The Leukemia & Lymphoma Society v. The Walter and Eliza Hall Institute of…

Background

The Leukemia & Lymphoma Society, Inc. funded research by The Walter and Eliza Hall Institute of Medical Research through grants totaling nearly $30 million from 2000 to 2022. The grant agreements required the Institute, when licensing research funded in whole or in part by the Society, to enter into a written agreement to share a portion of the resulting equity or royalties.

The Society alleged that the Institute licensed BCL-2 research to Genentech in 2006 without simultaneously disclosing the license or agreeing to share royalties. The Society also alleged that the Institute made misleading statements and omissions about the relationship for years, including statements in grant reports and responses to the Society’s inquiries. The Institute eventually disclosed the license in July 2017, shortly before announcing a deal to sell royalty rights connected to venetoclax.

The Society asserted claims for breach of contract, breach of the implied duty of good faith and fair dealing, and fraud. The Institute moved to dismiss the claims as untimely or duplicative and alternatively asked the court to dismiss the case because Australia was a more convenient forum.

Statute of limitations

The court held that the Society’s contract-based claims could proceed despite the six-year limitations period. Although the alleged initial contract breach occurred in December 2006, the court concluded that the Institute’s alleged affirmative misrepresentations and concealment supported equitable estoppel. Equitable estoppel can prevent a defendant from relying on a limitations defense when deception induced the plaintiff to delay filing suit. The court found that the Society had adequately alleged reasonable reliance and diligence, including audits, follow-up inquiries, annual reports, meetings, and a 2017 inquiry after the drug’s approval.

The court reached a different conclusion for the fraud claim. Under New York law, the relevant period includes two years after the plaintiff discovered, or reasonably could have discovered, the fraud. The court concluded that the Society had enough information to investigate the alleged fraud in July 2017, when the Institute disclosed the Genentech license. Because the Society did not enter into a tolling agreement until October 2019, more than two years later, the court held that the fraud claim was time-barred and dismissed it on that basis.

Duplicative-claim argument

The court denied the motion to dismiss the implied-duty claim as duplicative of the contract claim. It distinguished the claims based on the allegations supporting each one. The contract claim concerned the Institute’s alleged failure in 2006 to disclose the Genentech license and enter into a royalty-sharing agreement. The implied-duty claim concerned later alleged misrepresentations in reports and responses to inquiries, including an alleged obligation to provide accurate and truthful reporting. At the motion-to-dismiss stage, the court concluded that these claims were based on different alleged conduct.

Forum non conveniens

The court denied the Institute’s request to dismiss the case on forum non conveniens grounds. It agreed that Australia was an adequate alternative forum, but gave substantial deference to the Society’s choice of New York because the Society was incorporated there, had its principal place of business there, and alleged that significant events occurred in New York. The court also found that the private and public interest factors did not strongly favor Australia. Among other things, witnesses’ testimony could be preserved through depositions or remote testimony, and New York had a strong interest in applying its law and resolving disputes involving commitments made to New York residents.

Disposition

The court granted in part and denied in part the Institute’s motion to dismiss. It granted the motion insofar as the Society’s fraud claim was dismissed as untimely. It denied the motion as to the Society’s contract claims and denied the request to dismiss under the doctrine of forum non conveniens. The opinion does not decide the ultimate merits of the surviving claims.