the da Vinci Xi K131861 as the predicate device. While the 

Indications for Use IFU statements of your subject device and your predicate appear to be 

similar the intended use of your subject device does not appear to be the same as your 

proposed predicate device[.] For example your proposed predicate is not intended to 

provide bronchoscopic visualization of and access to patient airways for diagnostic and 

therapeutic procedures and does not contain a bronchoscope.”); id. at 1; see supra notes 

70-71 and accompanying text.

526 JX 2468 at 5 (“[G]iven FDA’s concern of using a predicate not indicated for 

bronchoscopic procedures, Auris has decided to remove the use of a bronchoscope from 

the initial submission.”); Mintz Tr. 604-06 (“Question: ‘Was [] the FDA telling Auris it 

would not approve iPlatform under the 510(k) pathway?’ Mintz: ‘It was not . . . They’re 

pointing out that the da Vinci Xi does not have bronchoscopic capability . . . so we removed 

that from our indications for use. . . . . There’s another da Vinci 510(k) that uses a robotic 

bed in conjunction with the system, and that was a more appropriate predicate. So we 

adjusted our submission to use that more appropriate predicate.’”).

527 See In re El Paso Pipeline P’rs, L.P. Deriv. Litig., 2014 WL 2768782, at *18 (Del. Ch. 

June 12, 2014) (observing that the implied covenant of good faith and fair dealing is 

properly invoked where “the parties simply failed to foresee the need for the term and, 

therefore, never considered to include it”); see also Nemec v. Shrader, 991 A.2d 1120, 

1128 (Del. 2010).
102

fact, J&J was surprised in August 2019 when it learned that Verb had to follow the 

De Novo pathway instead of 510(k).528 

J&J argues that requiring 510(k) approval was a material term to the Merger 

Agreement because the specific pathway affects the time to market, the resources 

required, and the deal value.529 But there is no evidence that the parties bargained 

for 510(k) instead of De Novo.530 J&J knew pre-merger that the FDA required 

extensive clinical testing for iPlatform to secure 510(k) approval.531 Though De 

Novo approval is generally more onerous, the primary difference for iPlatform was 

FDA review time, which J&J predicted would only add two months of delay.532 The 

FDA required iPlatform to submit clinical testing data under either the 510(k) or De 

Novo pathway.533 

528 See JX 2512 at 4-5.

529 Defs.’ Answering Post-trial Br. 51-53.

530 See supra note 512; cf. Aspen Advisors LLC v. United Artists Theatre Co., 843 A.2d 

697, 707 (Del. Ch. 2004) (explaining that the implied covenant will not fill a gap if the 

parties discussed and rejected it), aff’d, 861 A.2d 1251 (Del. 2004).

531 See JX 1284 at 4, 12; JX 1504 at 5.

532 JX 2396 at 15 (predicting a De Novo review would change Verb’s launch from April 

2022 to June 2022); see also Wittwer Tr. 1949-50 (“Per FDA regulation, a 510(k) is a 90-

day review clock. And a De Novo application is a 150-day review time.”); Wittwer Rep. 

¶¶ 158-60 (opining that the shift to De Novo review caused an approximately 60 day delay). 

Wittwer’s opinion was reliable. In addition to her educational and professional 

background, she has submitted and received FDA clearance on over fifty 510(k) 

applications and three De Novo applications. Wittwer Rep. ¶ 10.

533 See JX 2396 at 12 (J&J concluding there was “[n]o significant timeline differences” for 

Verb to achieve De Novo “as compared to a 510(k)”); Tillman Tr. 2823-24 (acknowledging 
103

Had the parties known that 510(k) would become unavailable for RASDs, 

they logically would not have listed 510(k) as the method of obtaining regulatory 

approval in the Merger Agreement.534 The Merger Agreement lacked a term to 

address what would occur if the 510(k) pathway were closed to iPlatform. When 

this change arose, however, J&J had an implied obligation—at least for the iPlatform 

General Surgery Milestone—to use commercially reasonable efforts to achieve De 

Novo clearance. Doing so would facilitate 510(k) approval for the subsequent 

milestones, which I address next.535 But J&J failed to utilize such diligence.

536

 It 

cannot avoid liability by scapegoating an unforeseen policy change that had an 

immaterial effect on the time and cost for iPlatform to gain FDA clearance.537

that iPlatform’s 510(k) process would be in the “minority of 510(k) submissions that 

require clinical data”).

534 See Oxbow Carbon & Mins. Hldgs., Inc. v. Crestview-Oxbow Acq., LLC, 202 A.3d 482, 

506-07 (Del. 2019) (explaining that the implied covenant exists to address “unanticipated 

developments”); Blaustein v. Lord Balt. Cap. Corp., 84 A.3d 954, 959 (Del. 2014) (“[T]he 

implied covenant is used in limited circumstances to include what the parties would have 

agreed to themselves had they considered the issue in their original bargaining positions at 

the time of contracting.” (citation omitted)).

535 JX 2396 at 12 (“Once De Novo classification is granted, the device can be used as 

predicate for future 510(k) submissions.”); Wittwer Tr. 1946, 1959.

536 See supra Section II.A.2.a.

537 Because I find that Fortis has prevailed on its implied covenant claim, I need not address 

its alternate theory that J&J should be ordered to “negotiate in good faith” to modify the 

Merger Agreement from 510(k) to De Novo to “effect the original intent of the parties.” 

Merger Agreement § 10.11; see also id. § 8.04(b); Pl.’s Opening Post-trial Br. 132-33.
104

ii. Umbrella Milestones

Auris also proved that J&J’s breaches of the Merger Agreement were 

reasonably certain to have led Auris to miss four 2023 iPlatform regulatory 

milestones: the Upper Abdominal Milestone, the Lower Abdominal Milestone, the 

Urologic Milestone, and the Gynecologic Milestone. Had J&J used commercially 

reasonable efforts in furtherance of the iPlatform General Surgery Milestone, the 

510(k) pathway would have been open. The delays caused by Project Manhattan

and dysfunction from the Verb combination/integration, among other breaches, led 

to compounding delays that put the milestones in peril. The evidence demonstrates 

that each of these umbrella milestones were likely to be met had J&J provided 

commercially reasonable efforts and resources to iPlatform as a priority device.538

Upper Abdominal Milestone. The Upper Abdominal Milestone required 

iPlatform to receive 510(k) approval for an “upper abdominal Umbrella 

Procedure[]” by the end of 2023.539 The RYGB procedure would have satisfied this 

milestone.540 iPlatform was on track to achieve it.

538 See JX 2683 at 3, 26-27 (Accelerando and Cambridge November 2019 projection that 

iPlatform could achieve the 2023 milestones).

539 Merger Agreement § 2.07(a)(iv); see id. § 10.03(uuu) (defining “Umbrella Procedure” 

as “any procedure or procedure category within a specialty, which represents higher 

complexity or risk and when cleared by the FDA includes covered procedures of less 

complexity or lower risk within that specialty”).

540 See JX 1729.
105

Surgeons using iPlatform successfully completed RYGBs in 12 labs between 

June 2019 and the first quarter of 2020—both during and after Project Manhattan.541 

Surgeons performed 21 four-arm RYGB cadaver labs from August to November 

2020 with iPlatform. Four different surgeons gave iPlatform all A and B grades 

during the final six “repeatability” labs performed in November, which were 

designed to test surgical techniques refined during earlier “procedure development” 

labs.542 iPlatform continued to demonstrate capability in RYGB with at least 11

cadaver labs completed in 2021. Although two surgeons gave iPlatform lower (but 

still adequate) ratings in these labs, three others rated iPlatform A+, A, and B in all 

categories.

543

To the extent J&J argues that technical issues caused iPlatform to miss the 

milestone, the trial record suggests otherwise. For example, after successful cadaver 

labs in November 2020, Joachim (who led the iPlatform team at the time) determined 

there was “[a]dequate approach workspace for 4-arm [RYGB] to move forward” to 

clinical trials.544 Put differently, workspace issues did not prevent iPlatform from 

541 See e.g., JX 2131 at 26-27 (June 2019 five-arm RYGB rated by physician as “nearly 

ready for clinical use”); JX 3047 at 57 (Nov. 2019 five-arm RYGB rated by same physician 

as on par with da Vinci); see also Pl.’s Dem. 13.

