IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

SOFREGEN MEDICAL INC., a Delaware 

Corporation; and SOFREGEN MEDICAL 

IRELAND LIMITED, an Irish Private 

Limited Company,

Plaintiffs/CounterclaimDefendants,

v.

ALLERGAN SALES, LLC, a Delaware 

Limited Liability Company; and 

ALLERGAN PHARMACEUTICALS 

HOLDINGS (IRELAND), an Irish 

Incorporated Private Unlimited Liability 

Company, 

Defendants/CounterclaimPlaintiffs.

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C.A. No.: N20C-03-319 EMD CCLD

DECISION AFTER TRIAL

Brian M. Rostocki, Esquire, Benjamin P. Chapple, Esquire, Anne M. Steadman, Esquire, Reed 

Smith LLP, Wilmington, Delaware. Attorneys for Defendants/Counterclaim-Plaintiffs Allergan 

Sales, LLC and Allergan Pharmaceuticals Holdings (Ireland).

Thomas A. Uebler, Esquire, Kathleen A. Murphy, Esquire, Adam J. Waskie, McCollom 

D’Emilio Smith Uebler LLC, Wilmington, Delaware. Attorneys for Plaintiffs/CounterclaimDefendants Sofregen Medical Inc. and Sofregen Medical Ireland Limited.

DAVIS, J.
1

I. INTRODUCTION

This is a breach of contract and fraudulent inducement action assigned to the Complex 

Commercial Litigation Division of this Court. In November 2016, Plaintiffs Sofregen Medical 

Inc. and Sofregen Medical Ireland Limited (collectively, “Sofregen”) purchased from Allergan 

Sales, LLC and Allergan Pharmaceuticals Holdings (Ireland) (collectively, “Allergan”) certain 

“silk biomaterial surgical mesh” (“SERI”) products for use in reconstructive surgeries.1 The 

purchase occurred via an asset purchase agreement (the “APA”) between Sofregen and 

Allergan.2 Sofregen conducted due diligence prior to the execution of the APA.3 However, after 

the APA was executed, Sofregen allegedly discovered for the first time that Allergan omitted 

troubling, material clinical studies from the documents it shared with Sofregen.4 Further, 

Sofregen discovered that some of the inventory allegedly covered by the APA was missing.5 As 

a result, Sofregen filed this action on March 31, 2020.6 

II. PROCEDURAL BACKGROUND

Sofregen filed a Second Amended Complaint on July 23, 2020, against Allergan for (1) 

breach of representations and warranties, (2) breach of contract, and (3) fraudulent inducement.7 

Allergan asserted counterclaims on May 3, 2021, for a declaratory judgment and two breaches of 

contract.8 One counterclaim relates to Sofregen’s alleged failure to consult with Allergan in 

related litigation, which was required by the APA.9 Another relates to Sofregen’s failure to pay 

1 Second Amended Complaint (“Second Am. Compl.”) ¶ 1. D.I. No. 20.

2

Id.

3 See id. ¶¶ 32-33.

4

Id. ¶ 34.

5

Id. ¶ 50.

6 Original Complaint (“Compl.”). D.I. No. 1.

7 See Second Am. Compl.

8 Defendants’ Counterclaims (“Defs.’ Countercls.”). D.I. No. 46.

9

Id. ¶¶ 109-15.
2

Allergan its share of sale proceeds as required by the APA.10 The final counterclaim is for a 

declaratory judgment.11 

Allergan filed a motion to dismiss all three counts in the Second Amended Complaint.12 

The Court denied the motion.13 Later, the parties stipulated to a dismissal of Count I (breach of 

representations and warranties).14 Allergan moved for summary judgment on Sofregen’s 

remaining claims and Allergan’s counterclaims (the “Motion”).15 The Court heard argument on 

the Motion on December 6, 2022. The Court denied the Motion on February 3, 2023.16

III. THE TRIAL

The Court held a bench trial from June 5, 2023, through June 8, 2023 (collectively, the 

“Trial”). After Trial, the parties engaged in post-trial briefing.

A. THE WITNESSES

During the Trial, the Court heard from and considered testimony from the following 

witnesses:

Dr. Anh Hoang Lindsay

Philippe Schaison

Christopher White

Howard Weisman

Daniel Huff

Dr. Jedediah Kaufman

Peter D. Wrobel

Kevin Green

Dr. Karen M. Decker

Carrie Strom

William G. Krieger 

10 Id. ¶¶ 116-22.

11 Id. ¶¶ 98-108.

12 Defendants’ Second Motion to Dismiss (“Defs.’ Second Mot. to Dismiss”). D.I. No. 23.

13 Sofregen Medical Inc. v. Allergan Sales, LLC, 2021 WL 1400071 (Del Super. Apr. 1, 2021). D.I. No. 38.

14 Order entered on Sept. 6, 2022. D.I. No. 145.

15 Defendants’ Motion for Summary Judgment (“Defs.’ Mot. for Summ. J.”). D.I. No. 146.

16 Sofregen Medical Inc. v. Allergan Sales, LLC, 2023 WL 2034584 (Del. Super. Feb. 3, 2023).
3

The expert witnesses for Sofregen were Peter D. Wrobel and Dr. Jedediah Kaufman. 

Allergan’s expert witnesses were Dr. Karen M. Decker and William G. Krieger.

All the witnesses testified on direct and were available for cross-examination. Normally, 

the Court would list the witnesses in the order they testified, and which party called the witness; 

however, because the Trial was a bench trial, the Court took witnesses out of order and used 

Rule 611 of the Delaware Rules of Evidence to allow for examination of the witness for both 

parties cases-in-chief.

B. CREDIBILITY OF WITNESSES

Here, the Court is the sole judge of each witness’s credibility, including the parties.17 

The Court considers each witness’s means of knowledge; strength of memory; opportunity to 

observe; how reasonable or unreasonable the testimony is; whether it is consistent or 

inconsistent; whether it has been contradicted; the witnesses’ biases, prejudices, or interests; the 

witnesses’ manner or demeanor on the witness stand; and all circumstances that, according to the 

evidence, could affect the credibility of the testimony.18

The Court finds that—based on their testimony at the Trial and the factors listed above—the 

witnesses that testified were generally credible. All witnesses had some form of relationship to 

the parties and the Court accounted for that bias. The Court, however, believes that the 

witnesses were not evasive, nor did they provide testimony that was not somehow supported by 

other evidence. While the Court finds that the witnesses were generally credible, the Court gave 

more weight to some testimony based on evidence supporting that testimony. As discussed 

below, some witnesses’ testimony was less helpful based on lack of memory or alike—e.g., 

17 See Superior Court Civil Pattern Jury Instruction 23.9.

18 Id.
4

testimony regarding a July 8, 2016, due diligence meeting at Allergan. The Court cannot give as 

much credibility to such testimony.

C. Exhibits

The parties submitted an extensive number of exhibits on June 9, 2023. Most of these 

exhibits were admitted without objection. The parties provided the Court with the exhibits in the 

form of joint exhibits (“JX”) and range from JX1 to JX507.19

IV. FACTUAL FINDINGS

A. THE PARTIES

Plaintiff Sofregen Medical Inc. is incorporated in Delaware and has its principal place of 

business in Medford, Massachusetts.20 Sofregen Medical Inc. is “an early stage commercial 

biotechnology company focused on developing natural biomaterial medical products for medical 

aesthetics and reconstructive surgery.”21 At the time of filing this action, Sofregen Medical Inc. 

raised a total of around $22.3 million in funding.22 Plaintiff Sofregen Medical Ireland Limited 

was “an Irish private limited company” when the APA closed in November 2016.23 

Defendant Allergan Sales, LLC is a Delaware limited liability company with revenues 

exceeding $16 billion in 2019.24 Defendant Allergan Pharmaceuticals Holdings (Ireland) is an 

“Irish incorporated private unlimited liability company.”25

19 One reason for the delay in issuing this decision related to the Court’s difficulty in reconciling the Court’s record 

of exhibits with those used by the parties in briefing.

20 Second Am. Compl. ¶ 10.

21 Id.

22 Id.

23 Id. ¶ 11.

24 Id. ¶ 12.

25 Id. ¶ 13.
5

B. SERI

SeriScaffold and SeriPliable (collectively, “SERI”) are surgical meshes for soft-tissue 

support.

26

 SERI is composed of purified silk that has been knit into a weave.27 Allergan 

acquired SERI for $70 million in 2010.28 The FDA approved SERI for use “as a transitory 

scaffold for soft-tissue support and repair to reinforce deficiencies where weakness or voids exist 

that require the addition of material to obtain the desired outcome.”29 Allergan interpreted the 

FDA’s approval to include any type of soft-tissue support, such as in the abdomen for a tummy 

tuck or in the breast for reconstruction.30

Allergan employed approximately 100 salespeople to market and sell SERI to doctors, 

surgeons, and hospitals.31 Allergan’s salespeople brought samples of SERI while meeting with 

potential customers (“Trunk Stock”).32 The evidence at Trial demonstrated that Allergan did not 

carefully track the Trunk Stock carried by its salespeople.33 

The FDA requires medical-device companies to track complaints about their devices.34

Allergan tracked SERI-related complaints using software called TrackWise, which generates a 

computerized spreadsheet listing each complaint (the “SERI Complaint Report”).35 The SERI 

Complaint Report consists of data compiled into a list of every complaint relating to SERI on a 

worldwide basis.36 Each SERI procedure is assigned a case number.

37

 The SERI Complaint 

26 June 5, 2023 Tr. 12:14-13:1.

27 June 5, 2023 Tr. 12:14-13:1.

28 JX 4 at 4.

29 JX 34 at 1; JX 4 at 4.

30 JX 403 at 7 (24:17-21).

31 June 8, 2023 PM-Tr. 10:4-7.

32 June 8, 2023 PM-Tr. 19:19-3.

33 Id. at 39:14-17; JX 403 at 19 (71:14-24) (“I think the reps had a lot of stock in their car trunk of Seri. We did not 

have a good system in place to know exactly how much was still with the reps because ... we were not tracking 

everything at that time.”)

34 June 5, 2023 AM-Tr. 40:12-15.

35 Id. 40:6-11.

36 June 7, 2023 AM-Tr. 123:13-23, 124:9-13.

37 June 5, 2023 AM-Tr. 40:16-41:6.
6

Report provides a separate entry for each complaint associated with that procedure.

38

 There 

could be multiple entries for different complaints from a single procedure.39 The SERI 

Complaint Report can reveal patterns of adverse events or safety signals but the information is 

insufficient to determine the cause of any specific adverse event.40 

The FDA expects that certain adverse events be reported with the Manufacturer and User 

Facility Device Experience (MAUDE) database.41 The MAUDE database homepage provides

that “[c]onfirming whether a device actually caused a specific event can be difficult based solely 

on information provided in a given report” and that “[e]stablishing a cause-and-effect 

relationship is especially difficult if circumstances surrounding the event have not been verified 

or if the device in question has not been directly evaluated.”42

C. SERI CLINICAL TRIALS AND USE

Allergan sponsored a number of Phase 4 clinical studies for SERI, including the SURE 

clinical studies after purchasing SERI.

43 Allergan had the first clinical trial started in the United 

States on October 22, 2010 (the “SURE-001 Study”).44 The SURE-001 Study explored the use 

of SERI for tissue support and repair in breast reconstruction.45 According to Dr. HoangLindsay, a study sponsor must obtain permission from the FDA, known as an investigational 

device exemption (“IDE”) before an experimental device may be used with human subjects.

46

38 June 5, 2023 AM-Tr. 40:16-41:6.

39 June 5, 2023 AM-Tr. 40:16-41:6.

40 June 5, 2023 AM-Tr. 42:5-8; June 7, 2023 AM-Tr. 124:1-21.

41 June 5, 2023 AM-Tr. 43:19-44:2; see also JX 495.

42 JX 495 at 1.

43 JX 452 at 5 (definition of “Study Phase”); Clinicaltrials.gov defines Phase 4 clinical trials as “[a] phase of research 

to describe clinical trials occurring after FDA has approved a drug [or device] for marketing .... These trials gather 

additional information about a drug’s [or device’s] safety, efficacy, or optimal use.” https://clinicaltrials.gov/studybasics/glossary.

