Court Opinion

ID: 4908699
Source: CourtListenerOpinion
Date Created: 2021-09-07 18:05:11.149899+00
Date Added: 2024-06-11T08:13:09.776576
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

ABBVIE ENDOCRINE INC.,                   )
                                         )
                  Plaintiff,             )
                                         )
      v.                                 ) C.A. No. 2020-0953-SG
                                         )
TAKEDA PHARMACEUTICAL                    )
COMPANY LIMITED,                         )
                                         )
                  Defendant.             )

                        MEMORANDUM OPINION

                      Date Submitted: August 3, 2021
                      Date Decided: September 7, 2021

A. Thompson Bayliss and Joseph A. Sparco, of ABRAMS & BAYLISS LLP,
Wilmington, Delaware; OF COUNSEL: Paul J. Loh, Jason H. Wilson, Peter
Shimamoto, Ashley L. Kirk, Lika C. Miyake, Amelia L.B. Sargent, and Kenneth M.
Trujillo-Jamison, of WILLENKEN LLP, Los Angeles, California, Attorneys for
Plaintiff AbbVie Endocrine Inc.

Kevin R. Shannon, Christopher N. Kelly, and Daniel M. Rusk, IV, of POTTER
ANDERSON & CORROON LLP, Wilmington, Delaware; OF COUNSEL: Fred A.
Kelly, Jr., Joshua S. Barlow, and Tiffany Jang, of HAUG PARTNERS LLP, Boston,
Massachusetts; David A. Zwally and Mark Basanta, of HAUG PARTNERS LLP,
New York, New York; and Christopher Gosselin, of HAUG PARTNERS LLP,
Washington, DC, Attorneys for Defendant Takeda Pharmaceutical Company
Limited.

GLASSCOCK, Vice Chancellor
      This brief Memorandum Opinion addresses the Plaintiff’s request for

expedited injunctive relief.   The Plaintiff is a Delaware corporation, AbbVie

Endocrine Inc. (“AbbVie”), a drug distributor. It receives its supply of a particular

drug, Lupron, a leuprorelin product, used to treat, among other things, pain

associated with cancer, from the Defendant, Takeda Pharmaceutical Co. Ltd.

(“Takeda”), a large drug manufacturer located in Japan. Specifically, Takeda is the

only source for Lupron in the world; AbbVie is accordingly entirely dependent on

Takeda for its supply.       AbbVie purchases its supply of Lupron through a

requirements contract with Takeda and distributes it in Canada and the United States.

Takeda, meanwhile, also markets similar leuprorelin products outside the U.S.,

notably in Japan and Asia.

      Takeda manufactures the product to the specifications required by the U.S.

Food and Drug Administration (the “FDA”) in its plant in Hikari, Japan. Starting in

2019, both Takeda and the FDA inspector at the Hikari plant found protocol

violations relating to the production of Lupron. Ultimately, this caused Takeda, with

the consent of AbbVie, to agree to third-party quality control oversight. That, in

turn—along with remediation efforts aimed at resolving the identified protocol

violations, including a “hold” that disrupted manufacturing for multiple weeks—

caused delays in manufacturing and distribution, resulting in a world-wide shortage

of leuprorelin products, including Lupron, that continues today. Takeda was thus

                                         1
unable to satisfy demand and was unable to fill AbbVie’s firm orders as required by

contract.

      AbbVie brought this action, seeking, in addition to a declaratory judgment

and damages, positive injunctive relief. The matter was expedited due to the

Plaintiff’s allegations of irreparable harm to its business reputation and goodwill,

although the pace of the litigation has not always seemed to reflect expedition. In

April and May, a four-day trial was held on the request for injunctive relief.

      The relief sought by AbbVie has changed over the course of the litigation. It

originally sought specific performance in addition to an order that all Lupron

production be diverted to satisfy its contractual requirements. Currently, it seeks an

order holding Takeda to supply AbbVie with one of three modification options to

Takeda’s projected leuprorelin production schedule as of April 2021. Because the

evidence at trial convinces me that such an injunction would be unworkable, would

lead to the necessity for the oversight of Takeda’s operations by the Court, and would

inevitably lead to contempt hearings at which Takeda’s ability to comply with the

injunction would be at issue, I conclude I cannot in equity grant the proposed

injunctive relief. In other words, even if I find that Takeda has breached its contract

with AbbVie, and that as a result AbbVie faces irreparable harm, the injunctive relief

sought is unavailable. Accordingly, in light of the expedited nature of the requested

injunctive relief, I issue this Memorandum Opinion denying the relief requested.

