throbber
Case 3:21-cv-01118-JLS-JLB Document 1 Filed 06/15/21 PageID.1 Page 1 of 13
`
`NORTON ROSE FULBRIGHT US LLP
`MICHELLE L. CARTER (BAR NO. 288081)
`555 South Flower Street
`Forty-First Floor
`Los Angeles, California 90071
`Telephone: (213) 892-9200
`Facsimile:
`(213) 892-9494
`michelle.carter@nortonrosefulbright.com
`Attorneys for Plaintiffs
`BLOCK SCIENTIFIC, INC.
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF CALIFORNIA
`
`BLOCK SCIENTIFIC, INC., a New
`York corporation,
`Plaintiff,
`
`v.
`TRUE DIAGNOSTICS, INC., a Nevada
`corporation; SYNTRON
`BIORESEARCH, INC., a California
`corporation; and DOES 1-100, inclusive,
`Defendants.
`
`Case No.
`
`'21CV1118
`
`JLS
`
`JLB
`
`COMPLAINT FOR DAMAGES
`(1) Breach of Contract
`(2) Intentional Interference with
`Contractual Relations
`(3) Intentional Interference with
`Prospective Economic Relations
`(4) Negligent Interference with
`Prospective Economic Relations
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`Case 3:21-cv-01118-JLS-JLB Document 1 Filed 06/15/21 PageID.2 Page 2 of 13
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`Plaintiff Block Scientific, Inc. alleges as follows:
`PARTIES
`Plaintiff Block Scientific (“Block Scientific”) is a New York
`1.
`corporation with a principal place of business at 22 Sawgrass Drive, Bellport, New
`York 11713.
`2.
`Defendant True Diagnostics, Inc. (“True Diagnostics”) is a Nevada
`corporation with a principal place of business at 2782 Loker Ave W, Carlsbad, CA
`92010.
`Defendant Syntron Bioresearch Inc. (“Syntron”) is a California
`3.
`corporation with a principal place of business at 2774 Loker Avenue W, Carlsbad,
`CA 92010.
`Plaintiff is ignorant of the true names and identities of each of the
`4.
`Defendants herein designated as Does 1 through 100, who are therefore sued herein
`by fictitious names. Plaintiff will seek leave to amend this Complaint to add
`additional defendants should their true names and identities become known.
`5.
`Defendants are business entities who, on information and belief, are
`agents of, or acting in concert and active participation with, each other in
`committing the wrongful acts alleged herein such that each Defendant is fully liable
`for all the acts and omissions of each of the other Defendants.
`VENUE AND JURISDICTION
`Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b)(1) and
`6.
`28 U.S.C. § 1391(b)(2). True Diagnostics and Syntron reside in this district, and a
`substantial part of the events and omissions giving rise to Block Scientific’s claims
`occurred in this district.
`7.
`Subject matter jurisdiction is proper in this Court pursuant to 28
`U.S.C. § 1332(a). The amount in controversy exceeds $75,000 and the parties are
`residents of diverse states. Block Scientific is a resident of New York. True
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`Case 3:21-cv-01118-JLS-JLB Document 1 Filed 06/15/21 PageID.3 Page 3 of 13
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`Diagnostics is a resident of Nevada and California. Syntron is a resident of
`California.
`
`FACTUAL ALLEGATIONS
`Block Scientific supplies high quality laboratory equipment made by
`8.
`the leading manufacturers in the industry. It carries an extensive product range to
`help clinical laboratories run at peak performance, and serves the equipment needs
`of many prestigious organizations, hospitals, and educational
`institutions
`worldwide. Its range of products includes, for example, blood collection supplies,
`analyzers for chemistry, coagulation, electrolytes, hematology, immunoassay,
`point-of-care, urinalysis, histology and cytology equipment, and microbiological
`systems.
`True Diagnostics is a research, development, and manufacturing
`9.
`that
`specializes
`in manufacturing
`advanced
`rapid
`in-vitro
`company
`immunodiagnostic test systems and reagents.
`10.
`Syntron manufacturers point-of-care in vitro diagnostic tests and
`detection readers. It offers products such as rapid lateral flow immunoassays for
`fertility, drugs of abuse, allergy, cancer, infection diseases, and thyroid diseases.
`True Diagnostics and Syntron are collectively referred to herein as “the Suppliers.”
`11. Block Scientific first engaged in business with the Suppliers in 2016.
`For the next two years, Block Scientific purchased Drug Test Cups produced by the
`Suppliers, which Block Scientific then sold to its own customers.
`12.