44 JX 25 at 1.

45 Id. at 1-2.

46 June 5, 2023 AM-Tr. 35:15-22.
7

Allergan failed to obtain an IDE for the SURE-001 Study, so the FDA required Allergan to 

obtain the IDE retroactively in 2013.47

The SURE-001 Clinical Study Report (the “SURE-001 CSR”) results were promising 

and indicated that SERI was safe and effective in breast reconstruction.48 The SURE-001 CSR 

reflected an explant rate of less than 10% and the reasons for explantation were not attributed to 

SERI.49 As explained at Trial, explant rate relates to the need to remove SERI from the body 

during a subsequent surgery. Only 5.3% of the adverse events were related to SERI and all were 

considered mild.50 The investigators did not find any serious adverse events related to SERI.51

All reported statistics were within an acceptable range for a surgical mesh.52 The SURE-001 

CSR reflected a high satisfactory rating for SERI with doctors and patients.53

The SURE-001 Study was completed on April 25, 2014.

54

 Allergan finalized the SURE001 CSR on December 24, 2014, seven months after the study was completed.55 In February 

2015, data for the SURE-001 Study was published in Plastic and Reconstructive Surgery, the 

journal of the American Society for Plastic Surgeons.56

During Allergan’s ownership of SERI, reports of adverse events associated with SERI in 

breast reconstruction increased “drastically.”57 Philippe Schaison, the former head of U.S. 

Medical for Allergan, learned from physicians, key opinion leaders (“KOL”),58 and Allergan 

47 JX 25 at 1; see also June 5, 2023 AM-Tr. 38:14-23.

48 June 7, 2023 AM-Tr. 122:7-15.

49 JX 25 at 5; JX 429 at 8.

50 June 7, 2023 AM-Tr. 120:19-121:3.

51 June 7, 2023 AM-Tr. 122:1-6.

52 June 7, 2023 AM-Tr. 118:20-121:15.

53 JX 25 at 4-5.

54 Id. at 2, 71.

55 Id. at 2, 71.

56 JX 429 at 6.

57 June 5, 2023 Tr. 268:23-269:15.

58 Key Opinion Leaders are clinicians that are early adopters and users of SERI that share their experience with their 

colleagues. See June 5, 2023 Tr. 270:5-7.
8

salespeople of increasing rates of adverse events and side effects, including seroma and removal

of SERI.59

Allergan commenced a second study of SERI—the “SURE-002 Study”—in Europe on 

June 21, 2011, to examine the use of SERI for tissue support and repair in direct-to-implant 

breast reconstruction.60 Dr. Carolin Nestle-Kräming and Dr. R. Douglas MacMillan were the 

principal investigators for the SURE-002 Study. The results reflected in drafts of the SURE-002 

Clinical Study Report (“SURE-002 CSR”) differed from the SURE-001 Study.61 Allergan’s 

then-Vice President of Regulatory Affairs, Constance Garrison, noted that “it was determined 

that a deep dive was required into the data to understand why the results from SURE-002 are so 

different from SURE-001 ....”62

Addressing the differences in results, Allergan proposed drafting a white paper (the 

“White Paper”) that would accompany the final SURE-002 CSR.63 In 2014, Allergan’s Vice 

President of Global Regulatory Affairs, Bruce Krattenmaker, commissioned an assessment of the 

SURE-002 Study to be completed by October 2014.64 During the drafting process, Allergan 

addressed ways to explain the rates of adverse events reflected in the SURE-002 Study data.65

Mr. Krattenmaker commented on a later draft of the White Paper that “[i]t reads very poorly to 

me and I think their rationale for justifying [adverse event] rates wouldn’t hold much support 

externally or by a regulatory agency ....”66

59 Id. 268:22-269:8. 

60 JX 469 at 2.

61 JX 37.

62 Id. at 37.

63 JX 45 at 1; JX 46 at 1.

64 JX 471.

65 JX 46 at 1.

66 JX 55 at 1.
9

On May 27, 2015, an email circulated within Allergan with the subject line “Douglas 

Macmillan – URGENT.”67 Dr. MacMillan (one of the SURE-002 Study investigators) advised 

Allergan that “he and some colleagues will shortly be publishing some data [sic] on SERI which 

he said is not favorable.”68 Dr. MacMillan explained that a manuscript about to published 

identified that 18% of patients “developed a significant ‘inflammatory reaction’ to Seri” that 

appears approximately six weeks post-surgery.69 At Trial, this inflammatory reaction was 

defined as Red Breast Syndrome. Dr. MacMillan promised to share a copy of the final 

manuscript with Allergan.70 This email chain was eventually forwarded to Dr. William Daunch, 

Ph.D., an Allergan consultant, and Dr. Joseph Purpura, Allergan’s Senior Medical Director, Head 

of Device Safety.71 

In September 2015, Dr. Mark Jewell advised Allergan of a link between SERI and Red 

Breast Syndrome.72 Dr. Jewell, a paid Allergan consultant, contacted Allergan’s then-Vice 

President of Sales and Marketing, Carrie Strom, to a presentation given by Dr. MacMillan 

regarding the SURE-002 Study and post-operative Red Breast Syndrome.73 Dr. Jewell informed

Ms. Strom that “[w]e will need to be vigilant about this, as I think that [Dr.] MacMillan and the 

Sure-002 group may try to publish something on their own about this issue.”74 

As such, Allergan was on notice of the data collected in drafts of the SURE-002 CSR 

drafts. Allergan had a “final” SURE-002 CSR by June 2015 (a year and a half before the APA).75

In December 2015 (a year before the APA), Mr. Smith, Allergan’s director of regulatory affairs,

67 JX 35.

68 Id. at 4.

69 Id. at 1.

70 Id.

71 Id. Dr. Daunch and Dr. Purpura were identified by Allergan as individuals with knowledge in the APA. JX 147 at 1. 

72 JX 40 at 1.

73 Id.

74 Id.

75 JX 36.
10

represented that the SURE-002 CSR “is being completed now and will probably be final in 

January ’16.”76 Results from the SURE-002 Study were due to the FDA by December 2015 but 

Allergan requested an extension until August 2016.77

Mr. Smith and Mr. Krattenmaker paused work on both the SURE-002 CSR and White 

Paper so Allergan could “wait and see the results of business development,” i.e., the sale of SERI 

to Sofregen.78 In March 2016, Mr. Smith instructed Allergan employees to continue to “hold for 

a little while more ...” on completion of the SURE-002 CSR.79

The SURE-002 Study concluded on February 5, 2015. Allergan did not sign SURE-002 

CSR until December 7, 2016—a time just after the sale of SERI to Sofregen.80 On August 10, 

2016, an Allergan employee sent an internal email indicating that the SURE-002 CSR was “esigned and ready for publishing.”81

 The SURE-002 CSR subsequently was revised and the 

SURE-002 CSR “version 2.0” was finally signed by Allergan on December 7, 201682 The signed 

SURE-002 CSR concluded that “[t]he use of SERI in this study provided an adequate and 

acceptable safety profile, a favorable risk-benefit ratio ... and high levels of breast satisfaction by 

surgeons and subjects.”83

Ms. Garrison inquired why the draft SURE-002 CSR “has a seroma rate of 30%, tissue 

necrosis of 21%, and explant rate of 25% with a conclusion that the device is safe and effective. 

(!).”84 Mr. Krattenmaker did not think that “the results in SURE 002 should be viewed positively 

and that they support safe and effective use in the patient population enrolled (and procedures 

76 JX 135 at 2.

77 JX 474 (“results were due Dec 2015 and we are requesting a new due date of August 2016”).

78 JX 472 at 2; June 7, 2023 AM-Tr. (Green) 79:2-9.

79 JX 473 at 1.

80 JX 157 at 1, 69.

81 JX 124.

82 JX 156.

83 JX 157 at 68. 

84 JX 36.
11

used) in SURE 002.”85 Mr. Krattenmaker believed that the “FDA isn’t going to buy any of it.”86

Mr. Krattenmaker acknowledged:

We have been concerned about regulatory implications, but in the end, this isn’t 

Regulatory Affairs responsibility to release a CSR or assure that it is defendable. If 

it comes back to haunt whoever owns Seri going forward, then they can seek out 

our CMO or Safety people to defend it.87

The SURE-002 CSR signed by Allergan reported surgeon satisfaction as an 8 of 10 and subject 

satisfaction as a 4.4 of 5.88

The SURE-006 clinical study began on July 1, 2013, exploring the use of SERI for softtissue support and repair in breast reconstruction with and without radiation (the “SURE-006 

Study” and together with the SURE-002 Study, the “SURE Studies”).89 Dr. Scheflan was the 

principal investigator on the SURE-006 Study.90 The SURE-006 Study was designed to analyze 

eighty patients but only fifteen patients were enrolled.91 Allergan halted the SURE-006 Study 

early.92 Five of the fifteen of them had SERI explanted.93

As with the SURE-002 CSR, the final SURE-006 clinical study report (the “SURE-006 

CSR” and together with the SURE-002 CSR, the “SURE CSRs”) provided that the investigator 

satisfaction with SERI was “a mean of 9.2 out of 10.”94 The SURE-006 CSR further provided 

that “Allergan halted enrollment in this study because it was determined that the enrollment 

criteria needed to be more restrictive.”

95

 An internal Allergan email provided that the SURE-006 

85 JX 45.

86 Id.

87 JX 475 at 1 (emphasis added).

88 JX 469 at 4, 61.

89 JX 128 at 1-2.

90 Id. at 2. 

91 Id.

92 JX 370 at 1-2.

93 Id. at 5.

94 JX 128 at 5.

95 Id. at 2.
12

Study was “stopped due to high SAE rates.”96 Testimony at Trial demonstrated that the inclusion 

and exclusion criteria for the SURE-006 Study were consistent with the SURE-001 Study and 

SURE-002 Study.

97

 The testimony also indicated that the SURE-006 Study likely was stopped 

because of high rates of adverse events and not because of the patient enrollment criteria.98 

The SURE-006 CSR was signed on September 19, 2016, approximately six months after 

the study ended and two months before the APA was signed.99 

On June 5, 2016, Drs. MacMillan, Nestle-Krämling, Scheflan, and two other physicians, 

submitted a manuscript for publication to the Journal of Plastic, Reconstructive & Aesthetic 

Surgery (the “Rolph Paper”).100 The Rolph Paper is a study that summarizes the authors’ clinical 

experience with SERI.101 The Rolph Paper addressed a complication with SERI described as “a 

delayed hypersensitivity reactions,” or “Red Breast Syndrome.”

102

 Red Breast Syndrome 

apparently causes the patient to have an immune response that attacks the mesh.103 

The authors of the Rolph Paper submitted the paper publication while Allergan still 

owned SERI and approximately five months before the APA was signed.104 The authors 

disclosed the consultancy fees and payment received from Allergan for conducting clinical 

trials.105

96 JX 370 at 1-2.

97 June 7, 2023 AM-Tr. 134:10-135:10.

98 Id.

99 JX 128 at 47.

100 JX 299 at 6.

101 June 7, 2023 AM-Tr. 139:1-22, 140:4-11.

102 Id. 140:22-141:3, 143:5-147:20.

103 Id.

104 JX 299 at 6.

105 JX 299 at 12.
13

D. ALLERGAN DECIDES TO DIVEST SERI

SERI does not appear to be a commercial success for Allergan.106 The record indicates a 

number of reasons for this. On May 29, 2015, the FDA issued a warning letter (the “Warning 

Letter”) to Allergan addressing Allergan’s untested use of SERI in breast-surgery applications in 

combination with a secondary device, like an implant or expander.

107 Although contested at 

Trial, surgeons also began having problems with SERI similar to those reflected in the SURE002 CSR and the Rolph Paper, including seroma and poor tissue integration, requiring 

explantation of SERI.108 Surgeons became reluctant to use SERI and Allergan salespeople 

stopped promoting SERI as the rates of adverse events increased.

