IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

PACIRA BIOSCIENCES, INC. and

PACIRA CRYOTECH, INC.,

Plaintiffs,

v.

FORTIS ADVISORS LLC, SOLELY

IN ITS CAPACITY AS

REPRESENTATIVE OF THE

FORMER SECURITYHOLDERS OF

MYOSCIEINCE, INC., TIMOTHY

STILL, GUMBALLA KRIS KUMAR,

JESSICA PRECIADO, and THE

FORMER SECURITYHOLDERS OF

MYOSCIENCE, INC.,

Defendants.

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C.A. No. 2020-0694-PAF

MEMORANDUM OPINION

Date Submitted: June 2, 2021

Date Decided: October 25, 2021

Lisa A. Schmidt, Raymond J. DiCamillo, Megan E. O’Connor, RICHARDS, 

LAYTON & FINGER, P.A., Wilmington, Delaware; Randy M. Mastro, Declan T. 

Conroy, GIBSON, DUNN & CRUTCHER LLP, New York, New York; Attorneys 

for Plaintiffs.

R. Judson Scaggs, Jr., Lauren K. Neal, Sarah P. Kaboly, MORRIS, NICHOLS, 

ARSHT & TUNNELL LLP, Wilmington, Delaware; Christopher J. Marino, DAVIS 

MALM & D’AGOSTINE, P.C., Boston, Massachusetts; Attorneys for Defendant 

Fortis Advisors LLC. 
Henry E. Gallagher, Jr., Shaun Michael Kelly, Jarrett W. Horowitz, CONNOLLY 

GALLAGHER LLP, Wilmington, Delaware; Attorneys for Defendants Timothy 

Still, Gumballa Kris Kumar, and Jessica Preciado. 

FIORAVANTI, Vice Chancellor
Pacira BioSciences, Inc. (“Pacira”) acquired MyoScience, Inc.

(“MyoScience”) in a 2019 merger (the “Merger”). The merger agreement provided 

for an up-front cash payment to MyoScience’s former securityholders along with 

contingent consideration if certain post-closing milestones have been achieved. 

Pacira has made certain milestone payments but seeks a declaration that it is not 

required to make further milestone payments. That claim is not the subject of this 

opinion. This opinion addresses a motion to dismiss the other six counts of the 

complaint.

Pacira contends that the securityholders’ representative and three former 

employees and securityholders of MyoScience owed and breached contractual 

obligations, either direct or implied, not to interfere with Pacira’s operation of the 

acquired company, now Pacira CryoTech, Inc. (“Pacira CryoTech” and together 

with Pacira, the “Plaintiffs”). The defendants have moved to dismiss those claims, 

and this opinion concludes that no such contractual obligation exists under the plain 

language of the merger agreement. Nor does the complaint state a claim under the 

implied covenant of good faith and fair dealing that the defendants made bad faith 

demands for milestone payments, interfered with Plaintiffs’ relationships with their 

employees, or impermissibly retained MyoScience’s former outside legal counsel. 

Plaintiffs have also asserted breach of contract and breach of fiduciary duty claims 

against two of the individual defendants based on post-merger conduct, and a claim 
2

against the other individual defendant for aiding and abetting those breaches of 

fiduciary duty. This opinion dismisses those claims for lack of personal jurisdiction 

over the individual defendants. 

I. BACKGROUND

Unless otherwise specified, the facts recited in this Memorandum Opinion are 

drawn from the Verified Complaint (the “Complaint” or “Compl.”) and documents 

integral thereto.

1

A. The Parties

Pacira is a “provider of non-opioid pain management solutions.”2 Pacira is a 

Delaware corporation based in Parsippany, New Jersey.

3 Pacira CryoTech is a 

Delaware corporation based in Fremont, California and a wholly owned subsidiary 

of Pacira.

4

 Pacira CryoTech is a successor to MyoScience, a Delaware corporation 

that Pacira acquired pursuant to an Agreement and Plan of Merger, dated March 4, 

2019, by and among Pacira Pharmaceuticals Inc.,5 PS Merger, Inc., MyoScience, 

1 Dkt. 1. Exhibits attached to the Complaint will be cited as “Ex.” 

2 Compl. ¶ 3.

3 Id. ¶ 26. 

4 Id. ¶¶ 27, 191. 

5 Pacira Pharmaceuticals, Inc. changed its name upon completion of the Merger to Pacira 

Biosciences, Inc. (i.e., Pacira). See Pacira BioSciences, Inc. Annual Report (Form 10-K) 

at 7 (filed March 1, 2021). Under Rule 201 of the Delaware Uniform Rules of Evidence, 

the court can take judicial notice of this fact for purposes of the pending motions. See WalMart Stores, Inc. v. AIG Life Ins. Co., 860 A.2d 312, 320 n.28 (Del. 2004) (holding that 
3

Inc., and Fortis Advisors LLC (“Fortis”), as the Securityholders’ Representative (the 

“Merger Agreement”).6 MyoScience, and now Pacira CryoTech, manufactures 

iovera® (“iovera”), a medical device that “applies controlled doses of extreme cold 

to targeted nerves to relieve pain.”7

Fortis (or the “Securityholders’ Representative”) serves as the representative 

of the MyoScience Securityholders (as defined below) pursuant to the Merger 

Agreement. 8

 Defendants Timothy Still (“Still”), Gumballa Kris Kumar (“Kumar”), 

and Jessica Preciado (“Preciado”) were MyoScience employees prior to the Merger. 

Kumar, Preciado, and Still all reside in California, and they are collectively referred 

to as the “Individual Defendants.” None of the Individual Defendants is a party to 

the Merger Agreement. 

Still was the CEO of MyoScience.

9 Following the Merger, Still became a 

member of a three-person “Advisory Committee” to Fortis.

10

the court may take judicial notice of public documents such as SEC filings required by law 

to be filed).

6 Ex. A. (“Merger Ag’t.”). The Merger Agreement refers to Pacira as the “Parent”, 

MyoScience as the “Company” or the “Surviving Corporation”, and Fortis as the 

“Securityholders’ Representative.” Id.

7 Compl. ¶ 3.

8 Id. ¶ 28. 

9 Id. ¶ 29. 

10 Id. ¶ 122. 
4

Kumar is a former head of Marketing & Product Management at 

MyoScience.11 “Following Pacira’s acquisition of MyoScience, Kumar worked for 

six months as a consultant for Pacira [CryoTech].”12

Preciado is the former Principal Scientist at MyoScience.13 Following 

Pacira’s acquisition of MyoScience, Pacira retained Preciado as Senior Director, 

Health Outcomes Value Assessment.14

B. Pacira Acquires MyoScience

Pacira acquired MyoScience in the Merger for $120 million in cash, subject 

to certain adjustments, and contingent payments (“Milestone Payments”) of up to 

$100 million to former MyoScience stockholders or option holders.

15 The Merger 

closed on April 9, 2019.16 The former MyoScience stockholders or option holders 

entitled to Milestone Payments executed either a Letter of Transmittal for Securities 

of MyoScience or an Option Holder Letter of Transmittal for Company Options of 

MyoScience (the “Option Holder Letter”).

17 The foregoing signatories are referred 

11 Id. ¶ 30.

12 Id. ¶¶ 30, 124. 

13 Id. ¶ 31.

14 Id.

15 Id. ¶ 4; Merger Ag’t. § 1.11. 

16 Pacira Biosciences, Inc., Current Report (Form 8-K) (Apr. 9, 2019).

17 Compl. ¶¶ 32, 95; Merger Ag’t. §§ 1.15(a)–(c). 
5

to as the “Escrow Participants” or “MyoScience Securityholders.”18 Among other

milestones triggering Milestone Payments, the Merger Agreement required Pacira 

to pay up to $50 million to the Escrow Participants if treatments involving iovera in 

certain specified medical settings could be reimbursed at certain specified levels 

within a certain period of time.

19

C. The iovera Product and CPT Codes

iovera is a patented Class II FDA-cleared handheld medical device that 

administers “cryoanalgesia” or “cryoneurolysis”—the application of “controlled 

doses of extreme cold temperature to targeted nerves to relieve pain.”20 iovera goes 

under several technical names that the Merger Agreement refers to as “Smart Tip 

Products.”21 Pacira alleges that 

[a]ccording to the [FDA’s] Indication Statement for the product, iovera can 

be used to (i) “destroy tissue during surgical procedures,” (ii) “produce lesions 

in peripheral nervous tissue by the application of cold to the selected site for 

the blocking of pain,” and (iii) “relie[ve] [] pain and symptoms associated 

with osteoarthritis of the knee for up to 90 days.”22

18 “Escrow Participants” are defined in the Merger Agreement as “the holders of Series G 

Preferred Stock, Series F Preferred Stock, and Carve-Out Common Stock, Qualifying 

Warrant Holders and Qualifying Option Holders.” Merger Ag’t. Ex. A.

19 Compl. ¶¶ 8, 102–04; see Merger Ag’t. §§ 1.15(a)(iv), (b)(i). 

20 Compl. ¶ 36; see id. ¶ 59. 

21 Id. ¶ 102 n.2. 

22 Id. ¶ 37. 
6

The success of iovera “was closely tied” to reimbursement rates and guidance 

issued by the Centers for Medicare and Medicaid (“CMS”).23 In order to be 

reimbursed by an insurance payer (e.g., Medicare or Medicaid) for performing a

medical procedure on a patient, a medical provider must be able to describe that 

procedure using a generalized description known as a Current Procedural 

Terminology code (“CPT Code”).24 The responsibility for maintaining and 

publishing the list of CPT Codes falls to American Medical Association (“AMA”), 

which also provides guidance on how to apply the codes.25 CMS sets the

reimbursement rates for each CPT Code pursuant to Section 1848(b) of the Social 

Security Act.

26 The reimbursement rates must be updated each year and are 

published in the Medicare Physician Fee Schedule.27

The CPT Codes have national reimbursement rates as well as locality-specific 

reimbursement rates. To determine the national reimbursement rate for a given CPT 

Code, CMS quantifies and aggregates the costs of applying the procedures 

associated with the CPT Code across several categories.

28 CMS also develops a 

23 Compl. ¶ 39.

24 Id. ¶¶ 38–39.

25 Id. ¶¶ 5, 41.

26 Social Security Act § 1848(b), 42 U.S.C. § 1395w–4. 

27 Id.; Compl. ¶ 39.

28 Compl. ¶ 44.
7

geographic practice cost index for each of more than 110 different localities that is 

used to determine locality-adjusted reimbursement rates.29 According to Plaintiffs, 

“[w]hen CMS publicizes the reimbursement rates for various CPT Codes, it 

consistently cites to the standard, nationwide reimbursement rates for those codes, 

not to the dozens of different locality-adjusted reimbursement rates.”30

As part of the annual process for updating the reimbursement rates, CMS 

solicits “feedback from practitioners and industry groups regarding the costs 

associated with types of procedures performed under the various CPT codes.”31

CMS then publishes draft reimbursement rates in July for a public comment period.32

After the comment period closes, “CMS reviews the feedback from industry 

participants, updates reimbursement rates as appropriate, and then publishes the final 

rules” for the upcoming calendar year in November.

33

The usage of a medical procedure depends in part on at least two factors. First, 

it is important that the CPT Codes reflect the actual costs of the medical procedure 

to ensure that the provider will be fully reimbursed for the costs of the procedure.34

29 Id. ¶¶ 46, 47.

30 Id. ¶ 48. 

31 Id. ¶ 49.

32 Id. ¶¶ 51, 52.

33 Id. ¶ 52.

34 Id. ¶ 53.
8

Second, the popularity of a particular procedure depends on the clarity of guidance 

from the AMA on the reimbursement rate for that procedure; “[p]ractitioners who 

assign the wrong CPT Codes to procedures risk costly audits of their reimbursement 

requests, as well as possible clawback of reimbursement payments.”35 With 

inconsistent or ambiguous guidance, medical device manufacturers face the risk that 

the usage of their device will “plummet.”36

D. MyoScience Seeks New CPT Codes and Favorable Reimbursement 

Rates 

Prior to the Merger, the Individual Defendants, on behalf of MyoScience, 

mounted a campaign in 2018 and 2019 to clarify which CPT Codes “should apply 

to procedures that used the [iovera] product to treat knee pain” and to persuade the 

AMA to rescind its “confusing” prior guidance.37 The Individual Defendants 

worked with Gail Daubert, MyoScience’s “outside reimbursement counsel” to 

persuade the AMA to rescind prior 2018 guidance recommending that practitioners 

use a vague catch-all code for cryoneurolysis.

