Teva Pharmaceuticals USA, Inc. v. Perrigo, LLC

Background

Teva Pharmaceuticals USA, Inc. alleged that it entered a 2010 agreement with Perrigo, LLC, Perrigo Pharma International D.A.C., and a Teva affiliate. Under the agreement, Teva manufactured and sold bulk pharmaceutical products, including Fexofenadine HCl, and Perrigo packaged them for sale in the United States. The agreement set the price at Teva’s actual direct material and labor costs plus five percent.

Teva alleged that, from 2014 through 2016, Perrigo paid based on estimated costs that were higher than Teva’s actual costs. After discussions about a year-end adjustment, Teva paid Perrigo approximately $1.04 million in 2017. Teva further alleged that, from 2017 through 2018, its actual costs were higher than the estimated prices Perrigo had paid, but Perrigo refused to pay the difference. Teva also alleged that Perrigo terminated the agreement in 2021, canceled remaining purchase orders, and did not purchase the minimum quantity required for the remainder of that year.

Rulings on the Claims

The court applied New York law and evaluated the allegations under Federal Rule of Civil Procedure 12(b)(6), which asks whether the complaint plausibly states a claim for relief.

Count I—True-Up Payments. The court denied dismissal of Teva’s claim that Perrigo breached the agreement by refusing to make true-up payments for 2017 through 2019. Although the written agreement did not expressly include a true-up mechanism and restricted contract modifications to signed writings, the court held that Teva had plausibly alleged that Perrigo’s conduct waived that restriction or modified the agreement. The alleged conduct included Perrigo’s request for estimated costs for true-up purposes, its lack of objection to estimated-price invoices, years of true-up discussions, and its acceptance of the approximately $1.04 million payment when the adjustment favored Perrigo. The court also held that the claim was not clearly barred by the four-year limitations period because Teva alleged a June 2019 invoice that Perrigo did not pay.

Count II—Forecasts and Purchase Orders. The court granted in part and denied in part dismissal of the portion of Count II concerning minimum purchases based on forecasts. The court allowed the claim concerning the February 2021 purchase order to continue because Perrigo’s January 2021 forecast could support a minimum purchase obligation for February. The court dismissed the claim to the extent it sought minimum-purchase payments after February 2021 or for a month without a forecast from the preceding month. The court did not address Count II’s separate allegations concerning canceled purchase orders because the motion did not challenge those allegations.

Counts III, IV, V, and VI—Alternative Theories. The court granted dismissal of the unjust-enrichment claims in Counts III and IV and the promissory-estoppel claims in Counts V and VI. Teva agreed that these alternative claims should be dismissed because the parties agreed that a valid contract governed the dispute.

Disposition

The court’s conclusion states that Perrigo’s motion to dismiss was GRANTED in part and DENIED in part. Count I survived. Count II survived only as to amounts connected with the February 2021 purchase order and canceled purchase orders not addressed by the motion. The alternative unjust-enrichment and promissory-estoppel claims were dismissed. The conclusion contains an apparent typographical error when listing the dismissed counts; the discussion makes clear that Counts III, IV, V, and VI were dismissed, while Count II was dismissed only in part.