109 Mr. Schaison testified that 

Allergan noticed a correlation between the decline of SERI’s reputation among surgeons and 

lower sales of SERI.110

Allergan decided in mid-2015 to stop promoting SERI.111 Allergan did this for a number 

of reasons. The Warning Letter instructed Allergan that using SERI in “breast reduction 

applications” would require additional FDA clearance.112 Substantially all of Allergan’s sales of 

SERI stemmed from breast surgery applications.113 Moreover, as already discussed, there were 

increasing incidents of adverse events. These combined reasons led Allergan to divest SERI.114 

In November 2015, Sofregen, through its CEO Howard Weisman, expressed interest in 

acquiring SERI to Mr. Schaison.115 Sofregen was developing its own silk-derived material that 

106 June 5, 2023 Tr. 264:5-7.

107 JX 34; June 5, 2023 AM-Tr. 57:4-12.

108 June 5, 2023 Tr. 268:16-269:13.

109 Id. 264:8-265:12.

110 Id. 271:12-272:4.

111 JX444.

112 JX34.

113 June 8, 2023 PM-Tr. 10:22-11:14.

114 Id. 272:5-15.

115 PTO ¶ 29.
14

originated from the same lab and shared similar technology as SERI.116 When Sofregen 

contacted Allergan about acquiring SERI, Sofregen knew that Allergan had been promoting 

SERI with its breast implant and tissue expander business.

117

 Sofregen also knew about the 

Warning Letter.118 Because SERI was otherwise performing well in the market, Sofregen saw 

the Warning Letter as an opportunity.119 Sofregen would use SERI as its only commercial 

product and leverage its understanding of silk technology to show surgeons the value of SERI.120

Moreover, Sofregen believed it would have an easier time navigating promotional issues with the 

FDA because it was a smaller company.121 Allergan had apparently had confidence in Sofregen’s 

ability to manage SERI despite Sofregen’s smaller size and sales force.122

Allergan’s Executive Director of Development, Kevin Green, oversaw due diligence for 

Allergan.123 On December 18, 2015, Mr. Green emailed individuals with the most knowledge of 

SERI, including Dr. Daunch, Mr. Krattenmaker, Ms. Strom, Mr. Smith, and Dr. Purpura, to 

gather diligence materials to share in a data room on Box.com.124 Mr. Green instructed them to 

“[t]hink about the types of things you would want to see if you were conducting diligence on this 

asset.”125 Allergan entitled the shared folder in Box.com as “Sofregen—Project Silver Oak—

Allergan R&D.”126

116 June 6, 2023 AM-Tr. 83:11-19.

117 Id. 84:10-23.

118 Id.

119 Id. 86:13-87:1-10.

120 Id. 87:16-88:1-2.

121 Id. 87:11-15; June 8, 2023 PM-Tr. 58:17-59:1-9.

122 JX 140; June 8, 2023 PM-Tr. 58:9-16.

123 JX 52 at 1; June 5, 2023 Tr. 22:12-16.

124 JX 52 at 1.

125 Id.

126 JX64.
15

Dr. Hoang-Lindsay,127 Sofregen’s then-Chief Science Officer, coordinated due diligence 

with a team of five or six Sofregen employees and consultants.128

In February 2016, Dr. Hoang-Lindsay, Sofregen’s co-founder and chairman, Howard 

Weisman, and Sofregen’s then-Chief Financial Officer, Milan Kofol, attended an in-person 

diligence meeting at Allergan’s offices in Irvine, California.

129

 Allergan’s attendees included Ms. 

Strom, Mr. Smith, and Dr. Daunch.130

At that meeting, Allergan gave a PowerPoint presentation that purported to represent 

SERI’s clinical performance and reputation among surgeons.131 One slide, titled “Perceptions of 

SERI have significantly improved on several attributes compared to 2014,” provided that 

surgeons perceived that there was rapid tissue integration, well-vascularized tissue, and minimal 

seroma after SERI was implanted.132 Allergan represented to Sofregen that the perception of 

SERI among surgeons had only grown more positive from 2014 to 2015.133 Another slide, titled 

“SERI Continues to Make Strides with Plastic Surgeons,” claimed that surgeons perceived SERI 

as performing as well as, or better than, biologically sourced surgical meshes.134 Allergan 

explained SERI’s “regulatory position” after receiving the Warning Letter.135 The presentation 

contained unit forecasts for SERI for periods before and after receipt of the Warning Letter.136 

Allergan projected lower financial projections for SERI after the Warning Letter.137

127 Dr. Hoang-Lindsay earned her Ph.D. in interdisciplinary material science from Vanderbilt University and completed 

a fellowship at Harvard University Medical School in biomedical engineering within the Center of Engineering for 

Medicine. June 5, 2023 Tr. 9:19-10:1-16. The Court did not understand that Dr. Hoang-Lindsay to be experienced 

with respect to due diligence in asset acquisition.

128 PTO ¶ 33.

129 JX444.

130 June 5, 2023 Tr. 15:16-21; JX 79 at 1.

131 June 5, 2023 Tr. 15:7-13.

132 JX 79 at 22; June 5, 2023 Tr. 18:4-13. 

133 June 5, 2023 Tr. 18:16-19:1.

134 JX 79 at 24; June 5, 2023 Tr. 19:9-20:1-4; June 5, 2023 Tr. 268:22-269:8.

135 JX65

136 JX79.

137 Id.
16

Due diligence began in early 2016 and consisted of regular conference calls, requests for 

information, and follow-up questions that continued until shortly before closing.138 Dr. HoangLindsay took notes during the conference calls summarizing key takeaways and shared her notes 

with Sofregen’s management team.139

Shortly after due diligence started, Allergan added a folder to the data room titled “SERI 

Phase IV,” devoted to the SERI-related Phase 4 clinical trial data (i.e. the SURE studies).

140

 

Allergan provided the SURE-001 Study data in the “SERI Phase IV” folder, and that data had 

also been published and was available on ClinicalTrials.gov.141 Allergan and Sofregen conferred 

regarding the SURE-001 Study data extensively during due diligence and Sofregen was 

impressed with the results.142 The low rates of seroma, skin necrosis, and explant were 

consistent with other FDA-approved surgical meshes and indicative that SERI carried a low 

liability risk.143 Mr. Smith and Dr. Hoang-Lindsay discussed using the SURE-001 Study clinical 

data to support Sofregen’s future application to the FDA to obtain clearance for the use of SERI 

in breast reconstruction.144 

Afterwards, Dr. Hoang-Lindsay and Mr. Smith talked regarding the retroactive IDE that 

Allergan obtained for the SURE-001 Study.145 Mr. Smith, followed up with Dr. Hoang-Lindsay 

to further clarify SERI’s “complex [regulatory] situation.”146 Mr. Smith explained that the “FDA 

continues to be concerned over [SERI’s use] in conjunction with a breast implant or tissue 

expander” based on the “new questions of safety and effectiveness” associated with SERI’s use 

138 PTO ¶ 31; June 5, 2023 AM-Tr. 20:16-21:11.

139 June 5, 2023 AM-Tr. 21:6-11.

140 JX 64; June 5, 2023 Tr. 245:17-246:1-2.

141 June 5, 2023 Tr. (Hoang-Lindsay) 245:13-246:22; JX 401 at 3.

142 June 5, 2023 Tr. (Hoang-Lindsay) 32:12-19 and 245:14-246:22.

143 Id. 33:20-34:19.

144 JX 118; June 5, 2023 Tr. 60:2-6.

145 JX 25 at 1; June 5, 2023 Tr. 38:14-17.

146 JX65.
17

“in proximity to expanding tissue.”147 Mr. Smith also noted that “any procedure involving a 

breast implant” was “definitely not within [SERI’s] cleared intended use.”148 Mr. Smith opined 

that, if Sofregen wanted to market SERI for any non-implant-based breast applications, Sofregen 

would need to provide a pre-market “submission for those applications.”149 A consultant 

apparently also advised Sofregen that SURE-001 could not be used to “support a future 

marketing application for any use of SERI in the breast ... [because] it lacked a control group 

and effectiveness endpoint.”150

As part of the application process, Dr. Hoang-Lindsay understood that Allergan would 

have provided all relevant SERI clinical data to the FDA so the FDA could evaluate the benefits 

and risks of SERI.151 Dr. Hoang-Lindsay believed that would have included any clinical SURE 

Studies data for the use of SERI in the breast or with an implant.152 Dr. Hoang-Lindsay thought

that any other SERI related clinical data was either consistent with the SURE-001 Study data or 

was not otherwise concerning because the FDA approved Allergan’s retroactive IDE 

application.

153

 

On July 8, 2016, Dr. Hoang-Lindsay emailed an updated due-diligence list to Mr. Green 

titled “AGN-Sofregen Pre-Closing Activity” (the “July 2016 Due Diligence Request”).154 The 

July 2016 Due Diligence Request asked for: (i) Allergan’s FDA regulatory files regarding SERI, 

(ii) the SERI Complaint Report and medical-device report, and (iii) contact information for SERI 

KOLs.155 The July 2016 Due Diligence Request also included a request for “Allergan to provide 

147 Id.

148 Id.

149 Id.

150 JX63.

151 June 5, 2023 Tr. 38:1-13.

152 Id.

153 June 5, 2023 Tr. 39:4-17.

154 JX 95; June 5, 2023 Tr. 23:3-8.

155 JX 95 at 2, 4; June 5, 2023 Tr. 23:12-26:1-7.
18

information of any on-going sponsored clinical studies ....”156 Mr. Green testified that the July 

2016 Due Diligence Request sought copies of the SURE Studies.157

Allergan provided the FDA communications, the SERI Complaint Report, medicaldevice report, and KOL list prior to closing on the APA.158

 Allergan does not appear to have 

provided the data from the SURE Studies until after the APA.159

On July 27, 2016, Dr. Hoang-Lindsay, Mr. Weisman, and Christopher White (Sofregen’s 

future president), traveled to Allergan’s offices for a second in-person due diligence meeting (the 

“Second Due Diligence Meeting”).160 Dr. Hoang-Lindsay requested to “review any clinical 

data” regarding SERI prior to the Second Due Diligence Meeting.

161

The Sofregen team was scheduled to meet with different Allergan representatives 

throughout the day; however, testimony regarding the Second Due Diligence Meeting was not 

overly helpful as Dr. Hoang-Lindsay, Mr. Smith, and Mr. Weisman do not recall who exactly

attended what meeting.162 For example, Mr. White took notes (“White’s Notes”) but Mr. White

cannot recall any details other than those in his notes.163 White’s Notes indicate that the 

Sofregen representatives met with Ms. Strom, Mr. Smith, and Dr. Purpura.164 

Apparently, Allergan made a presentation on the SURE-001 Study, SURE-002 Study, and 

SURE-006 Study.165 Mr. Smith reviewed three “Seri+ secondary device clinical trials.”

166

 The 

White Notes indicate that Mr. Smith also discussed the status of their accompanying “clinical 

156 JX 95 at 4.

157 Id.; June 7, 2023 AM 89:3-17.

158 June 5, 2023 Tr. 24:4-26:7.

159 Id.

160 Id. 27:14-28.

161 JX 96. 

162 June 5, 2023 Tr. 28:1-7; June 6, 2023 AM-Tr. 91:14-92:4; June 6, 2023 AM-Tr. 10:17-11:10.

163 JX 109; June 6, 2023 AM-Tr. 11:23-24:4.

164 JX 109 at 1, 4, 6.

165 Id. at 4-5.

166 JX100.
19

study reports [CSRs],”167 Mr. Smith first addressed SURE-001, disclosing: (i) this study 

involved “2 stage breast” reconstruction using a “[t]issue expander followed by [an] implant”; 

and (ii) the SURE-001 CSR was “available.”168 Mr. Smith also discussed SURE-002 and SURE006, two studies which (unlike SURE-001) involved “direct to implant” breast reconstruction.169

 

Mr. Smith made disclosures about SURE-002 and SURE-006: (i) SURE-002 involved “direct to 

implant surgery” in “breast cancer patients” and “[n]o tissue expander was used”; (ii) the SURE002 CSR was “not done but really close” and “should be finished in 1 or 2 months”; (iii) SURE006 involved “direct to implant” surgery in “[p]atients who had received radiation”; (iv) SURE006 was “[h]alted ... because enrollment [was] not strict enough”; and (v) the SURE-006 CSR 

was not yet finished.170

White’s Notes reflect, and Dr. Hoang-Lindsay recalled attending, a meeting with Dr. 