                                          2
          The remainder of the relief sought at this stage in the proceeding, a declaratory

judgment that Takeda is in breach, requires no expedition in light of the fact that

relief here will be limited to damages. Accordingly, I will issue a post-trial decision

on breach in due course. An additional phase of trial on damages will follow, if

required. The balance of this Memorandum Opinion explains my decision to deny

injunctive relief.

                                     I. BACKGROUND

          The facts in this post-trial Memorandum Opinion are either stipulated to in

the parties’ pre-trial stipulation or were proven by a preponderance of evidence at

trial.1

          A. The Parties and their Relationships

          Plaintiff AbbVie is a Delaware corporation that distributes a drug under the

brand name Lupron Depot (“Lupron”). Lupron is a leuprolide acetate product

“approved by the FDA for the palliative treatment of advanced prostatic cancer, the

management of endometriosis, to improve anemia due to vaginal bleeding from

uterine fibroids, and the treatment of children with central precocious puberty.”2

1
  Where the facts are drawn from exhibits jointly submitted at trial, they are referred to according
to the numbers provided on the parties’ joint exhibit list and with page numbers derived from the
stamp on each JX page (“JX __, at ___”).
2
  Joint Pre-Trial Stipulation ¶¶ 1, 3, Dkt. No. 156 [hereinafter “Stip”].

                                                 3
        Defendant Takeda is a Japanese corporation headquartered in Tokyo, Japan

that manufactures drug products containing leuprolide acetate, including Lupron.3

        The parties have a supplier-distributor relationship. The Defendant produces

Lupron, supplies Lupron to the Plaintiff, and the Plaintiff finishes and packages

Lupron for sale in Canada and the United States.4 Takeda manufactures Lupron at

two facilities, one in Hikari, Japan (the “Hikari Facility”) and one in Osaka, Japan

(the “Osaka Facility”).5

        On or around April 30, 2008, Takeda and the predecessor entity to AbbVie

entered into a supply agreement regarding the Plaintiff’s and the Defendant’s rights

and obligations regarding the manufacture, supply, and sale of Lupron (the “Supply

Agreement”).6 The Supply Agreement was amended on September 4, 2009 and July

17, 20197 and the parties agree that it is a valid and enforceable contract.8

        B. Factual Background

        As the reader may have, by this point, surmised, the central dispute here arises

from a disruption to Takeda’s supply line that sharply decreased the amount of

Lupron that Takeda is able to supply to AbbVie. The disruption constitutes, per the

Plaintiff, a breach of the Supply Agreement. The Plaintiff seeks injunctive relief

3
  Id. ¶¶ 2, 6.
4
  Id. ¶ 6.
5
  Id. ¶ 7.
6
  Id. ¶¶ 8–9.
7
  Id. ¶ 8.
8
  Id. ¶ 10.

                                            4
crafted to mitigate the irreparable harm allegedly caused by the breach. Crafting

such relief is difficult, however, even if the balance of the equities weighed in favor

of an injunction. To illustrate the difficulty, a recitation of the factual background

of the alleged breach and the factors related to the equities is helpful.

               1. The Hikari Plant Failure

       Lupron is distributed in syringes;9 accordingly, it cannot be sterilized once it

is assembled.10 Instead, its many components must be individually sterilized and

assembled in a sterile environment in order to avoid introducing bacteria, mold, or

viruses into the drug.11 That sterilization—of both Lupron’s components and

equipment that is used in the assembly rooms, such as gowns and utensils—is done

in a piece of equipment called an autoclave.12

       On October 28, 2019, an autoclave at Takeda’s Hikari Facility—one of two

facilities at which Takeda produces Lupron—failed its annual requalification test.13

Takeda informed AbbVie of the issue by November 6, 201914 and kept AbbVie

updated as to its investigation.15 From November 18, 2019 through November 26,

2019, the FDA conducted its planned inspection of the Hikari Facility.16 During the

9
  Trial Tr. 10:15–17, Dkt. No. 165.
10
   Id. at 210:21–211:4.
11
   Id. at 211:1–4.
12
   Id. at 211:5–11.
13
   Stip. ¶ 38; JX 390.
14
   JX 396.
15
   Id.
16
   Stip. ¶ 39; JX 434.

