Drexel Chemical Company v. Albaugh, Inc. , 645 F. App'x 467 ( 2016 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 16a0272n.06
Case Nos. 14-6340/6363
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
May 18, 2016
DREXEL CHEMICAL COMPANY, ) DEBORAH S. HUNT, Clerk
)
Plaintiff-Appellant/Cross-Appellee, ) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR
v. ) THE WESTERN DISTRICT OF
) TENNESSEE
ALBAUGH, INC., nka Albaugh, LLC, )
)
Defendant-Appellee/Cross-Appellant. )
BEFORE: SILER, COOK, and DONALD, Circuit Judges.
COOK, Circuit Judge. After the second bench trial in this contract-interpretation dispute
between two agricultural-chemical distributors, the trial court lamented that “much of the
evidence submitted at trial does not aid the court in determining the parties’ intent.” The parties
clarified nothing on appeal, so we decline to depart from the trial court’s interpretation of the
parties’ ambiguous contract. We AFFIRM.
I.
In 1958, Novartis Crop Protection’s corporate predecessor registered atrazine as a
pesticide under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), allowing it to
sell and distribute atrazine in the United States. Before registering atrazine under FIFRA, the
Environmental Protection Agency (EPA) reviewed health, safety, and environmental studies
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
generated and submitted by Novartis’s predecessor to confirm that atrazine “will not generally
cause unreasonable adverse effects on the environment.” 7 U.S.C. § 136a(c)(5)(D).
In the 1970s, plaintiff Drexel Chemical Company obtained its own registration under
FIFRA, allowing Drexel to sell and distribute atrazine. To obtain the registration, Drexel cited
Novartis’s health, safety, and environmental data and, as FIFRA mandates, offered to pay
Novartis for producing that data. 7 U.S.C. § 136a(c)(1)(F)(iii). The pesticide industry calls such
payments “data compensation” and initial registrants like Novartis “original data submitters.”
7 U.S.C. § 136a(c)(1)(F). Through FIFRA-mandated binding arbitration, 7 U.S.C.
§ 136a(c)(1)(F)(iii), (c)(2)(B)(iii), Drexel and Novartis split data-compensation costs on a
market-share basis. Because the EPA often requests additional pesticide data, whose costs all
registrants must share, 7 U.S.C. § 136a(c)(2)(B)(ii), Drexel and Novartis agreed to split future
data-compensation costs on the same market-share basis to avoid further disputes.
In the late 1990s, defendant Albaugh purchased a majority share in a foreign company
that formulated atrazine. Before Albaugh could import and distribute atrazine in the United
States, it too had to register with the EPA. 7 U.S.C. § 136a(a). Albaugh first offered to pay
Novartis to cite its health, safety, and environmental studies. Dissatisfied with the data
compensation Albaugh offered, Novartis threatened to oppose Albaugh’s registration with the
EPA.
Drexel hatched a solution: a supplemental distributorship. This relationship, blessed by
FIFRA, allows a distributor—Albaugh—to sell pesticides under its own brand name but another
entity’s—Drexel’s—FIFRA registration, provided that the participants notify the EPA. See
generally 40 C.F.R. § 152.132. In return for Albaugh’s use of Drexel’s atrazine registration,
Albaugh would pay Drexel $750,000 in installments and “fifty percent (50%) of the costs of all
-2-
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
future payments that Drexel makes to Novartis in the future as data compensation in order to
maintain the Registration.” Drexel and Albaugh signed the contract in December 1998.
Meanwhile, the EPA was reviewing all atrazine registrations, concerned about the
pesticide’s carcinogenicity. Novartis, and later Syngenta Crop Protection,1 submitted 190 studies
to the EPA to prove otherwise. Concluding its review in 2003, the EPA cancelled all existing
atrazine registrations, including Drexel’s. But it permitted reregistration, provided that the
registrants offered to pay Syngenta for 100 selected studies that proved atrazine’s safety (“the
Appendix B studies”) and also agreed to conduct more safety studies the EPA would identify in
the future (data call-ins or “DCIs”). Those who refused the EPA’s reregistration terms could no
longer import or sell atrazine. Drexel, then in the cost-splitting contract with Albaugh, accepted
the EPA’s terms, reregistered, and offered to pay Syngenta for the Appendix B studies. In 2004
and 2005 DCIs, the EPA asked atrazine registrants for additional safety studies. Syngenta
undertook these studies alone, electing to recoup the costs from other atrazine registrants later.
Both years Drexel timely offered to compensate Syngenta for the DCIs. In short, Drexel thrice
offered to pay Syngenta during the contract period—for the Appendix B studies, the 2004 DCI,
and the 2005 DCI—but made no actual payments.
