United States District Court, D. Massachusetts
TERUMO AMERICAS HOLDING, INC., Plaintiff and Counterclaim-Defendant,
GARY D. TURESKI, in his capacity as Seller's Representative, Defendant and Counterclaim-Plaintiff.
MEMORANDUM AND ORDER
DENISE J. CASPER, District Judge.
Plaintiff and Counterclaim-Defendant Terumo Americas Holding, Inc. ("Terumo"), a Delaware corporation, brings this declaratory judgment action pursuant to 28 U.S.C. §§ 2201-2202 against Defendant and Counterclaim-Plaintiff Gary D. Tureski ("Tureski"), in his capacity as Seller's Representative, seeking a declaration of the parties' rights and obligations pursuant to an Agreement and Plan of Merger (the "Agreement") entered into by the parties on April 1, 2011. D. 1. Terumo has moved for judgment on the pleadings on its declaratory judgment claim. D. 21. For the reasons discussed below, the Court ALLOWS Terumo's motion.
II. Standard of Review
Rule 12(c) of the Federal Rules of Civil Procedure provides that a party may move for judgment on the pleadings after the pleadings have closed. Fed.R.Civ.P. 12. "A motion for judgment on the pleadings is treated much like a Rule 12(b)(6) motion to dismiss." Perez-Acevedo v. Rivero-Cubano, 520 F.3d 26, 29 (1st Cir. 2008) (citing Curran v. Cousins, 509 F.3d 36, 43-44 (1st Cir. 2007)). "A Rule 12(c) motion nonetheless differs from a Rule 12(b)(6) motion because it implicates the pleadings as a whole." Santiago v. Bloise, 741 F.Supp.2d 357, 360 (D. Mass. 2010) (citation and internal quotation mark omitted). Facts in the answer, however, "are taken as true only where and to the extent that they have not been denied or do not conflict with those of the complaint." Id . (citation omitted).
To survive a Rule 12(c) motion, "a complaint must contain factual allegations that raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true....'" Perez-Acevedo, 520 F.3d at 29 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The Court must consider the well-pleaded facts "in the light most favorable to the non-moving party" and "draw all reasonable inferences in its favor." Gray v. Evercore Restructuring L.L.C., 544 F.3d 320, 324 (1st Cir. 2008) (citing Curran, 509 F.3d at 43). In reviewing the motion, the Court may also "consider documents the authenticity of which are not disputed by the parties;... documents central to plaintiffs' claim; [and] documents sufficiently referred to in the complaint.'" Curran, 509 F.3d at 44 (omission and alteration in original) (quoting Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993)).
III. Factual Background
Unless otherwise indicated, the Court relies on the facts as alleged in the complaint, D. 1, and, to the extent they are not disputed, the facts contained in Tureski's answer, D. 7.
A. Harvest's CLI Pivotal Clinical Trial
Harvest Technologies, Inc. ("Harvest") is an "an innovative biotechnology company." D. 1 ¶ 10. Harvest was founded in 1995 in Plymouth, Massachusetts and "provides bone marrow aspirate concentrate ("BMAC") systems to treat vascular, orthopedic, and cardiovascular diseases." D. 7 ¶ 13. Relevant to this action, Harvest is "conducting clinical research exploring the treatment of end-stage Critical Limb Ischemia ("CLI"), a result of peripheral artery disease, which often leads to lower-limb amputation and increased patient morbidity and mortality rates." D. 1 ¶ 11. Specifically, Harvest has been working to develop a non-surgical treatment for CLI, and, on February 5, 2011, Harvest submitted a CLI Development Plan (the "Plan") to the FDA to study the use of Harvest's BMAC system to treat patients with CLI. D. 7 ¶ 14. The Plan provided for a 210-patient clinical trial (the "CLI Pivotal Clinical Trial") to study the safety and efficacy of Harvest's CLI treatment. Id . ¶ 15. On March 3, 2011, the FDA approved Harvest's Plan. Id .; D. 23 at 9. Patient enrollment began in June 2011. D. 7 ¶ 31.
B. Terumo Acquires Harvest
On April 1, 2011, Terumo and certain selling stockholders (the "Sellers") of Harvest entered into an agreement for Terumo to acquire 100% of Harvest's outstanding shares. D. 1 ¶¶ 1, 10. Tureski was designated, and remains, the Seller's representative in connection with the Agreement. Id . ¶¶ 1, 6. The Agreement was signed less than a month after the FDA approved the CLI Pivotal Clinical Trial and before any patients began enrolling in the program. D. 7 ¶¶ 15-16, 31. As such, negotiations included discussion regarding the potential outcome of the Plan and the prospects of FDA approval. D. 7 ¶ 3, 19.
In an attempt to allocate the potential risks and rewards associated with the potential of FDA approval, Terumo agreed to pay the Sellers $70, 000, 000 in base consideration, D. 7-1 at 4, 6, and up to $35, 000, 000 in Earnout Payments upon completion of several Plan milestones, D. 7 ¶ 20. Specifically, Terumo agreed to pay an additional $5, 000, 000 upon completion of patient enrollment in the CLI Pivotal Clinical Trial, if enrollment was completed prior to the seventh anniversary of the Closing Date (i.e., April 2018). Id . ¶ 28 (quoting Agreement, § 1.6(a)(i)). In the ...