Purpura regarding SERI’s safety profile where Dr. Purpura represented that there had not been 

“any events for failures that were unusual or causes of concern” and that “[o]therwise, what was 

found is what you’d expect.”171

The Sofregen representatives did not recall learning anything during the Second Due 

Diligence Meeting that gave them cause for concern regarding SERI.

172

 

Around the time of the Second Due Diligence Meeting, Mr. Smith provided Dr. HoangLindsay with the SERI Complaint Report.173 After comparing the number of complaints listed 

with the approximate number of SERI units that Allergan had sold, Sofregen concluded that the 

167 JX109.

168 Id.

169 Id.

170 Id.

171 Id. at 6; June 5, 2023 Tr. 30:6-16.

172 June 5, 2023 Tr. 30:17-31:1-5; June 6, 2023 AM-Tr. 92:23-93:1-11.

173 JX 107.
20

percentage of SERI-related complaints was in the low single digits.174 During a follow-up call 

between Dr. Hoang-Lindsay and Allergan’s Brian Dunstan,175 Allergan represented that its 

analysis of this data did not reveal any safety signals or patterns of adverse events related to 

SERI.176

On July 31, 2016—just days after the July Meeting—Dr. Hoang-Lindsay prepared and 

circulated (internally) a list of transitional services that contemplated obtaining a “complete 

report” from Mr. Smith about SURE-001, SURE-002, and SURE-006 post-Closing.177 At Trial, 

Dr. Hoang-Lindsay admitted that she was aware of both SURE-002 and SURE-006 months preClosing.178

 

Dr. Hoang-Lindsay noted that the SERI Complaint Report recorded adverse events in 

foreign territories and inquired further.179 Allergan informed Dr. Hoang-Lindsay that Allergan ran 

the SURE-006 Study in Israel with Dr. Scheflan and that the study was terminated because “AEs 

were unacceptable.”180 Dr. Hoang-Lindsay then followed up with Allergan’s Medical Affairs 

Director, Dr. Jason Hammer.181 On August 9, 2016, Dr. Hoang-Lindsay called with Dr. Hammer 

to discuss the SURE-006 Study and SERI generally.182 Dr. Hammer explained that the high rates 

of adverse events reflected in the SURE-006 Study were the result of Dr. Scheflan refusing to 

follow the patient-enrollment criteria and called Dr. Scheflan a “cowboy.”183 

174 June 5, 2023 AM-Tr. 41:11-22.

175 JX 147 at 1.

176 June 5, 2023 AM-Tr. 42:5-43:1-5.

177 JX505.1; June 5, 2023 Tr. 171:5-11; June 5, 2023 Tr. 172:9-15.

178 June 5, 2023 Tr. 157:5-16.

179 Id. 44:3-6; JX 477 at 2.

180 JX 477 at 1.

181 Id. at 1; June 5, 2023 Tr. (Hoang-Lindsay) 46:3-22.

182 JX 123.

183 June 5, 2023 Tr. 47:14-48:22.
21

Dr. Hammer stated that SERI was well received by plastic surgeons and that, while 

Allergan had envisioned that SERI would be used in two-stage breast reconstruction, surgeons 

were finding success in direct-to-implant procedures.184 Dr. Hammer also discussed a study 

conducted by Dr. Dan Mills, the president of the American Society of Plastic Surgery, examining 

the effect of radiation on SERI that showed positive results.185 This was consistent with what Dr. 

Hoang-Lindsay had learned during an earlier due-diligence call that exposure to radiation did not 

alter the performance of SERI.186 On August 5, 2016, Dr. Hoang-Lindsay sent a follow-up email 

to Dr. Hammer asking, “[i]s there any other study that is outstanding (results not published, 

approved by Allergan but not initiated, or in the midst of study)?”187 Dr. Hammer never 

responded.188

The record indicates that Sofregen made three requests for all SURE clinical data.189 

However, the record also indicates that Allergan never made a representation that additional 

studies did not exist or that Allergan had produced all studies in due diligence.

E. SOFREGEN ACQUIRES SERI

On November 10, 2016 (“Closing”), Sofregen and Allergan executed the APA.190

Sofregen acquired all the existing SERI inventory, including the Trunk Stock for an initial 

payment of $3 million.

191

 The parties also executed a “Transition Services Agreement” under 

which Allergan would render services to Sofregen post-Closing.192 

184 JX 123 at 1; June 5, 2023 Tr. 49:6-19.

185 June 5, 2023 Tr. 48:7-13.

186 JX 94; June 5, 2023 Tr. 21:12-22:11.

187 JX 481.

188 June 5, 2023 Tr. 53:13-16.

189 June 5, 2023 Tr. 53:21-54:1-3.

190 JX 146 (“APA”).

191 Id., §2.2(a)(iv)); JX 147 at 31; June 6, 2023 PM-Tr. (Huff) 97:19-98:8.

192 Id., §1.1; June 5, 2023 Tr. 170:5-9.
22

The APA included assumption of liabilities provisions.193 Under the APA, Sofregen 

assumed liabilities for SERI sold by Allergan.194 Sofregen agreed to assume liabilities for SERI 

implanted after the execution of the APA even if sold prior to the signing of the APA.195 

In the APA, the parties agreed Allergan would provide the “Transferred Ancillary 

Documents” to Sofregen post-Closing.196 The APA defines Transferred Ancillary Document to 

include “all of [Allergan’s SERI-related] ... clinical study reports, product complaints and 

adverse events records, ... [and] research and development data and records,”197 Sofregen 

understood “that there was outstanding data ... from the studies that [Sofregen] was aware of 

[e.g., SURE-002, SURE-006].”198 Sofregen expected to receive this outstanding data (including 

CSRs and clinical trial data) post-Closing.199 

The APA sections relevant to the remaining claims in this civil action are set out here.

Section 2.2(a)(iv) of the APA governs the transfer of SERI units. It is titled “Transfer of 

Assets” and states:

(a) “Acquired Assets” means all of [Allergan’s] right, title and interest, as of the 

Effective Date, in and to [its] respective assets exclusively related to the Business 

and/or [SERI] Product, wherever located, including without limitation the 

following: . . . (iv) (A) all finished product inventory of [SERI], including the 

finished product inventory set forth on Schedule 2.2(a)(iv)(A) (such finished 

product inventory, the “Finished Product Inventory”), (B) all silk spools held for 

use solely to manufacture [SERI] set forth on Schedule 2.2(a)(iv)(B) (the “Spools”), 

and (C) the packaging materials used or held for use exclusively with respect to 

[SERI] set forth on Schedule 2.2(a)(iv)(C) (such packaging materials, together with 

the Finished Product Inventory and Spools, the “Product Inventory”).200

193 JX146, §2.3(a)(iii), §5.7.

194 JX 126.

195 JX146, at 17.

196 Id., §2.5(b).

197 Id., §1.1.

198 June 5, 2023 Tr. 197:7–15.

199 June 5, 2023 Tr. 198:13–18.

200 JX146, § 2.2(a)(iv).
23

Schedule 2.2(a)(iv)(A) lists 15,767 units of Finished Product Inventory in total.201 Both 

parties agree this was the total Finished Product Inventory under the Schedule,202 but they 

disagree over the number of unaccounted for units and the price of those missing units.203

Section 2.3(a)(iii) of the APA is titled “Assumption of Liabilities,” and it states:

(a) As of the Effective Date, [Sofregen] shall assume and pay, discharge, perform 

or otherwise satisfy the following liabilities and obligations of every kind and 

nature, whether known or unknown, express or implied, primary or secondary, 

direct or indirect, absolute, accrued, contingent or otherwise and whether due or to 

become due, of [Allergan’s] arising out of, relating to or otherwise in respect of the 

Acquired Assets and/or Business (the “Assumed Liabilities”): . . . (iii) subject to 

any applicable reimbursement obligations of [Allergan] in Section 5.7, (A) all 

liabilities and obligations for warranty claims, complaints and product liability, and 

the other liabilities assumed by [Sofregen] pursuant to Section 5.7, including all 

Actions relating to such liabilities, and (B) all liabilities and obligations for refunds, 

adjustments, allowances, repairs, exchanges, recalls and returns or similar claims, 

arising out of or relating to [SERI] Product, arising after the Effective Date, whether 

relating to any [SERI] Product sold prior to, on or after the Effective Date.204

Section 5.7(a)(ii) of the APA is titled “Product Responsibility,” and it states in pertinent 

part:

(a) From and after the Effective Date: . . . (ii) Without limiting the foregoing, (A) 

[Sofregen] shall promptly notify [Allergan] of any complaints, requests, 

investigations, reports or pending or threatened Actions with respect to any 

Previously Sold Product; (B) [Sofregen] shall regularly consult in advance with 

[Allergan] on all material actions to be taken relating to such complaints, requests, 

investigations, reports or Actions relating to any Previously Sold Product; (C) 

[Sofregen] shall in good faith incorporate into its response(s) to any such 

complaints, requests, investigations, reports or Actions any input of [Allergan] on 

such matters; and (D) [Allergan] shall be entitled to participate, at its cost, in any 

Action related thereto. [Sofregen] shall diligently conduct the defense of any such 

Action. . . . [Sofregen] shall be financially responsible for all such actions required 

to be taken by it under this clause (ii); provided, that if (1) any such complaint, 

request or investigation shall result in an Action relating to Previously Sold Product, 

(2) [Sofregen] has complied with the foregoing terms of this Section 5.7(a)(ii), and 

(3) the final and non-appealable holding in such Action is that [Sofregen] is liable 

201 JX146, Ex. 38 at 31 (showing a table of Finished Product Inventory as of November 7, 2016).

202 See id. at 22; Pls.’ Answering Br. at 44.

203 See Defs.’ Mot. for Summ. J. at 22, Ex. 51; Pls.’ Answering Br. at 22, Ex. 65. Sofregen believes that, using 

Allergan’s own pricing, the price of the missing units totals approximately $467,000. See Pls.’ Answering Br. at 22, 

Ex. 66. Allergan disagrees with the damages calculation. See Defs.’ Reply Br. at 20.

204 JX146, § 2.3(a)(iii).
24

for damages resulting, in whole or in part, from Non-Conforming Product (or such 

a determination is made in any appealable holding or settlement, consented to by 

[Allergan], such consent not to be unreasonably withheld, conditioned or delayed), 

then [Allergan] shall be responsible for its pro rata share . . . of the reasonable outof-pocket costs and expenses actually incurred by [Sofregen] in connection with 

such Action, including damages required to be paid by [Sofregen] relating thereto, 

but solely to the extent that such reasonable out-of-pocket costs and expenses and 

other Losses are attributable to the use, sale, manufacture or distribution of NonConforming Product.205

Allergan brought Counterclaim I against Sofregen for breach of the above APA Sections 

because Allergan believes Sofregen failed to assume liabilities and obligations in connection to 

certain lawsuits discussed below.

Sofregen’s post-acquisition plan was to promote SERI, within FDA guidelines, for softtissue reconstruction in a few, high performing markets.206 Sofregen increased its sales force by 

hiring six or seven salespeople experienced with surgical devices.207 Using Allergan’s sales data 

by territory, Sofregen designed its sales strategy around the largest SERI customers in the bestselling territories.208 Sofregen expected that sales of SERI in these territories would remain 

consistent post-Closing.209 Because Sofregen acquired a set quantity of SERI and it would be a 

few years before Sofregen could manufacture SERI, Sofregen’s plan was to maintain, but not 

increase, SERI sales.210 Allergan dismantled its own SERI manufacturing facility post-Closing

which meant that Sofregen constructed its own facility.211 

During due diligence, Allergan provided Sofregen with its historical SERI sales data that 

Sofregen used for its own financial projections for SERI.212 Dan Huff, Sofregen’s Chief 

205 Id., § 5.7(a)(ii).

206 June 6, 2023 AM-Tr. 93:17-94:1-3.

207 Id. 97:8-98:8.

208 Id. 98:14-99:1-7.

209 Id. 99:4-7.

210 Id. 94:4-21.

211 Id. 94:22-95:1-7.

212 June 6, 2023 PM-Tr. 69:3-8.
25

Financial Officer, presented the Sofregen board with updated post-Closing financial projections 

during a February 2017 board meeting.213 By 2019, Sofregen projected SERI sales to generate 

more than $20 million.214 

F. POST-CLOSING RECEIPT OF THE SURE-002 STUDY DATA AND SURE-006 STUDY DATA 

On December 12, 2016, Mr. Smith directed Allergan personnel to provide the SURE 

CSRs to Sofregen.