38 The effort succeeded; in April 2019, 

the AMA published a document clarifying that cryoneurolysis may be reported using

35 Id. ¶ 54.

36 Id. ¶ 55.

37 Id. ¶¶ 58–59, 64–72. 

38 Id. ¶¶ 7, 15, 64, 69–72, 72 n.1. 
9

a more specific code, CPT Code 64640,

39 which covers “[d]estruction by neurolytic 

[i.e., nerve blocking] agent; other peripheral nerve or branch.”40

A new opportunity to come under a favorable CPT Code emerged in May 

2018, when “CMS announced a number of new CPT Codes that would become 

available to practitioners on January 1, 2020.”41 Among the new additions was CPT 

Code 64xx1, a “placeholder code”42 specifically dedicated to a procedure that 

“destr[oys]” the “genicular nerve branches” by a “neurolytic agent.”43 CMS uses 

“x”s instead of numbers in the placeholder codes to signify that the code is still in 

draft form; CMS then replaces the “x”s with numbers when the code is finalized.44

Plaintiffs assert that, because CPT Code 64xx1 applied specifically to kneerelated cryoneurolysis, both MyoScience and the Individual Defendants understood 

the development of the code to be “highly relevant to reimbursement rates for the 

use of iovera.”45 MyoScience and the Individual Defendants thus teamed up with 

39 Id. ¶ 72.

40 Id. ¶ 63. 

41 Id. ¶ 74. 

42 Id. ¶ 76.

43 Id. ¶ 75.

44 Id. ¶ 76. 

45 Id. ¶ 82.
10

Daubert again to “influence CMS as it drafted the reimbursement rates that would 

apply to CPT Code 64xx1 pre-merger.”46

These efforts were ongoing while the representatives of MyoScience

(including Still) negotiated the terms of Pacira’s acquisition of MyoScience.

47 The 

Plaintiffs maintain that this backdrop “led to the inclusion of the CMS 

Reimbursement Milestones in the Merger Agreement.”48

E. The Mechanics of the Milestone Payment Provisions 

1. The Milestone Payments 

Section 1.15(a) of the Merger Agreement requires that certain Milestone 

Payments be made to the Escrow Participants “in the event the corresponding 

milestones” are achieved “at any time following the Closing.”49 The milestones fall 

into four categories: (i) “Regulatory Milestones”; (ii) “Costs of Goods Sold”; (iii) 

“Sales Milestones”; and (iv) “CMS Reimbursement Milestones.” Most pertinent

here, Section 1.15(a)(iv) (“CMS Reimbursement Milestones”) requires Pacira to pay 

the Escrow Participants an amount equal to:

(1) in the case of reimbursement related to use of the Smart Tip Products to 

treat a patient in the office setting . . . $20,000,000, if CMS Reimbursement is 

effective in fiscal year 2020 in an amount equal to or greater than $600.00 per 

such procedure using such product pursuant to CPT Code 64xx1 (or a different 

46 Id. ¶ 84; see id. ¶ 86. 

47 Id. ¶ 91.

48 Id. ¶ 92.

49 Merger Ag’t., § 1.15(a).
11

code that is appropriate to describe a procedure in which the Smart Tip 

Products are used) . . .

(2) in the case of reimbursement related to use of the Smart Tip Products to 

treat a patient in the ambulatory surgery centers setting . . . $20,000,000, if 

CMS Reimbursement is effective in fiscal year 2020 in an amount equal to or 

greater than $800.00 per such procedure using such product pursuant to CPT 

Code 64xx1 (or a different code that is appropriate to describe a procedure in 

which the Smart Tip Products are used) . . . [and] 

(3) in the case of reimbursement related to use of the Smart Tip Products to 

treat a patient in the out-patient hospital setting, $10,000,000, if CMS 

Reimbursement is effective at any time during the Milestone Achievement 

Period in an amount equal to or greater than $1,400.00 per such procedure 

using such product pursuant to CPT Code 64xx1(or a different code that is 

appropriate to describe a procedure in which the Smart Tip Products are used).

Sections 1.15(a)(iv)(i) and (ii) also provide for reductions in payments if the 

relevant milestone is met “after the end of fiscal year 2020” but before December 

31, 2023.50 The obligation to make any Milestone Payments terminates after 

December 31, 2023.

51 The Milestone Payments must be paid “[n]o later than 60 

days after the end of the fiscal quarter in which the applicable Milestone is 

achieved.”52

50 Id. § 1.15(b)(i) (defining the “Milestone Achievement Period” as the period starting on

January 1, 2019 and ending on December 31, 2023). The Merger Agreement does not 

define the phrase “fiscal year 2020.” 

51 Id.

52 Id. § 1.15(c)(i).
12

2. The Parties’ Rights Under the Milestone Provisions

Section 1.15(d) of the Merger Agreement requires that “[f]ollowing the 

Closing and for the duration of the Milestone Achievement Period, [Pacira] shall 

operate [Pacira CryoTech] in good faith in the context of this Section 1.15 and shall 

use commercially reasonable efforts to achieve the Milestones.”53 Further, Section 

1.15(e) provides, in pertinent part, that:

(i) the sole and exclusive right of the Escrow Participants under this Section 

1.15 will be to receive, subject to the other terms of this Agreement, the 

Milestone Payments payable pursuant to this Section 1.15 if [Pacira 

CryoTech] achieves such Milestone Payments within the time periods set 

forth herein and subject to each of the other conditions and qualifications 

contemplated herein; 

(ii) [Pacira] will have the right to operate the business of [Pacira CryoTech] 

as it chooses, in its sole discretion, except as expressly set forth in this Section 

1.15; [and]

(iii) [Pacira] is not under any obligation to provide any specific level of 

investment or financial assistance to [Pacira CryoTech] or to undertake any 

specific actions (or to refrain from taking any specific actions) with respect to 

the operation of the Surviving Corporation, except as expressly set forth in 

this Section 1.15.54

3. The Option Holder Letter 

As a precondition to receiving its portion of the merger consideration, 

including the Milestone Payments, each MyoScience Securityholder was required to 

53 Id. § 1.15(d).

54 Id. §§ 1.15(e)(i)–(iii).
13

execute either a Letter of Transmittal for Securities of MyoScience or an Option 

Holder Letter.

55 Pursuant to those agreements, the signatory’s “MyoScience shares 

or options to purchase MyoScience shares, respectively, were converted into the 

right to receive payments pursuant to the Merger Agreement.”56 Each of the 

Individual Defendants executed a copy of the Option Holder Letter.57 The Option 

Holder Letter incorporates certain sections of the Merger Agreement, to which the 

Individual Defendants agreed to be bound in their capacities as “Escrow 

Participants”, “Indemnifying Securityholders”, “Qualifying Option Holders” or 

“Securityholders.”58

Section (a) of the Option Holder Letter also provides that, by executing the

Option Holder Letter, the signatory appoints Fortis as “its true and lawful attorneyin-fact with full power of substitution . . . and exclusive agent pursuant to the terms 

of the Merger Agreement, the Escrow Agreement and related documents.”59 The

signatory of each Option Holder Letter “consents to the taking of any and all actions 

55 Compl. ¶ 32; see Merger Ag’t. §§ 1.11, 1.18(b). The Merger Agreement also required 

the holders of certain “Qualifying Company Warrants” for shares in MyoScience to 

execute a Warrant Cancellation Agreement as a precondition for receiving cash 

consideration for their warrants. Merger Ag’t. § 1.10.

56 Compl. ¶ 32. 

57 Exs. B–D (“Option Holder Ltrs.”). When referring to the actions of the Individual 

Defendants in connection with the Option Holder Letter, this Opinion refers to the actions 

taken by Kumar, Preciado, and Still with respect to their respective Option Holder Letters. 

58 Id. § (a). 

59 Id. § (a)(i).
14

and the making of any decisions required or permitted to be taken by the 

Securityholders’ Representative under the Merger Agreement, the Escrow 

Agreement and related documents as if expressly confirmed and ratified in writing 

by the undersigned.”60

Section (d) of the Option Holder Letter states that the payment of the merger 

consideration “is conditioned on multiple items, including (i) closing of the 

Transaction and, if applicable, receipt of the [proceeds] by the [paying agent] and 

(ii) receipt by the Company, Paying Agent and Parent, as applicable, of an accurately 

completed [Option Holder Letter] and required attachments.”61

The Option Holder Letter is governed by Delaware law, and each signatory 

“consents to the exclusive jurisdiction of the state and federal courts sitting in the 

State of Delaware and consents to personal jurisdiction of and venue in such courts 

with respect to any and all matters or disputes arising out of this [agreement].”62

F. Post-Merger Conduct of the Parties Leading to the Present Dispute 

1. The Post-Merger Roles of the Individual Defendants 

Following the merger, Kumar worked as a consultant for Pacira CryoTech for 

six months starting on April 9, 2019.

63 The terms of that agreement are contained 

60 Id. § (a)(ii).

61 Id. § (d).

62 Id. § (g).

63 Compl. ¶¶ 30, 124. 
15

in a consulting agreement (the “Consulting Agreement”). Among other terms, the 

Consulting Agreement required Kumar to “refrain from publishing, distributing, or 

disclosing”64 information defined as “Confidential” without the company’s prior

written consent for a period of three years.65 The Consulting Agreement states that 

Kumar’s “relationship with Company is and shall be that of an independent 

contractor, and neither party is authorized to nor shall act as the agent of the other.”66

After the Merger closed, Preciado became a “Senior Director, Health 

Outcomes Value Assessment” at Pacira.67 In that role, Preciado “led the 

development of research and quality improvement programs” and “research 

partnerships with key global, national, and regional health care executives across the 

medical device industry.”68 She also “regularly provides updates to senior 

management at Pacira, for whom she is authorized to fill in during both internal and 

external meetings.”69

64 Id. ¶ 126.

65 Id. ¶127; see Ex. F. 

66 Ex. F. ¶ 6. The Consulting Agreement is governed by New Jersey law. Id. ¶ 13.

67 Compl. ¶ 31. 

68 Id. ¶ 132.

69 Id.
16

Still joined what the Complaint describes as a three-person “Advisory

Committee” to Fortis.70 Still held no formal position at Pacira or Pacira CryoTech

after the Merger.

71 Plaintiffs allege that, notwithstanding this fact, “Still sent 

multiple messages to former MyoScience employees who had transitioned to 

working for Pacira, demanding concrete action to reach various milestone goals.”72 

In particular, Plaintiffs point to a May 1, 2019, email from Kumar to Still and 

Andrew Jones, a former MyoScience employee who had remained at Pacira 

CryoTech after the Merger, asking Jones for “the exact language in our final 

purchase agreement on the reimbursement mile stones.”73 In the email, Kumar 

stated that his “primary focus” would be to achieve “just that.”74 Plaintiffs maintain 

that this comment shows that the Individual Defendants sought to implement a 

strategy of achieving “the minimum threshold necessary to trigger the CMS 

Reimbursement Milestones.”75

70 Id. ¶ 122. The Merger Agreement provides for an “Advisory Group” to “provide 

direction to the Securityholders’ Representative in connection with its services” under the 

Merger Agreement. Merger Ag’t. § 5.4(b).

71 Compl. ¶¶ 123, 141.

72 Id. ¶ 140.

73 Id. ¶ 163; see id. ¶ 258. 

74 Id. ¶ 164.

75 Id. ¶ 165.
17

2. The Individual Defendants Coordinate After CMS Publishes 

Draft Reimbursement Rates and Fortis Hires Daubert

On July 29, 2019, CMS released the draft reimbursement rates for CPT Code 

64xx1.76 Plaintiffs allege that “[e]ach of those draft rates failed to meet the threshold 

for triggering the CMS Reimbursement Milestone.”77

The release of the draft reimbursement rates prompted the Individual 

Defendants to commence what Plaintiffs describe as a coordinated campaign to

ensure the final rates, when published, would trigger the CMS Reimbursement 

Milestones.

