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Watson Labs., Inc. v. Rhone-Poulenc Rorer, Inc.

United States District Court for the Central District of California

April 20, 2001, Decided

CASE NO. CV 99-7947 AHM (RZx)




This matter comes before the Court on Plaintiff's Motion for Partial Summary Judgment ("Plaintiff's Motion") and Defendants' four separate Motions for Partial Summary Adjudication ("Defendants' Motions"). This dispute between pharmaceutical companies arises out of Defendants' alleged breach of its contractual obligations to supply Plaintiff with the hypertension drug Dilacor XR(R) and to [**3]  not compete with Plaintiff in that drug market.

Plaintiff's omnibus, sprawling Motion seeks to establish that (1) Defendants breached the two contracts at issue; (2) Defendants may not rely on a force majeure affirmative defense; (3) Defendants' Third, Fifth and Eighth Affirmative Defenses (unclean hands, waiver and mitigation) to liability for breach of their supply obligations fail; (4) Defendants' Sixth and Ninth Affirmative Defenses (laches and good faith competition) are no defense to breach of the non-compete provisions; (5) the U.S.-based defendant parent company is liable for breaching the contracts signed by its subsidiaries (also defendants); (6) Defendants' counterclaim for a declaratory judgment that they are not in breach of the non-compete provision fails; and (7) Defendants engaged in unfair competition in violation of Cal. Bus. & Prof. Code § 17200.

Defendants' First Motion seeks a determination that Plaintiff is not entitled to "disgorgement" of profits as a remedy under Cal. Bus. & Prof. Code §§ 17200, 17203. Defendants' Second Motion seeks to establish that Plaintiff may not recover lost profits incurred after Defendants' supply obligation terminated. Defendants'  [**4]  Third Motion seeks a ruling that the event that caused their breach of the supply commitment qualifies as a force majeure event. Defendants' Fourth Motion seeks summary judgment on Plaintiff's Cal. Bus. & Prof. Code § 17200 claim.

The Court concludes, first, that no material factual disputes prevent the Court from construing the relevant contractual provisions to find liability on the breach of contract claims. Next, Plaintiff may proceed only on the "unlawful" prong of Cal. Bus. & Prof. Code § 17200 and that claim must be resolved at trial. Third, Plaintiff may not recover "disgorgement" of Cardizem CD(R) profits under § 17203. Finally, all other damages issues must be resolved at trial. Accordingly, the Court GRANTS Plaintiff's Motion in part, GRANTS in part Defendants' First and Fourth Motions for Partial Summary Adjudication and DENIES Defendants' Second and Third Motions for Partial Summary Adjudication.

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178 F. Supp. 2d 1099 *; 2001 U.S. Dist. LEXIS 22310 **

WATSON LABORATORIES, INC., Plaintiff, v. RHONE-POULENC RORER, INC., et al., Defendants.

Prior History: Watson Labs., Inc. v. Rhone-Poulenc Rorer Inc., 1999 U.S. Dist. LEXIS 24869 (C.D. Cal., Oct. 21, 1999)

Disposition:  [**1]  Watson's motion for partial summary judgment granted in part and Rhone-Poulenc's four motions for partial summary adjudication granted in part and denied in part.


majeure, manufacturing, License, diltiazem, shutdown, unfair, pharmaceutical, Partial, foreseeable, entities, prong, Affiliates, subsidiary, unforeseeable, non-compete, competitor, fraudulent, genuine, merger, plant, disgorgement, indirectly, undisputed, non-moving, antitrust, indirect, contractual, enumerated, laches, nonperformance

Civil Procedure, Discovery, Methods of Discovery, General Overview, Summary Judgment, Burdens of Proof, Entitlement as Matter of Law, Genuine Disputes, Supporting Materials, Movant Persuasion & Proof, Evidence, Allocation, Nonmovant Persuasion & Proof, Appropriateness, Trials, Judgment as Matter of Law, Directed Verdicts, Motions for Summary Judgment, Judgments, Evidentiary Considerations, Contracts Law, Contract Interpretation, Contract Conditions & Provisions, Commercial Law (UCC), Contract Provisions, Warranties, Energy & Utilities Law, Oil, Gas & Mineral Interests, Purchase Contracts, Uniform Commercial Code, Sales (Article 2), Standards of Performance & Liability, Breach, Excuse & Repudiation, Performance Excused, Business & Corporate Compliance, Contracts Law, Exculpatory Clauses, Acceptance of Goods, Excuse From Performance, Torts, Defenses, Exculpatory Clauses, Interpretation, Standards of Performance, Impossibility of Performance, Impracticability, Relevance, Preservation of Relevant Evidence, Exclusion & Preservation by Prosecutors, Banking Law, Federal Acts, Federal Trade Commission Act, Business Torts, Unfair Business Practices, Antitrust & Trade Law, Scope