Delaware court dismisses Merck's talc liability suit against Bayer

04 Apr 2023
endpts.com
Patent Infringement
A chancery court judge in Delaware has sided with Bayer, dismissing a case between two pharma giants over liabilities from a 2014 M&A deal. Delaware chancery court vice chancellor Nathan Cook signed off on Bayer’s motion to dismiss the case Monday. The chancery court previously held a hearing in December on Bayer’s motion, the ruling said. This case got its beginnings after Merck and Bayer entered into a contract for Bayer to buy Merck’s consumer care business in 2014. The $14 billion deal included the product lines for Dr. Scholl’s, along with Claritin allergy medicine and Coppertone sunscreen. Merck claimed that as part of its contract with Bayer, Merck would remain liable for certain product claims for only seven years — and hand liabilities over to Bayer on Oct. 1, 2021. However, after discussions related to liabilities “broke down,” Merck sued Bayer on Sept. 30, 2021 — accusing Bayer of breach of contract, according to the filing. Where the liabilities come in is related to talc-based products, says the ruling. Merck and Bayer were faced with lawsuits after the deal closed alleging that asbestos present in those products, such as those under the Dr. Scholls brand that contain talc, caused cancer. Whoever is deemed responsible could face liabilities, which could total billions of dollars in legal costs and payouts. Cook wrote in the 36-page ruling that per the contract, Merck “indefinitely retained substantive liability for the product liability claims related to products sold prior to the closing of the transaction,” according to the ruling. The judge said that Merck’s counterargument that it ended in 2021 contradicts the contract it signed with Bayer. Per one of the sections in the contract — Section 2.7 surrounding retained liabilities — Cook wrote that Merck “‘absolutely and irrevocably’ retained ‘all obligations and liabilities’ for product liability claims related to the product lines acquired by Bayer, including the Dr. Scholl’s product line.” “…the interpretation offered by Bayer is the only reasonable one, and, therefore, Merck’s complaint must be dismissed,” Cook added. A Merck spokesperson said that the company is “disappointed with the decision and we plan to appeal.” Bayer did not immediately respond to a request for comment from Endpoints News before deadline.
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