215 On December 22, 2016, Dr. Hoang-Lindsay received an email from 

Allergan indicating that additional documents had been uploaded to the Box.com data room.216

Dr. Hoang-Lindsay testified that she did not immediately review the uploaded information 

because she did not expect to receive any new data post-Closing that was materially different 

from, or contradicted, what was shared during due diligence.217

After reviewing the data, Dr. Hoang-Lindsay believed that the SURE-002 Study data was 

new and felt it was concerning.218 Dr. Hoang-Lindsay testified that the rates of necrosis, seroma, 

and explant were double, if not triple, the rates reflected in the SURE-001 CSR.219 Dr. HoangLindsay stated that this concerned Sofregen because patients that had SERI explanted were more 

likely to bring a lawsuit.220 Sofregen had been especially sensitive to explant rates during due 

diligence.221

The SURE-002 CSR concluded that SERI was safe and effective and reflected high levels 

of surgeon and patient satisfaction.222 Dr. Hoang-Lindsay was confused by this conclusion 

213 Id. 62:10-77:10; JX 189 at 25. 

214 JX 189 at 25.

215 JX 159 at 3.

216 JX 164.

217 June 5, 2023 AM-Tr. 70:7-71:1-4. 

218 Id. 71:5-12.

219 JX 157 at 55, 60; June 5, 2023 Tr. 71:19-72:18.

220 June 5, 2023 Tr. 72:19-73:1-14.

221 Id.

222 JX 157 at 68.
26

because the complication and explantation rates were outside the acceptable range for surgical 

meshes.223 In January 2017, Dr. Hoang-Lindsay contacted Robert Carnevale at Allergan asking 

to schedule a call with the head of the SURE-002 Study to discuss the data.224 Dr. HoangLindsay also asked Dr. Daunch for more information, but neither Mr. Carnevale nor Dr. Daunch 

could explain why Sofregen had not received the data during due diligence.225 Dr. HoangLindsay testified that she never received an explanation as to why the SURE-002 Study data was 

not shared during due diligence and never received a point of contact for the SURE-002 Study.226

Allergan provided written responses to Sofregen about SURE-002 and SURE-006 in 

February 2017.227

Sofregen contends that had it known about the SURE-002 Study data, the SURE-006 

Study data, or the Rolph Paper prior to November 10, 2016, it never would have agreed to 

purchase SERI or signed the APA.228

G. SERI SALES DECLINE

For the first few months after the acquisition, sales of SERI remained consistent with 

historical performance and Sofregen’s projections.229 SERI sales dropped at the end of the first 

quarter of 2017 and declined throughout 2017.230 Sales declined even in territories where SERI 

previously sold well.231 Mr. Schaison testified that SERI was a commercial failure for 

223 June 5, 2023 Tr. 73:19-74:1-12.

224 JX 184.

225 June 5, 2023 Tr. 78:12-79:1.

226 June 5, 2023 Tr.79:2-21.

227 JX209.

228 June 6, 2023 AM-Tr. 116:20-117:15; June 5, 2023 Tr. 82:8-83:23.

229 June 6, 2023 AM-Tr. 99:8-17.

230 Id. 99:8-20.

231 Id. 99:21-100:1.
27

Sofregen.

232

 Mr. Schaison contends that this failure could not have anticipated because of 

Allergan’s purported concealment of the SURE CSRs.233

H. SERI TRUNK STOCK

Allergan did not have a tracking system to know how much inventory was in the 

possession of its salespeople.234 Allergan stored its aesthetics inventory, including SERI, with 

Kuehne and Nagel (“K&N”), a third-party vendor in Texas.235 K&N kept records by serial 

number of the SERI inventory.236

Allergan provided Sofregen with an inventory of the SERI trunk stock (“Trunk Stock”) as 

of October 18, 2016, prior to Closing.

237 Sofregen realized that units of Trunk Stock were 

missing sometime in 2017.

238 In January 2018, Sofregen provided Allergan with a reconciliation 

of the Trunk Stock inventory received from Allergan prior to closing with an updated inventory 

list from K&N.

239

 This reconciliation demonstrates that 140 units of SERI remained missing.240

The outstanding Trunk Stock concerned Sofregen because it meant there were potentially 

140 individuals with implanted SERI and Sofregen had no idea who those patients were or how 

to monitor potential adverse events.241 Allergan conceded that 140 units of Trunk Stock could 

not be located.242 Mr. Schaison testified at Trial that, after Sofregen’s acquisition of SERI, he 

heard directly from salespeople that representatives were offering free samples of SERI to 

physicians to encourage the purchase of Allergan breast implants.243

232 June 5, 2023 Tr. 263:20-265:1-12.

233 Id. 

234 JX 403 at 19; June 8, 2023 PM-Tr. 39:14-17.

235 June 6, 2023 AM-Tr. 101:14-23.

236 Id. 102:4-9.

237 JX 274; June 6, 2023 AM-Tr. 104:12-105:1-8.

238 June 6, 2023 AM-Tr. 106:10-15.

239 JX 274; June 6, 2023 AM-Tr. 105:1-106:1.

240 Id.

241 June 6, 2023 AM-Tr. 106:2-9.

242 JX 281 at 1.

243 June 5, 2023 Tr. 274:21-275:1-12.
28

Sofregen continued trying to locate the missing Trunk Stock and, after an additional 

reconciliation, Sofregen still showed 131 units of Trunk Stock missing.244 Sofregen never located 

these 131 units of Trunk Stock.245 At no time did anyone at Allergan represent to anyone at 

Sofregen that the APA did not obligate Allergan to provide all the Trunk Stock.246

The Court finds that Sofregen has proved that Allergan is responsible to Sofregen for 131 

units of Trunk Stock. 

I. POST-CLOSING LAWSUITS 

A number of SERI-related lawsuits were filed after Closing. Each case involved a directto-implant procedure that resulted in explantation and, in certain cases, it was noted that SERI 

had failed to fully integrate into breast tissue:

• On November 28, 2016, Wendy Knecht filed suit in California.247 Knecht 

underwent a direct-to-implant breast reconstruction on February 24, 2015.248

During follow-up visits, it was noted that Knecht had developed seroma and the 

SERI was explanted in two separate surgeries.249

• On April 2, 2018, Dwyn Harben filed suit in Pennsylvania.250 Harben 

underwent a direct-to-implant breast reconstruction on January 29, 2015, and 

the SERI was explanted on December 28, 2016.251 During the explantation 

procedure, the SERI was still visible and palpable (i.e., had not integrated)252

• On July 27, 2018, Gianna Krstic filed suit in Massachusetts against Sofregen 

and Allergan.253 Krstic underwent breast augmentation surgery on July 16, 

2014, and, after her surgeon determined that the SERI “had not biodegraded as 

Allergan had represented it would do,” he removed the SERI.254

• On March 24, 2020, Jennifer Hasso filed suit in California.255 Hasso underwent 

244 June 6, 2023 AM-Tr. 107:3-108:8; JX 281 at 1.

245 June 6, 2023 AM-Tr. 107:22-108:8.

246 Id. 109:1-7.

247 JX 169 at 15.

248 Id. at 25, ¶ 56.

249 Id. at 25-26, ¶¶ 59-60, 68.

250 JX 289.

251 Id. at 3, ¶¶ 2, 26, 92.

252 Id. at 26, ¶ 92. 

253 JX 323.

254 Id. at 5, ¶¶ 19, 23.

255 JX 374.
29

a direct-to-implant breast reconstruction on February 4, 2014, and experienced 

significant complications, including seroma.256 The SERI was explanted in 

March 2020.257

V. APPLICABLE LAW

The Court will be applying the following general legal principles:

A. GOVERNING SUBSTANTIVE LAW

Delaware law applies here. The parties have relied on Delaware law and the Court is 

unaware of any reason why Delaware law does not apply to the claims asserted by the parties.

B. FRAUDULENT INDUCEMENT

To establish a claim for fraudulent inducement, a party must prove: 

(1) a false representation of material fact; (2) the defendant’s knowledge of or belief 

as to the falsity of the representation or the defendant’s reckless indifference to the 

truth of the representation; (3) the defendant’s intent to induce the plaintiff to act or 

refrain from acting; (4) the plaintiff’s action or inaction taken in justifiable reliance 

upon the representation; and (5) damage to the plaintiff as a result of such 

reliance.258 

Element (2) is often referred to as “scienter.”259

Fraud does not merely consist of overt misrepresentations.260 Fraud may also occur when 

someone deliberately conceals facts important to a transaction, causing the other party to rely on 

the concealment to that party’s detriment.261 A party’s concealment can occur through silence in 

the face of a duty to disclose the facts or by some action taken to prevent the other party from 

discovering the facts important to the transaction.262 

256 Id. at 12, ¶¶ 63, 65.

257 Id. at 13, ¶ 69.

258 Chapter 7 Tr. Constantino Flores v. Strauss Water Ltd., 2016 WL 5243950, at *7 n.34 (Del. Ch. Sept. 22, 2016) 

(internal quotation marks omitted) (citing Duffield Assocs., Inc. v. Meridian Architects & Eng’rs, LLC, 2010 WL 

2802409, at *4 (Del. Super. July 12, 2010)).

259 See ITW Glob. Invs. Inc. v. Am. Indus. P’rs Cap. Fund IV, L.P., 2017 WL 1040711, at *6 (Del. Super. Mar. 6, 

2017).

260 Gaffin v. Teledyne, Inc., 611 A.2d 467, 467 (Del. 1992).

261 Id.

262 Id.; see also Superior Court Civil Pattern Jury Instruction 16.3.
30

If a party is aware of the true facts of the transaction, even if the facts were concealed, 

then there is no fraud.263

C. BREACH OF CONTRACT

Under Delaware law, to prove a breach of contract claim, a party must show: “(1) a 

contractual obligation; (2) a breach of that obligation; and (3) resulting damages.”264 A party 

harmed by a breach of contract is entitled to compensation that will place that party in the same 

position that the party would have been in if the other party had performed under the contract.265

The standard remedy for breach of contract is based upon the reasonable expectations of 

the contracting parties.266 Expectation damages are measured by determining “the amount of 

money that would put the promisee in the same position as if the promisor had performed the 

contract.”267 “Damages for a breach of contract must be proven with reasonable certainty. 

Recovery is not available to the extent that the alleged damages are uncertain, contingent, 

conjectural, or speculative.”268

“Delaware adheres to the ‘objective’ theory of contracts, i.e.[,] a contract’s construction 

should be that which would be understood by an objective, reasonable third party.”269 “Contract 

terms themselves will be controlling when they establish the parties’ common meaning so that a 

reasonable person in the position of either party would have no expectations inconsistent with the 

contract language.”270

263 See Merrill v. Crothall-American, Inc., 606 A.2d 96, 100 (Del. 1992) (knowledge negates fraud); see also Superior 

Court Civil Pattern Jury Instruction 16.4

264 Interim Healthcare, Inc. v. Spherion Corp., 884 A.2d 513, 548 (Del. Super. 2005). 

265 See E.I. DuPont de Nemours and Co. v. Pressman, 679 A.2d 436, 445-46 (Del. 1996). 

266 See Duncan v. Theratx, Inc., 775 A.2d 1019, 1022 (Del. 2001).

267 Id.

268 Lee-Scott v. Shute, 2017 WL 1201158, at *7 (Del. Com. Pl. Jan. 30, 2017).

269 Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010) (citing NBC Universal v. Paxson Commc’ns, 

2005 WL 1038997, at *5 (Del. Ch. Apr. 29, 2005)). 

270 Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997).
31

D. BURDEN OF PROOF 

In a civil case, the burden of proof is by a preponderance of the evidence. Proof by a 

preponderance of the evidence means proof that something is more likely than not. This means 

that certain evidence, when compared to the evidence opposed to it, has the more convincing 

force and makes the Court believe that something is more likely true than not. If the evidence on 

any particular point is evenly balanced, the party having the burden of proof has not proved that 

point by a preponderance of the evidence, and the Court must find against the party on that 

point.271 While in some jurisdictions fraud must be shown by clear and convincing evidence, the 

burden of proof in a fraud case in Delaware is by a preponderance of the evidence.272

In deciding whether any fact has been proved by a preponderance of the evidence, the 

Court may consider the testimony of all witnesses regardless of who called them, and all exhibits 

received into evidence regardless of who produced them.

