We've all spotted a waiver in the other side's papers—some issue that would have been raised earlier or more clearly by a noble opponent in a just world. Normally the issue doesn't merit more than a finger-shaking footnote, but its galling nonetheless.
Forget it Jake, it's Delaware.
An Issue Ignored
This brings us to the convoluted saga of San Rocco Therapeutics, LLC v. Bluebird Bio, Inc. The plaintiff had a license to the patents-in-suit and the parties disputed whether it was sufficient to grant standing. Because that license had an arbitration provision, the defendant moved to stay the case and compel arbitration.
In their opening brief, however, Defendants did not address the threshold question of who should decide arbitrability—the Court or the arbitrator? Plaintiff, in turn, devoted a scant paragraph to this apparent waiver:
Because Defendants have conceded that this Court should decide the issue of arbitrability by failing to argue otherwise in their Opening Brief, the Court should “assume, without further analysis, that the Agreement leaves the question of arbitrability to judicial determination.” . . . Nor can Defendants timely raise any argument to the contrary in reply.
D.I. 72 at 1 (internal citations omitted).
Defendants' reply did not address the issue or the alleged waiver.
A Request For Further Briefing
In a surprising twist, Judge Andrews then raised the issue sua sponte, noting that it had been briefed in a related case regarding the same plaintiff and the same license:
The Court takes notice that a motion to compel arbitration based on the same agreement as in this case is also pending in San Rocco Therapeutics, LLC v. Memorial Sloan-Kettering Cancer Center, Case No. 21-cv-08206 (S.D.N.Y. filed Oct. 5, 2021) (D.I. 36). The parties in that case briefed the issue of who is to decide arbitrability under the 2020 Settlement Agreement the Court or the arbitrator. Id. (D.I. 37, 43, 51). I request that Defendants submit a letter by July 15, 2022, indicating its position on the issue, with argument in support of whatever that position is. If Plaintiffs position differs from its position in New York, it too should submit a letter by July 15th with appropriate argument.
D.I. 70.
Defendants' letter stated, for the first time, that it believed arbitrability should be decided by the arbitrator and did not address Plaintiff's earlier allegations of waiver. Plaintiff naturally took the opposite position and reiterated its position that Defendants had waived the issue.
Consequences, However Light
Just a few days later judge Andrews decided the motion, finding that Defendants had waived the right to argue that the arbitrator should decide arbitrability in the first instance.
Defendants' opening brief makes no argument regarding who decides arbitrability. They asked the Court to do that. Thus, that is the waiver.
San Rocco Therapeutics, LLC v. Bluebird Bio, Inc., C.A. No. 21-1478-RGA, D.I. 75 at 8 (D. Del. July 26, 2022)
This holding was a bit surprising, given that the Court had specifically requested letter briefing on the issue after normal briefing had closed. It appears from the opinion however, that this holding was due in part to the defendants failure to address the waiver issue in its letter brief:
Defendants have not disputed Plaintiffs assertion that Defendants have waived their right to raise the issue. The Court need not launch its own inquiry into the question, but may rely on the parties' own posture on the issues. For these reasons, the Court will assume that it has the authority to decide the issue of arbitrability.
Id. at 8-9 (cleaned up).
This marks the first time I can recall the Court finding that a party has waived a waiver argument. I promise to update you if I ever come across a third-degree waiver. Stay safe out there.
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