78 On July 29, “Kumar provided Still with internal Pacira 

correspondence containing a Pacira consultant’s preliminary assessment of the draft 

reimbursement rates.”79 The Individual Defendants then exchanged “numerous 

emails” and agreed to “get clarity” and “find out” additional information.80 Also on 

July 29, 2019, Still emailed Gail Daubert, MyoScience’s former outside counsel,

stating, “I might need to consider engaging your expertise” on the draft 

reimbursement rates for CPT Code 64xx1.81 Daubert wrote to Still that her acting 

76 Id. ¶ 167.

77 Id. 

78 Id. ¶ 174.

79 Id. ¶ 173. 

80 Id.

81 Id. ¶ 194.
18

on behalf of the MyoScience Securityholders “would be adverse to Pacira.”82

Shortly thereafter, Still formally retained Daubert “on behalf of the Individual 

Defendants”83 to persuade CMS and the AMA to “adjust the reimbursement rates 

applicable to CPT Code 64xx1.”84 There is no allegation that, at the time of her 

email exchange with Still, Daubert had been employed or retained by Pacira or 

Pacira CryoTech in any capacity.

At roughly the same time, Pacira began to formulate its own response to the 

draft reimbursement rates using Pacira’s pre-merger reimbursement counsel, 

Latham & Watkins LLP (“Latham”).85 Unbeknownst to Pacira, Kumar and Preciado 

sent Still a number of updates on Pacira’s internal discussions and shared documents 

that the Complaint alleges were confidential.

86

• On July 30, 2019, Kumar “forwarded to Still an email with Pacira’s 

General Counsel concerning the draft reimbursement rate for CPT code 

64xx1” that had been intended for Latham.87

82 Id. ¶ 195. Still disagreed with this statement, responding “[n]o.” Id. 

83 Id. ¶¶ 197.

84 Id. ¶¶ 199. 

85 See id. ¶ 174 (referencing email from Pacira’s General Counsel to Latham concerning 

the draft reimbursement rate). 

86 Id. ¶¶ 174–88. 

87 Id. ¶ 174.
19

• On August 1, 2019, Kumar sent Still “an email reflecting information 

provided to Pacira by Latham.”88 The message reflected “Latham’s 

impressions and advice regarding reimbursement procedures under 

CPT Code 64xx1 and the reimbursement calculations proposed by 

CMS.”89

• On August 5, 2019, Preciado participated in a call with Pacira’s General 

Counsel and Latham regarding the draft reimbursement rates that she 

secretly recorded.

90 After the call, Preciado sent Kumar a file entitled 

“Call with Latham Watkins re:646XX1 - 2019-8-5.m4a” from her 

personal email account.91 Kumar then sent Still a “[s]ummary of our 

discussion today with Latham & Watkins” for “[his] records.”92

• On August 6, 2019, Preciado forwarded to Still a draft letter Pacira had 

planned to send to CMS regarding the draft reimbursement rates for 

CPT Code 64xx1.93 The Complaint does not describe the contents of 

the letter and neither party has entered the document into the record. 

88 Id.

89 Id.

90 Id. ¶¶ 181–82.

91 Id. ¶ 182.

92 Id. ¶ 186.

93 Id. ¶ 174.
20

• On August 10, 2019, Kumar sent Still “an email reflecting competitive 

intelligence that Pacira had gathered about industry competitors, 

including potential actions those competitors might take during the 

CMS comment period.”94

Still also sought to enlist Pacira’s support. On August 22, 2019, Still sent an 

“unsolicited” email to Pacira’s CEO Dave Stack, listing “all the steps that he would 

take, if he were in Stack’s position, to influence the draft reimbursement rates.”95 

Still told Stack that MyoScience had worked with Daubert in the past and had “been 

successful in the past with sending a memo; scheduling a phone call; and getting 

clarification where AMA and CMS had misread / misinterpreted information 

regarding iovera.”96

On August 28, 2019, Pacira’s General Counsel emailed Daubert asking if she 

would “join the team” that was “formulating [Pacira’s] response to the iovera CM[S] 

reimbursement proposed rule.”97 Daubert declined, telling Pacira that “we have a 

conflict.”98 Plaintiffs contend that “Still’s retention of Daubert led to significant 

increased costs, inefficiencies, and duplicative work” because Pacira would not have 

94 Id.

95 Id. ¶ 170 (emphasis omitted).

96 Id.

97 Id. ¶ 205.

98 Id. ¶ 207.
21

had to perform certain work that Daubert had already completed for MyoScience

before the merger if Pacira had been able to hire Daubert.99

3. CMS Publishes Final Reimbursement Rates and Fortis Makes 

Demands for Milestone Payments

On November 1, 2019, CMS finalized CPT Code 64xx1 as CPT Code 64624 

and published the final reimbursement rates.100 CMS set the following 

reimbursement rates:

• $417.56 for procedures that used CPT Code 64624 in the office 

setting, compared to a CMS Milestone threshold of $600;

• $471.33 for procedures that used CPT Code 64624 in an ambulatory 

surgery center setting, compared to a CMS Milestone threshold of 

$800; and

• $1,872.01 for procedures that used CPT Code 64624 in an outpatient hospital setting, compared to a CMS Milestone threshold of 

1,400.00.

101

On January 3, 2020, Pacira sent Fortis a letter stating that the CMS Milestone 

set forth in Section 1.15(a)(iv)(3) of the Merger Agreement (tied to “reimbursement 

. . . in an out-patient hospital setting”) had been satisfied and that it would pay the 

99 Id. ¶ 208.

100 Id. ¶¶ 155, 210, 214–15.

101 Id. ¶¶ 215–16.
22

MyoScience Securityholders $10 million on June 1, 2020.102 Pacira made that 

payment on May 27, 2020.103

On May 29, 2020, Fortis sent Pacira a letter demanding $40 million in 

Milestone Payments under both Section 1.15(a)(iv)(1) (tied to “reimbursement . . . 

in the office setting”) and Section 1.15(a)(iv)(2) (tied to “reimbursement . . . in the 

ambulatory surgery centers setting”).

104 The letter demanded a response within one 

week.105 In the letter, Fortis asserted that, with respect to the 1.15(a)(iv)(1) 

milestone, “where a Smart Tip procedure destroys three nerves (other than the 

genicular nerve) in a single procedure . . . and is billed under CPT Code 64640, the 

payment for that procedure will exceed the $600 milestone threshold in many 

localities.”106 Fortis also contended that the local reimbursement rates for “CPT 

code 64625 or 64635,” “CPT code 64640,” “CPT 64635 and 64636,” or “CPT 64633 

+ 64634 + 64634” satisfied the Milestone Payment thresholds, justifying its demand 

for payment.107

102 Id. ¶ 217.

103 Id. ¶ 218.

104 Id. ¶ 222.

105 Id.

106 Fortis Opening Br. Ex. 3; see also Compl. ¶ 226.

107 Compl. ¶ 229. 
23

Attorneys for Pacira responded to Fortis on June 5, 2020, asserting that 

“neither of the requested milestone payments is warranted” under Section 

1.15(a)(iv)(1) or 1.15(a)(iv)(2) of the Merger Agreement.108 On June 8, 2020, Fortis 

responded, stating that its “reimbursement experts” were “putting together a package 

of background data” that was “supportive of the many ways we have identified in 

which the milestones were reached.”109 

Plaintiffs allege that Fortis made this and other demands in bad faith.

110 In 

support of that position, Plaintiffs cite to a November 4, 2019 email to Still from

Chris Anson, the Director of M&A at Fortis, stating: “I agree that it makes sense to 

use the ambiguous language to pressure them to pay quickly (and I will do so).”111 

Plaintiffs aver the reference to ambiguous language refers to the provisions in the 

Merger Agreement governing the Milestone Payments.

112

Since the closing of the Merger, Pacira has made three Milestone Payments 

to the Escrow Participants.

113 The first, $7 million for satisfaction of the Regulatory 

Milestone involving CE Markings in Section l.15(a)(i)(1), occurred in November 

108Id. ¶ 233.

109 Id. ¶ 236.

110 Id. ¶¶ 147, 156–57, 261–62. 

111 Id. ¶ 148 (emphasis omitted). In the Complaint, Anson’s name is misspelled as “Anon.”

112 Pls.’ Ans. Br. 32.

113Compl. ¶ 152.
24

2019 following a back-and-forth between Pacira and Fortis’s legal counsel about 

whether the milestone had been met in the second or third quarter of that year.

114

Pacira alleges that this initial disagreement evinced Still and Fortis’s willingness to 

make bad faith payment demands without any justification.115 The second Milestone 

Payment of $5 million occurred in either February or March 2020 after Pacira 

obtained approval to use iovera in Canada, as set forth in Section l.15(a)(i)(2).

116 

The third milestone payment, $10 million for the satisfaction of the CMS 

Reimbursement Milestone in Section l.15(a)(iv)(3), occurred in May 2020 as 

described above.117

G. Procedural History

On August 21, 2020, Plaintiffs filed their Complaint.

118 The Individual 

Defendants have moved to dismiss the Complaint in its entirety and Fortis has 

moved to dismiss Count III.

119 After briefing on the motions, the court heard oral 

argument on June 3, 2021.

114 Id. ¶¶ 143–46; Merger Ag’t. § 1.15(a)(i)(1).

115 Compl. ¶¶ 144, 147. 

116 Compare id. ¶ 150 (stating the payment was made on March 2, 2020), with id. ¶ 152 

(stating that Pacira made payments in November 2019, February 2020, and May 2020). 

117 Id. ¶¶ 151, 217, 221. 

118 Dkt. 1.

119 Dkt. 13, 14. Fortis filed its Answer and Verified Counterclaim on October 5, 2020, 

alleging that Pacira breached the Merger Agreement and owes the Escrow Participants $40 

million in Milestone Payments. Dkt. 12. 
25

II. ANALYSIS

The Complaint contains seven counts. Count I seeks a declaratory judgment 

that the MyoScience Securityholders are not entitled to Milestone Payments under 

Sections 1.15(a)(iv)(1) or 1.15(a)(iv)(2) of the Merger Agreement. Count II asserts

that the Individual Defendants breached the Option Holder Letter. Count III is a 

claim for breach of the implied covenant of good faith and fair dealing against Fortis 

and the Individual Defendants. Count IV alleges that Kumar breached the 

Consulting Agreement. Count V alleges Kumar breached his fiduciary duties. 

Count VI alleges Preciado breached her fiduciary duties. Count VII alleges Still 

aided and abetted Kumar and Preciado in breaching their fiduciary duties.

A. Standard of Review 

On a motion to dismiss for failure to state a claim under Court of Chancery 

Rule 12(b)(6):

(i) all well-pleaded factual allegations are accepted as true; (ii) even 

vague allegations are well-pleaded if they give the opposing party 

notice of the claim; (iii) the Court must draw all reasonable inferences 

in favor of the non-moving party; and ([iv]) dismissal is inappropriate 

unless the plaintiff would not be entitled to recover under any 

reasonably conceivable set of circumstances susceptible of proof.

Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002) (cleaned up). Although

the pleading standards are minimal, Central Mortg. Co. v. Morgan Stanley Mortg. 

Cap. Hldgs. LLC, 27 A.3d 531, 536 (Del. 2011), “a trial court is required to accept 

only those ‘reasonable inferences that logically flow from the face of the complaint’ 
26

and ‘is not required to accept every strained interpretation of the allegations 

proposed by the plaintiff.’” In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d 

162, 168 (Del. 2006) (quoting Malpiede v. Townson, 780 A.2d 1075, 1083 (Del. 

2001)). “[A] claim may be dismissed if allegations in the complaint or in the exhibits 

incorporated into the complaint effectively negate the claim as a matter of law.”

Malpiede, 780 A.2d at 1083.

