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CSL Behring, LLC v. Bayer Healthcare, LLC

United States District Court, D. Delaware

September 17, 2019

CSL BEHRING, LLC, Plaintiff,
v.
BAYER HEALTHCARE, LLC, Defendant.

          MEMORANDUM

         Plaintiff CSL Behring, LLC and Defendant Bayer Healthcare, LLC are parties to a License and Supply Agreement (the "Supply Agreement") that memorialized Bayer's obligation to supply CSL with recombinant Factor VIII, a human blood factor used to treat hemophilia A patients. Previously, CSL moved to dismiss Counts 2 and 3 of Bayer's counterclaims, which alleged breach of contract under the Uniform Commercial Code ("U.C.C.") and breach of the implied covenant of good faith and fair dealing. (D.I. 31). I granted the motion with leave to amend, and Bayer filed amended counterclaims. (D.I. 69, D.I. 70, D.I. 75). Currently pending before the court is CSL's motion to dismiss the same claims in Bayer's amended counterclaims. (D.I. 77). The court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331 and 1338(a). For the reasons discussed below, CSL's motion to dismiss the amended counterclaims is granted.

         I. BACKGROUND

         A. The Parties' Relationship

         The Supply Agreement is governed by New York law and terminated by its own terms on December 31, 2017. (D.I. 78-1 at §§ 7.1, 11.2). Under the Supply Agreement, Bayer agreed to manufacture and supply CSL with two human recombinant Factor VIII products that CSL sold under the trade names "Helixate" and "Iblias." (D.I. 75 at ¶ 41-44). Bayer concurrently made and sold the same products for itself under the trade names "Kogenate" and "Kovaltry." (Id.). In May 2016, CSL obtained FDA approval of its own human recombinant Factor VIII product that competes with Helixate and is sold under the trade name "Afstyla." (Id. at ¶ 70).

         B. Relevant Terms of the Supply Agreement

         Two provisions in the Supply Agreement govern CSL's purchasing obligations. First, there is a "minimum purchase obligation," found in Section 2.2.3.2 of the Supply Agreement, which states: "For Calendar Year 2011 and beyond, CSL's minimum purchase obligation will be sixty percent (60%) of the previous Calendar Year's actual purchase." (D.I. 78-1 at § 2.2.3.2). Second, there is a mechanism set forth in Section 2.3.1 by which CSL provides Bayer, on a monthly basis, rolling forecasts that govern CSL's future orders. (Id. at § 2.3.1). The first three months of each forecast are considered a "firm order." (Id.). The second three months (i.e., months four through six) cannot change by more than 15% when those months become firm orders. (Id.). Specifically, Section 2.3.1 states, in relevant part:

CSL shall provide Bayer with a rolling twelve (12) month forecast of its requirements of Product broken down by calendar months..... The first three (3) calendar months of this forecast shall represent a firm order .... The second three (3) calendar months of this forecast may not change more than plus or minus fifteen percent (15%) from the immediately preceding twelve (12) month forecast when the second three (3) months of the immediately preceding forecast are upgraded to the status of a firm order.

         II. STANDARD OF REVIEW

         Under Rule 12(b)(6), a party may move to dismiss a complaint for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). To survive the motion to dismiss, the complaint must contain sufficient factual matter "to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009) (quoting Bell Ail. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The factual allegations do not have to be detailed, but they must provide more than labels, conclusions, or a "formulaic recitation" of the claim elements. Twombly, 550 U.S. at 555. In assessing the plausibility of a claim, the court must accept all well-pleaded factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. In re Rockefeller Ctr. Prop., Inc. Sec. Litig., 311 F.3d 198, 215 (3d Cir. 2002). The court's review is limited to the allegations in the complaint, exhibits attached to the complaint, documents incorporated by reference, items subject to judicial notice, and matters of the public record. Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010).

         III. DISCUSSION

         Bayer asserts amended counterclaims for breach of contract based on U.C.C. § 2-306 (Count 2) and breach of the implied covenant of good faith and fair dealing (Count 3). CSL has moved to dismiss both counts for failure to state a claim pursuant to Rule 12(b)(6). Each count is addressed in turn.

         A. Count 2: Breach of Contract - U.C.C. § 2-306

         In Count 2 of the amended counterclaims, Bayer alleges that the Supply Agreement is a "requirements contract" under U.C.C. § 2-306, which CSL breached by failing to order the amount of Helixate that CSL could have sold in calendar year 2017. (D.I. 75 at ¶¶ 107-08). An agreement is not a requirements contract unless it: (1) obligates the buyer to buy the goods exclusively from the seller, and (2) obligates the buyer to buy all of its requirements for goods of a particular kind from the seller. In re Hawker Beechcraft, Inc., 2013 WL 2663193, at *4 (Bankr. S.D.N.Y. June 13, 2013).

         I previously dismissed this counterclaim, because Bayer failed to show an express or implied promise of exclusivity. (D.I. 69 at 6). With the amended counterclaims, Bayer tries to establish an express or implied promise primarily through extrinsic evidence, specifically allegations regarding its exclusive manufacturing license and the prior course of dealings between the parties and their predecessors. (D.I. 75, Counterclaims at ¶¶ 12-45). Bayer also tries to establish a promise of exclusivity through intrinsic evidence, specifically terms of the Supply Agreement providing for remedies and ...


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