In this particular case, Sofregen carries the burden of proof on Counts II and III of its 

Second Amended Complaint. Allergen carries the burden of proof on the Counterclaims. 

E. EVIDENCE EQUALLY BALANCED

If the evidence tends equally to suggest two inconsistent views, neither has been 

established. That is, where the evidence shows that one or two things may have caused the 

breach/damages—one for which a party was responsible and one for which a party was not—the 

Court cannot find for the party carrying the burden of proof if it is just as likely that the 

breach/damages was caused by one thing as by the other.273 

271 Superior Court Civil Pattern Jury Instruction 4.1.

272 See In re IBP, Inc., Shareholders Litigation, 789 A.2d 14, 15, 54 (Del. Ch. 2001).

273 Superior Court Civil Pattern Jury Instruction 4.2.
32

VI. DISCUSSION274

A. SECOND AMENDED COMPLAINT COUNT I—THE MISSING SERI UNITS

APA Section 2.2(a)(iv) governs the transfer of SERI units. It is titled “Transfer of 

Assets” and states:

(a) “Acquired Assets” means all of [Allergan’s] right, title and interest, as of the 

Effective Date, in and to [its] respective assets exclusively related to the Business 

and/or [SERI] Product, wherever located, including without limitation the 

following: . . . (iv) (A) all finished product inventory of [SERI], including the 

finished product inventory set forth on Schedule 2.2(a)(iv)(A) (such finished 

product inventory, the “Finished Product Inventory”), (B) all silk spools held for 

use solely to manufacture [SERI] set forth on Schedule 2.2(a)(iv)(B) (the “Spools”), 

and (C) the packaging materials used or held for use exclusively with respect to 

[SERI] set forth on Schedule 2.2(a)(iv)(C) (such packaging materials, together with 

the Finished Product Inventory and Spools, the “Product Inventory”).275

Allergan had a contractual obligation to turn over the Trunk Stock within 30 days of 

closing.276 Schedule 2.2(a)(iv) of the APA identified the SERI Product Inventory that Allergan 

was obligated to transfer to Sofregen.277

At Trial, Sofregen carried its burden and proved Allergan breached its contractual 

obligation under APA Section 2.2(a)(iv). Allergan failed to accurately account for and turn over 

its Trunk Stock. In the spring of 2017, Sofregen realized that a number of Trunk Stock units 

remained outstanding.278 Sofregen prepared and provided Allergan with a reconciliation of the 

inventory of Trunk Stock it received from Allergan with an updated list of inventory it received 

from K&N, noting that 140 units remained unaccounted for.279 After additional reconciliation, 

274 To the extent that the Court does not provide a citation of a finding of fact in this Section, the Court incorporates 

by reference the findings in Section IV above.

275 JX 146, § 2.2(a)(iv).

276 Id., §§ 2.1, 2.2 and 2.5.

277 Id., at 31. 

278 June 6, 2023 AM Tr. 106:10-15.

279 JX 274. 
33

131 units of Trunk Stock were still unaccounted for, without explanation.280 Allergan never 

recovered the missing Trunk Stock.281

Allergan’s witnesses confirmed Allergan’s breach when Ms. Strom testified that Allergan 

did not have a tracking system to determine the location of all SERI product,282 and Mr. Schaison 

further testified that he heard from Allergan salespeople and managers that they were offering 

free samples of SERI to physicians to encourage the purchase of Allergan breast implants.283

The Court also finds that Sofregen has met its evidentiary burden as to damages. 

Sofregen has been damaged by not receiving the SERI inventory as was contractually agreed to 

by Allergan and Sofregen. Because Allergan failed to account for and provide Sofregen all of 

the Trunk Stock, Sofregen was not able to identify and track the adverse events that patients 

experienced, as required by the FDA because Allergan failed to account for and provide all of 

the SERI Trunk Stock.

284

Sofregen’s inability to meet FDA requirements was a liability concern.285 Further, 

Sofregen was unable to market or sell the Trunk Stock that Allergan failed to provide.286 Using 

Sofregen’s average sales price of $3,000 per unit287 multiplied by 131 units of Trunk Stock,288

The Court awards Sofregen damages in the amount of $393,000, plus prejudgment interest. 

B. SECOND AMENDED COMPLAINT COUNT III—FRAUDULENT INDUCEMENT

To establish fraudulent inducement, Sofregen must prove: 

(1) a false representation of material fact; (2) the defendant’s knowledge of or belief 

as to the falsity of the representation or the defendant’s reckless indifference to the 

280 JX 281 at 1; JX 486. 

281 June 6, 2023 PM Tr. 99:22-100:3. 

282 June 6, 2023 PM Tr. 39:14-17; see also JX 270 at 1. 

283 June 5, 2023 Tr. 274:21-275:12.

284 June 6, 2023 AM Tr. 103:19-104:5. 

285 June 6, 2023 AM Tr. 103:19-104:5.

286 June 6, 2023 PM Tr. 97:1-98:1-13. 

287 Id. 94:7-8; see also JX 189 at 8. 

288 June 6, 2023 PM Tr. 98:9-13; see also JX 282.
34

truth of the representation; (3) the defendant’s intent to induce the plaintiff to act or 

refrain from acting; (4) the plaintiff’s action or inaction taken in justifiable reliance 

upon the representation; and (5) damage to the plaintiff as a result of such

reliance.289 

Element (2) is often referred to as “scienter.”290

Fraud does not merely consist of overt misrepresentations.291 Fraud may also occur when 

someone deliberately conceals facts important to a transaction, causing the other party to rely on 

the concealment to that party’s detriment.292 A party’s concealment can occur through silence 

in the face of a duty to disclose the facts or by some action taken to prevent the other party from 

discovering the facts important to the transaction.293

Sofregen must prove these elements by a preponderance of the evidence.294

Allergan argues: (a) it did not conceal material facts; (b) it did not act with scienter; and 

(c) Sofregen cannot establish justifiable reliance. Sofregen argues: (a) Allergan intentionally hid 

harmful SERI studies and remained silent in the face of a duty to disclose the studies; (b) 

Allergan acted with at least reckless indifference; (c) Allergan concealed with the intent to 

induce Sofregen into the APA; and (d) Sofregen justifiably relied on Allergan’s due diligence 

disclosures.

After hearing all of the evidence and considering the post-trial briefing, the Court finds that 

Sofregen failed to carry its burden of proof at Trial. Because Sofregen failed to carry its burden 

on the essential elements, the Court will not address the issue of whether Sofregen suffered 

damages.

289 Chapter 7 Tr. Constantino Flores, 2016 WL 5243950, at *7 n.34.

290 See ITW Glob. Invs. Inc., 2017 WL 1040711, at *6.

291 Gaffin, 611 A.2d at 467. 

292 Id.

293 Id.

294 See In re IBP, Inc., Shareholders Litigation, 789 A.2d at 54.
35

1. Sofregen Cannot Prove that Allergan Knowingly Made False Statement or 

Concealed the Truth from Sofregen.

Sofregen cannot demonstrate that Allergan concealed information regarding SERI. 

Sofregen did not establish that Allergan failed to disclose the SURE-001 CSR pre-Closing. The 

record does demonstrate that Allergan did disclose information about SURE-002 and SURE-006 

months pre-Closing, including that SURE-006 was halted due to “unacceptable” adverse events. 

Sofregen elected not to request the data from SURE-002 or SURE-006 pre-Closing. In addition, 

Sofregen failed to establish justifiable reliance in light of Allergan’s pre-Closing disclosures and 

the provisions of the APA. 

Sofregen can only prevail on its fraud claim if it demonstrates concealment of material 

information.295 Sofregen claims Allergan engaged in concealment by: (i) not disclosing the 

SURE-002 and SURE-006 data and CSRs pre-Closing; (ii) selectively disclosing the SURE-001 

CSR post-Closing; (iii) repeatedly representing that there were no issues with SERI’s clinical 

performance but failing to disclose SURE-002’s and SURE-006’s high rates of serious adverse 

events; and (iv) not disclosing the Rolph Paper or the link between SERI and RBS.

Sofregen has not provided evidence that Allergan took steps to conceal the SURE-002 

and SURE-006 CSRs or underlying data prior to Closing. The Court notes that: (i) Allergan 

disclosed the study design and status of the SURE-002 and SURE-006 studies during the Second 

Due Diligence Meeting;

296 and (ii) Allergan disclosed SURE-006 was halted because of 

“unacceptable” adverse events just days after the Second Due Diligence Meeting.

297

 The 

evidence shows that Sofregen failed to specifically request or, if there was a request, follow up to 

obtain the CSRs or data for either SURE-002 or SURE-006 pre-Closing. 

295 JX 385 at 10-11.

296 JX 109 at 4–5.

297 JX 120 at 1.
36

Allergan’s post-Closing disclosure of the SURE-002 and SURE-006 CSRs is not 

evidence of concealment, because this disclosure was expressly contemplated by the APA. 

There, the parties agreed Sofregen would receive “clinical study reports” post-Closing (along 

with “adverse events records” and “research and development data”).298 

Sofregen contends that Allergan concealed high rates of adverse events in connection 

with SURE-002 and SURE-006 while also representing there were no issues with SERI’s clinical 

performance. Sofregen points to (i) survey results reported within slides entitled “Perceptions of 

SERI” that were presented at the February Meeting;299 (ii) a purported representation regarding a 

trend analysis of the Complaints Report;300 and (iii) representations by Dr. Hammer during a call 

with Dr. Hoang-Lindsay,301 which Dr. Hoang-Lindsay claims was organized to discuss the 

SURE-006 study.

302

The “Perceptions of SERI” slides do not constitute representations that there were no 

issues with SERI’s clinical performance. Allergan reported the results of a June 2015 survey of 

plastic surgeons.303 The survey results do not describe SERI’s efficacy and, instead, convey 

information regarding how SERI was perceived by the surveyed plastic surgeons.304 The Court 

does not find that the slides would not cause a reasonable person to believe SERI had “rapid 

tissue integration, well vascularized tissue, and minimal seroma,” because the majority of 

surveyed surgeons did not even perceive SERI as having these characteristics.

305

298 JX 146 § 2.5(b); JX 146 § 1.1.

299 JX 79 at 22, 24.

300 June 5, 2023 Tr. 42:5–43:5.

301 June 5, 2023 Tr. 49:6–19.

302 June 5, 2023 Tr. 47:5–9.

303 JX 79 at 22, 24.

304 Id. at 22.

305 Id. at 22 and 24.
37

Sofregen contends that Mr. Dunstan represented that an analysis of the Complaints 

Report did not reveal any safety signals or patterns of adverse events related to SERI. The 

record does not wholly support that contention. 

First, the support for this representation is Dr. Hoang-Lindsay’s trial testimony.

306

 The 

Court was not presented with any additional or corroborating evidence to support the testimony. 

Sofregen also did not present any trial or deposition testimony from Mr. Dunstan to support 

Sofregen’s burden of proof. Second, the purported statement is not a representation that SERI 

has “no issues.” Moreover, Sofregen does not dispute the accuracy of Mr. Dunstan’s 

representation regarding the Complaints Report.307 Third, Sofregen possessed “the means of 

knowledge” regarding any safety signals or patterns in the Complaints Report because Sofregen 

analyzed the report months pre-Closing.308 Sofregen could not have reasonably relied on Mr. 

Dunstan’s purported assessment.309 Finally, Sofregen could not have reasonably relied on Mr. 

Dunstan’s purported representation because Sofregen elected not to obtain “AE trend reports for 

SERI” until post-Closing (instead of independently analyzing the trend reports pre-Closing).310

Sofregen describes Dr. Hoang-Lindsay’s August 5, 2016,

311 call with Dr. Hammer as 

scheduled in response to Mr. Green’s disclosure regarding “unacceptable” adverse events in 

SURE-006.312 Sofregen’s position is based on Dr. Hoang-Lindsay’s trial testimony, and it also 

ignores her deposition testimony that she was unaware of SURE-006 pre-Closing.