542 JX 3603 at 7. 

543 See e.g., JX 3948 at 1 (May 2021 five-arm RYGB by surgeon performing his first lab 

on iPlatform, rating iPlatform’s performance either A or A+ across the board); see also 

Pl.’s Dem. 13.

544 JX 3685 at 7.
106

proceeding to clinical trials for the four-arm procedure. This assessment was three 

years before the milestone deadline.

545

 

Lower Abdominal Milestone. The Lower Abdominal Milestone required 

iPlatform to obtain 510(k) approval for a “colorectal/lower abdominal Umbrella 

Procedure[]” by the end of 2023.546 

The LAR procedure could satisfy the milestone. During Project Manhattan, 

a KOL successfully completed it using iPlatform.547 Between July 2019 and January 

2020, surgeons performed 14 additional LAR cadaver labs using the iPlatform.548 

J&J only produced written reports for five of these labs, but all show successful 

results.549 From April to June 2021, surgeons performed 15 more LAR cadaver labs 

545 J&J’s insistence on a full-featured iPlatform beta that could perform RYGB for the first 

regulatory approval effectively forced iPlatform to meet the Upper Abdominal Milestone 

two years early. See supra Section II.A.2.a.iii.

546 Merger Agreement § 2.07(a)(v).

547 JX 2125 at 21-22; see also JX 1541 (March 2019 report of iPlatform “[s]uccessful 

access of relevant workspaces for LAR”).

548 See Pl.’s Dem. 13.

549 See id. Records for hundreds of iPlatform labs were not produced by J&J. Fortis asks 

me to conclude that this amounts to spoliation, and that I should infer that the withheld or 

destroyed lab materials confirm iPlatform’s capabilities. See Pl.’s Opening Post-trial Br. 

119-120; see also Pl.’s Mot. in Limine for an Adverse Inference Due to Spoliation and/or 

Withholding of Evidence of iPlatform Lab Procedures (Dkt. 465). Though there are gaps 

in the record where information has been lost, J&J also produced a substantial amount of 

materials from a design history file and other records. I lack grounds to find that J&J’s 

non-production rises to the level of reckless or intentional spoliation of evidence and 

decline to draw an adverse inference. See Sears, Roebuck & Co. v. Midcap, 893 A.2d 542, 

552 (Del. 2006). At the same time, it would be inequitable to infer that iPlatform did not 

successfully perform these labs based upon J&J’s failure to produce the underlying data. I 
107

on iPlatform. Based on the 11 procedures for which J&J produced lab data, 

iPlatform performed well. For all but one of these 11 labs, iPlatform was rated 

above, equivalent to, or near da Vinci on all metrics.550 In February 2022, a fivearm LAR was performed that overall met or exceeded da Vinci’s performance.551

Urologic Milestone. The Urologic Milestone required iPlatform to obtain 

510(k) approval for a “urological Umbrella Procedure[]” by the end of 2023.552 Lab 

records show that iPlatform could perform prostatectomy and partial nephrectomy—

two procedures that Auris could have used to satisfy the milestone.553

iPlatform demonstrated its capability to perform a prostatectomy as early as 

2018.554 Post-merger, surgeons completed 19 prostatectomy cadaver labs on 

iPlatform, rating iPlatform’s performance as above or equivalent to da Vinci on most 

view the missing information as neutral. Even without it, Fortis proved by a preponderance 

of the evidence that iPlatform was on track to meet the milestones before J&J’s breaches.

550 See e.g., JX 3992 at 2 (rating iPlatform A+ or A across all metrics, with “[n]o 

workspace/collision issues” and instrument trajectories superior to da Vinci); see also Pl.’s 

Dem. 13; Pl.’s Dem. 20 (five-arm LAR lab on iPlatform in June 2021; surgeon reporting 

“high[] satis[faction”).

551 Gardiner Tr. 825-27. J&J produced no records for labs after June 2021. See Pl.’s Dem. 

13 at rows 204-35. Gardiner, however, credibly testified to his personal experience with 

the iPlatform system performing this procedure.

552 Merger Agreement § 2.07(a)(vi).

553 See, e.g., JX 2610 at 3, 10 (partial nephrectomy performed with “high confidence”); JX 

4013 at 3, 10 (reporting 17 prostatectomy labs “with almost all A ratings, and a good range 

of patients”); see supra notes 73, 255 (explaining these procedures).

554 Moll Tr. 87-88; Mintz. Tr. 552-53; Gardiner Tr. 746-49 (“It worked perfectly.”).
108

metrics.

555

 In 2021, J&J concluded that iPlatform would be capable in 

prostatectomy.556

iPlatform was also successfully performing partial nephrectomies. During 

Project Manhattan, a KOP completed a partial nephrectomy on iPlatform and rated 

it “nearly ready for clinical use.”557 Two more partial nephrectomy cadaver labs 

were completed in 2019 with strong results.558 From July to December 2021, 

surgeons completed 12 more partial nephrectomy cadaver labs on iPlatform. Based 

on the subset of lab results J&J produced, these procedures were also successful and 

the iPlatform system was rated equivalent to da Vinci on most metrics.559

Gynecologic Milestone. The Gynecologic Milestone required iPlatform to 

obtain 510(k) clearance for a “gynecological Umbrella Procedure[]” by the end of 

2023.560 Auris intended to satisfy the milestone with a hysterectomy indication. 

555 See JX 4013 at 10 (17 surgeons giving almost all A ratings and a few Bs); Gardiner Tr. 

812-13; see also Pl.’s Dem. 13; Pl.’s Dem. 20 at 4 (two surgeons rating iPlatform with A+s, 

As, and a few Bs across relevant metrics during five prostatectomies each on iPlatform, 

with three other surgeons giving similar ratings during one prostatectomy each).

556 JX 4129 at 18 (“Beta system will be capable in Prostatectomy[.]”).

557 JX 2131 at 21-22.

558 See JX 2610 at 10 (surgeon writing: “Everything feels like you could go to market today, 

the motion of tools feels good and the workspace is great.”); Gardiner Tr. 797-98 (recalling 

watching this procedure); see also Pl.’s Dem. 13.

559 Pl.’s Dem. 13; see also Gardiner Tr. 821-22 (describing his performance of these 

procedures).

560 Merger Agreement § 2.07(a)(vii).
109

During Project Manhattan, a KOP successfully completed a hysterectomy with 

iPlatform’s alpha version.561 This procedure was especially notable because it was 

the first using iPlatform’s sixth arm.

562

In total, iPlatform completed at least five successful hysterectomy cadaver 

labs.563 If replicated, these procedures would show that iPlatform was safe and 

effective in hysterectomy from a regulatory standpoint.564 J&J concluded in 

September 2021 that iPlatform was expected to be capable in hysterectomy.

565

iii. GI Milestone

The GI Milestone required either iPlatform or Monarch to secure 510(k) 

clearance for “Endoscopic Submucosal Dissection (ESD)” by the end of 2023.566 At 

the time of the merger, it was expected that the milestone could be met by the 

deadline with iPlatform.

567

 

561 JX 2131 at 27-28.

562 Id. at 8-9, 27-28; see also Mintz Tr. 596-98; Pl.’s Dem. 8 (video of the procedure).

563 JX 2131 at 27-28; JX 2610 at 11 (surgeon: “This is so much easier than what I currently 

do.”); Pl.’s Dem. 13.

564 Wittwer Tr. 1958.

565 JX 4129 at 19 (“Beta system expected to be capable in Hyster[e]ctomy[.]”).

566 Merger Agreement § 2.07(a)(viii). ESD is a procedure using an endoscope to remove 

precancerous and cancerous areas in the GI tract. See Endoscopic Submucosal Dissection, 

Johns Hopkins Medicine, https://www.hopkinsmedicine.org/health/treatment-tests-andtherapies/endoscopic-submucosal-dissection (last visited August 31, 2024).