`In or around March 2020, Block Scientific learned that the Suppliers
`had developed a serology test to identify IgG and IgM antibodies to SARS-CoV-2
`in human serum, plasma, or whole blood, called the “QuikPac II IgG & IgM
`COVID-19 Test Kit” (“QuikPac Test”).
`13.
`In March and April 2020, Block Scientific had numerous
`conversations with the Suppliers regarding the QuikPac Test, including with respect
`to its legality, availability, and sensitivity and specificity testing results. The
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`Suppliers represented that they had and would abide by all requirements set by the
`United States Food and Drug Administration (“FDA”) for serology testing,
`including obtaining all applicable authorizations and approvals. The Suppliers also
`represented throughout this period that the QuikPac Test was highly effective and
`would far exceed a 90% IgG PPA sensitivity and specificity. Indeed, in multiple
`product insert drafts shared with Block Scientific in March 2020, the Suppliers
`represented that the QuikPac Test scored IgG PPA sensitivity and specificity well
`in excess of 90%.
`14.
`In April 2020, Block Scientific and the Suppliers negotiated and
`executed a Manufacturing Supply Agreement for the Suppliers’ manufacturing and
`sale of QuikPac Tests to Block Scientific. The Agreement stated that Block
`Scientific wished to purchase QuikPac Tests from the Suppliers, which it would
`then distribute to its customers in the United States.
`15.
`In executing the Agreement, the Suppliers represented and warranted
`to Block Scientific that (1) their execution, delivery, and performance of the
`Agreement would not violate, conflict with, require consent under or result in any
`breach or default under applicable Law, defined as any statute, law, ordinance,
`regulation, rule, code, constitution, treaty, common law, Governmental Order or
`other requirement or rule of law of any Governmental Authority; (2) they were in
`material compliance with all applicable Laws relating to the Agreement and the
`QuikPac Tests; and (3) they had obtained all material licenses, authorizations,
`approvals, consents, or permits required by applicable Laws to conduct their
`business and to perform their obligations under the Agreement.
`16.
`In the meantime, with the Suppliers’ knowledge, Block Scientific
`entered into multiple contracts with its own customers, Hopco and Meridian
`(“Customers”), for the sale of QuikPac Tests. On April 11, 2020, Block Scientific
`entered into a Product Purchase and Order Agreement with Hopco (“Hopco
`Agreement”), which provided for Hopco’s purchase of a substantial number of
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`QuikPac Tests, with additional orders to be placed by purchase order. On April 13,
`2020 and May 4, 2020, Meridian Bioscience placed two significant, high-volume
`Purchase Orders of QuikPac Tests from Block Scientific (“Meridian Purchase
`Orders”). Together, the Hopco Agreement and Meridian Purchase Orders
`(“Customer Contracts”) were worth millions of dollars in sales to Block Scientific,
`with the potential to achieve tens of millions of dollars more in future sales.
`17.
`The Suppliers were well aware of the existence and significance of
`Block Scientific’s Customers Contracts. Indeed, Block Scientific and the Suppliers
`had multiple calls and written correspondence with both Hopco and Meridian,
`beginning in April 2020, regarding the parties’ commitments and expectations.
`18.
`For example, on April 15, 2020, the principals of Block Scientific, the
`Suppliers, and Hopco had a conference call to discuss, among other items: (1) ramp
`up numbers to determine when the first units under the Hopco Agreement would be
`available; (2) confirmation that the Suppliers had properly submitted a notification
`for the QuikPac Tests to the FDA; and (3) what ramp up would look like if Hopco
`ordered millions of additional units. Accordingly, the Suppliers were well aware of
`Block Scientific’s time and product commitments to Hopco, the scope of Hopco’s
`contemplated future orders from Block Scientific, as well as the importance to
`Hopco of timely product delivery and strict compliance with FDA requirements.
`19.
`The Suppliers also knew about the Meridian Purchase Orders,
`including Meridian’s expectations regarding product delivery and FDA compliance.
`20.
`The Suppliers’ conduct in the weeks that followed completely
`disrupted Block Scientific’s contractual relationships with both Hopco and
`Meridian.
`First, the Suppliers continuously failed to deliver QuikPac Tests on
`21.
`time, altered production timelines and missed production schedules, and failed to
`properly communicate delays. These actions caused Block’s Customers to cancel
`deliveries to their own customers—some of which required delivery of tests to
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`reopen their clinics and businesses—and resulted in their own loss of customers.
`Further, Block Scientific and its Customers suffered irreparable reputational harm
`due to their inability to timely supply product as a result of the Suppliers’ failures.
`22.