313

306 June 5, 2023 Tr. 42:5-43:5.

307 JX 410 at 114:19–23 (“[The] complaints that [Allergan was] monitoring were pretty consistent and very low single 

digits.”).

308Universal Enter. Grp., L.P. v. Duncan Petroleum Corp., 2013 WL 3353743, at *43 (July 1, 2013); see also JX107; 

JX 116; JX 117.

309 Universal, 2013 WL 3353743, at *43.

310 JX158 at 1.

311 Sofregen identifies that call having occurred on August 9. OB at 26; but see JX123 at 1.

312 JX 120. 

313 JX 410 at 65:12–18, 121:11–17, 13:10–15.
38

The Court notes that some evidence demonstrates that, as of July 31, 2016 (a time prior to 

Mr. Green’s SURE-006 email), Dr. Hoang-Lindsay already had a call scheduled to discuss 

“sponsored research studies” with Dr. Hammer.314 About a week before the call, Allergan 

identified Dr. Hammer as the appropriate contact for Allergan-sponsored “IITs” (i.e., 

investigator-initiated trials) which would not have included the sponsor initiated SURE-006 

study.315 Dr. Hammer was also identified as a point of contact for a specific IIT initiated by Dr. 

Mills.316 After the August 5 call, Dr. Hoang-Lindsay confirmed that it had been “recommended 

by [Strom]” and was for the purpose of discussing “sponsored research studies.” 317 

Dr. Hoang-Lindsay’s email summary of the Dr. Hammer call also does not reflect any 

discussion of SURE-006 or the “unacceptable” adverse events Green disclosed.318 The email 

summary also does not mention either Israel (the location of SURE-006) or Dr. Scheflan (SURE006’s principal investigator), despite identifying other clinicians by name (including Dr. 

Mills).319

To the Court, other evidence undermines Sofregen’s claim that Dr. Hammer made 

misrepresentations to Dr. Hoang-Lindsay to prevent inquiry into SURE-006. At Trial, the Court 

understood that Dr. Hoang-Lindsay knew about SURE-006 and, for some reason, elected not to 

inquire about it during a previously scheduled call with Dr. Hammer unrelated to that study. 

Even with all this, and without further inquiry, Sofregen proceeded to iron out the details of the 

acquisition. 

314 JX 505 at 1; see also JX505.1 at C23. 

315 JX 113 at 1.

316 JX 109 at 3.

317 JX 478 at 1; see also JX479 at 1 (call was scheduled “some time ago”).

318 JX 123 at 1–2. 

319 Id.
39

The Court also does not find that Allergan concealed information about the “possible” 

publication of the Rolph Paper and any link between SERI and Red Breast Syndrome. For 

example, Sofregen, during Trial, did not identify due diligence requests that would have included 

the Rolph Paper. Additionally, during due diligence, Allergan disclosed the involvement of Dr. 

Scheflan in a the SURE-006 study that was halted due to “unacceptable” adverse events.320 Dr. 

Scheflan is a co-author of the Rolph Paper. This disclosure seems inconsistent with Sofregen’s 

theory that Allergan actively concealed the possible publication of the Rolph Paper.

As for Red Breast Syndrome, Allergan provided Sofregen with the Complaints Report, 

which contains the phrase “red breast” 76 times321 and the phrase “red breast syndrome” 46 

times.322 The Complaints Report’s entries also relate to patients treated by Dr. Macmillan—

another co-author of the Rolph Paper.323 Allergan also disclosed in the APA a pending product 

liability lawsuit, Goulet v. Allergan, Cause No. DC-16-3808 (Tex. Dist. Ct.).

324

 The complaint 

there included specific allegations regarding red breast issues. These disclosures refute Allergan 

actively concealing any connection between SERI and Red Breast Syndrome.

The Court finds that, with this factual record, Sofregen cannot carry its burden on 

concealment by Allergan or that Allergan knowing made false statements. The Court, therefore, 

finds that Sofregen cannot meet this element of its fraudulent inducement claim. 

320 JX 120 at 1.

321 JX 107.1 at AP558–72, AP632–44, AP829–30, AP834–41, AP1052–56, AP1063–64, AP1077, AP1126, AP1128–

29, AP1145–46, AP1174–78, AP1196–97, AP1241, AP1294–95, AP1704–09, AP1735, AP1858–65.

322 JX 107.1 at AP558–72, AP632–44, AP1052–56, AP1128–29, AP1145–46, AP1196–97, AP1294–95, AP1704–08.

323 JX 107.1 at AP558–72, AP632–44.

324 JX 147 at 36.
40

2. Sofregen Cannot Meets its Burden on Justifiable Reliance.

The Court also finds that Sofregen did not carry its evidentiary burden as to justifiable 

reliance. As such, Count III fails for the independent reason that Sofregen satisfy the element of 

justifiable reliance. 

To support justifiable reliance, Sofregen claims it: (i) specifically requested the SURE002 and SURE-006 data “multiple times” pre-Closing so it reasonably believed Allergan had 

shared all of the clinical trial data available; (ii) reasonably believed the SURE-002 and SURE006 data was consistent with the positive data from the SURE-001 study showing SERI was safe 

and effective; and (iii) reasonably relied on Allergan’s purported representations regarding 

SERI’s positive clinical performance. 

However, Sofregen expressly disclaims any such reliance in the APA. Accordingly, the 

Court cannot agree with Sofregen’s arguments regarding reliance on extra-contractual 

representations and the incompleteness of information regarding SERI disclosed pre-Closing 

based on the APA. 

Sofregen’s reliance arguments are also unsupported by the evidence, which demonstrates 

that Sofregen knew, prior to Closing, that data from SURE-002 and SURE-006 was available 

(including data regarding “unacceptable” adverse events). However, Sofregen elected not to 

specifically request the data or CSRs for either study prior to Closing. Given these (and other) 

undisputed facts, Sofregen cannot establish justifiable reliance.

The Court has held APA “Sections 4.5(b) and 6.7 do not disclaim fraud by 

concealment;”

325 however, this Court has not yet examined how the APA’s provisions impact the 

“fact-intensive inquiry” into whether Sofregen can establish justifiable reliance. Sofregen’s 

325 JX 385 at 11.
41

claimed justifiable reliance cannot be squared with the promises and representations it expressly 

made in the APA.

First, Sofregen’s argument that it reasonably believed Allergan provided complete 

responses to Sofregen’s pre-Closing information requests cannot be reconciled with Sofregen’s 

unambiguous disclaimer that Allergan had not made “any representation ... as to the accuracy 

and completeness of any information” provided during due diligence.326 Second, Sofregen 

expressly agreed that (except as expressly set forth in Article III of the APA) Allergan made no 

“representation or warranty of any kind ... relating to the ... design, performance, value, 

merchantability or fitness for any particular purpose of” SERI.327 This unambiguous provision—

together with APA Sections 4.5(b) and 6.7—directly refutes Sofregen’s argument that it 

reasonably relied on Allergan’s purported extra-contractual representations about SERI’s 

performance.328 Third, Sofregen’s purported reliance on extra-contractual representations is 

undermined by the exclusive-remedies provision in APA Section 2.4(h) of the APA which 

provides the remedies in APA Section 2.4 are exclusive for any claim related to the APA except 

for one “based upon fraud ... with respect to a representation contained in this Agreement.”329 

APA Section 2.4(h) requires Sofregen to premise its claimed reliance on an express 

representation in the agreement. 330 Fourth, the APA expressly contemplated Sofregen would 

receive “clinical study reports” post-Closing (along with all “research and development data”).331 

326 JX 146 § 4.5(b); see RAA Mgmt., LLC v. Savage Sports Hldgs., Inc., 45 A.3d 107, 116 (Del. 2012).

327 JX 146 § 3.10. 

328 Great Lakes Chem. Corp. v. Pharmacia Corp., 788 A.2d 544, 556 (Del. Ch. 2001); see also Infomedia Grp., Inc. 

v. Orange Health Sols., Inc., 2020 WL 4384087, at *22 (July 31, 2020) (“The language in the [APA] unambiguously 

defines the universe of information on which [Sofregen] relied in deciding to purchase [SERI].”).

329 JX 146 § 2.4(h). 

330 Novipax Hldgs. LLC v. Sealed Air Corp., 2017 WL 5713307, at *31–32 (Nov. 28, 2017) (finding that anti-reliance 

and exclusive-remedies provisions, read together, “preserved a fraud claim [but limited that fraud claim] to written 

representations in the APA”).

331 JX 146 § 1.1; see id. § 2.5(b). 
42

The Court finds that this express agreement regarding the post-Closing disclosure forecloses 

Sofregen’s belief that Allergan “had shared all [available] clinical trial data” prior to Closing.

The Court notes that Sofregen’s claims of reliance must include recognition that 

Sofregen’s due-diligence team was sophisticated and professional.

332

 “[J]ustifiable reliance has a 

personalized character. It is measured by reference to the plaintiff’s capabilities and knowledge; 

[and] a plaintiff’s sophistication may affect a court’s judgments about what dangers were fairly 

considered obvious.”333

The Court finds that the evidence demonstrates Sofregen knew (pre-Closing) it had not 

received all available clinical trial data prior to Closing and could not reasonably have concluded 

that the SURE-002 and SURE-006 data—which Sofregen consciously elected not to request—

were consistent with SURE-001. Sofregen’s failure to specifically request the SURE-002 and 

SURE-006 data is fatal to its ability to establish justifiable reliance.

During the Second Due Diligence Meeting, Allergan made several key disclosures that 

alerted Sofregen to the two studies—and the necessary existence of their underlying clinical data. 

At that point in time, Sofregen knew that: (i) both SURE-002 and SURE-006 (unlike SURE-001) 

investigated SERI’s use in one-stage, direct-to-implant breast reconstruction; (ii) the SURE-002 

study was complete and the SURE-006 study had been halted; and (iii) Allergan already had a 

near-final draft of the SURE-002 CSR, which Allergan planned to finalize within “1 or 2 

months.”334 Based on these disclosures, Sofregen knew (or, at the very least, was on inquiry 

notice), prior to Closing, that Allergan had not provided the SURE-002 and SURE-006 data.335 

332 Dr. Hoang-Lindsay, aided by a team of experts led Sofregen’s technical diligence in connection with the potential 

acquisition. June 5, 2023, Tr. 13:23–14:6, 107:15–108:5; JX410 at 75:23–76:6. Also, Mr. Weisman, Mr. White, and 

Mr. Kofol were sophisticated individuals who had prior experience with complex transactions. JX408 at 95:13–16, 

96:4–25.

333 Arwood v. Arwood, 2022 Del. Ch. LEXIS 57, at *41 (Mar. 9, 2022) (citation omitted).

334 JX 109 at 5. 

335 JX 410 at 119:14–18; Vichi v. Koninklijke Philips Elecs, N.V., 85 A.3d 725, 796 (Del. Ch. 2014). 
43

Dr. Hoang-Lindsay testified, based on previous disclosures, that SURE-002 data was available as 

of the July Meeting.336 The Court is unaware of any evidence indicating Allergan told Sofregen 

any data or CSR (draft or otherwise) for SURE-002 or SURE-006 was unavailable. 

After the Second Due Diligence Meeting, Dr. Hoang-Lindsay and the rest of Sofregen’s 

management team (i.e., Mr. Weisman, Mr. White, and Mr. Kofol) knew Allergan was in 

possession of negative clinical trial data for “unacceptable” adverse events.337 At the time, Dr. 

Hoang-Lindsay knew Sofregen had not received a “complete report” from Mr. Smith about 

SURE-002 or SURE-006.338 Dr. Hoang-Lindsay testified that she was not “too concerned” 

about adverse events in SURE-006 “[b]ecause the numbers were statistically not meaningful.” 339 

Despite its knowledge, Sofregen elected not to request the SURE-002 and SURE-006 data after 

the Second Due Diligence Meeting and prior to Closing. 340

On these facts, the Court cannot find that Sofregen has satisfied the element of justifiable 

reliance.

341

 Sofregen knew or should have known that Allergan had the SURE-002 and SURE006 data in its possession no later than the Second Due Diligence Meeting during their in-person 

meeting. Sofregen consciously proceeded to Closing without reviewing the clinical data (or the 

CSRs) for SURE-002 and SURE-006. Sofregen now claims it relied on extra-contractual 

representations despite agreeing in the APA that it had not done so. However, the Court finds 

that Sofregen appears an neglectful buyer that fails to ask for or otherwise follow-up on available 

records that would have been useful. 