567 JX 1729 at 16 (projecting Q2 2023 for iPlatform GI indication clearance and adding in 

a buffer time period); JX 3139 at 1 (J&J predicting a 75% chance of achieving the eighth 

regulatory milestone (GI) with iPlatform).
110

In the year after the merger, a small research team reporting to Leparmentier 

demonstrated the feasibility of performing ESD on either system.568 In December—

four years before the milestone deadline—the Monarch team completed a “very 

successful” ESD on a live pig with Auris-designed instruments that could be used 

on iPlatform.569 Lepartmentier was confident at that point that the GI milestone 

would be met, provided that the GI team was given resources to move toward 

product development.570 But J&J deprioritized GI.

571

In a presentation to J&J leadership on April 6, 2020, the GI team 

recommended that ESD clearance be pursued on iPlatform first and Monarch 

later.572 Lepartmentier supported this strategy, understanding that J&J intended to 

launch iPlatform in the near term.573 The plan never came to fruition because of 

Project Manhattan and the Verb integration.

568 Leparmentier Tr. 1003-04.

569 JX 2867 at 12 (report of “completed” colon ESD procedure “in a live porcine model” 

on Dec. 18, 2019); Leparmentier Tr. 1004-06.

570 Leparmentier Tr. 1006.

571 See JX 3091 at 3; Leparmentier Tr. 1008; see also JX 3451 (Shen directing the GI team 

to limit its efforts to “skunk R&D work”—exploratory research with minimal resources).

572 JX 3148 at 38-40; Leparmentier Tr. 1010, 1085-86 (describing how pursuing the GI 

indication on iPlatform made commercial sense for customers and insurers); Lopes 

Tr. 2441-42 (discussing that GI capability was a “better fit” for iPlatform).

573 Leparmentier Tr. 1010.
111

The ESD indication is perhaps the one for which iPlatform was least prepared 

to seek clearance. But J&J’s failure to use commercially reasonable efforts derailed 

iPlatform’s plan to build towards endoluminal capability. As iPlatform’s MVP 

approach was lost, so too was its readiness to perform GI procedures. 

Having failed iPlatform, one would expect that J&J would redirect its GI 

Milestone-related efforts to Monarch. Monarch had made strides in ESD during 

2019 and 2020.574 There is no evidence, though, that J&J tried to use Monarch for 

the achievement of the GI Milestone.

At trial, J&J spent little time defending its approach to the GI Milestone except 

to highlight iPlatform’s purported technical defects. This is not compelling.

575

 The 

record supports a finding that J&J’s breach of the Merger Agreement is reasonably 

certain to have harmed to Fortis. Failed efforts and resulting delays snowballed, 

leaving iPlatform unable to timely meet the GI Milestone.

b. Net Sales Milestone

The Merger Agreement includes two net sales milestones. The first would 

have been met if J&J’s “Robotics Net Sales” reached “$575 million in the aggregate” 

574 See JX 2867 at 12: Leparmentier Tr. 1004-06; JX 3075 at 17 (physician in February 

2020 praising Monarch GI as an “[i]mmense improvement over traditional ESD” after 

completing a lab on a porcine colon).

575 See supra notes 475-78 and accompanying text.
112

during 2022 or sooner.576 The second could be met if “Robotics Net Sales” reached 

“$1,650 million in the aggregate” during 2024 or sooner.577

By its terms, the efforts provision in Section 2.07(e) does not apply to the net 

sales milestones.578 The sole constraint for J&J with respect to the net sales 

milestones is in Section 2.07(e)(iii), which bars J&J from taking, or refraining from 

taking, actions “with the intention of avoiding . . . any Earnout Payment” or “based 

on taking into account the cost of making any Earnout Payment(s).”579 Fortis proved 

that J&J breached this provision when J&J considered the loss of the contingent 

payments as a factor when directing that iPlatform combine with Verb.

580

Fortis did not, however, prove that this breach was a reasonably certain cause 

of the missed net sales milestones. J&J’s prioritization of Verb over iPlatform would 

have supported the net sales milestones since Verb sales are included. As Fortis 

concedes, “it often takes years for an innovative device to become profitable.”581 

576 Merger Agreement § 2.07(a)(ix); see id. § 10.03(ddd) (defining “Robotics Net Sales”).

577 Id. § 2.07(a)(x).

578 Id. § 2.07(e)(i) (requiring J&J to use “commercially reasonable efforts to achieve each 

of the Regulatory Milestones”).

579 Id. § 2.07(e)(iii)(A)-(B). 

580 See supra notes 389-91 and accompanying text.

581 Pl.’s Opening Post-trial Br. 110 (citing Grennan Tr. 2552-53; Shen Tr. 1169; JX 4495 

¶¶ 61, 65).
113

The fact that iPlatform was on the cusp of regulatory approval is not equivalent to it 

becoming commercially viable, much less profitable for J&J.582

4. Whether J&J Repudiated the Merger Agreement

Fortis also avers that J&J is liable for repudiating the Merger Agreement.583 

“Under Delaware law, repudiation is an outright refusal by a party to perform a 

contract or its conditions entitling ‘the other contracting party to treat the contract as 

rescinded.’”584 “Repudiation must be ‘positive and unconditional.’”585 

The purported “repudiation” Fortis complains of does not meet this standard. 

According to Fortis, J&J’s cancelation of the iPlatform and GI regulatory milestones 

and the net sales milestones in April 2020 amounts to repudiation. But the writedown was not an “outright refusal” to perform.586

 

The write-down was an accounting exercise by which J&J released reserves; 

it was not a cancelation of the milestones. If iPlatform (or Monarch) reached any 

milestone in the Merger Agreement, J&J retained a contractual obligation to make a 

corresponding earnout payment. In addition, J&J continued to perform in the sense 

582 See supra note 491 and accompanying text.

583 See Pl.’s Opening Post-trial Br. 102-04.

584 CitiSteel USA, Inc. v. Connell Ltd. P’ship, 758 A.2d 928, 931 (Del. 2000) (quoting 

Sheehan v. Hepburn, 138 A.2d 810, 812 (Del. Ch. 1958)).

585 W. Willow-Bay Court, LLC v. Robino-Bay Court Plaza, LLC, 2009 WL 458779, at *5 

(Del. Ch. Feb. 23, 2009) (quoting Carteret Bancorp., Inc. v. Home Grp, Inc., 1998 WL 

3010, at *6 (Del. Ch. Jan. 13, 1988)).

586 CitiSteel USA, 758 A.2d at 931.
114

that it provided some resources to the Auris robots post-write-down. J&J may have 

fallen short of its efforts promise, but that is different from an outright refusal to 

perform.587

B. Fraud

Fortis contends that J&J fraudulently induced Auris to merge.588 The 

elements of common law fraud are:

(1) a false representation, usually one of fact, made by the 

defendant; (2) the defendant’s knowledge or belief that the 

representation was false, or was made with reckless indifference 

to the truth; (3) an intent to induce the plaintiff to act or to refrain 

from acting; (4) the plaintiff’s action or inaction taken in 

justifiable reliance upon the representation; and (5) damage to 

the plaintiff as a result of such reliance.589

587 Fortis also claims that J&J failed to provide Fortis with quarterly disclosures, in breach 

of Section 2.07(d)(i) of the Merger Agreement. Section 2.07(d)(i) provides that J&J must, 

each quarter, provide “to the Stockholder Representative . . . a reasonable written update 

on the status of achieving each of the Milestones, including with respect to the Regulatory 

Milestones, a reasonable update on the actions undertaken by [J&J] . . . pursuant to Section 

2.07(e).” Fortis relegated its argument on this claim to a footnote in its opening post-trial 

brief. Pl.’s Opening Post-trial Br. 133 n.43. To the extent it continues to press the claim, 

Fortis did not prove a breach of Section 2.07(d)(i). The record reflects that Fortis was 

given reasonable quarterly disclosures. See JX 2528; JX 2530; JX 2665; JX 2978; JX 3218. 

