United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY UNITED STATES DISTRICT JUDGE
Pharmaceuticals LLC sought to manufacture and sell generic
pharmaceuticals. Antrim began to work with Bio-Pharm, Inc. a
contract manufacturer, to produce two drugs, but their
arrangement collapsed after Bio-Pharm withheld shipment of
one of the products. Antrim has sued Bio-Pharm for breach of
contract and unjust enrichment. Bio-Pharm has counterclaimed
against Antrim, asserting claims of promissory estoppel and
breach of contract. Both have moved for summary judgment.
present suit arises from a dispute between Antrim and
Bio-Pharm involving the production of two generic drugs,
escitalopram and ondansetron. The following background focuses
on four events leading to the present dispute: the execution
of a term sheet outlining a plan to create a new entity, the
subsequent dealings between Antrim and Bio-Pharm,
Antrim's navigation of the regulatory barriers to its
sale of the pharmaceuticals, and the breakdown of the
relationship between the two companies.
December 2009, Antrim (then doing business as BrianT
Laboratories of Illinois LLC), Bio-Pharm, and S. Zhaveri
Pharmakem PVT, Ltd. entered into an agreement regarding a
prospective venture. The Court refers to this agreement as
the Term Sheet. The Term Sheet was drafted to
"formaliz[e] the relationship" between the three
entities seeking to form a new entity to produce
pharmaceutical products. D.E. 77, Def.'s Ex. 2 at Antrim
0002329. Antrim would own sixty percent of the new venture;
Zhaveri and Bio-Pharm would each own twenty percent.
to its terms, the Term Sheet was to be replaced by a
"Definitive Agreement" within 90 days. It also
provided that, "[i]n case a Definitive Agreement is not
entered into within the aforesaid period for reason that any
of the Parties is not interested in continuing with the
subject matter stated herein, then the Agreement the Term
Sheet [sic] shall stand terminated . . . ." Id.
at Antrim 0002334. Zhaveri departed from the arrangement, but
Antrim and Bio-Pharm continued to pursue a business
relationship. They never created a new entity.
Antrim and Bio-Pharm's relationship
November 2010, approximately a year after creating the Term
Sheet, Brian Tambi, one of the owners of Antrim, e-mailed
Amit Shah, Bio-Pharm's Vice President of Corporate
Development, stating: "As you know we don't have an
Agreement as yet. . . . I suggested that we just follow the
[Term Sheet] and I will see about making it an operational
Agreement." D.E. 77, Def.'s Ex. 7 at BIO-PHARM
013287. Shah responded: "I agree that we should not
spend anymore money with lawyers and agreement and we are
fine with formailizing [sic] and reactivating the [Term
parties continued to discuss the matter in e-mails and
otherwise. See D.E. 82, Pl.'s Ex. 34 at Antrim
0002551-53 (Mar. 7, 2012 Tambi e-mail to Shah). In August
2012, Shah sent an e-mail to Tambi in which he described the
current status of the parties' relationship: "[Y]ou
decided you would continue the relationship with Bio-Pharm.
We also showed our interest in receiving some type of equity
investment/committment [sic] as we felt that would make the
most sense for us so as not to have conflicts and also grow
each others businesses in the best possible manner."
Id. at Antrim 0002551.
January 2013, Shah e-mailed Tambi, writing "[w]e would
like to have a final agreement at the moment we just have the
Term Sheet." D.E. 77, Def.'s Ex. 8 at Antrim
0001954. Shah also stated: "We feel for the level of
work we are putting in to the project during the development
and eventual commercialization we would like to have a larger
share in the product." Id. In response to
Shah's first point, Tambi responded: "Agree-I will
finalize the Agreement." Id. He also wrote:
"I regret I cannot change the Terms we agreed unless
there is something patently unfair. As I countered on the
Phone, Amit, I do not find this to be the case. I have been
subject to this type of post-Agreement suggestions by
Companies in India and I have recinded [sic] the
subsequent e-mails, Shah and Tambi continued to dispute
whether Bio-Pharm was entitled to equity. In July 2015, Shah
e-mailed a draft agreement to Tambi that contained a section
stating that Antrim and Bio-Pharm would "jointly own the
products in a ratio of 75:25%." D.E. 82, Pl.'s Ex. 9
at Antrim 0001252. Tambi deleted the ownership section and
replaced it with a term providing for a profit-sharing
arrangement in which Bio-Pharm would receive twenty-five
percent and Antrim seventy-five percent of the profits over
the commercial life of the product. .Id.