                                             5
inspection, the FDA inspector flagged the autoclave issue.17 By November 21, 2019,

Takeda had issued a hold for several Lupron batches produced in the Hikari

Facility.18 On November 22, 2019, the FDA inspector requested that Takeda put all

lots of Lupron on hold, which communication Takeda promptly forwarded to

AbbVie.19

      On November 26, 2019, the FDA inspector issued a “Form 483.”20 Per the

FDA website, “[a]n FDA Form 483 is issued to firm management at the conclusion

of an inspection when an investigator(s) has observed any conditions that in their

judgment may constitute violations of the Food Drug and Cosmetic (FD&C) Act and

related Acts.”21 The Form 483 describes itself as listing “observations made by the

FDA representative(s) during the inspection of your facility. They are inspectional

observations, and do not represent a final Agency determination regarding your

compliance.”22 Takeda’s Form 483, issued November 26, 2019, included seven

observations.23 One of these observations was that “[p]rocedures designed to

prevent microbiological contamination of drug products purporting to be sterile did

17
   JX 434.
18
   JX 407.
19
   JX 412.
20
   Stip. ¶ 40; JX 434.
21
   FDA Form 483 Frequently Asked Questions, U.S. Food & Drug Administration (Jan. 9, 2020),
https://www.fda.gov/inspections-compliance-enforcement-and-criminal-
investigations/inspection-references/fda-form-483-frequently-asked-questions.
22
   JX 434.
23
   Id.

                                            6
not include adequate validation of the aseptic and sterilization process.” 24 In other

words, the autoclave failure that Takeda had identified not a month earlier had also

caught the eye of the FDA, and all Lupron batches at the Hikari facility were placed

on an indefinite hold.25 That hold lasted three weeks, ending in the third week of

December 2019.26

       The parties, however, did not thereafter receive much reprieve. On March 11,

2020, the FDA issued an Official Action Indicated letter (“OAI Letter”), indicating

that the Hikari Facility was “considered to be in an unacceptable state of compliance

with regards to current good manufacturing practice (CGMP).”27 On or about May

8, 2020, Takeda discovered that an autoclave at the Hikari Facility, which was used

in the production of leuprolide products, was operated in a way that deviated from

standard operating procedures.28 That deviation, according to Takeda employees,

had existed for approximately five years.29 And on June 9, 2020, the FDA issued a

warning letter to Takeda regarding the November 2019 inspection of the Hikari

Facility as well as Takeda’s responses to the Form 483.30

24
   Id. at 2.
25
   Trial Tr. 100:18–22, Dkt. No. 165.
26
   Id. at 100:23–101:3.
27
   JX 623.
28
   Stip. ¶ 41.
29
   Id. ¶ 42.
30
   Id. ¶ 43.

                                          7
       In response to and concurrently with these discoveries, Takeda took remedial

steps, including shutting down the Hikari Facility for periods of time in spring of

2020.31 Takeda also, in June of 2020, approved a plan to allocate its remaining

production capacity of leuprorelin products at the Hikari Facility between production

for AbbVie and production for itself.32 That allocation went into effect once the

Hikari Facility came back online in July 2020.33 Takeda’s June 2020 allocation

schedule includes allocations for itself so that leuprorelin products can be marketed

in Japan and elsewhere in Asia.34 Notably, the dosages produced for leuprorelin

product sales in Japan differ from the Lupron dosages produced for use in the United

States, such that the end result is a different product.35 In other words, the leuprorelin

product sold by Takeda in Asia is not wholly interchangeable with the Lupron

provided to AbbVie by Takeda.

       Takeda is the world’s only supplier of Lupron;36 accordingly, due in part to

the allocation, AbbVie experienced shortages of Lupron and, by the end of August,

AbbVie had run out of its stock of certain dosages of Lupron.37 That shortage was

exacerbated by further remedial steps necessitated by the Hikari Facility’s

31
   JX 1020; Trial Tr. 103:5–8, Dkt. No. 165; Stip. ¶ 45.
32
   Stip. ¶ 44.
33
   Id. ¶ 45.
34
   Id. ¶ 44.
35
   Trial Tr. 628:19–21, Dkt. No. 167.
36
   Trial Tr. 12:22–23, Dkt. No. 165.
37
   Id. at 102:22–103:19.