Even if J&J had breached the provision, Fortis did not prove resulting damage. Moll and 

DeFonzo also provided information to Fortis’s Advisory Board directly. See Salehizadeh 

Dep. 78-79, 86-90; see also Royan Tr. 428-29. 

588 PTO ¶ 3.

589 Stephenson v. Capano Dev., Inc., 462 A.2d 1069, 1074 (Del. 1983); see Maverick 

Therapeutics, Inc. v. Harpoon Therapeutics, Inc., 2020 WL 1655948, at *26 (Del. Ch. 

2020) (“The elements of fraud and fraudulent inducement are the same.”).
115

The fraud must be “material” and “concern an essential part of the transaction.”

590

 

Fraud may arise through misrepresentations, concealment of material facts, or 

silence under a duty to speak.591 

Fortis advances three fraud theories. First, it claims that J&J’s statements 

about developing iPlatform and Verb in parallel were false.592 Second, it claims that 

J&J misled Auris by promising a “light touch” integration into J&J.593 And third, it 

claims that the Soft Tissue Ablation Milestone was not “highly certain” to be met, 

as J&J assured Auris.594 

Before addressing the merits, I first resolve J&J’s argument that the Merger 

Agreement’s integration clause is a barrier to the first and second fraud theories.

1. The Integration Clause 

J&J argues that Fortis’s fraud claims based on parallel development and “light 

touch” integration are barred by the Merger Agreement’s integration clause.595 The 

Merger Agreement’s integration clause is standard.596 The Merger Agreement 

590 Maverick, 2020 WL 1655948, at *31 (quoting Great Hill Equity Partners IV, LP v. SIG 

Growth Equity Fund I, LLLP, 2018 WL 6311829, at *33 (Del. Ch. Dec. 3, 2018)). 

591 Stephenson, 462 A.2d at 1074.

592 Pl.’s Opening Post-trial Br. 88-89.

593 Id. at 89-90 (quoting JX 2755).

594 Id. at 90-91.

595 Defs.’ Answering Post-trial Br. 130-32.

596 Merger Agreement § 10.07 (“This Agreement, the Escrow Agreement and the 

Confidentiality Agreement [] constitute the entire agreement, and supersede all prior 
116

contains only an asymmetric anti-reliance provision in which J&J disclaimed 

reliance on extra-contractual representations.597 Auris did not make a similar 

disclaimer.

In resolving J&J’s motion to dismiss, I explained that “a standard integration 

clause, without anti-reliance language, cannot disclaim reliance of representations 

outside of the written contract.”598 I also observed that the one-way anti-reliance 

clause in the Merger Agreement means “Auris was permitted to rely on the 

defendants’ assurances.”599 J&J avers that I left open the effect of the integration 

clause on “alleged extra-contractual promises of future intent.”600 I see no basis to 

deviate from my prior ruling.601 To the extent that J&J is not bound by it or has 

presented different considerations, J&J’s argument fails on the merits. 

agreements and understandings, both written and oral, among the parties with respect to 

the subject matter hereof or thereof . . . .”).

597 Id. § 4.08 (“Except for the representations and warranties contained in Article III [of the 

Merger Agreement], [J&J] and Merger Sub acknowledge that none of [Auris] or any person 

on behalf of [Auris] makes, and neither [J&J] nor Merger Sub have relied upon, any other 

express or implied representation or warranty with respect to [Auris] or any of its 

Subsidiaries or with respect to any other information provided or made available to [J&J] 

or Merger Sub in connection with the transactions contemplated by this Agreement . . . . 

Each of [J&J] and Merger Sub disclaims any representations and warranties other than 

those that are expressly set forth in Article III.”).

598 MTD Mem. Op. 22.

599 Id. at 29.

600 Defs.’ Answering Post-trial Br. 130; see also Defs.’ Pre-trial Br. 78.

601 See Advanced Litig., LLC v. Herzka, 2006 WL 2338044, at *5 (Del. Ch. Aug. 10, 2006).
117

J&J asserts that “an integration clause alone is sufficient to bar a fraud claim 

based on expressions of future intent or future promises.”602 It cites two decisions 

in support: Shareholder Representative Services LLC v. Albertsons Companies, Inc.

and Black Horse Capital, LP v. Xstelos Holdings, Inc.603 Nevertheless, the general 

rule in Delaware is that “integration clauses do not operate to bar fraud claims based 

on factual statements not made in the written agreement.”604 “If parties fail to 

include unambiguous anti-reliance language, they will not be able to escape 

responsibility for their own fraudulent representations made outside of the 

agreement’s four corners.”605 There is neither a recognized exception to these 

principles nor a reason to deviate from them here.

606

602 Defs.’ Answering Post-trial Br. 130 (quoting Albertsons, 2021 WL 2311455, at *12).

603 Albertsons, 2021 WL 2311455, at *2; see also Black Horse Cap. L.P. v. Xstelos Hldgs., 

Inc., 2014 WL 5025926, at *24-25 (Del. Ch. Sept. 30, 2014) (holding that an integration 

clause barred a fraud claim because the statements allegedly relied upon “were not 

misrepresentations of material fact . . . but rather prior parole evidence that would vary the 

extant terms in the subsequent integrated writings”).

604 Kronenberg v. Katz, 872 A.2d 568, 592 (Del. Ch. 2004); see also 11 Williston on 

Contracts § 33:24 (4th ed.), Westlaw (May 2024 update).

605 Abry P’rs V, L.P. v. F & W Acq. LLC, 891 A.2d 1032, 1059 (Del. Ch. 2006).

606 See Trifecta Multimedia Hldgs., Inc. v. WCG Clinical Servs. LLC, 318 A.3d 450, 466-67 

(Del. Ch. 2024) (rejecting a similar argument).
118

On top of that, Albertsons and Xstelos are inapposite. Neither case involved 

a contract with a one-sided anti-reliance clause. And unlike here, the purported oral 

misrepresentations in those cases conflicted with the terms of the contracts.607

2. Parallel Pathing and Prioritization

Fortis avers that J&J’s senior leadership made various false statements 

promising to prioritize iPlatform and develop it in parallel with Verb.

608

 Most are 

the sort of “classically vague statements that a commercial party routinely makes 

during deal-making courtship.”609 They include:

• that iPlatform and Verb were “complementary”;610

• that Auris had J&J’s “resources at [its] sails” to develop 

iPlatform;611

• that J&J would spend “multiples” of what Auris alone could 

devote to its technology;612

• that iPlatform was a “priority”;613 and

607 Albertsons, 2021 WL 2311455, at *2; Xstelos, 2014 WL 5025926, at *22.

608 Pl.’s Opening Post-trial Br. 88.

609 Airborne Health, Inc. v. Squid Soap, LP, 2010 WL 2836391, at *8 (Del. Ch. July 20, 

2010).