`Second, in June 2020, Block Scientific and its Customers learned that
`the Suppliers failed to properly submit the QuikPac Test for Emergency Use
`Authorization (“EUA”), as required by the FDA to legally market and sell the
`QuikPac Test in the United States. Instead, the Suppliers claimed that a third-party
`supplier of components, Tianjin New Bay Bioresearch Co. (“Tianjin”), a Chinese
`company, had made the EUA submission as Syntron’s “sponsor,” despite that the
`FDA required the manufacturer of the applicable serology test to submit the EUA
`request. The Suppliers assured Block Scientific and its Customers that they would
`request a name change with the FDA. Upon information and belief, however, a
`name change request was never made.
`23.
`The Suppliers’ failure to properly make the requisite EUA submission
`was the last straw for Hopco, which informed Block Scientific that the legal,
`marketing, and business risks associated with the Suppliers’ QuikPac Tests had
`become untenable for a continued business relationship. Accordingly, Hopco
`cancelled its orders and requested an immediate refund from Block Scientific.
`24.
`Similarly, in June 2020, Meridian directed Block Scientific to,
`effective immediately, place its Purchase Orders on hold, stating that it needed
`confirmation regarding the QuikPac Test’s EUA status before proceeding further.
`25.
`In July 2020, the Suppliers shared with Block Scientific that the
`QuikPac Test failed a serology test evaluation, scoring an IgG PPA/sensitivity of
`only 73.3%, far below the 90% required for FDA EUA and repeatedly guaranteed
`by the Suppliers. Accordingly, the Suppliers immediately withdrew the QuikPac
`Tests from distribution.
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`26. As a result of the Suppliers’ actions, including its failure to obtain
`EUA status, Meridian cancelled its orders and requested a full refund from Block
`Scientific.
`27. While Block Scientific worked in good faith with its Customers and
`issued them full and timely refunds, the Suppliers have refused to do the same with
`respect to Block Scientific. Despite months of good faith attempts by Block
`Scientific to resolve this matter informally, court intervention is now required.
`FIRST CAUSE OF ACTION
`(Breach of Contract – Against All Defendants)
`Plaintiff re-alleges and incorporates by reference the allegations of
`28.
`paragraphs 1 through 27, as though fully set forth herein.
`29. On April 15, 2020, Block Scientific and the Suppliers entered into a
`Manufacturing Supply Agreement (“Agreement”).
`30. Block Scientific has performed all of its obligations under the contract.
`31.
`In executing the Agreement, the Suppliers represented and warranted
`to Block Scientific that (1) their execution, delivery, and performance of the
`Agreement would not violate, conflict with, require consent under or result in any
`breach or default under applicable Law, defined as any statute, law, ordinance,
`regulation, rule, code, constitution, treaty, common law, Governmental Order or
`other requirement or rule of law of any Governmental Authority; (2) they were in
`material compliance with all applicable Laws relating to the Agreement and the
`QuikPac Tests; and (3) they had obtained all material licenses, authorizations,
`approvals, consents, or permits required by applicable Laws to conduct their
`business and to perform their obligations under the Agreement. The Agreement
`also required the Suppliers to use commercially reasonable efforts to deliver all
`QuikPac Tests before their expected delivery date.
`32.
`The FDA required all commercial manufacturers of COVID-19
`serological tests—like the QuikPac Test—to submit EUA requests for their
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`products. Nevertheless, neither True Diagnostics nor Syntron submitted an EUA
`request for the QuikPac Test; instead, they claimed that a third-party supplier of
`components for the product, Tianjin New Bay Bioresearch Co. (“Tianjin”), a
`Chinese company, had made the EUA submission as Syntron’s “sponsor.” The
`Suppliers assured Block Scientific and its Customers that they would request a
`name change with the FDA. Upon information and belief, however, a name change
`request was never made.
`33. Moreover, in order to obtain EUA, the FDA required that serology
`tests achieve an IgG PPA/sensitivity of 90%. Although the Suppliers repeatedly
`guaranteed to Block Scientific that the QuikPac Test exceeded this sensitivity, in
`July 2020, the Suppliers notified Block Scientific that the QuikPac Test IgG
`PPA/sensitivity scored an IgG PPA/sensitivity of only 73.3%. Accordingly, the
`QuikPac Test stood no chance of obtaining EUA even had it been properly
`submitted, and the Suppliers withdrew it from distribution.
`34.
`The Suppliers breached their representations and warranties in the
`Agreement by (1) failing to properly submit the QuikPac Test for EUA or request a
`name change with the FDA, such that their delivery and performance of the
`Agreement violated and conflicted with FDA requirements, and they were not in
`material compliance with applicable laws relating to the Agreement and the
`QuikPac Tests; and (2) failing to attain EUA for the QuikPac Tests, such that they
`did not obtain all material authorizations, approvals, and consents required to
`perform their obligations under the Agreement. The Suppliers further breached the
`Agreement by failing to use commercially reasonable efforts to timely deliver
`QuikPac Tests to Block Scientific and its Customers.