In summer 2006, Drexel learned that Albaugh “was thinking about getting out of the
[a]trazine business.” Drexel began to worry about paying Syngenta without Albaugh’s help.
Accordingly, Drexel asked Syngenta to invoice it $1.5 million in data-compensation costs.
Drexel paid Syngenta and invoiced Albaugh for $750,000 in September 2006. Albaugh
immediately terminated the contract. It ceased importing atrazine but continued to sell existing
inventory until April 2007.
1
Syngenta is the corporate successor to Novartis. The parties agree that the contract
covers Drexel’s payments to Syngenta.
-3-
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
Syngenta initiated binding arbitration with Drexel in May 2007 to fix Drexel’s data-
compensation costs for the Appendix B studies, 2004 DCI, and 2005 DCI. The arbitrators
awarded Syngenta $131,3402 for the Appendix B studies and $2,393,662 for the 2004 and 2005
DCIs combined. The arbitrators again used the market-share approach to allocate costs.
Drexel’s market share included both Drexel’s (5.1% for the Appendix B studies and 6.2% for the
DCIs) and Albaugh’s (1.2% for the Appendix B studies and 1.8% for the DCIs) atrazine market
shares. Drexel and Syngenta split the arbitration costs. Some of the 2004 and 2005 DCI studies
were still in progress, so the arbitrators directed the parties to split future costs under the same
market-share approach. As of 2012, Drexel has paid $5,578,518.97 to Syngenta.
In 2008, Drexel sued Albaugh for breach of contract, seeking half its payments to
Syngenta. Initially, the court held Albaugh liable for fifty percent of actual payments that Drexel
made to Syngenta as data compensation before Albaugh’s termination on September 29, 2006. It
therefore entered a $750,000 judgment for Drexel, plus prejudgment interest, representing half of
the $1.5 million Drexel paid to Syngenta before Albaugh terminated.
The parties cross-appealed. We affirmed the $750,000 judgment but remanded for
further proceedings. Drexel Chem. Co. v. Albaugh, Inc., 489 F. App’x 63, 69 (6th Cir. 2012)
(Drexel I). We found the contract ambiguous “as to whether Albaugh is responsible for
payments that Drexel makes after the termination of the Agreement but relating to the period that
the Agreement was in effect,” i.e., the post-termination payments Drexel has made and will make
to Syngenta for the Appendix B studies and the 2004 and 2005 DCIs. Id. at 67. We remanded
for factual development, suggesting that the lower court consider: how the agricultural-chemical
business understands the contract terms, the FIFRA regulatory regime, the nature of Drexel’s
2
The arbitrators credited Drexel’s $1.5 million September 2006 payment toward the
Appendix B studies, leaving Drexel only $131,340 in unpaid Appendix B costs.
-4-
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
payments to Syngenta, correspondence between Drexel and Albaugh, and Albaugh’s post-
termination reliance on Drexel’s registration. Id.
On remand, the court held Albaugh liable for half of Drexel’s payments for the studies
Syngenta either generated or submitted to the EPA before Albaugh’s termination on September
29, 2006. To set Drexel’s damages, the court relied on exhibits listing Syngenta’s Appendix B
studies and the 2004 and 2005 DCI studies and their costs. These lists dated Syngenta’s studies
by year only, making a precise damages award to September 29 impossible. The court therefore
included all 2006 studies in Drexel’s damages, reasoning “that it is more likely than not that the
studies dated 2006 were generated or submitted by Syngenta prior to Albaugh’s termination.” It
awarded Drexel $841,726, plus prejudgment interest, representing half the payments Drexel
made to Syngenta for studies dated 2006 and earlier, less the $750,000 affirmed in the first
appeal. The court denied Drexel’s demand that Albaugh pay for half its arbitration costs,
including attorney’s fees.
The parties once again cross-appeal. Drexel demands half its $5.5 million total payments
to Syngenta, while Albaugh seeks reversal of the $841,726 awarded in the second bench trial.
II.
We must determine whether the trial court correctly interpreted two warring provisions
from Drexel and Albaugh’s 1998 contract: (1) “Albaugh shall pay fifty percent (50%) of the
costs of all future payments that Drexel makes to Novartis in the future as data compensation in
order to maintain the Registration,” (the future-payment provision) and (2) “Albaugh may also
terminate this agreement at any time after final payment of the $750,000 called for [under the
contract]” (the termination provision).
-5-
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
Tennessee contract law governs our inquiry and requires us “to ascertain and give effect
to the intent of the parties.” Allstate Ins. Co. v. Watson, 195 S.W.3d 609, 611 (Tenn. 2006)
(citing Christenberry v. Tipton, 160 S.W.3d 487, 494 (Tenn. 2005)). Because we already
deemed the contract’s plain language ambiguous, Drexel I, 489 F. App’x at 67, we apply
“established rules of construction to determine the intent of the parties.” Allstate, 195 S.W.3d at
611 (citing Planters Gin Co. v. Fed. Compress & Warehouse Co., 78 S.W.3d 885, 890 (Tenn.