                                                8
deficiencies. In September 2020, the FDA mandated—and the parties agreed—that

Takeda would engage third-party consultants Quantic and Gintegra, with the latter

to perform batch certification until the next FDA inspection.38 That quality control

process is still in place and AbbVie continues to see shortages in Lupron supply to

this day.39

               2. Lupron Production Today

       The production of Lupron requires a number of technical and precise steps.

Lupron is assembled in “clean rooms” by personnel who must pass equipment and

product through autoclaves for sterilization purposes.40                 In order to bring its

manufacturing processes into compliance with FDA and internal standards, Takeda

has increased the number of data entries and procedures attending this process,

necessitating 25 to 30% more time to complete.41 In addition, the manufacturing

arena undergoes a complete disassembly, sterilization and in-depth cleaning and re-

assembly one out of every six days.42 Again, in order to improve its procedures,

Takeda’s performance of this process has increased in length; while Takeda

previously was able to produce half of a batch of Lupron on these disassembly days,

they are now unable to manufacture any product at all.43

38
   JX 1536.
39
   Tr. Of 8.3.21 Post-Trial Oral Arg., at 9:12–17, Dkt. No. 190 [hereinafter “Posttrial Tr.”].
40
   Trial Tr. 613–614, Dkt. No. 167.
41
   Id. at 615:19–23.
42
   Id.
43
   Id. at 616:1–8.

                                                 9
       The active ingredient is prepared first, which takes nine days per lot.44 Upon

production, the active ingredient goes through about 36 days of quality tests and

approval, at which time it is approved to be dispensed.45

       Lupron then undergoes lyophilization, which is, at a high level, a freeze-

drying process.46 While some lyophilization only requires six steps to complete,

Lupron production requires about 25 steps,47 including, among other things,

dissolution, filtration, sterilization, and filling.48   Lyophilization is a four-day

process. At this point, microspheres have been produced.49

       Following the microsphere production are 45 days’ worth of quality testing

comprised of six major tests.50 If the microspheres pass the applicable tests, they are

then dispensed into the final fill process, which occurs over two days.51 Once filled,

the syringes go through another inspection and certain safety devices are

assembled.52

       At this time, Takeda’s quality assurance department begins to undertake its

33 quality control tests, which take place over about four weeks.53 In parallel, Takeda

44
   Id. at 620:5–7.
45
   Id. at 620: 7–10.
46
   Id. at 617:5–7.
47
   Id. at 617:5–9.
48
   Id. at 617–618.
49
   Id. at 617:20–21.
50
   Id. at 622:5–7.
51
   Id. at 622 8–11.
52
   Id. at 624:20–22.
53
   Id. at 629:21–24, 631:19–22.

                                           10
reviews the batch record associated with the manufacturing process to date, decides

whether to move forward with the batch, and, if so, sends it to inspection.54 The

batch record is finalized, with any deviations, investigations or other matters of

concern being reviewed.55

       It is at this juncture that Quantic, a third-party consultant, participates. Quantic

shadows and consults with the Takeda employees completing the batch record

review and undertakes its own final review.56 If the batch is acceptable, Quantic then

provides its final sign-off along with a letter of approval.57 Gintegra, a second third-

party consultant, undertakes a similarly in-depth review following the Quantic

review.58 Gintegra may, and according to Takeda, often does, review the full camera

footage of the manufacturing process to ensure best practices are followed.59

       Assuming the batch passes muster, Lupron then undergoes a packaging phase

and associated quality control particular to the packaging.60 All told, the

manufacturing process, including the additional rounds of review and record

production devised to respond to the various recent issues, now takes anywhere from

54
   Id. at 630:19–20.
55
   Id. at 632:19–24.
56
   Id. at 634:4–9.
57
   Id.
58
   Id. at 634:11–12.
59
   Id. at 634:13–22.
60
   Id. at 632:7–18.

                                            11
over 100 to over 120 days.61 And any inspection failure may result in a batch being

withheld from timely release to AbbVie.