`35. As a direct and proximate result of the Suppliers’ actions, Block
`Scientific has suffered injuries and damages in excess of the jurisdictional limit of
`this Court in an amount to be ascertained at trial.
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`SECOND CAUSE OF ACTION
`(Intentional Interference with Contractual Relations – Against All Defendants)
`36.
`Plaintiff re-alleges and incorporates by reference the allegations of
`paragraphs 1 through 27, as though fully set forth herein.
`37. With the Suppliers’ knowledge, Block Scientific entered into multiple
`contracts with customers for the sale of QuikPac Tests. On April 11, 2020, Block
`Scientific entered into a Product Purchase and Order Agreement with its customer,
`Hopco (“Hopco Agreement”), which provided for Hopco’s purchase of a
`substantial number of QuikPac Tests, with additional orders to be placed by
`purchase order. On April 13, 2020 and May 4, 2020, Meridian Bioscience placed
`two significant, high-volume Purchase Orders of QuikPac Tests from Block
`Scientific (“Meridian Purchase Orders”). Together, the Hopco Agreement and
`Meridian Purchase Orders (“Customer Contracts”) were worth millions of dollars in
`sales to Block Scientific, with the potential to achieve tens of millions of dollars
`more in future sales.
`38.
`The Suppliers are not parties to the Customer Contracts.
`39.
`The Suppliers were well aware of the existence and significance of
`Block Scientific’s Customers Contracts. Indeed, Block Scientific and the Suppliers
`had multiple calls and written correspondence with both Hopco and Meridian,
`beginning in April 2020, regarding the parties’ commitments and expectations.
`40.
`The Suppliers’ actions as alleged herein were designed to induce a
`breach or disruption of Block Scientific’s Customer Contracts. Indeed, it was
`substantially certain, and the Suppliers knew, that the Suppliers’ alteration of
`production timelines and production schedules, failure to timely deliver products
`and properly communicate delays, failure to properly submit the QuikPac Test for
`EUA or request a name change with the FDA, and failure to obtain EUA for the
`QuikPac Test, would necessarily disrupt Block Scientific’s Customer Contracts.
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`41. Block Scientific’s Customer Contracts were disrupted as a result of the
`Suppliers’ interference. Indeed, both Customers cancelled their orders and
`demanded immediate refunds of monies paid to Block Scientific as a result of the
`Suppliers’ actions.
`42.
`As a direct and proximate result of True Diagnostics and Syntron’s
`actions, Block Scientific has suffered injuries and damages in excess of the
`jurisdictional limit of this Court in an amount to be ascertained at trial.
`43. When committing the actions alleged herein, True Diagnostics and
`Syntron acted with oppression, fraud, and malice, and in conscious disregard of
`Block Scientific’s rights, for which Block Scientific is entitled to an award of
`punitive and exemplary damages.
`THIRD CAUSE OF ACTION
`(Intentional Interference with Prospective Economic Relations – Against All
`Defendants)
`Plaintiff re-alleges and incorporates by reference the allegations of
`44.
`paragraphs 1 through 27, as though fully set forth herein.
`45. With the Suppliers’ knowledge, Block Scientific entered into multiple
`contracts with customers for the sale of QuikPac Tests. On April 11, 2020, Block
`Scientific entered into a Product Purchase and Order Agreement with its customer,
`Hopco (“Hopco Agreement”), which provided for Hopco’s purchase of a
`substantial number of QuikPac Tests, with additional orders to be placed by
`purchase order. On April 13, 2020 and May 4, 2020, Meridian Bioscience placed
`two significant, high-volume Purchase Orders of QuikPac Tests from Block
`Scientific (“Meridian Purchase Orders”). Together, the Hopco Agreement and
`Meridian Purchase Orders (“Customer Contracts”) were worth millions of dollars in
`sales to Block Scientific, with the potential to achieve tens of millions of dollars
`more in future sales.
`46.
`The Suppliers are not parties to the Customer Contracts.
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`The Suppliers were well aware of the existence and significance of
`47.
`Block Scientific’s Customers Contracts. Indeed, Block Scientific and the Suppliers
`had multiple calls and written correspondence with both Hopco and Meridian,
`beginning in April 2020, regarding the parties’ commitments and expectations.
`48.
