LivaNova is a multinational, publicly traded medical device company that works in therapeutic areas such as cardiopulmonary, obstructive sleep apnea and heart failure. Faegre Drinker represented LivaNova in a contractual dispute that began in 2012 when LivaNova’s corporate predecessor, Sorin, invested in Caisson Interventional LLC, an entity created by Todd Mortier and CJ Schweich to develop a replacement mitral heart valve. In 2017, LivaNova exercised an option to purchase the remaining outstanding equity of the company pursuant to a Unit Purchase Agreement (UPA). Under the UPA, payments were made to the founders and employees upon closing and on anniversary dates, with additional payments tied to achieving regulatory milestones and commercialization.
In 2018, the Caisson device suffered setbacks in early clinical trials, with patients suffering a number of adverse events, resulting in the stoppage of clinical trials. Meanwhile, also in late 2018, a mitral valve repair device made by a competitor showed unexpectedly promising clinical results, changing the competitive landscape of the mitral repair and replacement valve market. In 2019, faced with the need for a complete redesign of the Caisson product, an extended time and greater investment to get the product to market, and a much more competitive market, LivaNova attempted to sell the Caisson product and intellectual property. There were no offers. Ultimately, in late 2019, LivaNova shut the company down.
Plaintiff Mortier, as the member representative of the LLC members, filed suit. He asserted claims for breach of contract, breach of the good duty of good faith and fair dealing, and unjust enrichment, alleging that LivaNova’s decision to shut down the development of the Caisson product was a breach of the UPA. Plaintiff originally sought payment of the regulatory milestone payments, certain unpaid employee retention bonus payments, and the royalty for commercialization. Plaintiff ultimately dropped the employee retention bonus claims of roughly $10 million, leaving roughly $40 million in damages at issue.
In May 2022, the United States District Court for the District of Minnesota granted LivaNova's motion for summary judgment. The court ruled that the parties’ contract unambiguously allowed LivaNova to exercise its business judgment in deciding whether to continue funding the Caisson device, accepting fully the arguments we advanced. In June 2023, the United States Court of Appeals for the Eighth Circuit unanimously affirmed the ruling in LivaNova's favor.