B. Alleged Breach of the Option Holder Letter

Count II alleges that each of the Individual Defendants breached the Option 

Holder Letter by violating Section 1.15(e) of the Merger Agreement. The parties do 

not dispute that the Option Holder Letter incorporates Section 1.15(e). Section 

1.15(e)(i) (the “Exclusive Right Provision”) provides that the “sole and exclusive 

right of the Escrow Participants under this Section 1.15 will be to receive, subject to 

the other terms of this Agreement, the Milestone Payments payable pursuant to this 

Section 1.15.” Section 1.15(e)(ii) (the “Sole Discretion Provision”) provides that 

Pacira “will have the right to operate the business of [Pacira CryoTech] as it chooses, 

in its sole discretion, except as expressly set forth in this Section 1.15.” Plaintiffs 

fuse these provisions to impose contractual obligations upon the Individual 

Defendants. 

“In order to survive a motion to dismiss for failure to state a breach of contract 

claim, the plaintiff must demonstrate: first, the existence of the contract, whether 
27

express or implied; second, the breach of an obligation imposed by that contract; and 

third, the resultant damage to the plaintiff.” VLIW Tech., LLC v. Hewlett-Packard 

Co., 840 A.2d 606, 612 (Del. 2003).

Plaintiffs argue the Merger Agreement (through the Option Holder Letter)

imposes an obligation on the Individual Defendants to refrain from interfering in 

Pacira’s internal affairs or operations. The Merger Agreement does not provide for 

such an express obligation. Plaintiffs derive that obligation, however, from the Sole 

Discretion Provision, which they claim gives Pacira “the exclusive right to operate 

Pacira CryoTech free from interference,”120 and the Exclusive Right Provision, 

which Plaintiffs assert imposes on the Individual Defendants an obligation to “limit 

their post-merger role to potentially receiving milestone payments.”121 According 

to Plaintiffs, the Individual Defendants breached this obligation in two ways. First, 

they attempted to “influence and instruct”122 Pacira CryoTech employees to achieve 

the “minimum threshold necessary to trigger the CMS Reimbursement 

Milestones.”123 Second, the Individual Defendants “prevented Pacira from working 

with Gail Daubert” by retaining her first.124 Plaintiffs allege that Pacira suffered 

120 Pls.’ Ans. Br. 15–16. 

121 Id. at 49.

122 Compl. ¶ 258.

123 Id. ¶ 165.

124 Id. ¶ 258.
28

damages “including, but not limited to, the deprivation of Pacira’s negotiated 

contractual rights, the loss of valuable, confidential information, and the time and 

money Pacira has been forced to expend due to the Individual Defendants’ retention 

of Daubert.”125

The Individual Defendants respond that Section 1.15(e) “does not impose any 

obligations on Individual Defendants or prohibit them from taking any action.”126

Section 1.15(e), on their reading, serves instead as a “disclaimer of any obligation” 

by Pacira to “make payments to the former MyoScience securityholders under 

Section 1.15 other than the Milestone Payments if they are achieved or . . . [to] 

operate the company in a specific way following the Merger except as otherwise set 

forth in Section 1.15.”127

Where, as here, the meaning of a contract is in dispute, the court must “give 

priority to the parties’ intentions as reflected in the four corners of the agreement, 

construing the agreement as a whole and giving effect to all its provisions.” 

Salamone v. Gorman, 106 A.3d 354, 368 (Del. 2014) (internal quotations omitted). 

In doing so, the court must read a contract so as not to render any part of the contract 

“mere surplusage,” Kuhn Const., Inc. v. Diamond State Port Corp., 990 A.2d 393, 

125 Id. ¶ 296.

126 Indiv. Defs.’ Opening Br. 36.

127 Id. at 34–35.
29

396–97 (Del. 2010), or “illusory or meaningless.” O’Brien v. Progressive Northern 

Ins. Co., 785 A.2d 281, 287 (Del. 2001). The court must also “interpret clear and 

unambiguous terms according to their ordinary meaning.” Riverbend Cmty., LLC v. 

Green Stone Eng’g, LLC, 55 A.3d 330, 335 (Del. 2012). “A contract is not rendered 

ambiguous simply because the parties do not agree upon its proper construction. 

Rather, a contract is ambiguous only when the provisions in controversy are 

reasonably or fairly susceptible of different interpretations or may have two or more 

different meanings.” Rhone–Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 

616 A.2d 1192, 1196 (Del. 1992). 

Plaintiffs argue that “[o]n its face, Section 1.15(e) imposes a clear obligation 

on the Escrow Participants.”128 As evidence for this proposition, Plaintiffs cite to 

the Exclusive Right Provision. This argument ignores the plain language of Section 

1.15(e). Nowhere does that section use the term “obligation” with respect to the 

Escrow Participants. The only pertinent reference in Section 1.15(e) to any 

obligation concerns Pacira: 

[MyoScience] and the Securityholders’ Representative on behalf of each 

Escrow Participant acknowledge and agree that, without limiting the 

provisions and obligations of [MyoScience] in this Section 1.15 . . . [Pacira] 

is not under any obligation to provide any specific level of investment or 

financial assistance to the Surviving Corporation or to undertake any specific 

actions (or to refrain from taking any specific actions) with respect to the 

128 Pls.’ Ans. Br. 50.
30

operation of the Surviving Corporation, except as expressly set forth in this 

Section 1.15.129

Plaintiffs also fail to explain how a reference to the Escrow Participants’ “sole 

and exclusive” right to receive the Milestone Payments could reasonably be read as 

imposing an affirmative obligation on them. Because the agreement does not 

contain any language demonstrating that the parties intended to impose obligations 

on the Escrow Holders, I conclude that Section 1.15(e) of the Merger Agreement 

unambiguously does not impose any obligation on the Individual Defendants. 

Read within the context of the other provisions of Section 1.15, the Sole 

Discretion Provision defines the scope of Pacira’s obligations to make Milestone 

Payments to the Escrow Holders under the Merger Agreement’s Milestone Payment 

provisions in Section 1.15(a). Section 1.15(d) provides that Pacira “shall operate 

[Pacira CryoTech] in good faith in the context of this Section 1.15 and shall use 

commercially reasonable efforts to achieve the Milestones.”130 Further refining 

Pacira’s specific obligations, Section 1.15(e)(iii) states that Pacira need not “provide 

any specific level of investment or financial assistance” to Pacira CryoTech to 

achieve the milestones or to “undertake any specific actions (or to refrain from taking 

any specific actions) with respect to [its] operation.” 

129 Merger Ag’t. § 1.15(e).

130 For a detailed discussion of efforts clauses, see Akorn, Inc. v. Fresenius Kabi AG, 2018 

WL 4719347, at *85–86 (Del. Ch. Oct. 1, 2018), aff’d, 198 A.3d 724 (Del. 2018).
31

Section 1.15(e) operates as a disclaimer of Pacira’s obligations to engage in 

any conduct beyond that specified in the Merger Agreement. As this court has noted 

when interpreting a similar provision giving the purchaser “sole discretion with 

regard to all matters relating to the operation of the Business,” these provisions “set 

a contractual standard by which to evaluate whether [the buyer’s] failure to achieve 

and pay [the] Milestones was improper.” Himawan v. Cephalon, 2018 WL 6822708, 

at *8 (Del. Ch. Dec. 28, 2018) (“paraphras[ing]” Fortis Advisors LLC v. Dialog 

Semiconductor PLC, 2015 WL 401371, at *5 (Del. Ch. Jan. 30, 2015)); see also, 

e.g., Neurvana Med., LLC v. Balt USA, LLC, 2020 WL 949917, at *2, *14 (Del. Ch. 

Feb. 27, 2021) (earn-out provision gave buyer the “sole discretion and authority 

post-closing to make decisions concerning all matters relating to [the acquired 

product]” provided it used commercially reasonable efforts to achieve a CE marking 

milestone (internal quotations omitted)); Lazard Tech. P’rs., LLC v. Qinetiq N. Am. 

Operations LLC, 114 A.3d 193, 196 (Del. 2015) (earn-out provision “left the buyer 

free to conduct its business post-closing in any way it chose so long as it did not act 

with the intent to reduce or limit the earn-out payment”); ev3, Inc. v. Lesh, 114 A.3d 

527, 528 (Del. 2014) (earn-out provision imposed obligation on buyer to fund and 

pursue certain regulatory milestones in its “sole discretion, to be exercised in good 

faith”).
32

The Plaintiffs ask this court to read the Sole Discretion Provision as imposing 

an obligation on the Escrow Holders to refrain from making any efforts to 

communicate with Pacira employees or the authorities that determine reimbursement 

rates which affect the calculation of the Milestone Payments. Plaintiffs cite no case 

where the court read a similar provision as imposing the obligation Plaintiffs seek to 

impose here. If that is what the parties had intended, they could have easily provided 

for such an obligation in the Merger Agreement or the Option Holder Letter. 

Section 1.15(e) demonstrates that the parties knew how to specify whether a party is 

required “to refrain from taking any specific actions” in the post-closing operations 

of the business.131 Likewise, the parties’ use of the phrase “shall” in Section 1.15(d)

to impose legal obligations on Pacira indicates that, had the parties intended to 

impose an obligation on the Individual Defendants, they would have used the same 

construction.132 “[A]s a matter of contractual interpretation, [courts] should refrain 

from writing a provision into a contract when the parties could have done so 

themselves, but chose not to.” Vintage Rodeo Parent, LLC v. Rent-a-Center, Inc., 

2019 WL 1223026, at *21 (Del. Ch. Mar. 14, 2019). Absent any reference to the 

131 Merger Ag’t. § 1.15(e)(iii) (“Parent is not under any obligation to provide any specific 

level of investment or financial assistance to the Surviving Corporation or to undertake any 

specific actions (or to refrain from taking any specific actions) with respect to the operation 

of the Surviving Corporation, except as expressly set forth in this Section 1.15.”). 

132 Id. § 1.15(d) (“Following the Closing and for the duration of the Milestone Achievement 

Period, Parent shall operate the Surviving Corporation in good faith in the context of this 

Section 1.15 and shall use commercially reasonable efforts to achieve the Milestones.”). 
33

obligations of the Escrow Holders, the plain meaning of Section 1.15 is not 

susceptible to the Plaintiffs’ interpretation. 

Because Section 1.15(e) plainly does not impose any obligation on the 

Individual Defendants, the Plaintiffs have failed to specify an obligation that the 

Individual Defendants breached. Count II is accordingly dismissed for failure to 

state a claim. 

C. Claim for Breach of the Implied Covenant of Good Faith and Fair 

Dealing

Count III alleges that Fortis and the “MyoScience stockholders, through Fortis 

Advisors” violated an implied covenant that Fortis “would only make proper, goodfaith demands for payments under the Merger Agreement’s milestone 

provisions.”133 The Complaint further alleges that Fortis and the Individual 

Defendants have breached the implied covenant of good faith and fair dealing by 

engaging “in conduct intended to frustrate Pacira’s rights to receive the full benefits 

of the Merger Agreement by making demands for Milestone Payments, that are not, 

in fact, due.”134 

The implied covenant of good faith and fair dealing “attaches to every contract 

by operation of law,” Metro. Life Ins. Co. v. Tremont Grp. Hldgs, Inc., 2012 WL 

133 Compl. ¶ 261.

134 Id. ¶ 263. 
34

6632681, at *15 (Del. Ch. Dec. 12, 2012), and is “best understood as a way of 

implying terms in the agreement.” E.I. DuPont de Nemours & Co. v. Pressman, 679 

A.2d 436, 443 (Del. 1996). The doctrine “ensures that the parties deal honestly and 

fairly with each other when addressing gaps in their agreement.” Glaxo Grp. Ltd. v. 

DRIT LP, 248 A.3d 911, 919 (Del. 2021). It requires “a party in a contractual 

relationship to refrain from arbitrary or unreasonable conduct which has the effect 

of preventing the other party to the contract from receiving the fruits of the bargain.” 

Dunlap v. State Farm Fire and Cas. Co., 878 A.2d 434, 442 (Del. 2005) (internal 

quotations omitted). 