610 Pl.’s Opening Post-trial Br. 25 (quoting JX 838).

611 Id. at 24 (quoting DeFonzo Tr. 330-31).

612 Id. (quoting JX 1004).

613 Id. (quoting McEvoy Tr. 2598). This is, of course, different from whether J&J treated 

iPlatform as a priority device in fulfilling its efforts obligation. 
119

• that Auris could access J&J’s “global candy store” of 

resources.614

Statements like these, praising one’s “skills, experience, and resources,” are “mere 

puffery and cannot form the basis for a fraud claim.”615 

Further, it is not apparent that these statements are false or were made with 

scienter.616 The evidence suggests that J&J intended to provide the Auris robots with 

more resources than Auris had as a standalone company.617 Auris’s products were

given, among other things, substantial funding, access to J&J’s “global candy store,” 

614 Id. (quoting JX 920).

615 Solow v. Aspect Res., LLC, 2004 WL 2694916, at *3 (Del. Ch. Oct. 19, 2004) (citing 

Kronenberg, 872 A.2d at 580-81); see also Trenwick Am. Litig. Trust v. Ernst & Young, 

L.L.P., 906 A.2d 168, 209 (Del. Ch. 2006) (explaining that “statements of expectation or 

opinion about the future of the company and the hoped for results of business strategies” 

are “generally not actionable” for fraud claims under Delaware law); Winner Acceptance 

Corp. v. Return on Cap. Corp., 2008 WL 5352063, at *8 (Del. Ch. Dec. 23, 2008) 

(describing statements that one’s expertise would help expand the business as “mere pun 

and puffery”); Trifecta, 318 A.3d at 463-64 (holding that statements about a party being 

“the best partner to accelerate growth” or that the counter-party would benefit from 

“collaboration, coordination and shared relationship” across thousands of clients were 

“non-actionable puffery”); Earth Pride Organics, LLC v. Corona-Orange Foods 

Intermediate Hldgs., LLC, 2024 WL 1905384, at *9 (Del. Ch. Apr. 17, 2024) (concluding 

that statements about resources to “support growth,” company capabilities, and expertise 

“to execute against new opportunities” were the sort of pre-transaction puffery that could 

not support a fraud claim).

616 See Metro Commc’n Corp. BVI v. Advanced Mobilecomm Techs. Inc., 854 A.2d 121, 

143 (Del. Ch. 2004); see also Arwood v. AW Site Servs., LLC, 2022 WL 705841, at *20 

(Del. Ch. Mar. 9, 2022) (explaining that a plaintiff must show that false statements were 

made “knowingly, intentionally, or with reckless indifference to the truth” and that the 

speaker “intended to induce [the plaintiff’s] reliance” on the alleged misrepresentation 

(citation omitted)).

617 E.g., JX 1150; JX 2873; McEvoy Tr. 2664-65; McEvoy Dep. 281-82; see also Shen Tr. 

1462-63. 
120

a dedicated “Tiger Team,” and many of Verb’s assets. These resources mostly came 

too late to support iPlatform’s achievement of the regulatory milestones, or even 

impaired iPlatform’s success. That does not, however, mean that J&J’s statements 

were untrue. 

J&J’s statements about parallel pathing Verb and iPlatform are relatively less 

vague. They include:

• that iPlatform and Verb would be developed in “parallel”;618 and

• that J&J planned to launch both iPlatform and Verb, meaning 

that it had the funds to develop both.619

Fortis contends that J&J “never intended” to develop the two systems in parallel, as 

evidenced by Project Manhattan and the Ashley Management Decision.620

These are statements of future intent rather than present fact.621 The record 

demonstrates that pre-merger, J&J was considering different options for the 

618 Pl.’s Opening Post-trial Br. 24 (quoting Moll Tr. 40).

619 Id. (citing Morano Tr. 1474).

620 Id. at 25.

621 See Great Lakes Chem. Corp. v. Pharmacia Corp., 788 A.2d 544, 554 (Del. Ch. 2001) 

(“Predictions about the future cannot give rise to actionable common law fraud. Nor can 

expression of opinion.” (citation omitted)); MicroStrategy Inc. v. Acacia Rsch. Corp., 2010 

WL 5550455, at *15 (Del. Ch. Dec. 30, 2010) (“Generally, prior oral promises or 

statements of future intent do not constitute ‘false representation[s] of fact’ that would 

satisfy the first element of fraudulent misrepresentation.”); Winner Acceptance, 2008 WL 

5352063, at *10 (“This Court looks with particular disfavor at allegations of fraud when 

the underlying utterances take the form of unfulfilled promises of future performance.”); 

Carrow v. Arnold, 2006 WL 3289582, at *9 (Del. Ch. Oct. 31, 2006) (“Generally, prior 

oral promises or statements of future intent do not constitute ‘false representation[s] of 
121

respective programs. J&J viewed iPlatform as a potential a backup for Verb—

Shen’s so-called “bullet proof strategy.”622 Before closing, J&J evaluated 

developing both systems and launching them as complementary offerings focused 

on different indications or markets.623 I cannot conclude that J&J’s statements about 

parallel pathing were made without any intention of performing.624

Project Manhattan was contrary to J&J’s promise to devote commercially 

reasonable efforts to iPlatform. But the contours of Project Manhattan as a direct 

comparison between iPlatform and Verb were set after closing. J&J had the funds 

to develop and launch both robots, even if the Ashley Management Decision made 

fact’ that would satisfy the first element of fraudulent misrepresentation.”), aff’d, 933 A.2d 

1249 (Del. 2007).

622 JX 1630; see supra note 218 and accompanying text.

623 E.g., JX 1363 at 9 (J&J in February 2019 projecting launches for iPlatform and Verb); 

JX 664 at 4 (Shen in September 2018 describing “a potential segmentation play” of Verb 

and iPlatform, stating that the programs “can be complementary,” and that having both 

would be a “‘Fail Safe’ plan for [J&J’s] robotic[s] strategy”); see also JX 1557 at 2 (J&J 

telling the FTC post-closing that the systems were “complementary” because “Verb will 

pursue laparoscopic procedures with a focus on those that benefit from advanced 

instrumentation, and iPlatform will pursue complex procedures that benefit from 

concomitant endoscopic and laparoscopic techniques”).

624 See Grunstein v. Silva, 2009 WL 4698541, at *13 (Del. Ch. Dec. 8, 2009) (“Courts . . . 

will convert an unfulfilled promise of future performance into a fraud claim if 

particularized facts are alleged that collectively allow the inference that, at the time the 

promise was made, the speaker had no intention of performing.”); see also Stevanov v. 

O’Connor, 2009 WL 1059640, at *12 (Del. Ch. Apr. 21, 2009).
122

this a less likely outcome.625 Parallel pathing was one of the three outcomes of 

Project Manhattan contemplated by Shen.626 

J&J ultimately chose to use iPlatform to prop up Verb. Some J&J officers, 

like Gorsky, may have viewed “meshing” the robots as an upside of the merger. As 

of closing, though, it was just a scenario under consideration. The final decision to 

merge iPlatform with Verb was made only after Project Manhattan when the J&J 

Board approved it. Although J&J’s conduct regarding iPlatform fell short of its 

contractual efforts obligations, Fortis did not prove that J&J’s pre-closing statements 

about parallel pathing constitute fraud.

3. “Light Touch” Integration

Fortis also avers that J&J defrauded it by making representations about 

Auris’s anticipated place within the overall J&J organization. These statements 

include:

• that J&J would “[p]reserve [Auris’s] entrepreneurial innovation 

culture”;627

625 See Shen Tr. 1247-48 (explaining that despite the budget challenge by McEvoy, J&J 

was financially able to develop both systems in parallel if the business decision was made 

to do so).

626 JX 1702 at 3 (“Develop both systems in parallel and the[n] make the final 

commercialization decision.”).

627 Pl.’s Opening Post-trial Br. 31 (quoting JX 838 at 6); see also id. (quoting Moll. Tr. 38).
123

• that J&J would “retain [Auris’s] leadership / team by creating a 

semi-autonomous model”;628

• that J&J would be “deferential” to Moll;629 and

• that, unlike in prior mergers, it was going to “do[] Silicon Valley 

well . . . this time.”630

Fortis did not prove that these statements were fraudulent. Several are the sort 

of fluffy platitudes made during negotiations that “no rational prospective investor . 

. . would find material.”631 J&J’s integration of Auris might not have had the “light 

touch” Auris anticipated, but it seems that Auris had a different subjective view of 

lightness than J&J.632

Other statements are not false. Auris personnel were kept in some key 

leadership positions and maintained a measure of control over certain functions, as 

J&J intended.633 In many other ways, Auris’s autonomy was understandably lost. 

