Meso Scale Diagnostics, LLC. v. Roche Diagnostics GMBH

• Decision Date: 08 February 2021
• Docket Number: No. 200, 2020,200, 2020
• Citation: 247 A.3d 229
• Parties: MESO SCALE DIAGNOSTICS, LLC., et al., Plaintiffs Below, Appellants, v. ROCHE DIAGNOSTICS GMBH, et al., Defendants Below, Appellees.
• Court: United States State Supreme Court of Delaware

247 A.3d 229

MESO SCALE DIAGNOSTICS, LLC., et al., Plaintiffs Below, Appellants,

v.ROCHE DIAGNOSTICS GMBH, et al., Defendants Below, Appellees.

No. 200, 2020

Supreme Court of Delaware.

Submitted: December 9, 2020

Decided: February 8, 2021

Corrected: February 15, 2021

David L. Finger, Esquire, Finger & Slanina, Wilmington, Delaware, William S. Consovoy, Esquire, J. Michael Connolly, Esquire (argued), Consovoy McCarthy PLLC, Arlington, Virginia, Patrick Strawbridge, Esquire, Consovoy McCarthy PLLC, Boston, Massachusetts for Appellants.

Matthew E. Fischer, Esquire, Timothy R. Dudderar, Esquire, J. Matthew Belger, Esquire, Andrew H. Sauder, Esquire, Potter Anderson & Corroon LLP, Wilmington, Delaware; Of Counsel Thomas L. Shriner, Jr., Esquire (argued), James T. McKeown, Esquire, Foley & Lardner LLP, Milwaukee, Wisconsin for Appellees.

Before VALIHURA, VAUGHN, TRAYNOR, MONTGOMERY-REEVES, Justices and RANJI, Judge,^* constituting the Court en Banc.

PER CURIAM:

In 2010, Appellants Meso Scale Diagnostics, LLC and Meso Scale Technologies, LLC (collectively "Meso") filed suit in the Court of Chancery against Appellee entities Roche Diagnostics GmbH, Roche Diagnostics Corp., Roche Holding Ltd., IGEN LS LLC, Lilli Acquisition Corp., IGEN International, Inc., and Bioveris Corp. (collectively "Roche"), all of which are or were affiliates or subsidiaries of the F. Hoffmann -- La Roche, Ltd. family of pharmaceutical and diagnostics companies. Meso alleged two counts of breach of contract. Roche prevailed at trial, and this Court affirmed the judgment in 2014.

On February 28, 2019, Meso brought a new action asking the court to reopen the case, vacate the judgment entered after trial, and order a new trial. Meso alleged that the Vice Chancellor who decided its case four years earlier had an undisclosed disabling conflict, namely, that Roche's counsel had been simultaneously representing him in an unrelated federal suit challenging the constitutionality of Delaware's law providing for confidential business arbitration in the Court of Chancery, 10 Del. C. § 349 (" Section 349"). In that federal litigation, which ended in 2014, the Chancellor and Vice Chancellors of the Court of Chancery, as the parties responsible for implementing the challenged statute, were nominal defendants (hereinafter, the "Judicial Officers").

The Court of Chancery denied relief and dismissed the action. Meso appeals.

For the following reasons, we AFFIRM the judgment of the Court of Chancery.

I. Factual and Procedural Background

Though this case reaches us as an appeal from the dismissal of Meso's complaint granting Roche's motion pursuant to Court of Chancery Rule 12(b)(6), Meso's "complaint" is, in effect, substantively a motion for relief from a judgment under Court of Chancery Rule 60(b), and in particular, under subparagraphs (b)(4) and (b)(6). Meso's request for relief was restyled as a separate action for the convenience and at the request of the trial court. Roche's corresponding dismissal motion likewise presents, in effect, its opposition to the Rule 60(b) arguments raised by Meso. The Court of Chancery treated the motion substantially as one seeking Rule 60(b) relief.¹

We take the facts as pled by Meso.² In so doing, we defer only to those facts Meso alleged in its pleading and the reasonable inferences therefrom.³ We otherwise rely on the trial court's recitation of the facts.

Meso sued Roche on June 22, 2010 alleging two counts of breach of contract ("Meso Litigation").⁴ Then-Attorney Andre Bouchard represented Roche in that action, while Vice Chancellor Parsons presided over the case. On April 8, 2011, the Vice Chancellor denied Roche's motion to dismiss the Meso Litigation.⁵

On October 25, 2011 the Delaware Coalition for Open Government, Inc. (the "Coalition") filed suit in the United States District Court for the District of Delaware against the State of Delaware, as well as the Court of Chancery and the Judicial Officers, including Vice Chancellor Parsons ("DelCOG Litigation").⁶

The Coalition asserted a cause of action under 42 U.S.C. § 1983, the federal civil rights statute. It alleged no specific misconduct by Vice Chancellor Parsons. Rather, it alleged that Section 349 deprived the Coalition of its right to public access to judicial proceedings under the First Amendment of the United States Constitution. The Coalition sought a declaration to that effect, as well as injunctive relief barring further arbitrations under the statute and rules. It also sought to unseal the records of prior arbitrations conducted pursuant to Section 349.