       At trial, Takeda provided extensive evidence of its attempts to comply with

good manufacturing practices and FDA requirements at the Hikari facility. In

addition to the hiring of the two quality control firms discussed above, Takeda made

its own efforts at remediation. Examples include the hiring of additional personnel

and consultants,62 training of employees,63 monthly communication with the FDA,64

fixes and repairs including replacement of equipment,65 facility calibration66 and

simplifying and translating the standard operating procedures at the Hikari facility.67

Takeda estimates that it invested roughly $30 million into the remediation program

last year.68 Still, production of Lupron lags.

              3. Impact on AbbVie

       The shortage of Lupron has impacted AbbVie in a myriad of ways, including

loss of customers,69 loss of reputation,70 loss of doctors,71 loss of market share72 and

61
   Id. at 637:4–6.
62
   Id. at 561:22–24.
63
   Id. at 562:12–17.
64
   Id. at 562:17–19.
65
   Id. at 563:5–17.
66
   Id.
67
   Id. at 611:6–11.
68
   Id. at 562:2–4.
69
   Trial Tr. 123:11–18, Dkt. No. 165.
70
   JX 2522, at 20–21.
71
   Trial Tr. 134:2–14, Dkt. No. 165.
72
   JX 2349, at Fig. 13.

                                          12
ultimately overall sales.73 For the purposes of this Memorandum Opinion, I will

assume that the loss of customers, including doctors, loss of reputation and loss of

market share experienced by AbbVie led to an injury not wholly repairable by

damages.

       C. Procedural History

       The Plaintiff filed a Verified Complaint, a Motion for Preliminary Injunction

and a Motion to Expedite on November 6, 2020.74 The Verified Complaint includes

two counts: (I) Breach of Contract for failure to fulfill firm orders placed under the

Supply Agreement and (II) Breach of Contract for allocating manufacturing capacity

for Lupron to Takeda and/or its affiliates.75

       On November 16, 2020, the Defendant opposed both the Motion for

Preliminary Injunction and the Motion to Expedite.76 On November 20, 2020, I

granted the Plaintiff’s Motion to Expedite and denied the Plaintiff’s Motion for

Preliminary Injunction.77 Discovery followed. A four-day trial took place April 27

through April 29 and May 3, 2021.78 I heard post-trial argument on August 3, 2021,

and I considered the matter fully submitted at that time.79

73
   Id., at Fig. 12.
74
   Verified Compl., Dkt. No. 1 [hereinafter “Compl.”].
75
   See id. ¶¶ 113–114, 126.
76
   Def.’s Opp’n to Pl.’s Mot. to Expedite, Dkt. No. 9.
77
   Telephonic Hr’g re: Pl.’s Mot. to Expedite and the Ct.’s Ruling, Dkt. No. 34.
78
   See Trial Tr., Dkt. Nos. 165–168.
79
   See Posttrial Tr.

                                               13
                                      II. ANALYSIS

       In order to justify consideration by this Court of the extraordinary remedy of

final injunctive relief, a plaintiff must demonstrate a violation of a legal right,

resulting irreparable harm and that the balance of the equities invokes equitable

relief.80 For purposes of this Memorandum Opinion, I assume without holding that

Takeda has breached the Supply Agreement, that AbbVie has suffered irreparable

harm, and that the balance of the equities favors AbbVie. Even assuming those three

elements have been satisfied, however, this Court cannot provide the injunction

AbbVie seeks, because equity will not permit imposition of an order with which a

litigant cannot comply, or one that will require unworkable court involvement to

ensure compliance. The evidence at trial, recounted above, indicates that production

of Lupron is a complex operation currently subject to delay. The delay is due to

detailed oversight required by problems at the manufacturing facility, and Takeda’s

attempts to remedy those problems. Takeda is not presently able to produce the

requested Lupron on a timely basis, and any affirmative injunction requiring it to do

so would necessarily require extensive judicial supervision and enforcement beyond

the purview of the court system. Such judicial intervention, I note, would likely be

80
  Vento v. Curry, 2017 WL 1076725, at *2 (Del. Ch. Mar. 22, 2017) (quoting Arnold v. Soc'y for
Sav. Bancorp, Inc., 1993 WL 183698, at *4 (Del. Ch. May 29, 1993)).