628 Id. (quoting JX 838 at 6).

629 Id. (quoting DeFonzo Tr. 328).

630 Id.

631 Lazard Debt Recovery GP, LLC. v. Weinstock, 864 A.2d 955, 971 (Del. Ch. 2004) 

(finding that statements touting an “ideal work environment” and “unique resources” were 

“at best enthusiastic puffery”); Squid Soap, 2010 WL 2836391, at *8 (explaining that 

statements of “corporate optimism” cannot support a fraud claim); see supra note 615 and 

accompanying text.

632 E.g., JX 1299 at 8 (J&J talking points explaining to Auris “some aspects that will need 

to be integrated into J&J post-close such as financial reporting, and HR”).

633 E.g., McEvoy Tr. 2597; Pl.’s Dem. 7; cf. Trifecta, 318 A.3d at 458, 464-65 (holding that 

it was reasonably conceivable an explicit promise that a target could “operate 

independently (including all local corporate functions)” was fraud where the acquirer 
124

Auris could not justifiably expect that it would retain the same culture and 

independence it enjoyed as a startup after being acquired by a multi-billion-dollar 

global company like J&J. Nor did J&J represent as much.

4. Certainty of the Soft Tissue Ablation Milestone

Fortis’s third fraud theory is markedly different than the others. On January 

24, 2019, while working to convince Auris to sell, Gorsky (with the guidance of 

Morano and Kozak) offered the $100 million Soft Tissue Ablation Milestone to 

Moll. Gorsky told Moll that there was such a “high certainty” of achieving the 

milestone that J&J viewed it as an “‘effective’ up front” payment.634 This 

representation was false because the milestone was not remotely certain to be met.

635

prevented the target’s personnel from speaking with potential customers immediately after 

closing). 

634 JX 1228 at 5 (Gorsky talking points delivered to Moll on January 24, 2019, referencing 

the milestone as part of the total up front consideration); id. at 6 (explaining that J&J had 

included the milestone “to be responsive to [Auris’s] request” and that J&J thought Auris 

would “view [it] as relatively certain and near-term”); see also Kozak Tr. 1572-73; Moll 

Tr. 51 (testifying that Gorsky described “a highly likely target for achievement by the team 

because it was a very simple integration” between Monarch and the FLEX device).

635 Kozak testified that J&J viewed the milestone as “achievable.” Kozak Tr. 1618; see also 

JX 1239 at 3 (discussing the achievability of the milestone by end of July 2022). That is 

very different from being “‘effective’ up-front consideration.” JX 1228 at 5.
125

Whether Gorsky’s statement is an “overt misrepresentation” is borderline.636 

But it is undoubtedly “active concealment of material facts.”637 When J&J’s 

representation about the milestone’s certainty was made, J&J knew that a patient in 

its NeuWave clinical study had recently died.

638

 A for-cause, on-site investigation 

had been launched by the FDA.639 On January 24—two weeks before Gorsky and 

Moll spoke—J&J’s point of contact for the study “briefed” J&J’s Auris deal team 

(including Kozak) on the “patient death that [wa]s currently under investigation.”640 

The investigation risked substantial delay.641 Yet J&J waited until after closing to 

tell Auris.

Gorsky’s statement was intended to induce Auris to agree to a contingent 

payment and Auris justifiably relied on it.

642

 Auris was damaged as a result of its 

636 In re Am. Int’l Grp., Inc., Consol. Deriv. Litig., 965 A.2d 763, 804 (Del. Ch. 2009), aff’d 

sub nom. Teachers.’ Ret. Sys. Of La. v. PricewaterhouseCoopers LLP, 11 A.3d 228 (Del. 

2011) (TABLE).

637 Id.

638 See JX 1901 at 30.

639 See JX 1673; Bryant Tr. 2519-20; supra note 172 and accompanying text.

640 JX 1182 (Kozak updating Morano in January 2019, discussing that “a sensitivity 

[analysis] will be run to understand impact to valuation” from the patient death under 

investigation); see also JX 1171; JX 1673.

641 See Wittwer Rep. ¶¶ 95-101; Wittwer Tr. 1966-68; see also JX 1213.

642 See Hebert Tr. 1400-01; Kerrey Tr. 1428-29; Royan Tr. 1378-79; see also JX 1249 at 3 

(Moll on Jan. 24, 2019 calling the Monarch milestone a “chip shot”). J&J argues that 

“[t]here is no document that corroborates” the Auris directors’ testimony that they relied 

on J&J’s representations. Defs.’ Answering Post-trial Br. 121 n.9. It is unclear why J&J 

feels that the directors’ credible testimony is insufficient. The parties’ negotiating history
126

reliance.643 Destroying the value of the milestone was a direct and proximate result 

of J&J’s fraud.644 Auris never would have agreed to this milestone had it known 

about the patient death, since uncertainty persisted over the safety of FLEX and the 

timeline to clear regulatory hurdles.645 It would have demanded a higher upfront 

payment instead.

646

III. REMEDY

Fortis is entitled to damages for J&J’s breaches of the efforts provision in the 

Merger Agreement as they relate to the iPlatform regulatory milestones and GI 

Milestone. It is also entitled to damages for J&J’s fraud as it relates to the Soft 

further supports that the $100 million milestone as “up front” consideration was important 

in Auris’s decision to merge. See Moll Tr. 51-52; DeFonzo Tr. 390-392. 

J&J has asked for adverse inferences on the Auris board’s reliance since two 

members (Salehizadeh and Hebert) failed to preserve text messages. Defs.’ Mot. for 

Spoliation Sanctions (Dkt. 328). On June 5, 2023, I ordered the directors’ remaining 

responsive texts to be produced and reserved decision on whether they recklessly spoliated 

evidence. After reviewing the trial record, I decline to issue sanctions. I see no basis to 

conclude that either individual recklessly (much less intentionally) spoliated evidence.

643 At some point, the fact of the patient death became public. See JX 976. A report dated 

December 3, 2018 is on the FDA’s website. Id. at 3. This does not excuse J&J’s fraud. It 

is unknown when the report was posted. Even if it were made public pre-merger, Auris 

would have had no reason to search the FDA’s website for information about problems 

with the NeuWave study.

644 See Maverick, 2021 WL 1592473, at *9.

645 See DeFonzo Tr. 391-92 (“[I]f we were aware of that, I don’t think we would have 

accepted that milestone.”); Moll Tr. 177 (testifying the FLEX complications put in doubt 

whether the “milestone was even relevant”); see also JX 2339; Leparmentier Tr. 996-97.

646 See Moll Tr. 51-52; DeFonzo Tr. 391-92; see also supra note 642.
127

Tissue Ablation Milestone. Once liability is established, “this court has broad 

discretion to tailor a remedy to suit the situation as it exists.”647

Under Delaware law, the standard remedy for breach of contract “is based 

upon the reasonable expectations of the parties ex ante.”648 Damages for fraud are 

similar. “[T]he recipient of a fraudulent misrepresentation is entitled to recover as 

damages . . . the pecuniary loss to [it] of which the misrepresentation is a legal 

cause.”649 “Such expectation—or benefit-of-the-bargain—damages are measured 

by the amount of money that would put the plaintiff in the position it would have 

held if the defendant’s representations were true” or if the defendant had performed 

as promised.650 

A. Contract Damages

J&J must indemnify Fortis for losses “arising from or relating to” any “breach 

of or failure to perform” under the Merger Agreement.651 Fortis proved that J&J 

647 Gilliland v. Motorola, Inc., 873 A.2d 305, 312 (Del. Ch. 2005) (citation omitted).

648 Siga II, 132 A.3d at 1111 (quoting Duncan v. Theratx, Inc., 775 A.2d 1019, 1022 (Del. 

2001)).

649 NetApp, Inc. v. Cinelli, 2023 WL 4925910, at *17 (Del. Ch. Aug. 2, 2023) (quoting 

Restatement (Second) of Torts § 549(1)).

650 Id. at *17 (citing Siga II, 132 A.3d at 1130); see also Comrie v. Enterasys Networks, 

Inc., 837 A.2d 1, 17 (Del. Ch. 2003) (“Th[e] principle of expectation damages is measured 

by the amount of money that would put the promisee in the same position as if the promisor 

had performed the contract.” (citing Duncan, 775 A.2d at 1022)).