The doctrine most often “comes into play in two situations”: (1) “when it is 

argued that a situation has arisen that was unforeseen by the parties and where the 

agreement’s express terms do not cover what should happen” or (2) “when a party 

to the contract is given discretion to act as to a certain subject and it is argued that 

the discretion has been used in a way that is impliedly proscribed by the contract’s 

express terms.” Oxbow Carbon & Minerals Hldgs., Inc. v. Crestview-Oxbow 

Acquisition, LLC, 202 A.3d 482, 504 n.93 (Del. 2019). 

“In order to plead successfully a breach of an implied covenant of good faith 

and fair dealing, the plaintiff must allege a specific implied contractual obligation, a 

breach of that obligation by the defendant, and resulting damage to the plaintiff.” 

Fitzgerald v. Cantor, 1998 WL 842316, at *1 (Del. Ch. Nov. 10, 1998). “When 
35

presented with an implied covenant claim, a court first must engage in the process 

of contract construction to determine whether there is a gap that needs to be filled.” 

Allen v. El Paso Pipeline GP Co., 113 A.3d 167, 183 (Del. Ch. 2014). “During this 

phase, the court decides whether the language of the contract expressly covers a 

particular issue, in which case the implied covenant will not apply, or whether the 

contract is silent on the subject, revealing a gap that the implied covenant might fill.” 

Id. “[O]ne generally cannot base a claim for breach of the implied covenant on 

conduct authorized by the terms of the agreement.” Glaxo Grp. Ltd., 248 A.3d at 

920. Put differently, the court may not use the doctrine to recognize any obligations 

that “negate an unrestricted contractual right authorized by an agreement” or prohibit 

conduct that the contract authorizes. Id. at 921.

“Even where the contract is silent as to the conduct in question, an interpreting 

court cannot use an implied covenant to re-write the agreement between the parties, 

and should be most chary about implying a contractual protection when the contract 

could easily have been drafted to expressly provide for it.” Oxbow, 202 A.3d at 507

(cleaned up). Doing so would give the parties “contractual protections that they 

failed to secure for themselves at the bargaining table.” El Paso Pipeline, 113 A.3d 

at 183–84 (quoting Aspen Advisors LLC v. United Artists Theatre Co., 843 A.2d 697, 

707 (Del. Ch. 2004), aff’d, 861 A.2d 1251 (Del. 2004)). Permissible considerations 

at this stage include, for example, whether the “expectations of the parties were so 
36

fundamental that it is clear that they did not feel a need to negotiate about them,” 

Allied Cap. Corp. v. GC-Sun Hldgs., L.P., 910 A.2d 1020, 1033 (Del. Ch. 2006), or 

whether the gap arises due to reasonably unforeseeable contingencies. El Paso 

Pipeline, 113 A.3d at 184 (noting that “[e]ven the most skilled and sophisticated 

parties will necessarily fail to address a future state of the world”) (cleaned up). 

“Assuming a gap exists and the court determines that it should be filled, the 

court must determine how to fill it.” Id. At this stage, the court “seeks to enforce 

the parties’ contractual bargain by implying only those terms that the parties would 

have agreed to during their original negotiations if they had thought to address 

them.” Gerber v. Enter. Prods. Hldgs., LLC, 67 A.3d 400, 418 (Del. 2013). Because

“a court can only imply a contractual obligation when the express terms of the 

contract indicate that the parties would have agreed to the obligation had they 

negotiated the issue, the plaintiff must advance provisions of the agreement that 

support this finding in order to allege sufficiently a specific implied contractual 

obligation.” Fitzgerald, 1998 WL 842316, at *1. The court “must assess the parties’

reasonable expectations at the time of contracting and not rewrite the contract to 

appease a party who later wishes to rewrite a contract [s]he now believes to have 

been a bad deal.” Nemec v. Shrader, 991 A.2d 1120, 1126 (Del. 2010). 

Proving breach of the implied claim “does not depend on the breaching party’s 

mental state.” ASB Allegiance Real Est. Fund v. Scion Breckenridge Managing 
37

Member, LLC, 50 A.3d 434, 442 (Del. Ch. 2012), rev’d on other grounds, 68 A.3d 

665 (Del. 2013). The implied covenant therefore “does not require that a party [to] 

have acted in subjective good faith.” El Paso Pipeline, 113 A.3d at 183.

1. Bad Faith Claim Against Fortis for Improper Demands 

Plaintiffs argue that the Complaint states a claim for breach of the implied 

covenant because: (1) Fortis had an obligation to refrain from making “premature, 

bad-faith, and/or baseless demands” for payment under the Merger Agreement;135

(2) Fortis violated that obligation by making such demands;136 and (3) Pacira 

suffered damages because it was denied the “full benefits”137 of the Merger 

Agreement and because it had to “expend resources” to respond to such demands.138

Plaintiffs advance two broad points to support this claim. First, they argue the 

Merger Agreement contains a “gap” regarding payment demands from Fortis as the 

Securityholders’ Representative insofar as the “parties did not contract for Fortis to 

submit demands for payment” and “did not appear even to have contemplated that 

possibility.”139 Second, Plaintiffs urge the court to fill that gap with an implied 

135 Compl. ¶ 262; see id. ¶ 261. 

136 Id. ¶ 262.

137 Id. ¶ 263; see id. ¶ 267.

138 Id. ¶ 268.

139 Pls.’ Ans. Br. 21–22.
38

prohibition against the making of “bad-faith payment demands” because Pacira will 

otherwise be denied “numerous post-merger benefits.”140

The Plaintiffs’ argument fails at step one of the implied covenant analysis 

because the Merger Agreement addresses the issue of demands from the 

Securityholders’ Representative. There is no gap. Plaintiffs did contract for specific 

circumstances in which Fortis is entitled to make demands of Pacira related to the 

satisfaction of milestones, and to which Pacira has an obligation to respond. Section 

1.15(f) of the Merger Agreement expressly provides that, “in the event of a dispute 

with respect to any audit conducted or report provided under Section 1.15(f)” the 

Securityholders’ Representative “shall deliver an objection notice” to Pacira.141 

Section 1.15(f) also requires both parties to “work in good faith to resolve” the 

disagreement and provides that, if the parties fail to reach agreement, they shall 

submit their dispute to a mutually agreed upon accounting firm for resolution.142 

Section 1.15(f) also imposes an express limitation on Fortis’s ability to lodge 

objections under Section 1.15—“in no event shall the Securityholders’ 

140 Id. at 29; see id. at 18–19.

141 Merger Ag’t § 1.15(f)(ii). 

142 Id.
39

Representative be entitled to submit a Milestone Objection Notice more than once 

in any fiscal year.”143

Plaintiffs argue that Section 1.15(f) addresses a different subject matter—not 

payment demands, but milestone reports—and is limited to a narrow range of 

disputes involving “audits” of financial information.144 But that point only serves to 

undermine Plaintiffs’ argument. Plaintiffs’ argument thus concedes that the parties 

contracted for specific circumstances in which Fortis’s ability to make demands of 

Pacira is circumscribed. And they did so in the narrow context of Fortis demanding 

financial information from Pacira to confirm whether certain milestones involving 

“calculations” and “measurements” have been satisfied. What follows from this is 

not that the contract contains a gap regarding Fortis’s demands in all other 

circumstances. To the contrary, it confirms both that the parties agreed to place no 

restrictions on the ability of Fortis to make demands for payment from Pacira and, 

correspondingly, placed no obligation on Pacira to respond to any such demands.145 

143 Id. In addition, Section 1.15(f)(i) expressly provides that “no more than once per fiscal 

year” the Securityholders’ Representative shall have the right to access “the financial books 

and records of Parent to the extent relating to the achievement or non-achievement of the 

Milestones.” Merger Ag’t § 1.15(f)(i). It also provides that, under certain circumstances, 

“Parent may restrict the foregoing access” in the exercise of its “good faith, reasonable 

judgment.” Id. 

144 Pls.’ Ans. Br. 22–23.

145 Plaintiffs offer no authority for their assertion that the absence of any provision 

addressing unsolicited payment demands “suggests, at a minimum, that they are 

disfavored, if not outright disallowed.” Pls.’ Ans. Br. 24. Using the implied covenant to 
40

That is particularly apt here. “We do not ordinarily speak of one’s entitlement to 

make a demand of any sort; demands are simply made and, once they are made, the 

question is not whether one was entitled to make the demand, but whether there is a 

legal obligation to comply with it.” Schick Inc. v. Amalgamated Clothing & Textile 

Workers Union, 533 A.2d 1235, 1240 (Del. Ch. 1987). The existence of Section 

1.15(f) demonstrates that had the parties wanted to curtail or restrain Fortis’s ability 

to make the types of demands for payment about which Pacira now complains, the 

contract “could easily have been drafted to expressly provide for it.” Oxbow, 202 

A.3d at 507. 

Plaintiffs respond that the parties failed to provide for a prohibition against

bad faith demands not because they intended to leave all demands outside of the 

narrow context of Section 1.15(f) unregulated, but rather because such a prohibition 

was “too obvious to need expression.”146 In support of that proposition, Plaintiffs 

point to what they extol as “clear Delaware precedent”147—a bench ruling by thenVice Chancellor Strine in HCP CH1 Saddle River, LLC v. Sunrise Senior Living 

create such a rule would “create a free-floating [negative] duty . . . unattached to the 

underlying legal document.” Dunlap v. State Farm Fire and Cas. Co., 878 A.2d 434, 441

(Del. 2005). 

146 Pls.’ Ans. Br. 26 (quoting Dieckman v. Regency GP LP, 155 A.3d 358, 368 (Del. 2017)).

147 Id. at 20.
41

Services, Inc., C.A. No. 4691-VCS (Del. Ch. Dec. 9, 2009) (TRANSCRIPT)

(“Saddle River”).

Setting aside Plaintiffs’ assertion that a transcript ruling is “clear Delaware 

precedent,”148 Saddle River does not support the Plaintiffs’ argument. In Saddle 

River, the counterclaim-defendant, “HCP”, acquired a portfolio of senior living 

facilities operated by counterclaim-plaintiff, “Sunrise”, pursuant to certain 

management agreements.149 HCP tried to renegotiate the agreements but Sunrise 

resisted.150 HCP then tried to pressure Sunrise to renegotiate the agreements by 

exercising certain discretionary contractual rights in a manner that Sunrise alleged 

was oppressive—such as serial demands for audits and other irrelevant 

information.151 In denying a motion to dismiss an implied covenant claim alleging 

that HCP had “repeatedly made demands of Sunrise in bad faith,”152 the court held 

that Sunrise had sufficiently pleaded that “HCP used its contractual discretion in bad 

faith by engaging in harassing conduct designed to put financial and other kinds of 

pressure on Sunrise to renegotiate.” Saddle River, C.A. No. 4691-VCS Hrg. Tr. at 

148 Cf. Day v. Diligence, Inc., 2020 WL 2214377, at *1 (Del. Ch. May 7, 2020) (“Transcript 

Rulings generally have no precedential value in this Court and they should ordinarily not 

be relied on as precedent—at most they offer persuasive authority.”).

149 Saddle River, C.A. No. 4691-VCS (Dkt. 44 (Ans. & Verified Countercl.) ¶¶ 1–4). 

150 Id. ¶¶ 5, 15.

151 Id. ¶¶ 8–9, 18–19, 24, 28, 35–36. 

152 Id. ¶ 35.
42

55:7–10. The court made clear that the violation of the implied covenant claim 

concerned HCP’s abuse of its “contractual power.” Id. at 11:16–21; see id. at 12:2–

6 (“THE COURT: . . . They point to the provisions of the contract that deal with 

these things, and, yeah, they have a right to ask for information, they don’t have a 

right to change their mind a million times, basically to do it pretexturally [sic] just 

to drive us crazy.” (emphasis added)). 