                                             14
inadequate in any event. Therefore, the requested injunctive relief is not available

in equity.

       A. Any potential injunctive relief could not practicably be enforced.

       The injunctive relief AbbVie has sought throughout this case has undergone

many evolutions. Originally, AbbVie sought both specific performance of the

Supply Agreement, which would have required Takeda to perform its obligations

under the Supply Agreement in full, and an injunction enjoining the Defendant from

allocating either the supply or production capacity for Lupron to itself or to others.81

AbbVie then retreated from both prongs of this original request; their Corrected Trial

Brief called for solely specific performance.82 At trial, the Plaintiff indicated that

what they intended to seek was an order requiring that “Takeda meet their own plan,”

referring to an April 2021 update to the original June 2020 allocation schedule

designed by Takeda (the “April 2021 Schedule”).83 This plainly differs from specific

performance; adherence to the April 2021 Schedule would not require strict

compliance from Takeda under the terms of the Supply Agreement.84 Later in the

course of the trial, AbbVie proposed three different modification options to the April

2021 Schedule (collectively, the “AbbVie Post-Trial Proposal”).85 They renewed

81
   Compl. ¶¶ 117, 128.
82
   Pl.’s Corrected Tr. Br. 71.
83
   Trial Tr. 33:3–11, Dkt. No. 165; see also JX 2981.
84
   See JX2981; see also JX 96.
85
   Trial Tr. 1110–15, Dkt. No. 168; see also Decl. of Stephen Laegeler under 10 Del. C. § 3927
[hereinafter “Laegeler Decl.”].

                                             15
this request in their Post-Trial Brief, although they still call the request one for

specific performance, and characterize the AbbVie Post-Trial Proposal as seeking

“reliable, sufficient, and timely supply” of Lupron.86

          This request is no longer one for specific performance. AbbVie alleges at

least three ongoing breaches of the Supply Agreement: that Takeda is failing to fill

contractual “firm orders”; that Takeda has failed to maintain a “safety reserve” of

product sufficient to prevent any supply disruptions; and that Takeda’s failure to

operate the Hikari plant in compliance with good manufacturing practices violates

the agreement. The order the Plaintiff seeks—to compel Takeda to provide it with

a reliable, sufficient, and timely supply of Lupron—would not cure the first breach

and would not address the second and third. But it is quite apparent on the record

created at trial that it is the second and third deficiencies that have led to the disrupted

supply of Lupron. The problems at the Hikari plant will not allow Takeda to create

a contractually compliant safety reserve of Lupron, or fill the firm orders, because

the remediation at the facility and the employment of the outside consultants has led

to a bottleneck in production that Takeda has thus far been unable to overcome. The

various and changing iterations of the relief AbbVie has requested in this litigation

indicate an inability even on the Plaintiff’s part to determine exactly what type of

injunctive relief might be an effective remedy.            By no longer seeking strict

86
     Pl.’s Post-Trial Br. 41, 46.

                                            16
performance of the Supply Agreement, AbbVie tacitly admits that Takeda cannot

comply with its contractual performance to fulfill all of its firm orders for Lupron.

Instead, they now seek a more limited form of relief, though they note that the

AbbVie Post-Trial Proposal remains subject to revision or modification.87

       Takeda maintains that it would be willing to fulfill all contractual

requirements if it could;88 it has demonstrated at trial that it cannot comply at this

time, given the recent manufacturing setbacks it has experienced and the attendant

delays imposed as it implements a more rigorous quality assurance and quality

control program.89 Takeda predicts that, should the Court order performance, even

the more modest mandatory injunctive relief sought would end in failure and non-

compliance.90 These failures would likely result in a series of contempt hearings at

which Takeda defends based upon impossibility.91

              In response, AbbVie posits that Takeda is “choosing” to deny AbbVie

reliable supplies of Lupron,92 and suggests that with a Court order and Court

supervision Takeda could comply with any requirement so ordered. At oral

argument, AbbVie posited that the current employees simply lacked the “will”

87
   Laegeler Decl., Ex. A, 1 n.1.
88
   Trial Tr. 656:1–5, Dkt. No. 167.
89
   Id. at 636:20–638:2.
90
   Def.’s Post-Trial Answering Br. 37–38.
91
   Id. at 3.
92
   Pl.’s Post-Trial Answering Br. 46.