651 Merger Agreement § 8.02. Although Section 8.02(c) caps damages at $170,000,000 

except for intra-contractual fraud, Section 8.05(b) carves out the “right to Earnout 

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what Auris expected to gain using the probability-weighted milestone values 

assigned by the parties.654 Auris’s estimated probabilities of success are from a 

February 2019 valuation prepared by its financial advisor Centerview Partners, 

which reflects input from Auris management.655 J&J’s estimates are from a January 

2019 valuation model prepared by J&J and presented to its Board.656 Manning also 

calculated a blended approach by averaging the parties’ probability assignments.657

Manning’s alternative approach is warranted here. Contract damages should 

“put the promisee in the same position as if the promisor had performed the 

contract.”658 At the time of the merger, neither party anticipated that the milestone 

payments were a certainty. They separately assigned each iPlatform regulatory 

milestone a probability of achievement. The risk-adjusted probabilities assessed by 

the parties and their advisors reasonably reflect the likelihood that the milestones 

would have been achieved if J&J complied with its efforts obligation. 

valuation, competition economics and antitrust, intellectual property, business strategy, 

and public policy. See JX 4493 (“Manning Rep.”) 11.

654 Manning Tr. 2051-52; Manning Rep. ¶ 115; see Pl.’s Dem. 15 at 14.

655 Manning Rep. ¶¶ 115(a), 177; JX 1413 (Centerview Feb. 12, 2019 presentation).

656 Manning Rep. ¶¶ 115(b), 173-74; JX 2873 (J&J Jan. 2019 “BoD model” with native 

Excel attachment).

657 Manning Rep. ¶ 115(c); see Pl.’s Dem. 15 at 14.

658 Comrie, 837 A.2d at 17 (citation omitted).

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criticized Manning’s approach.663 Malackowski opined that Manning’s analysis 

used an outdated pre-diligence model created by J&J, which relied on inaccurate 

projections from Auris and did not account for “undisclosed risks” negatively 

affecting Auris’s value.664

None of these points are persuasive. J&J’s own communications state that the 

differences between the pre-diligence model presented to its Board (that Manning 

relied on) and a updated post-diligence updated model (that Malackowski addressed) 

are “slight.”665 The changes have no meaningful effect on Fortis’s damages.666 The 

probabilities of success J&J assigned to the relevant milestones remained the 

same.667 J&J’s projections were based on extensive due diligence and reliance on 

an outside advisor. These estimates supported an essential part of the deal.

668

 And 

663 Malackowski is the co-founder and senior managing director of Ocean Tomo, LLC, 

which provides financial expert, management consulting, and advisory services. He is an 

experienced testifying expert on subjects including valuation, lost profits, and venture 

financing including expected risk / return. He has a bachelor’s degree in accounting from 

the University of Notre Dame and is a registered Certified Public Accountant. 

Malackowski Rep. 5-6.

664 Id. at 37-58.

665 JX 2873 (“The overall EBIT differences are slight – only about $200MM cumulative.”).

666 Compare Malackowski Rep. Figure 12, with id. at Figure 13.

667 Compare id. at Figure 13, with Pl.’s Dem. 15 at 14.

668 See Manning Tr. 2061-62 (opining that it was reasonable to conclude that the parties’

estimates of success were reliable since they were “an essential part of the transaction they 

were engaged in”).

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B. Fraud Damages

Fortis proved that J&J committed fraud with respect to the Soft Tissue 

Ablation Milestone.671 Fortis has the burden to present a reasonable method to 

calculate fraud damages.672

Fortis offers two measures of damages for its fraud claim: (1) rescissory 

damages or (2) benefit of the bargain (i.e., expectation) damages.673 Rescissory 

damages are “the monetary equivalent of rescission” and intended to restore parties 

to the economic positions they would have held had the challenged transaction not 

occurred.674 Benefit of the bargain damages “are equal to ‘the difference between 

the actual and the represented values of the object of the transaction.’”675 Since 

J&J’s fraud concerns a single milestone, I believe that the benefit of the bargain 

approach is more suitable to compensate Fortis than the “exceptional” remedy of 

rescissory damages.676

671 See JX 1215 at 5; supra Section II.B.4.

672 See, e.g., Maverick, 2021 WL 1592473, at *9.

673 Pl.’s Opening Post-trial Br. 97. 

674 Lynch v. Vickers Energy Corp., 429 A.2d 497, 501 (Del. 1981), overruled in part on 

other grounds, Weinberger v. UOP, Inc., 457 A.2d 701, 714 (Del. 1983).

675 LCT Cap., LLC v. NGL Energy P’rs LP, 249 A.3d 77, 91 (Del. 2021) (quoting 

Stephenson, 462 A.2d at 1076).

676 See Universal Enters. Grp., L.P. v. Duncan Petroleum Corp., 2013 WL 3353743, at 

*15-16 (Del. Ch. July 1, 2013) (explaining that Delaware courts are reluctant to award 

rescissory damages, particularly for transactions occurring years prior where intervening 

events have occurred) (citations omitted).
134

The purpose of expectation damages is to put Fortis “in the position it would 

have held if [J&J’s representations] were true.”677 Unlike rescissory damages, which 

are based on undoing a fraudulent transaction, expectation damages remit to Fortis 

the value of the object it was fraudulently promised.678 Damages are equal to the 

difference between the actual and represented values of the object of the fraudulent 

transaction—here, the Soft Tissue Ablation Milestone. 

The actual value of the milestone is the reduced probability of reaching it due 

to the material information J&J kept from Fortis. Manning treated the actual value 

as $0, on the assumption that J&J’s misrepresentation made the earnout payment 

associated with the milestone unattainable. I adopt this value. Fortis has proven that 

the milestone became unattainable due to the cumulative effect of J&J’s fraud.

The represented value of the milestone is based on Auris’s reasonable 

expectation of its value at the time of the breach—i.e., the risk-adjusted probability 

of reaching the milestone. Manning calculated this figure using the expected net 

present value (eNPV) of the milestone at the time of the merger.679 He considered 

677 NetApp, 2023 WL 4925910, at *17 (citing Siga II, 132 A.3d at 1130); Strassburger v. 

Earley, 752 A.2d 557, 579 (Del. Ch. 2000) (explaining that expectations are measured at 

the time of the transaction).

678 See Maverick, 2021 WL 1592473, at *9 (“Benefit of the bargain damages are equal to 

the difference between the actual and represented values of the object of the fraudulent 

transaction. This method should put the plaintiff in the same position that the plaintiff 

would have been in if the defendant’s representations had been true.” (citation omitted)).

679 Manning Rep. ¶¶ 181-85.
135

three valuation scenarios representing Auris’s reasonable expectation of the 

contingent payment. First, he assessed an eNPV for the milestone using 

Centerview’s February 2019 valuation.680 Second, he assessed an eNPV for the 

milestone using J&J’s January 2019 model as presented to its Board.681 Finally, he 

calculated an eNPV for the milestone using a blended average of Centerview and 

J&J’s risk-adjusted values.682

Centerview derived a present value of the contingent payments based on an 

estimated probability of success for each milestone.683 The estimated probability of 

successful results multiplied by the contingent payment amount results in an 

expected payment for each milestone. To calculate the present value of each 

milestone, Centerview discounted each expected payment back to March 31, 2019 

using a 10.5% discount rate.684 Centerview’s risk-adjusted eNPV for the Soft Tissue 

Ablation Milestone is $58,000,000 using an 85% probability of achievement.685

680 Id. ¶ 183; see id. ¶¶ 161, 177; JX 1413.

681 Manning Rep. ¶ 184; see id. ¶¶ 173-74; JX 2873.

682 Manning Rep. ¶ 182.

683 JX 1413; see Manning Rep. ¶¶ 177-79.

684 JX 1413 (“Valuation as of 3/31/19 based on 10.5% discount rate using mid-year 

convention.”); Manning Rep. ¶ 177.