Unlike in Saddle River, where the counterclaim defendant had express, 

unconditional contractual rights to seek books and records and discretionary rights 

to refuse to approve the counterclaim plaintiff’s operating budget and capital 

expenditures, the Merger Agreement here does not require Pacira to respond to any 

unsolicited communication from Fortis outside the limited context of Section 

1.15(f). In Saddle River, the express contractual rights were the necessary factual 

predicate for the implied obligation not to exercise those rights in a harassing manner 

with the aim of depriving the counterparty of its contract rights. Here, by contrast, 

Pacira has no obligation to respond to any of Fortis’s demands until after Pacira 

sends Fortis a written report pursuant to Section 1.15(f). Because Fortis’s demands

for milestone payments were not in response to a written report pursuant to Section 

1.15(f)(i), Pacira was free to dismiss any requests related to the CMS Milestones out 
43

of hand.153 Saddle River is thus consistent with well-established authority that 

“[w]hen a contract confers discretion on one party, the implied covenant requires 

that the discretion be used reasonably and in good faith.” See Airborne Health, Inc. 

v. Squid Soap, LP, 984 A.2d 126, 146–47 (Del. Ch. 2009); see id. at 147 n.1 

(collecting authorities).154

In any event, Plaintiffs have failed to plead sufficient facts to show that the 

communications sent to Pacira by Fortis or by Still on behalf of Fortis constituted 

harassment or “oppressive or underhanded tactics.” Chamison v. HealthTrust-Hosp. 

Co., 735 A.2d 912, 920 (Del. Ch. 1999); see id. at 920–23 (noting that defendant 

HealthTrust, Inc. acted oppressively by refusing to “pay the reasonable fees and 

expenses of [defense] counsel selected by [HealthTrust]” pursuant to an 

indemnification provision by demanding that plaintiff Chamison accept an attorney 

who “contemplated a group defense strategy that ignored Chamison’s unique 

153 Merger Ag’t § 1.15(f)(i). Plaintiffs likewise have not alleged or argued that Pacira had 

a contractual obligation to respond to any of what Pacira characterizes as Fortis’s allegedly 

“premature, bad-faith, and/or baseless demands” made between April and August 2019. 

Compl. ¶¶ 144, 261. 

154 Compare Travel Servs. Network, Inc. v. Presidential Fin. Corp. of Mass., 959 F.Supp. 

135, 141 (D. Conn. 1997) (observing that “Massachusetts courts have left open the 

possibility that in certain circumstances lenders may violate the implied covenant by the 

manner in which they exercise express contractual rights” (emphasis in original)), with

CSL Behring, LLC v. Bayer Healthcare, LLC, 2019 WL 4451368, at *4 (D. Del. Sept. 17, 

2019) (“A defendant does not violate the implied covenant of good faith and fair dealing 

merely by acting in its own self-interest while also performing its express obligations under 

the contract.” (applying New York law) (internal quotations omitted)).
44

defenses” (emphasis omitted)), aff’d, 748 A.2d 407 (Del. 2000). Nor have Plaintiffs 

alleged that Fortis’s demands for Milestone Payments were a pretext for some other 

purpose. Cf. Saddle River, C.A. 4691-VCS Hrg. Tr. at 12:2–6 (describing claim that

demands were made pretextually). 

The Complaint describes four separate instances of correspondence directed 

at Pacira by or on behalf of Fortis. While the Complaint asserts that counsel for the 

Securityholders’ Representative, Davis Malm, sent Pacira “multiple emails and 

letters to Pacira between April and August 2019 prematurely demanding 

payment”155 related to one of the Regulatory Milestones not at issue here, the 

Complaint cites just two. The first is an August 26, 2019 email stating that Fortis 

“expects to receive payment for the Milestone on Friday, August 30, 2019.”156 The 

second is an August 28, 2019 email stating that “[a] failure to receive a CMS 

reimbursement in 2020 is by all means unacceptable.”157 

With respect to the CMS Milestone Payments, Plaintiffs point to two letters 

from Fortis—a May 29, 2020 letter requesting that Pacira “inform [the MyoScience 

Securityholders] of the plans for the payment of $40 million within one week”158

and a June 8, 2020 reply to Pacria’s response letter, expressing “confiden[ce] . . . 

155 Compl. ¶ 144. 

156 Id. ¶ 145.

157 Id. ¶ 154. 

158 Id. ¶ 222.
45

that all of the codes identified can be used for procedures using iovera, and that they 

include codes under which iovera procedures were billed in the past.”159

These emails are non-threatening business communications. Even when the 

two emails from 2019 are considered in connection with Fortis’s 2020 demand 

letters related to the CMS Milestone Payments—sent ten months later—these 

communications fall far short of a “conscious, persistent campaign to put pressure 

on somebody to renegotiate by making their life hellacious.” Saddle River at 10:6–

8. “Despite the appearance in its name of the terms ‘good faith’ and ‘fair dealing,’

the covenant does not establish a free-floating requirement that a party act in some 

morally commendable sense . . . [n]or does satisfying the implied covenant 

necessarily require that a party have acted in subjective good faith.” El Paso 

Pipeline, 113 A.3d at 182–83 (internal citations omitted). 

Plaintiffs’ other argument, that these emails constitute “bad faith” because 

Fortis understood them to be baseless, is itself without merit. Plaintiffs’ only ground 

for that assertion is an excerpt from a November 4, 2019 email to (not from) Still 

from Chris Anson, the Director of M&A at Fortis, expressing an intent to use 

“ambiguous language [in the Merger Agreement] to pressure [Pacira] to pay 

159 Id. ¶ 235. 
46

[milestone payments] quickly.”160 Plaintiffs offer no context for the email.161 Even 

if I draw the inference that Anson was referring to the CMS Regulatory Milestone 

payments in light of CMS’s publication of the finalized reimbursement rates on 

November 1, 2019, the statement fails to establish that Anson or Still understood 

Fortis’s demands to be baseless. At most, it shows that they understood the contract 

to be susceptible to multiple meanings, some of which were more favorable to its 

position than others. Fortis was and remains free to leverage perceived ambiguities 

in the contract to advance its positions—just as Plaintiffs have sought to do in this 

action. See ASB Allegiance, 50 A.3d at 442 (“Proving a breach of contract claim 

does not depend on the breaching party’s mental state.”).

Plaintiffs have also failed to plead sufficient facts to support their assertion 

that Pacira was denied “multiple benefits of the bargain.”162 Plaintiffs assert that 

Fortis denied Pacira the right to operate Pacira CryoTech “as it chooses, in its sole 

discretion.”163 But Plaintiffs have failed to allege facts from which it can be 

reasonably inferred that any letters from Fortis demanding Milestone Payments

160 Compl. ¶ 148.

161 Aside from the language quoted, neither side to this action has submitted the email into 

the record on this motion. 

162 Pls.’ Ans. Br. 27. 

163 Id. at 29. 
47

under the Merger Agreement deprived Pacira of its ability to operate Pacira 

CryoTech as it chose or the benefits of the Merger. 

For these reasons, the motion to dismiss Count III as to Fortis for failure to 

state a claim is granted in its entirety.

2. Improper Interference Claims 

Plaintiffs separately argue that the Individual Defendants “frustrated Pacira’s 

rights to receive the full benefits of the Merger Agreement” by “interfering in 

Pacira’s relationships” and “denying Pacira the rights and privileges it acquired 

pursuant to Section 1.4 of the Merger Agreement.”164 Specifically, Plaintiffs argue 

that Individual Defendants have interfered in Pacira’s internal affairs by “attempting 

to commandeer and misdirect Pacira employees.”165 Plaintiffs also contend that the 

“rights” and “privileges” Pacira obtained in Section 1.4 of the Merger Agreement 

includes an implied covenant protecting any “external relationships” that 

MyoScience had—specifically, the relationship with Daubert.166 Plaintiffs then 

assert that this implied covenant extends to the Individual Defendants. 

The Individual Defendants contend that they are not proper defendants for the 

implied covenant claims under the Merger Agreement because Fortis is the 

164 Compl. ¶ 264.

165 Pls.’ Ans. Br. 1. 

166 Id.
48

Securityholders’ Representative and the only party against whom these claims can 

be asserted.167 Plaintiffs argue, however, that their implied covenant claims can 

proceed against the Individual Defendants.168 Plaintiffs rely on Shareholder 

Representative Services, LLC v. RSI Holdco, LLC, 2019 WL 2207452, at *6-7 (Del. 

Ch. May 22, 2019), where the court permitted unjust enrichment claims to proceed 

against a group of former stockholders who also had a designated stockholder 

representative representing their interests under the merger agreement. In that case, 

the court allowed the unjust enrichment claims to proceed against the individuals 

because the seller alleged that the contract itself was a product of fraud. Thus, the 

sellers sought to recover monies that the individuals had received from the merger 

in excess of the value of the company at the time the merger closed. Id. at *6. Unlike 

in RSI Holdco, Plaintiffs’ implied covenant claim is based upon the terms of the 

Merger Agreement and assumes its validity.

Even if the claims could be asserted directly against the Individual 

Defendants, Plaintiffs have not identified a gap in the contract or to any “express 

terms of the contract” indicating that the parties would have agreed to impose 

167 Indiv. Defs.’ Opening Br. 40 (citing Fortis Advisors LLC v. Allergan W.C. Holding Inc.,

2020 WL 2498068, at *3 (Del. Ch. May 14, 2020) (“The contractual appointment of a 

shareholder representative to bring certain actions makes that representative the real party 

in interest in those actions.”)). 

168 Pls.’ Ans. Br. 54–56. 
49

obligations on the Individual Defendants to refrain from communicating with or 

recruiting Pacira’s current or former employees. Fitzgerald, 1998 WL 842316 at 

*1. “[A] court should be cautious when implying a contractual obligation and do so 

only where obligations which can be understood from the text of the written 

agreement have nevertheless been omitted from the agreement in the literal sense.” 

Id. If the parties had wanted to prohibit the selling stockholders from engaging with 

or soliciting information from Pacira or Pacira CryoTech employees, “the contract 

could easily have been drafted to expressly provide for it.” Oxbow, 202 A.3d at

507.169 Implying such a covenant would grant Plaintiffs contractual protections they

“failed to secure for themselves at the bargaining table.” Aspen Advisors LLC, 843 

A.2d at 707.

170

169 See, e.g., EBP Lifestyle Brands Hldgs., Inc. v. Boulbain, 2017 WL 3328363, at *2 (Del. 

Ch. Aug. 4, 2017) (describing non-compete covenant in Stockholders’ Agreement 

prohibiting a stockholder and former employee from “directly or indirectly (i) solicit[ing] 

or induc[ing], or attempt[ing] to solicit or induce or assist any Person in soliciting or 

inducing any employee or sales representative of [EBP] or any subsidiary to leave the 

employ or engagement of [EBP] or such subsidiary, or in any way interfere with the 

relationship between [EBP] or any subsidiary and any such employee or sales 

representative thereof”). 

170 See Angela C. Zambrano, Robert Velevis & Frank J. Favia Jr., What Private Equity 

Sponsors Need to Know About an Implied Permanent Nonsolicitation Covenant Under 

New York Law, WESTLAW TODAY, Mar. 16, 2020, Doc. No. 2020 PRINDBRF 0055

(“Noncompetition and nonsolicitation restrictive covenants are familiar tools often used in 

mergers and acquisitions to encourage retention of key employees of a sold business and 

to discourage the seller or key employees from poaching important customers or suppliers 

post-sale.”); Krishna Veeraraghavan & Bradley S. King, Considerations in Carve-Out 

Transactions, THE M&A LAW., Nov./Dec. 2019, at 7 (noting that a “no-poach” or “non-
50

Nor can Plaintiffs rely on Section 1.4 to support their claim that Still’s hiring 

of Daubert on behalf of Fortis violated the implied covenant. Section 1.4 of the 

Merger Agreement provides that, as a result of the Merger, “all the property, rights,

privileges, powers and franchises of the Company and Merger Sub will vest in 

[Pacira CryoTech]” and the debts and liabilities of the Company and Merger Sub 

will become debts and liabilities of the Pacira CryoTech.171 Section 1.4 is not among 

the provisions of the Merger Agreement to which the Individual Defendants became 

bound under Paragraph “a” of the Option Holder Letter. It does not impose any 

affirmative obligations on the Individual Defendants.