The Coalition's complaint included a prayer for attorney's fees and a residual prayer for "such other and further relief as the Court deems fair and just."⁷ Aside from this mention of attorney's fees, there is no other indication in the record that the Coalition sought to recover damages, and Meso made clear that Vice Chancellor Parsons did not face the prospect of money damages or other personal liability beyond the declaratory and injunctive relief sought in his capacity as a judicial officer charged with implementing Section 349.

The State retained then-Attorney Bouchard to represent it in the DelCOG Litigation some time before November 29, 2011.⁸ At that time, then-Attorney Bouchard sent a letter to the Court on behalf of all parties coordinating a briefing and oral argument schedule for the cross-motions for judgment on the pleadings. As the letter indicates, the parties agreed to stay discovery pending a ruling on those motions. Also copied on the letter were the Coalition's counsel and the counsel for the Judicial Officers, Professor Lawrence A. Hamermesh of the Widener University - Delaware Law School.

The United States District Court for the District of Delaware held oral argument on February 9, 2012.⁹ Then-Attorney Bouchard and other attorneys at his firm continued to represent the State and the Court of Chancery. Professor Hamermesh continued to represent the Judicial Officers. During that argument, the parties confirmed a prior agreement that the State and the Court of Chancery should be dismissed.¹⁰ Then-Attorney Bouchard presented oral argument on behalf of all defendants, including Vice Chancellor Parsons.

The District Court granted judgment in the Coalition's favor on the cross-motions on August 30, 2012.¹¹ Consistent with the parties’ stipulation, the District Court dismissed the State and Court of Chancery on Eleventh Amendment sovereign immunity grounds.¹² Then-Attorney Bouchard remained counsel of record in the case, and on October 12, 2012, he entered his appearance for the Judicial Officers, including Vice Chancellor Parsons.¹³

While that matter was on appeal, Vice Chancellor Parsons granted Roche summary judgment on the first of the two breach of contract counts in the Meso Litigation on February 22, 2013.¹⁴ He presided over a trial on the remaining count three days later, from February 25 through March 1, 2013.¹⁵

The United States Court of Appeals for the Third Circuit affirmed the District Court in the DelCOG Litigation on October 23, 2013.¹⁶ Then-Attorney Bouchard was still one of several attorneys representing the Judicial Officers at that time.¹⁷

Thereafter, Vice Chancellor Parsons heard post-trial argument in the Meso Litigation on November 8, 2013.¹⁸

On January 21, 2014, then-Attorney Bouchard, Professor Hamermesh, and the rest of the defense team in the DelCOG Litigation submitted a Petition for Writ of Certiorari to the United States Supreme Court.¹⁹ The United States Supreme Court denied certiorari on March 24, 2014.²⁰ The parties allege no further involvement by then-Attorney Bouchard in the DelCOG Litigation.

On April 16, 2014, then-Attorney Bouchard sought to withdraw from representing Roche in anticipation of his elevation to the position of Chancellor of the Court of Chancery, while his firm continued the representation.²¹ The trial court approved that request, and he withdrew on April 29, 2014.²² On June 25, 2014, Vice Chancellor Parsons issued a decision in Roche's favor on the remaining breach of contract count.²³ This Court affirmed the judgment on the basis of the trial court's opinion on June 18, 2015.²⁴ The United States Supreme Court denied certiorari on November 16, 2015.²⁵

The foregoing facts are undisputed.

Meso asserts, and in this procedural posture we assume to be true, certain key subsequent developments:

15. In early 2018, Jacob Wohlstadter, the President and Chief Executive Officer of Meso, was conducting Internet research and discovered for the first time that Mr. Bouchard had represented Vice Chancellor Parsons in the DelCOG Litigation during his representation of Roche in the Meso Litigation.

16. Mr. Wohlstadter immediately notified Jonathan Klein-Evans, the Vice President and General Counsel of Meso, and Meso's Chief Legal Officer of this revelation, about which all were previously unaware. They were all shocked that Vice Chancellor Parsons had never disclosed this fact or recused himself from the Meso Litigation.

17. After Meso learned of this conflict of interest, and despite its involvement in another trial at the time, Mr. Klein-Evans led a careful investigation of the issue. The investigation confirmed that no one at Meso was aware of Mr. Bouchard's representation of Vice Chancellor Parsons. Nor were there any indications that it had been disclosed.²⁶

Thereafter, Meso sought to retain counsel to collaterally challenge the judgment. Meso secured its current firm in July 2018 after six other firms declined to represent it. That firm lacked a Delaware office, and Meso was able to retain local counsel on January 24, 2019 only after five other firms declined representation. Meso sought to file the instant matter as a Rule 60(b) motion under the Meso Litigation's docket on February 22, 2019. At the direction of the clerk's office, Meso refashioned the motion as a separate complaint and filed it on February 28, 2019, stipulating that "the Court may elect to treat this...