A Pennsylvania federal judge on Wednesday denied a global healthcare manufacturer’s motion for a new trial, leaving undisturbed an $8.5 million jury verdict (now up to approximately $10 million with interest) in a contract dispute involving the manufacture of Covid-19 test kits.
Earlier this year, Azer Scientific Incorporated, a Pennsylvania-based manufacturer and supplier of laboratory products, won a verdict against Quidel Corporation, a global diagnostic healthcare manufacturer, in a jury trial in the Eastern District of Pennsylvania before District Judge John M. Gallagher. Azer sued claiming that Quidel breached a contract between the parties involving the manufacture and supply of a component part of Quidel’s at-home Covid-19. In March 2021, Azer had agreed to make the liquid solution and fill the 2mL tubes that come in those test kits, and Quidel agreed to buy 120 million of those solution-filled tubes for a 12-month commitment period (10 million tubes per month) for a total price of $10,557,120. In June 2021, however—after Azer had purchased the specially-made machines needed to fill Quidel’s particular 2mL tubes and spent substantial time and money getting the machines up and running—Quidel told Azer to substantially ramp down.
Before trial, Judge Gallagher ruled that the March 2021 emails memorializing the parties’ agreement constituted a contract as a matter. After a one-week trial, the jury determined that Quidel had breached that contract and awarded damages in the amount of $8,521,609.00.
Quidel then moved for a new trial, challenging the jury’s verdict and Judge Gallagher’s legal and evidentiary rulings in sometimes sharp attacks. Among other things, Quidel challenged the Court’s pretrial rulings and conduct of the trial, including the Judge’s decision to begin trial with opening statements on a Friday afternoon, immediately after the jury was selected, rather than on Monday morning as originally scheduled, the subsequent ordering of witnesses, and certain evidentiary rulings that Quidel claimed prejudiced it at trial.
In its opinion, Judge Gallagher rejected Quidel’s arguments. With regard to damages, the Court found that the jury verdict was supported by testimony from Azer’s chief financial officer and damages expert. As for the timing of trial and the ordering of witnesses, the Court noted a that district judge has “inherent power” to control cases before it, provided it exercises the power “in a matter that is in harmony with the Federal Rules of Civil Procedure.” In a separate order on Thursday, Judge Gallagher directed Quidel to submit an $11 million supersedeas bond.
Azer’s attorney, Ronald Schiller, said “we are pleased with the Court’s decision and hope that this brings this dispute with Quidel another step closer to resolution.” Azer is represented by Ron Schiller, Mike Carlson, Kyle Heisner and Elizabeth Dolce of Hangley Aronchick Segal Pudlin & Schiller. Quidel is represented by Troutman Sanders.