`The Suppliers’ actions as alleged herein were designed to induce a
`breach or disruption of Block Scientific’s Customer Contracts. Indeed, it was
`substantially certain, and the Suppliers knew, that the Suppliers’ failure to properly
`submit the QuikPac Test for EUA or request a name change with the FDA, and
`failure to obtain EUA for the QuikPac Test, would necessarily disrupt Block
`Scientific’s Customer Contracts. The Suppliers’ failure to abide by all FDA
`requirements was independently wrongful.
`49. Block Scientific’s Customer Contracts were disrupted as a result of the
`Suppliers’ interference. Indeed, both Customers cancelled their orders and
`demanded immediate refunds of monies paid to Block Scientific as a result of the
`Suppliers’ actions. It was reasonably probable that the relationship between Block
`Scientific and its Customers would have yielded additional economic benefits, had
`it not been derailed by the Suppliers’ interference.
`50. As a direct and proximate result of True Diagnostics and Syntron’s
`actions, Block Scientific has suffered injuries and damages in excess of the
`jurisdictional limit of this Court in an amount to be ascertained at trial.
`51. When committing the actions alleged herein, True Diagnostics and
`Syntron acted with oppression, fraud, and malice, and in conscious disregard of
`Block Scientific’s rights, for which Block Scientific is entitled to an award of
`punitive and exemplary damages.
`FOURTH CAUSE OF ACTION
`(Negligent Interference with Prospective Economic Relations – Against All
`Defendants)
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`Plaintiff re-alleges and incorporates by reference the allegations of
`52.
`paragraphs 1 through 27, as though fully set forth herein.
`53. With the Suppliers’ knowledge, Block Scientific entered into multiple
`contracts with customers for the sale of QuikPac Tests. On April 11, 2020, Block
`Scientific entered into a Product Purchase and Order Agreement with its customer,
`Hopco (“Hopco Agreement”), which provided for Hopco’s purchase of a
`substantial number of QuikPac Tests, with additional orders to be placed by
`purchase order. On April 13, 2020 and May 4, 2020, Meridian Bioscience placed
`two significant, high-volume Purchase Orders of QuikPac Tests from Block
`Scientific (“Meridian Purchase Orders”). Together, the Hopco Agreement and
`Meridian Purchase Orders (“Customer Contracts”) were worth millions of dollars in
`sales to Block Scientific, with the potential to achieve tens of millions of dollars
`more in future sales.
`54.
`The Suppliers are not parties to the Customer Contracts.
`55.
`The Suppliers were well aware of the existence and significance of
`Block Scientific’s Customers Contracts. Indeed, Block Scientific and the Suppliers
`had multiple calls and written correspondence with both Hopco and Meridian,
`beginning in April 2020, regarding the parties’ commitments and expectations.
`56.
`The Suppliers owed Block Scientific a duty of care, and breached that
`duty by altering production timelines and production schedules, failing to timely
`deliver products and properly communicate delays, failing to properly submit the
`QuikPac Test for EUA or submitting a name change with the FDA, and failing to
`obtain EUA for the QuikPac Test. The Suppliers were aware that if they did not act
`with due care, their actions would interfere with Block Scientific’s relationships
`with its Customers and cause Block Scientific to lose, in whole or in part, the
`probable future economic benefit or advantage of the relationships.
`57. Block Scientific’s Customer Contracts were disrupted as a result of the
`Suppliers’ interference. Indeed, both Customers cancelled their orders and
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`demanded immediate refunds of monies paid to Block Scientific as a result of the
`Suppliers’ actions, and Block Scientific lost all of the economic benefits reasonably
`expected from these relationships.
`58. As a direct and proximate result of True Diagnostics and Syntron’s
`actions, Block Scientific has suffered injuries and damages in excess of the
`jurisdictional limit of this Court in an amount to be ascertained at trial.
`PRAYER FOR RELIEF
`WHEREFORE, Plaintiff prays judgment as follows:
`1.
`For compensatory damages in an amount to be determined at trial
`according to proof;
`2.
`For punitive and exemplary damages in an amount to be determined at
`trial according to proof;
`3.
`For pre-judgment and post-judgment interest;
`4.
`For costs of suit incurred;
`5.
`For reasonable attorneys’ fees; and
`6.
`For such other relief as the Court may deem proper and just.
`Dated:
`June 15, 2021
`
`NORTON ROSE FULBRIGHT US LLP
`MICHELLE L. CARTER
`
`By /s/ Michelle L. Carter
`MICHELLE L. CARTER
`Attorneys for Plaintiffs
`BLOCK SCIENTIFIC, INC.
`michelle.carter@nortonrosefulbright.com
`
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`
`DOCUMENT PREPARED
`ON RECYCLED PAPER
`
`- 13 -
`COMPLAINT
`
`

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