Even if the Individual Defendants had consented to Section 1.4, Plaintiffs 

have again failed to identify a gap in the Merger Agreement that would license the 

application of the implied covenant to prohibit Still’s interactions with Daubert—

whether in his individual capacity or on behalf of Fortis. Section 1.4 mirrors Section 

259 of the Delaware General Corporation Law, which provides that following a 

merger, “all property, rights, privileges, powers and franchises, and all and every 

other interest shall be thereafter as effectually the property of the surviving or 

resulting corporation . . . .”172 In interpreting the statute, this court has held that 

solicitation” covenant is “[a]nother post-closing commitment commonly sought by buyers”

in carve-out M&A transactions). 

171 Merger Ag’t. § 1.4. 

172 8 Del. C. § 259.
51

“attorney-client privilege—like all other privileges—passes to the surviving 

corporation in the merger as a matter of law.” Great Hill Equity P’rs. IV, LP v. SIG 

Growth Equity Fund I, LLLP, 80 A.3d 155, 159 (Del. Ch. 2013). Plaintiffs seek to 

transform Pacira’s contracted-for right to privileged information obtained by 

Daubert over the course of her representation of MyoScience into an exclusive 

implied contractual right to prohibit Fortis from hiring Daubert when she was no 

longer engaged by MyoScience or Pacira. But Section 1.4 shows that the Merger 

Agreement already addresses that issue; the Merger Agreement provides for Pacira’s 

right to the privileged information in Daubert’s possession. Plaintiffs’ effort to 

expand the terms “rights” and “privileges” in Section 1.4—a provision to which the 

Individual Defendants are not parties—to create an implied covenant claim against 

the Individual Defendants for retaining a former outside counsel to MyoScience is 

untenable. This court may not imply a valuable term that Plaintiffs failed to secure 

for themselves.173 There is no gap in the contract to be filled.174 

For the foregoing reasons, the motion to dismiss Count III for failure to state 

a claim against the Individual Defendants is granted in its entirety.

173 See Lou R. Kling & Eileen T. Nugent, Negotiated Acquisitions of Companies, 

Subsidiaries and Divisions § 18.07[4], at 18-44 (2021 ed.) (“Restrictive covenants such 

as non-competition and non-solicitation agreements are often valued elements of a 

corporate transaction.”). 

174 Plaintiffs do not allege that Daubert violated, or that Still sought to induce Daubert to 

violate, her duty to safeguard Pacira CryoTech’s privileged information. 
52

D. The Individual Defendants’ Motion to Dismiss Claims for Breach 

of Contract, Breach of Fiduciary Duty, and Aiding and Abetting 

The Individual Defendants have moved to dismiss Counts IV, V, VI, and VII 

for lack of personal jurisdiction over each of the Individual Defendants.175 None of 

the Individual Defendants is a Delaware resident, and the Complaint alleges no facts 

indicating they have had any contacts with Delaware. 

1. Motion to Dismiss for Lack of Personal Jurisdiction 

“On a motion to dismiss under Rule 12(b)(2), the plaintiff has the burden to 

show a basis for the court’s jurisdiction over the nonresident defendant.” EBG 

Hldgs. LLC v. Vredezicht’s Gravenhage 109 B.V., 2008 WL 4057745, at *4 (Del. 

Ch. Sept. 2, 2008). “When evaluating whether plaintiffs have met their burden of 

showing a basis for jurisdiction over a nonresident defendant, Delaware courts 

invoke a two-prong test.” Eagle Force Hldgs., LLC v. Campbell, 187 A.3d 1209, 

1228 (Del. 2018) (internal quotations omitted). “In the first step, the court must 

determine whether the plaintiff has identified a legally cognizable basis for asserting 

jurisdiction over the defendant. Typically this involves identifying and meeting the 

requirements of a statute, such as Delaware’s long-arm statute. Terramar Retail 

175 In Section II of their Opening Brief, the Individual Defendants argued that they had not 

been served in compliance with 10 Del. C. § 3104. Indiv. Defs.’ Opening Br. 27–30. On 

December 7, 2020, the Individual Defendants stipulated and agreed to accept service of the 

Complaint and withdrew all arguments in Section II. Dkt. 28. The stipulation and 

proposed order related to service of process was granted on the same day. Dkt. 29.
53

Ctrs., LLC v. Marion #2-Seaport Tr. U/A/D/ June 21, 2002, 2017 WL 3575712, at 

*8 (Del. Ch. Aug. 18, 2017), aff’d, 184 A.3d 1290 (Del. 2018).

176 Next, the Court 

must engage in a due process inquiry to determine whether the “nonresident 

defendant has sufficient minimum contacts with Delaware” so as to “reasonably 

anticipate being required to defend itself in Delaware’s courts.” Eagle Force Hldgs.,

187 A.3d at 1228 (cleaned up). Yet “[w]here a party commits to the jurisdiction of 

a particular court or forum by contract, such as through a forum selection clause, a 

‘minimum contacts’ analysis is not required as it should clearly anticipate being 

required to litigate in that forum.” Id. (citations omitted). In evaluating a motion to 

dismiss for lack of personal jurisdiction, the “court may consider the pleadings, 

affidavits, and any discovery of record.” EBG Hldgs., 2008 WL 4057745, at *4. If 

“no evidentiary hearing has been held and discovery has not been taken, plaintiffs 

need only make a prima facie showing of personal jurisdiction, and the record will 

be construed in the light most favorable to the plaintiff.” Id. 

176 If the Long Arm Statute does not permit the exercise of general jurisdiction over the 

defendant, then the Court must examine whether there is a “sufficient nexus” between the 

defendant’s “forum-directed conduct and [each] claim being asserted.” Terramar Retail 

Ctrs., LLC, 2017 WL 3575712, at *8. 
54

2. The Scope of the Individual Defendants’ Consent to 

Jurisdiction Under the Merger Agreement 

Plaintiffs argue that this court has jurisdiction over the breach of fiduciary 

duty claims against Kumar and Preciado because they agreed, by signing the Option 

Holder Letter, to the exclusive forum provision in Section 9.7 of the Merger 

Agreement.

177 The Individual Defendants respond that they did not agree to be 

bound by Section 9.7 of the Merger Agreement, and even if they did, Counts IV-VII

do not “arise out of the Merger Agreement or the matters contemplated [t]herein.”178

Section 9.7 of the Merger Agreement provides, in pertinent part:

Each Party irrevocably consents to the exclusive jurisdiction of . . . any 

state . . . court located in the state of Delaware in connection with any 

matter based upon or arising out of, or with respect to, this Agreement 

or the matters contemplated herein . . . . 

The exclusive forum provision in Section 9.7 of the Merger Agreement 

does not, by its terms, apply to the Individual Defendants. That provision 

expressly applies to each “Party” to the Merger Agreement. None of the 

Individual Defendants is a Party to the Merger Agreement. 

The Option Holder Letter binds the Individual Defendants to certain 

provisions of the Merger Agreement, but Section 9.7 is not one of them. Paragraph 

“a” of the Option Holder Letter provides that the Option Holder:

177 Pls.’ Ans. Br. 43–44. 

178 Indiv. Defs.’ Opening Br. 22–23 (internal quotations omitted).
55

agrees to be bound by the terms and conditions of the Merger 

Agreement . . . applicable to “Escrow Participants” . . . in their 

capacities as such, as applicable to a holder of securities of the type held 

by the undersigned . . . including the following: Section 1.8 (Company 

Options, Section 1.11 (Merger Consideration); Section 1.12 (Merger 

Consideration Payments); Section 1.13 (Working Capital Adjustment 

Escrow; Indemnity Escrow), Section 1.14 (Post-Closing Adjustment to 

Merger Consideration), Section 1.15 (Milestone Consideration) . . . 

Article VIII (Certain Remedies) (and all defined terms used in any of 

the foregoing provisions and Article IX to the extent applicable 

thereto).179

***

The undersigned consents to the exclusive jurisdiction of the state and 

federal courts sitting in the State of Delaware and consents to personal 

jurisdiction of and venue in such courts with respect to any and all 

matters or disputes arising out of this [Option Holder Letter].180

Paragraph “a” binds the signatories to specific provisions of the Merger 

Agreement. Section 9.7 is not among the enumerated provisions. Undeterred, 

Plaintiffs claim that the Option Holder Letter incorporates all of Article IX, 

including Section 9.7.181 That argument is based upon a mischaracterization and 

partial quotation of the parenthetical in paragraph “a”. The parenthetical 

unambiguously includes only the “defined terms” of Article IX.182

179 Option Holder Ltrs. ¶ (a).

180 Id. ¶ (g).

181 Pls.’ Ans. Br. 46. 

182 The reference to Article IX in the parenthetical is most naturally read as the indirect 

object in the prepositional phrase “defined terms used in.” Thus, the only part of Article 
56

In signing the Option Holder Letter, the Individual Defendants agreed to be 

bound to certain terms of the Merger Agreement in their capacities as Escrow 

Participants, Indemnifying Security Holders, Qualifying Option Holders, and 

Securityholders. Section 9.7 of the Merger Agreement makes no reference to any of 

these groups. It only mentions each “Party” to the Merger Agreement. The breach 

of contract, breach of fiduciary duty, and aiding and abetting claims in Counts IV 

through VII are not asserted against the Individual Defendants in their capacities as 

stated in the Option Holder Letter.

Plaintiffs argue that, even if the Individual Defendants have not consented 

directly to the jurisdictional provision in the Merger Agreement, they are still bound 

by proxy. Plaintiffs maintain that the Individual Defendants are subject to personal 

jurisdiction because the (i) the Individual Defendants consented to have Fortis, as 

the Securityholders’ Representative, serve as their agent and (ii) Fortis, as a Party to 

the Merger Agreement, consented to be bound by Section 9.7.183 

This argument is unpersuasive for several reasons. First, Plaintiffs’ legal 

support for this argument is inapposite. In Aveta v. Cavallieri, 23 A.3d 157 (Del. 

Ch. 2010), the court held that a signatory to a purchase agreement who appoints a 

IX that the Option Holder Letter incorporates are the “defined terms used in . . . Article 

IX.”

183 Pls.’ Ans. Br. 47. 
57

stockholder representative is bound by the decisions of the stockholder 

representative as a matter of agency law. See Aveta, 23 A.3d at 163, 168, 170–71. 

The decision did not involve a party contesting personal jurisdiction, and unlike in 

Aveta, the Individual Defendants are not signatories to the Merger Agreement. In 

McWane, Inc. v. Lanier, 2015 WL 399582, at *9 (Del. Ch. Jan. 30, 2015), former 

stockholders who had asserted claims in Alabama relating to the merger agreement 

were held subject to the Delaware forum clause in the merger agreement under an 

estoppel theory. McWane, 2015 WL 399582, at *6–7. Plaintiffs here are not 

advancing an estoppel theory for jurisdiction. Neither Aveta nor McWane is 

applicable here.

Second, Pacira’s argument ignores the plain terms of the Option Holder Letter 

establishing the scope of Fortis’s permissible action.184 Under Section (a) of the 

Option Holder Letter, the Individual Defendants agreed to be bound by “any and all 

actions and the making of any decisions required or permitted to be taken by the 

Securityholders’ Representative under the Merger Agreement.” 

184 See, e.g., Concors Supply Co., Inc. v. Gieske Int’l, 1990 WL 28567, at *2 (Del. Super. 

Ct. Mar. 5, 1990) (“In general, a principal is only responsible for the acts of his agent which 

were done within the course of the agent’s employment and within the scope of his 

authority.”); see also Restatement (Second) Agency § 144 (1958) (“A disclosed or partially 

disclosed principal is subject to liability upon contracts made by an agent acting within his 

authority if made in proper form and with the understanding that the principal is a party.”); 

id. § 219(1) (“A master is subject to liability for the torts of his servants committed while 

acting in the scope of their employment.”). 
58

Read together, the Option Holder Letter and the Merger Agreement give 

Fortis a role in the distribution of the merger consideration to the Option Holders 

and authorize Fortis to enforce the Option Holders’ right to receive that 

consideration. That is consistent with Section (g) of the Option Holder Letter, which

grants this court jurisdiction over any claims “arising out of” the Option Holder 

Letter, including the provisions of the Merger Agreement that the Option Holder 

Letter incorporates. Plaintiffs point to nothing in the Merger Agreement that 

“require[s] or permits” Fortis to bind the Option Holders to the jurisdiction of 

Delaware courts for the resolution of disputes beyond what the Individual 

Defendants agreed. To accept Plaintiffs’ theory, the court would render the 

provision in the Option Holder Letter granting consent to be bound by the 

enumerated provisions mere surplusage.185 And it would flip on its head a structure 

designed to efficiently enforce the rights of the Option Holders against Pacira.186 

Even if this court were to assume, arguendo, that the Individual Defendants 

consented to be bound by Section 9.7, the Plaintiffs have failed to establish that the 

fiduciary duty claims are covered by the exclusive forum provision. 

