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Kramer Levin Client Conor Medsystems Cannot be Sued for Lost Profit Damages Over Stent Recall

October 24, 2011

On October 21, 2011, a New York State Supreme Court judge ruled that a supply contract between German drugmaker Biotronik AG and Kramer Levin client Conor Medsystems Inc., a unit of Johnson & Johnson, clearly bars Biotronik from seeking $100 million in lost profits stemming from Conor's 2007 CoStar stent recall. Biotronik had sued Conor, the maker of CoStar, over the recall claiming it was unjustified and breached a 2004 supply agreement between the companies that allowed Biotronik to market the stents outside of the U.S., where CoStar was not yet approved. The deal would expire in December 2007 with an automatic renewal for one year unless either party elected to back out before July 2007. In May 2007, Conor recalled and stopped making CoStar following a Johnson & Johnson report that it "did not meet its endpoint" in clinical trials required for U.S. FDA approval. Biotronik claimed breach of contract for the recall, arguing that CoStar was a safe and effective product, and sought damages of $100 million in lost profits. Judge Bernard J. Fried ruled that issues of fact required the denial of Conor's motion for summary judgment on liability, but that the supply contact was clear in that "...the parties did not contemplate that consequential damages in the form of lost profits could be awarded for any breach." Those are the only damages being sought by Biotronik in the case.

Litigation partners Harold P. Weinberger and Kerri Ann Law, and associates Jared Heller and Kristen Coleman represented Conor Medsystems.

Law360 reported on the decision.

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