685 Manning Rep. Attachment D-2; see JX 1413.
136

Like Centerview, J&J assessed the present value of the contingent payments

using an estimated probability of success for each milestone.686 The expected 

payment amount was calculated by multiplying the estimated probability of success 

by the contingent payment amount. J&J discounted each expected payment back to 

April 1, 2019 using a 9.5% discount rate.687 The risk-adjusted eNPV for the Soft 

Tissue Ablation Milestone using J&J’s model is $63,731,495 based on an 85% 

probability of achievement.688

Manning’s blended average of the Centerview and J&J risk-adjusted eNPVs 

is $60,865,748.689 The difference between the represented value of the Monarch 

Soft Tissue Ablation Milestone and the actual value ($0) is $60,865,748. I adopt 

this figure as the most responsible estimate of Auris’s reasonable expectation of the 

Monarch Soft Tissue Ablation Milestone’s value at the time of the merger. 

Consistent with my approach to contract damages, the blended value strikes a 

responsible balance.

686 JX 2873 (Tab: “Contingent Consideration”); Manning Rep. ¶¶ 174-75.

687 Manning Rep. ¶ 174; JX 2873 (Tab: “Corporate Model (Stock)”).

688 Manning Rep. ¶ 192; id. at Attachment D-3; JX 2873 (Tabs: “Input,” “Contingent 

Consideration”).

689 Manning Rep. ¶ 190; id. at Attachment D-1.
137

C. Pre-judgment Interest

“In Delaware, pre-judgment interest is awarded as a matter of right.”690 

“Prejudgment interest serves two purposes: first, it compensates the plaintiff for the 

loss of the use of [its] money; and second, it forces the defendant to relinquish any 

benefit that it has received by retaining the plaintiff’s money in the interim.”

691

 

1. Contract Damages

The Merger Agreement states that, for any earnout payment not paid within 

10 days of J&J delivering notice of a milestone’s achievement:

interest shall accrue on such unpaid amount at a rate per annum equal to the 

prime rate of interest reported from time to time in The Wall Street Journal, 

calculated on the basis of the actual number of days elapsed over three 

hundred sixty (360), from the date such amount should have been paid 

pursuant to the terms of this Agreement . . . to the date of actual payment in 

full of such amount.692

The Merger Agreement also states that J&J will “notify the Stockholders’ 

Representative in writing within fifteen (15) days after the achievement” of any 

regulatory milestone.693 J&J “shall, or shall cause the Surviving Corporation or the 

Paying Agent to, pay the applicable Earnout Payment . . . within ten (10) days after 

such notice is delivered.”694

690 Citadel Hldg. Corp. v. Roven, 603 A.2d 818, 826 (Del. 1992).

691 Brandywine Smyrna, Inc. v. Millennium Builders, LLC, 34 A.3d 482, 486 (Del. 2011).

692 Merger Agreement § 2.07(d)(vii).

693 Id. § 2.07(c).

694 Id. § 2.07(c).
138

Guided by these provisions, Manning calculated pre-judgment interest on 

Fortis’s breach of contract damages using per-quarter averages of daily prime rates 

as reported in The Wall Street Journal, adjusted to reflect one quarter of a 360-day 

year.695 He conservatively assumed that the milestone payments would have been 

received 25 business days after the last day of the milestone period.696 He calculated 

pre-judgment interest through May 18, 2023 (the date through which he was asked 

to calculate damages), applying a floating interest rate that compounds quarterly.697 

I adopt Manning’s approach as both fair and consistent with the Merger 

Agreement. The prime rate was not only agreed upon by the parties, but also 

considered the best measure of the commercial lending rate used by banks for loans 

to creditworthy customers.

698

 Using a variable rate accounts for the economic 

realities during the relevant period, which saw significant swings in interest rates.699 

Whether to award compound or simple interest is a discretionary matter for this 

695 Manning Rep. ¶ 87. 

696 Id.

697 Id. 

698 Id. ¶ 87 n. 202 (citing Federal Reserve Website, FAQs, “What is the Prime Rate, and 

Does the Federal Reserve Set the Prime Rate?” https://www.federalreserve.gov/ 

faqs/credit_12846.htm).

699 See Gentile v. Rossette, 2010 WL 3582453, at *2 (Del. Ch. Sept. 10, 2010) (“In 

departing from a legal rate of interest fixed at the time of the wrongdoing, our courts have 

considered concepts such as ‘the realities of the relationship’ between the parties, whether 

a particular party was the primary cause for a delay in the litigation, as well as general 

‘fundamental economic realit[ies].’” (citation omitted)).
139

court.700 J&J’s sophistication, plus the years that it benefitted from non-payment of 

the earnout, support compound rather than simple interest.701

The only applicable milestones that expired before May 18, 2023 are the 

General Surgery Milestone and the Soft Tissue Ablation Milestone. A further 

interest calculation from May 19, 2023 through the date of judgment will be needed 

for these milestones, as well as the four iPlatform umbrella milestones for which 

Fortis proved its entitlement to damages. 

For the General Surgery Milestone, Manning computed pre-judgment interest 

from (1) the milestone end date plus 25 business days through (2) May 18, 2023. 

For the first quarter of this period, for each milestone, he multiplied the damages by 

the quarterly average prime rate and by the number of days in the quarter divided by 

360 to determine interest. For each of the remaining quarters, for each milestone, 

he multiplied the sum of the expected payment and cumulative interest by the 

number of days in the quarter divided by 360 and by the quarter’s average prime 

rate.702 The resulting calculation is:703

700 NGL Energy P’rs LP v. LCT Cap., LLC, --- A.3d ---, 2024 WL 2716005, at *4 (Del. 

May 28, 2024).

701 See Valeant Pharms. Int’l v. Jerney, 2007 WL 2813789, at *8 (Del. Ch. Mar, 1, 2007).

702 Manning Rep. ¶ 93.

703 Id. at Attachment B-20 (calculating interest for the General Surgery Milestone by 

quarter beginning in Q1 2022 based upon the average prime rate assuming a cumulative 

payment of $300,000,000).


142

states that J&J will indemnify Auris for “any and all Losses suffered or incurred by 

any such Seller Indemnified Party arising from or relating to . . . any breach of or 

failure to perform any covenant, agreement or obligation . . . contained in this 

Agreement.”709 “Losses” are defined as: 

any and all debts, obligations, losses, liabilities, damages, [t]axes, costs 

of investigation and other third party costs and expenses, in each case,

whether known or unknown, absolute or contingent, liquidated or

unliquidated, direct or indirect, due or to become due, accrued or not 

accrued, asserted or unasserted, related or not related to a Third Party 

Claim or otherwise (in each case excluding (x) incidental consequential

and lost profits (in each case to the extent not reasonably foreseeable)

and (y) punitive damages or damages based upon a financial metric 

multiple (except, in each case, to the extent awarded in a final nonappealable judgment and actually paid to a third party as part of a Third 

Party Claim)).710

There is no language in this provision, or elsewhere in the Merger Agreement, 

contemplating an award of attorneys’ fees for litigation. Granting Fortis’s request 

would force me to “interpret the provision in an expansive way that would be 

inconsistent with the American Rule,” which requires each party to bear its own 

attorneys’ fees.711 I decline Fortis’s invitation to do so.

709 Merger Agreement § 8.02(ii).

710 Id. § 8.01. 

711 Senior Housing Cap., LLC v. SHP Senior Housing Fund, LLC, 2013 WL 1955012, at 

*45 (Del. Ch. May 13, 2012).

144

General Surgery, Upper Abdominal, Lower Abdominal, Urologic, Gynecologic, and 

GI Milestones. J&J also committed fraud relating to the Soft Tissue Ablation 

Milestone. Fortis is entitled to damages, plus pre- and post-judgment interest, as 

outlined above.

Within 14 days, Fortis is asked to file an updated interest calculation 

consistent with the methodology adopted above. The parties are asked to confer on 

and file a proposed final order within 10 days of Fortis’s interest submission.