Pharmaceutical Contract Arbitration Suit Heads to Court

Misemer Pharmaceuticals, Inc. (Misemer) and its president, Arun Kapoor, have filed suit against Virtus Pharmaceuticals (Virtus) over a supposedly unlawful notice of arbitration that Virtus filed against Misemer. The notice, filed on April 28, asserted that Misemer and Kapoor, along with Belcher Pharmaceuticals, LLC, (Belcher) and Supriya Taneja, were in “violation of an exclusive Supply and Distribution Agreement between Virtus and Belcher.” However, the plaintiffs contend that they are not parties of signatories of the agreement, and therefore they have “not agreed to arbitrate any claims with Virtus.”

Belcher entered into an agreement with Virtus that detailed an exclusive partnership concerning Clidinium Bromide. Upon Virtus’s discovery of a similar potential arrangement between Belcher and Misemer, the plaintiffs claim that Virtus sent a letter to one of Misemer’s clients, Xiromed LLC, requesting that they “cease and desist from purchasing certain pharmaceutical products from Misemer,” due to the alleged agreement violation. This prompted Xiromed to completely terminate its agreement with Misemer.

Belcher Pharmaceuticals also has connections with Misemer through its president, Arun Kapoor. Kapoor was a prior employee of Belcher, before relocating and starting with Misemer. Due to these discrepancies, the defendant argues in the arbitration notice that “Misemer is an alter ego of Belcher,” and that Kapoor, the president of Misemer and former employee of Belcher, was making efforts to conceal Belcher’s true control and ownership of Misemer. The plaintiffs assert that the two companies are “separate and distinct legal entities.”

Virtus informed Belcher of their expectations regarding Belcher’s business with Misemer prior to the agreement between the two companies, stating that they expect “Belcher and Misemer to refrain from entering into or continuing with any arrangement concerning Clidinium Bromide that violate the exclusivity terms of the Virtus Agreement.” Despite this communication with Belcher, Virtus was also in communication with Misemer in hopes of negotiating an agreement regarding Clidinium Bromide between the two of them.

Misemer and Kapoor are seeking damages to compensate for lost funding due to “Virtus’s tortious interference with its contact with Xiromed.” They are also seeking a statement that they are under no legal obligation to arbitrate any claims with Virtus, as well as an order “permanently enjoining Virtus from prosecuting an arbitration,” against the plaintiffs.

The plaintiffs are represented by Adams and Reese LLP and Copeland Cook Taylor & Bush.