Mortier v. LivaNova USA, Inc.

Background

Todd J. Mortier sued LivaNova USA, Inc. as the member representative of former members and option-holders of Caisson Interventional, LLC. Caisson was formed to develop a transcatheter mitral valve replacement system. The parties’ Unit Purchase Agreement provided for milestone and earn-out payments tied to regulatory approvals and product sales.

Mortier claimed that LivaNova breached the agreement by failing to provide sufficient effort, funding, resources, clinical-trial support, and regulatory work for the device. He relied principally on Section 4.3, which addressed the efforts, level of care, and business decisions LivaNova had to use in pursuing regulatory approvals and product sales. Mortier also relied on Section 7.13, which stated that LivaNova had adequate financial resources and cash to satisfy its obligations under the agreement. He additionally asserted claims for breach of the implied covenant of good faith and fair dealing and unjust enrichment.

LivaNova moved for summary judgment. Summary judgment is entered when the record shows no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment under the law. LivaNova argued that the agreement did not impose the obligations Mortier claimed, that Mortier’s damages were unsupported or limited, and that the alternative claims were duplicative or unavailable. LivaNova also argued that some former members had released their claims, but the court did not reach that issue.

Section 4.3

The court held that Section 4.3 was not ambiguous. Under the court’s interpretation, LivaNova had to use efforts, care, and business decision-making consistent with its general practices in seeking regulatory approvals and conducting related business. The provision did not require equal results among LivaNova’s strategic portfolio initiatives, equal budgets, or a guarantee that the device would obtain regulatory approval. It also expressly allowed LivaNova to consider costs, benefits, internal rate of return, and return on investment.

The court found that Mortier did not identify evidence creating a genuine factual dispute about whether LivaNova followed an inconsistent process. LivaNova considered the device’s delayed timeline, increased costs, changing regulatory requirements, patient deaths and related risks, competitive conditions, and the possibility that the device would not be first to market. Mortier identified disagreements about those decisions and different outcomes involving other projects, but the court held that this did not show that LivaNova used efforts, care, or decision-making inconsistent with its general practices.

The court therefore granted summary judgment for LivaNova on Mortier’s Section 4.3 breach-of-contract claim.

Section 7.13

The court also rejected Mortier’s interpretation of Section 7.13. It held that the provision represented that LivaNova was sufficiently capitalized and solvent for purposes of the transaction; it did not create an ongoing obligation to fund Caisson at the level Caisson expected. The court stated that there was no dispute that LivaNova complied with those representations and remained solvent. Mortier’s breach claim based on Section 7.13 therefore failed.

Alternative Claims

The court granted summary judgment on Mortier’s implied-covenant claim. Under Delaware law, the implied covenant of good faith and fair dealing cannot override express contract terms and generally applies only when the contract is truly silent about the conduct at issue. The court found that Mortier had not shown evidence supporting the additional implied obligations he proposed, including promises to fund development, avoid interfering with the project, or return Caisson and related property if LivaNova stopped funding it.

The court also held that Mortier’s unjust-enrichment claim failed because the Unit Purchase Agreement governed the parties’ relationship. The court noted that Mortier’s complaint itself alleged that an express, enforceable contract controlled that relationship.

Order and Disposition

Judge Eric C. Tostrud granted Defendant LivaNova USA, Inc.’s motion for summary judgment. The court did not address whether some members released their claims, whether the agreement limited damages, or the motions to exclude expert testimony because those issues were unnecessary to the decision. The court denied as moot Plaintiff’s motions to exclude Martin C. Burke and Matthew Grennan, and Defendant’s motions to exclude Todd Mortier, Cyril J. Schweich Jr., Ramji Iyer, and Peter Crosby. The court ordered judgment to be entered accordingly.