                                            17
required to overcome Takeda’s production problems.93                     Presumably, it sees

injunctive relief as necessary to generate sufficient willpower to overcome Takeda’s

Lupron shortfalls. At the same oral argument, AbbVie’s counsel pointed out that a

late July FDA inspection revealed that the Hikari plant remained out of

compliance,94 despite the extensive efforts to the contrary which Takeda

demonstrated at trial.95

               Mandatory injunction is an extraordinary remedy. Nonetheless, as

AbbVie correctly points out, requirements contracts like the one at issue here, where

the buyer has no alternative source for the product, are the quintessential business

contract subject to specific performance.96 In such a situation, the lack of an

alternative source for an essential product threatens irreparable harm, so that

allowing an efficient breach remedied by damages is insufficient in equity.97 If

Takeda were sitting on a mountain of Lupron suitable to the Supply Agreement,

specific performance would be an attractive remedy. I note, however, that the

existence of a requirements contract, the breach of which threatens irreparable harm,

93
   Posttrial Tr. 57:12–19. In trial testimony, one of AbbVie’s witnesses suggested that changes in
leadership of Takeda might be beneficial to the remediation efforts. See Trial Tr. 1093–94, Dkt.
No. 168.
94
   Posttrial Tr. at 56:6–10.
95
   See supra notes 60–66 and accompanying text.
96
   UCC § 2-716 cmt. 2 (“[R]equirements contracts involving a particular or peculiarly available
source or market present today the typical commercial specific performance situation. . . .”).
97
   See Equitable Trust Co. v. Gallagher, 102 A.2d 538, 546 (“It is elementary that the remedy of
specific performance is designed to take care of situations where the assessment of money damages
is impracticable or somehow fails to do justice.”).

                                               18
is not sufficient to support injunctive relief where compliance is impossible or

unworkable without extraordinary Court intervention, as the following hypotheticals

attempt to make clear.98

                Consider a case where buyer, a bullet-proof vest manufacturer, had

entered a contract with a seller of a new metal, Vibranium. The seller touts the

quality of its product, which is uniquely suited to the task, able to deflect the largest-

caliber projectiles. The parties enter a requirements contract, and buyer makes a

large down payment; subsequently, it enters contracts to supply Vibranium vests to

a number of customers. Seller breaches, and buyer seeks specific performance.

               Once it proves that the seller is a fraudster who developed the concept

of Vibranium from reading comic books, a number of remedies are possible. It is

readily apparent, however, that, despite threatened reputational harm to the buyer,

the Court will not attempt to enforce a mandatory injunction to provide the fictional

Vibranium. Equity will not impose a meaningless order or mandate impossible

performance.

98
   See, e.g., Wholesale Janitor Supply Co., Inc. v. Diamond Motor Sports, Inc., 1979 WL 6167, at
*1 (Del. Ch. Mar. 1, 1979) (“[P]laintiff does not have the absolute right to seek specific
performance . . . because such form of relief would, in effect, constitute specific performance of a
building contract which a court of equity should not generally have to supervise”); see also In re
Diet Drugs (Phentermine/Fenfluramine/Dexenfluramine) Prods. Liab. Litig., 369 F.3d 293, 315
(3d Cir. 2004) (“[I]njunctions must be enforceable, workable, and capable of court supervision.”);
Lemon v. Kurtzman, 411 U.S. 192, 200 (1973) (“[E]quitable remedies are a special blend of what
is necessary, what is fair, and what is workable.”); Richard A. Lord, 25 Williston on Contracts
§ 67:22 (4th ed. 2021).

                                                19
             Next, consider another example, one closer to the instant facts. A

supplier of automobiles for movies and resorts wishes to provide historically

accurate Model B Fords to its customer for a new series of “Depression Parks” where

visitors get to “vacation like it’s 1939.” It contracts with a manufacturer of replica

cars, which shows the supplier an example of its work, a handmade Model B. The

parties enter a requirements contract for 100 cars per month. But the manufacturer

proves completely incapable of scaling up, and struggles to deliver five per month.

The buyer points out that it will suffer irreparable reputational harm if it cannot

supply its own customers with the promised Model Bs, and also argues that, with a

sufficient expenditure of funds for plant and equipment and labor, the contract is

performable. It seeks specific performance.