185 See e.g., NAMA Hldgs, LLC v. World Mkt. Ctr. Venture, LLC, 948 A.2d 411, 419 (Del. 

Ch. 2007) (“Contractual interpretation operates under the assumption that the parties never 

include superfluous verbiage in their agreement, and that each word should be given 

meaning and effect by the court.”), aff’d, 945 A.2d 594 (Del. 2008). 

186 See, e.g., Ballenger v. Applied Digit. Sols., Inc., 2002 WL 749162, at *10 (Del. Ch. Apr. 

24, 2002) (“To accomplish such efficiency, the merger agreement empowers plaintiffs . . .

to act as ‘Stockholders’ Representatives’ for all the selling . . . stockholders.”). 
59

Plaintiffs assert that, because Section 9.7 expressly covers both claims “based 

upon” and matters “contemplated []in” the Merger Agreement, it must be “read 

broadly” so as to encompass any claim that “touch[es] on” its rights or the 

performance of its contractual obligations under the Merger Agreement.187 In 

support for that proposition, Plaintiffs cite to two cases by this court interpreting 

forum selection provisions much broader than Section 9.7. In CA, Inc. v. Ingres 

Corp., 2009 WL 4575009 (2009), aff’d, 8 A.3d 1143 (Del. 2010), the forum clause

covered “any claim directly arising out of or related to this Agreement.” Id. at *46. 

The court observed that “[t]his is a broad forum selection clause sweeping in all 

claims that ‘arise out of’ or ‘relate to’ the Legacy Support Agreement.” Id. 

Similarly, in ASDC Hldgs., 2008 WL 4552508, the relevant provision extended to

“any claim or cause of action arising under or relating to this Agreement.” Id. at *5.

The court explained that “[b]road forum selection clauses . . . which expressly cover, 

for example, all claims between the contracting parties that ‘arise out of’ or ‘relate 

to’ a contract, apply not only to claims dealing directly with the terms of the contract 

itself, but also to any issues that touch on contract rights or contract performance.

(internal quotations omitted). Id. These cases are inapposite because the provisions 

they interpret, unlike the provision here, cover all claims that “relate to” the contract. 

187 Pls.’ Ans. Br. 44–45.
60

“The phrase “relating to” is broader than the phrase ‘arising out of.’” Fla. Chem. 

Co. v. Flotek Indus, Inc., 2021 WL 3630298, at *10 (Del. Ch. Aug. 19, 2021). The 

Merger Agreement does not extend that far. By contrast, in Ruggiero v. FuturaGene, 

plc., 948 A.2d 1124 (Del. Ch. 2008), the court held that a forum selection provision 

in a shareholder agreement covering claims made “in connection with any matter

based upon or arising out of this Agreement or the matters contemplated herein” did 

not reach contractual claims brought against a selling shareholder in his capacity as 

“an officer or director” of the company. Id. at 1130, 1132-33, 1138. 

Plaintiffs concede that “the Individual Defendants’ fiduciary obligations did 

not technically arise from the Merger Agreement.”188 Other than the MyoScience 

Securityholders’ right to receive Milestone Payments, nothing in the Merger 

Agreement contemplates any fiduciary or contractual relationship between or among

the Plaintiffs on the one hand and any of the Individual Defendants on the other. 

The Complaint does not base the fiduciary duty claims against Kumar and Preciado 

upon duties arising under the Merger Agreement. As to Kumar, the claim is based 

upon alleged duties “[a]s an agent of Pacira CryoTech pursuant to the Consulting 

Agreement . . . with access to confidential information provided by that 

agreement.”189 Similarly, as to Preciado, the fiduciary duty claim is based upon 

188 Pls.’ Ans. Br. 47. 

189 Compl. ¶ 280.
61

alleged duties “[a]s an agent of Pacira CryoTech in her capacity as a key manager at 

Pacira CryoTech.”190 Accordingly, the resolution of the dispute about whether 

Kumar and Preciado breached their fiduciary duties does not require the 

interpretation of the Merger Agreement. See Ashall Homes Ltd. v. ROK Ent. Grp. 

Inc., 992 A.2d 1239, 1252 n.66 (2010) (describing the test for whether a claim is 

“based on the contract containing the [forum] selection clause” as “whether the 

plaintiff’s claims depend on rights and duties that must be analyzed by reference to 

the contractual relationship.”); Flotek, 2021 WL 3630298, at *10 (“For a claim to 

stem from the contractual relationship, it must be based upon the rights and 

obligations created by the underlying agreement.” (internal quotations omitted)).

Plaintiffs argue that their fiduciary duty claims are “based on” the Merger 

Agreement because “viable causes of action for breach of fiduciary duty would not 

exist absent the Merger Agreement.”191 This is the same “but for” theory that 

Ruggiero rejected, noting that the fiduciary duty claims over decision to approve 

stock options were—as here—“only tangentially related to the Merger Agreement”). 

948 A.2d at 1130–31, 1138. Section 9.7 cannot serve as the jurisdictional hook for 

Counts IV through VII. 

190 Id. ¶ 286.

191 Id. at 45. 
62

3. Ancillary Personal Jurisdiction Theory

It is well-established that once a nonresident director or officer of a Delaware 

corporation or a manager of a Delaware LLC is properly subject to personal 

jurisdiction for a claim for breach of fiduciary duty pursuant to 10 Del. C. § 3114 or 

6 Del. C. § 18-109(a), the court may subject that defendant to personal jurisdiction 

for claims that are “‘sufficiently related’ or ‘[not] distantly related’ to the breach of 

fiduciary duty claim.” Neurvana Med., LLC v. Balt USA, LLC, 2020 WL 949917, 

at *9 (Del. Ch. Feb. 27, 2020) (quoting Hazout v. Tsang Mun Ting, 134 A.3d 274, 

292 n.63 (Del. 2016)). The doctrine has also been extended outside this 

paradigmatic context in a small set of cases where (i) the defendant had consented 

to the Court’s jurisdiction by signing a contract with a jurisdictional provision; (ii) 

the pendent claim was found to be “sufficiently related”192 to the anchor claim; and 

(iii) the Court found that the exercise of ancillary jurisdiction would comport with 

192 Fitzgerald v. Chandler, 1999 WL 1022065, at *4 (Del. Ch. Oct. 14, 1999); Cap. Grp. 

Companies, Inc. v. Armour, 2004 WL 2521295, at *2 (Del. Ch. Oct. 29, 2004). 
63

due process.193 Plaintiffs seek to invoke this doctrine here, which has been referred 

to as “ancillary personal jurisdiction”194 or “pendent personal jurisdiction.”195

The doctrine of pendent personal jurisdiction has its roots in the jurisprudence 

of pendent subject matter jurisdiction. Olin v. Fisons PLC, 47 F.Supp.2d 151, 155 

(D. Mass. 1999). It is described as “a federal case law doctrine.” Nam Chuong 

Huynh v. Aker Biomarine Antarctic AS, 2017 WL 2242299, at *13 (Wash. App. May 

22, 2017) (declining to apply the doctrine and noting that “even if due process 

permits a [state] court to exercise pendant personal jurisdiction . . . the long arm 

statute must also permit jurisdiction”); see also United States v. Botefuhr, 309 F.3d 

1263, 1272–75 (10th Cir. 2002) (exploring the doctrine and its origin); Laurel 

Gardens, LLC v. Mckenna, 948 F.3d 105, 123-24 (3d Cir. 2020) (discussing the 

Third Circuit’s recognition of the doctrine in 1973).

193 See Chandler, 1999 WL 1022065, at *2, *4 (noting that the court’s “discretion emanates 

from a policy of achieving maximum judicial economy and efficiency of effort where 

substantive due process rights of the parties are not affected” and finding that the exercise 

of ancillary jurisdiction over pendent claims would comport with “traditional notions of 

fair play and substantial justice”); Armour, 2004 WL 2521295, at *2 (considering whether 

“the exercise of jurisdiction, in the context presented, comport[s] with due process.”). In 

each of these cases, the court held that it had jurisdiction and declined to dismiss the anchor 

claims. See Chandler, 1999 WL 1022065, at *3 (“No one can dispute that the Partnership 

Agreement’s forum selection clause gives this Court personal jurisdiction over the 

defendants as a result of claims that the defendants breached the Partnership Agreement.”); 

Armour, 2004 WL 2521295, at *2 (“[T]his court can exercise jurisdiction over Ritter in her 

capacity as trustee.”). 

194 Ruggerio, 948 A.2d at 1138.

195 N. Am. Cath. Educ. Programming Found., Inc. v. Gheewalla, 2006 WL 2588971, at *7 

n.73 (Del. Ch. Sept. 1, 2006), aff’d, 930 A.2d 92 (Del. 2007). 
64

The exercise of personal jurisdiction under this doctrine is “entirely 

discretionary.” Ruggerio, 948 A.2d at 1139. When deciding whether to exercise its 

discretion over the pendent claim, the court considers (i) whether it would have to 

consider a “significant number of facts wholly unrelated to those necessary to 

determine” the merits of the anchor claim; (ii) whether the claims seek similar or 

different relief; (iii) whether the claims are governed by Delaware law; and (iv) 

whether Delaware courts have a “strong interest” in adjudicating the issues raised 

by the pendent claim. Id. “Of course, if the only jurisdictionally sufficient claim is 

dropped or dismissed, particularly if that occurs early in the litigation, the pendent 

claim should be dismissed as well.” Gheewalla, 2006 WL 2588971, at *7 n.73 

(quoting 4A CHARLES ALAN WRIGHT ET. AL., FEDERAL PRACTICE AND PROCEDURE

§ 1069.7 (2d ed. 1995)); see id., 2006 WL 2588971, at *7 (dismissing claims brought 

under ancillary personal jurisdiction theory after finding court lacked personal 

jurisdiction over anchor claim); see also Botefuhr, 309 F.3d at 1273 (discussing 

pendent personal jurisdiction and noting: “Generally, when a district court dismisses 

the [anchor] federal claims, leaving only supplemented state claims, the most 

common response . . . has been to dismiss the [ancillary] state claim or claims 

without prejudice.”) (cleaned up); Lisowski v. Henry Thayer Co., Inc., 501 F. Supp. 

3d 316, 326 (W.D. Pa. 2020) (citing Botefuhr, 309 F.3d at 1273, for the same 

proposition); Int’l Union, United Mine Workers of Am. v. CONSOL Energy, Inc., 
65

465 F. Supp. 3d 556, 581 (S.D.W. Va. 2020) (declining to exercise pendent personal 

jurisdiction, reasoning that “if the court were to decide to exercise pendent personal 

jurisdiction in this case despite the obvious deficiencies in the claim serving as the 

source of jurisdiction, this would serve as an incentive to all plaintiffs who may lack 

personal jurisdiction to add meritless claims where federal personal jurisdiction is 

present to try to use them as a jurisdictional loophole.”). 

Plaintiffs have not established a statutory basis for personal jurisdiction over 

the Individual Defendants for any of their claims in Counts IV through VII. Nor 

have they demonstrated that subjecting these defendants to personal jurisdiction in 

Delaware for these claims would satisfy due process. Having granted the motion to 

dismiss the anchor claims against the Individual Defendants, I decline to exercise 

personal jurisdiction over the remaining counts against the Individual Defendants.

For these reasons, the motion to dismiss Counts IV through VII against the 

Individual Defendants is granted for lack of personal jurisdiction. 

III. CONCLUSION

For the foregoing reasons, the motions to dismiss by the Individual 

Defendants and by Fortis are granted in their entirety. 

IT IS SO ORDERED.