contends that, during the same period the e-mails were
exchanged, Shah and Tambi engaged in phone conversations
about their arrangement. During his deposition, Tambi
testified to numerous phone calls he had with Shah, in which
he said they agreed to a profit-sharing arrangement, as
opposed to an equity share:
Q. Did Amit ever say to you in writing, I understand that
Bio-Pharm does not have any equity in Escitalopram?
A. I think that he - he understood that. There are a number
of telephone calls where that was acknowledged.
A. Now, whether we put it into an e-mail, I don't know,
but I will - we will search for it.
Q. Yeah. That's my question, is: Did he ever say that to
you in writing?
A. Not in writing, but I think - I am very positive that he
said he said he understood that on telephone calls.
Id., Pl.'s Ex. 1 at 245-46. But Tambi also
testified that he was not able to "definitively"
state that Shah conceded that Bio-Pharm would have no equity
share. Id. at 110. Tambi testified that an oral
agreement between the parties was formed under which
Bio-Pharm would obtain twenty-five percent of the profits
over the life of the products and would be compensated for
its costs in manufacturing the drug through the proceeds of
the sale of the drug. Tambi also testified that Bio-Pharm
would be compensated upon sale of the drug based on the cost
of production, plus ten percent. Shah likewise testified that
Bio-Pharm would be reimbursed from the sales proceeds.
Antrim's ability to market
Antrim was also engaged in the process of obtaining
regulatory approval to manufacture and market escitalopram
and ondansetron. To obtain approval to market the
pharmaceuticals, Antrim was required to successfully complete
an Abbreviated New Drug Application (ANDA) for approval by
the Food and Drug Administration. Part of the ANDA process
includes shipping samples of the products for FDA review.
Bio-Pharm produced these samples and supplied them for the
ANDA. The FDA approved Antrim's ANDA for escitalopram on
February 2, 2012. But the FDA has never approved Antrim's
ANDA for ondansetron.
Antrim was required to find a third party that could market
and distribute the pharmaceuticals that Bio-Pharm produced.
At the time, Antrim planned to use Leading Pharmaceuticals,
an entity licensed to fulfill this role. The parties dispute
whether the relationship was finalized. Antrim also contends
that it has secured an agreement with another third-party
seller, RxTPL, but it is unclear from the record whether a
contract between Antrim and RxTPL exists.
Bio-Pharm withholds escitalopram
the FDA approved the ANDA for escitalopram and as Leading
Pharmaceuticals and Antrim were finalizing a distribution
agreement, Bio-Pharm withheld shipment of the escitalopram
(Bio-Pharm concedes this). Antrim and Bio-Pharm never sold
any of the pharmaceuticals Bio-Pharm produced. Bio-Pharm
contends that it incurred $277, 000 in manufacturing costs:
$152, 000 for escitalopram and $125, 000 for ondansetron.
Bio-Pharm alleges that in manufacturing the products, it
relied on Antrim's purported promise to provide it with
an equity share; it says it withheld the products when Antrim
declined to extend the promised equity.
January 2016, Antrim sued Bio-Pharm for breach of contract
and conversion. The Court later dismissed the conversion
claim. Antrim Pharms. LLC v. Bio-Pharm, Inc., 16 C
784, D.E. 21 (N.D. Ill. June 12, 2016). Bio-Pharm has
counterclaimed, asserting claims of promissory estoppel and
breach of contract. Both parties have moved for summary
prevail on a motion for summary judgment, the movant must
"show that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law." Fed.R.Civ.P. 56(a). When considering a
motion for summary judgment, the Court takes all reasonable
inferences and construes all facts in favor of the nonmoving
party. Omnicare, Inc. v. UnitedHealth Grp., Inc.,
629 F.3d 697, 706 (7th Cir. 2011). To defeat summary
judgment, the nonmoving party must "produc[e] ...