             The result here will be the same as with the Vibranium case. Although

the contract is theoretically performable, the Court would be unable practically to

enforce an order of specific performance. The complexity of the business judgments

involved, and the involvement of the Court required to differentiate contemptuous

from non-contemptuous failures to comply, would involve the Court in the seller’s

business far beyond the boundaries of equity. Such a request for unworkable

injunctive relief would be denied.

      AbbVie, no doubt, would point out that unlike the small replica car

manufacturer, Takeda is a large drug company that has proven capable in the past of

                                         20
supplying Lupron without problems. True. But it became clear at trial that Takeda

has thus far been unable to overcome both the production problems and the

bottlenecks caused by vigorous third-party oversight of the complex production

process, which oversight is required to satisfy FDA concerns and permit shipment

of product to the U.S. market.

       In Northern Delaware Industrial Development Corporation v. E.W. Bliss

Company, this Court was asked to grant an order of specific performance that would

have required the defendant to hire 300 workmen to advance the completion of a

construction project which had fallen behind schedule.99 The Court noted that

enforcement would require the Court to become “deeply involved” in the

supervision of a complex project located on the plaintiff’s property, which would be

impracticable, if not impossible.100 As such, the Bliss court declined to grant the

requested relief, reasoning that courts of equity “should not order specific

performance of any building contract in a situation in which it would be impractical

to carry out such an order.”101

       Although the case before me today deals with drug production rather than

construction, the factual posture is similar enough for Bliss to be instructive. AbbVie

argues that the production of Lupron has fallen behind schedule and seeks injunctive

99
   See N. Del. Indus. Dev. Corp. v. E. W. Bliss Co., 245 A.2d 431 (Del. Ch. 1968).
100
    Id. at 433.
101
    Id. at 434 (citing Restatement (First) of Contracts § 371 (Am. Law Inst. 1932)).

                                                21
relief that will require, as in Bliss, “speeding up of work at the site by means of a

court-ordered requisitioning.”102 I conclude that, just as this Court in Bliss found it

impractical to supervise the hiring and progress of 300 laborers in order to fulfill a

building contract,103 it would be similarly impractical to supervise and enforce the

detailed and precise work of drug manufacturing overseas. AbbVie suggests that

Takeda could meet its contractual obligations, if only it was ordered to do so,104 but

the facts at trial indicate otherwise.105 If Takeda is objectively unable to produce

Lupron in the amounts AbbVie requests while remaining in compliance with the

applicable quality assurance and quality control metrics, ordering them to produce

and deliver Lupron per AbbVie’s firm orders will not magically resolve the

compliance issues and attendant delays.

       The complex nature of the production of Lupron, as complicated by FDA

requirements and the addition of outside quality control monitors (as agreed to by

AbbVie and as promised to the FDA) makes Takeda’s ability to supply AbbVie with

the requested amounts of Lupron, in the short term, problematic. As such, it may be

impossible for Takeda to comply with an affirmative injunction to produce Lupron.

The most likely scenario, should mandatory relief issue, and assuming supply delays

102
    Bliss, 245 A.2d at 432.
103
    See generally id.
104
    Trial Tr. 867:17–24, Dkt. No. 167.
105
    Id. at 822:7–823:1.

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continue, is that a series of contempt hearings would ensue, in which I would be

asked to second-guess Takeda’s operation of its manufacturing process, and to

determine whether any failure to supply Lupron in a timely fashion was

contemptuous or non-contemptuous in nature. This type of relief, requiring as it

would intensive Court oversight and enforcement, is unworkable, and unavailable in

equity.

       I note that I have assumed here both contractual breach and resulting

irreparable harm. The latter element is clearly present, as AbbVie’s inability to

comply with demand from its own customers has no doubt caused some quantum of

reputational damage beyond my ability to quantify as damages. Nonetheless, if I

find Takeda in breach of the Supply Agreement, AbbVie is hardly without remedy.

Much of the loss it has suffered may be addressed in damages after the next phase

of trial.

                               III. CONCLUSION

       The Plaintiff’s Request for Injunctive Relief is DENIED. The parties should

submit a form of order consistent with this Memorandum Opinion.

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