336 JX 410 at 119:14–18. 

337 JX 120 at 1. 

338 June 5, 2023 Tr. 172:6-15; JX505.1 at C31. 

339 Day 1 at 49:3–5; see also id. at 48:1–3.

340 JX 410 at 121:21–122:6; June 5, 2023 Tr. 172:6-15, 178:13–20, 181:21–182:1, 184:19–185:1. Dr. Hoang-Lindsay 

also testified at Trial that she made a conscious decision not to request the SURE-006 data. June 5, 2023 Tr. 48:23–

49:5.

341 See, e.g., Homan v. Turoczy, 2005 Del. Ch. LEXIS 121, at *60–61 (Aug. 12, 2005). 
44

C. COUNTERCLAIM I—DECLARATORY JUDGMENT

Allergan is seeking a declaration, pursuant to APA Section 2.3 and 5.7, that Sofregen 

assumed all liabilities and obligations relating to Previously Sold Products under APA Section 

2.3(a)(iii).342 Moreover, Allergan seeks a declaration that Allergan is not responsible for 

reimbursing Sofregen for any damages or costs associated with warranty claims and product 

liability unless and until there is a final and non-appealable holding that Sofregen was liable for 

damages resulting, in whole or in part, from a Non-Conforming Product and, even then, only if 

Sofregen has satisfied the conditions precedent in APA Section 5.7(ii).343

Delaware’s Declaratory Judgment Act344 “provides a means for securing judicial relief in 

an expeditious and comprehensive manner.”345 The Act permits the Court to construe a contract 

and provide to a party a declaration of rights thereunder.346 To consider a controversy suitable 

for declaratory judgment: “1) the controversy must involve a claim of right or other legal interest 

of the party seeking declaratory relief; 2) the [claim] must be asserted against” a party with “an 

interest in contesting the claim; 3) the conflicting interests must be real and adverse; and 4) the 

issue must be ripe for judicial determination.”347

The parties previously agreed that Counterclaim I was justiciable. The parties disagreed 

as to the meaning of APA Section 2.3(a)(ii) and 5.7(a)(ii). The Court has already ruled on the 

language of APA Section 2.3(a)(ii) but will set out the reasoning again in this Decision after 

Trial. 348 

342 Defs.’ Countercls. ¶ 108.

343 Id.

344 10 Del. C. § 6502.

345 Weiner v. Selective Way Ins. Co., 793 A.2d 434, 439 (Del. Super. 2002). “The Act is entitled to liberal 

application.” Id. (citing Stabler v. Ramsay, 89 A.2d 544 (Del. 1952)).

346 See 10 Del. C. § 6502.

347 Weiner, 793 A.2d at 439 (citing Rollins Int’l Inc. v. Int’l Hydronics Corp., 303 A.2d 660, 662 (Del. 1973)).

348 Sofregen Medical Inc., 2023 WL 2034584, at *15-18. 
45

Sofregen argues that the plain language of the APA shows that Sofregen “did not assume 

any liability for SERI implanted prior to the execution of the APA, only SERI sold prior to the 

APA that is implanted after.” Sofregen contends that is the correct interpretation because APA 

Section 2.3(a)(iii) contains the language, “arising after the Effective Date.”

APA Section 2.3(a)(iii), titled “Assumption of Liabilities” states:

(a) As of the Effective Date, [Sofregen] shall assume and pay, discharge, perform 

or otherwise satisfy the following liabilities and obligations of every kind and 

nature, whether known or unknown, express or implied, primary or secondary, 

direct or indirect, absolute, accrued, contingent or otherwise and whether due or to 

become due, of [Allergan’s] arising out of, relating to or otherwise in respect of the 

Acquired Assets and/or the Business (the “Assumed Liabilities”): . . . (iii) subject 

to any applicable reimbursement obligations of [Allergan] in Section 5.7, (A) all 

liabilities and obligations for warranty claims, complaints and product liability, and 

the other liabilities assumed by [Sofregen] pursuant to Section 5.7, including all 

Actions relating to any such liabilities, and (B) all liabilities and obligations for 

refunds, adjustments, allowances, repairs, exchanges, recalls and returns or similar 

claims, arising out of or relating to the Seri Product, arising after the Effective Date, 

whether relating to any Seri Product sold prior to, on or after the Effective Date.349

APA Section 5.7(a)(ii), titled “Product Responsibility” states:

(a) From and after the Effective Date: . . . (ii) Without limiting the foregoing, (A) 

[Sofregen] shall promptly notify [Allergan] of any complaints, requests, 

investigations, reports or pending or threatened Action with respect to any 

Previously Sold Product; (B) [Sofregen] shall regularly consult in advance with 

[Allergan] on all material actions to be taken relating to such complaints, requests, 

investigations, reports or Actions relating to any Previously Sold Product; (C) 

[Sofregen] shall in good faith incorporate into its response(s) to any such 

complaints, requests, investigations, reports or Actions any input of [Allergan] on 

such matters; and (D) [Allergan] shall be entitled to participate, at its cost, in any 

Action related thereto. . . . [Sofregen] shall be financially responsible for all such 

actions required to be taken by it under clause (ii); provided, that if (1) any such 

complaint, request or investigation shall result in an Action relating to Previously 

Sold Product, (2) [Sofregen] has complied with the foregoing terms of this Section 

5.7(a)(ii), and (3) the final and non-appealable holding in such Action is that 

[Sofregen] is liable for damages resulting, in whole or in part, from NonConforming Product . . . then [Allergan] shall be responsible for its pro rata share 

. . . of the reasonable out-of-pocket costs and expenses actually incurred by 

[Sofregen] in connection with such Action, including damages required to be paid 

by [Sofregen] relating thereto but solely to the extent that such reasonable out-of349 JX 146, § 2.3(a)(iii).
46

pocket costs and expenses and other Losses are attributable to the use, sale, 

manufacture or distribution of Non-Conforming Product.350

“Previously Sold Product” is defined as “any SeriScaffold sold and distributed in 

interstate commerce by [Allergan] or any of its Affiliates prior to the Effective Date.”351 “NonConforming Product” is defined as: 

[A]ny SeriScaffold sold and distributed in interstate commerce by [Allergan] or its 

Affiliates prior to the Effective Date, the manufacture of which failed to conform 

in all material respects to the Laws then applicable to the manufacture of 

SeriScaffold, . . . as finally determined (i) [in writing by the parties], (ii) [final 

judgment of a court], or (iii) [any of means the parties agree to].352

Allergan argues that “Section 2.3(a)(iii) consists of a sub-part (A) and (B) and the former 

does not include the ‘arising after the Effective Date’ language.” APA Section 2.3(a)(iii) is 

subject to only one reasonable interpretation, and Allergan’s interpretation is not reasonable. 

The only reasonable interpretation of APA Section 2.3(a)(iii) is to read the “arising after the 

Effective Date” language as relating to both sub-part (A) and (B). To read sub-part (A) without 

this limiting language would render other liability provisions meaningless because it would 

operate as a general liability clause. Such a construction is inconsistent with the way Sections 

2.3(a)(i)-(ii) are drafted. Further, the plain language of APA Section 5.7(a) states that Sofregen 

is financially responsible for Previously Sold Products “[f]rom and after the Effective Date,” not 

generally as Allergan argues.353

Therefore, APA Section 2.3(a)(iii) is subject to only one reasonable interpretation, and 

that interpretation is inconsistent with Allergan’s interpretation underlying its requested 

declaration.

350 Id., § 5.7(a)(ii).

351 Id., § 1.1.

352 Id.

353 See id., § 5.7(a).
47

While the Court already addressed the issue of what APA Section 2.3(a)(iii), and APA 

Section 5.7(a)(ii) mean, the Court denied summary judgment.

354

 The reason the Court denied 

summary judgment on Counterclaim I had to do with Count III of the Second Amended 

Complaint. The Court has ruled on Count III so the holding on what is the meaning of APA 

Section 2.3(a)(iii), and APA Section 5.7(a)(ii) is law of the case. Moreover, as discussed below, 

the Court finds that Allergan has failed to prove that Sofregen breached APA Section 5.7. 

D. COUNTERCLAIM II—BREACH OF CONTRACT (APA SECTIONS 2.3 AND 5.7).

In Counterclaim II, Allergan contends that Sofregen breached APA Sections 2.3 and 5.7. 

In post-Trial briefing, Allergan makes the following legal and factual arguments regarding 

Counterclaim II:

Sofregen failed to “diligently conduct the defense” and “regularly consult” with 

Allergan regarding Actions relating to Previously Sold Products, including the 

Knecht, Hasso, Harben, and Krstic Actions. JX146 § 5.7(a)(ii). Sofregen has not 

identified any credible evidence demonstrating it regularly consulted with Allergan 

with respect the foregoing post-Closing Actions relating to Previously Sold 

Products. Allergan has incurred significant expenses as a result of Sofregen’s 

failure to comply with Section 5.7. Day 3 (Morning) at 61:12–62:22.

Allergan relies exclusively on the APA Agreement and brief Trial testimony on June 7, 

2023.355 Allergan seemingly places the burden of proof on Sofregen to show that Sofregen 

complied with APA Sections 2.3 and 5.7. Allergan misstates the law on this point. Allergan 

carries the burden on each and every element as to Counterclaim II. The Court finds that, on this 

354 Sofregen Medical Inc., 2023 WL 2034584, at *18.

355 June 7, 2023 AM Tr. 61:12–62:22.
48

record, Allergan has failed to meet its burden of proof that Sofregen breached APA Sections 2.3 

and 5.7. Accordingly, the Court finds in favor of Sofregen on Counterclaim II.

E. COUNTERCLAIM III—FAILURE TO PAY EARN-OUT PAYMENTS

APA Section 2.8(b) involves “Earn-Out Payments.”356 Section 2.8(b) states that 

“[Sofregen] shall pay to [Allergan] earn-out payments equal to five percent (5%) of Net Sales of 

[SERI] Products sold directly or indirectly by [Sofregen and related parties] during the Earn-Out 

Term (the ‘Earn-Out Payments’) in accordance with Section 2.8(b).”357 The APA defines “EarnOut Term” as “the period commencing on the Effective Date and ending on the first to occur of 

(i) the 10th anniversary of the Effective Date; and (ii) the expiration of the last-to-expire patent 

covering SeriScaffold or SeriPliable.”358

Sofregen failed to provide Earn-Out Reports and pay Earn-Out Payments after Q3 2017. 

Allergan alleges that Sofregen’s failure to pay from Q4 2017 to Q4 2018 entitles Allergan to 

damages. Sofregen’s failure to pay relates to its belief that Allergan breached the APA. 

Sofregen does not dispute that it breached the earn-out obligations under Section 2.8(b) of the 

APA. 

The Court has already found that Sofregen failed to carry its burden as to Count III. The 

APA therefore is enforceable. The Court has found Allergan breached the APA in Count II as to 

the return of SERI Trunk Stock. No party has argued that Allergan’s breach would excuse the 

performance of Sofregen under APA Section 2.8(b). Accordingly, Allergan is entitled to 

judgment in its favor on Counterclaim III in the amount of $102,033, plus pre-judgment interest.

356 See JX 146, § 2.8(b).

357 Id. (underlining in original). Under Section 2.8(b)(ii), Earn-Out Payments for a specific quarter were due within 

sixty (60) days after the end of each quarter. See id., § 2.8(b)(ii).

358 Id., § 1.1 (Definitions).
49

VII. CONCLUSION

The Court enters judgment in favor of Sofregen on Count II in the amount of $393,000, 

plus prejudgment interest and costs.

The Count enters judgment in favor of Allergan on Count III.

The Court enters judgment on Counterclaim I consistent with its early decision on the 

meaning of APA Sections 2.3 and 5.7.

The Court enters judgment in favor of Sofregen on Counterclaim II.

The Court enters judgment in favor of Allergan on Counterclaim III in the amount of 

$102,033 plus pre-judgment interest and costs.

IT IS SO ORDERED.

September 26, 2024

Wilmington, Delaware

/s/ Eric M. Davis

Eric M. Davis, Judge

 

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