2002)). We review the trial court’s conclusions of law de novo and accept its findings of fact
unless they are clearly erroneous. Smith v. Jefferson Cty. Bd. of Sch. Comm’rs, 788 F.3d 580,
585–86 (6th Cir. 2015) (citation omitted).
A. Albaugh’s Arguments
Under Albaugh’s proposed interpretation, its liability to Drexel included only actual
payments made by Drexel to Syngenta before Albaugh terminated on September 29, 2006. By
paying half of Drexel’s $1.5 million pre-termination payment to Syngenta after the first bench
trial, Albaugh satisfied its sole contractual liability. Albaugh offers two arguments in favor of its
interpretation: (1) the trial court failed to construe the future-payment provision against Drexel,
the drafter, and (2) the court ignored the parties’ supplemental-distributor relationship.
1. Construe Against Drafter
Drexel drafted the future-payment provision, and it remained materially unchanged in
every draft the parties circulated. Albaugh therefore urges the court to construe the provision in
its favor, citing Tennessee contract cases construing ambiguous provisions against the
provisions’ drafters. See, e.g., Realty Shop, Inc. v. RR Westminster Holding, Inc., 7 S.W.3d 581,
598 (Tenn. Ct. App. 1999); Nat’l Garage Co. v. George H. McFadden & Bro., 542 S.W.2d 371,
374 (Tenn. Ct. App. 1975).
-6-
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
But Albaugh ignores the trial court’s finding that both the future-payment and
termination provisions were ambiguous, particularly when read together, and that Albaugh
drafted the termination provision. The court therefore construed each provision against its
drafter, refusing to extend the future-payment provision in perpetuity for Drexel or to favor the
termination provision over the future-payment provision for Albaugh.
As to the future-payment provision, in Drexel I, we noted that “[t]he language of the
[provision] could even be said to have no outer limit for when Albaugh’s payment obligations
end, if read strictly literally.” 489 F. App’x at 67. The trial court construed this open-ended
language against Drexel, its drafter, cutting off Albaugh’s obligation for future payments when it
left the atrazine market.3 And the court construed the termination provision against Albaugh.
Although the contract twice referenced “future” payments, Albaugh’s termination provision
never accounted for such payments. Accordingly, the court declined to elevate the termination
provision’s silence on future payments over the future-payment provision. This argument avails
neither Albaugh nor Drexel.
2. Supplemental Distributorship
Next, Albaugh argues that the trial court overlooked Drexel and Albaugh’s supplemental-
distributor relationship and its effect on the contract. But we agree with the trial court that the
supplemental distributorship provides no interpretive assistance. True, supplemental distributors
shoulder limited regulatory responsibilities under FIFRA—they need not pay data compensation
to the original data submitter, for example. That responsibility falls to the registrant, who
3
Although an early draft provided that Albaugh’s data-compensation obligation would
survive until December 31, 2005, whether or not the parties terminated, the final draft omitted
this provision. Albaugh claims that the deletion proves that Drexel knew how to (but did not)
provide for post-termination payments. This argument sidesteps our inquiry: Is Albaugh liable
for costs incurred before termination, but not paid until after termination?
-7-
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
typically prices data-compensation costs into the supplemental-distributor agreement. But
Albaugh contractually expanded its limited regulatory responsibilities through the future-
payment provision. As the trial court correctly noted, “the parties’ rights and obligations were
[therefore] governed by the terms of the Agreement,” not FIFRA’s supplemental-distributor
regulations. Albaugh fails to persuade us that the court erred in rejecting its proposed
interpretation.
B. Drexel’s Arguments
Drexel presses an alternate interpretation: Albaugh must pay half of every cost
obligation Drexel incurred before termination. Drexel incurred three such cost obligations—the
Appendix B studies, the 2004 DCI, and the 2005 DCI. Drexel therefore seeks half the $5.5
million it paid to Syngenta as of 2012 and asks us to interpret the contract accordingly. To
support its proposed interpretation, Drexel cites the FIFRA regulatory regime and Albaugh’s
reliance on its registration. Drexel also protests the court’s refusal to award as damages half of
Drexel’s costs and attorney’s fees for the arbitration with Syngenta.
1. FIFRA Regulatory Regime
Drexel claims the FIFRA regulatory regime renders its offers to pay Syngenta
“irrevocable” once made. Because those offers immediately triggered Drexel’s irrevocable
obligation to pay, the contract immediately imposed on Albaugh a duty to pay Drexel. In other
words, when Drexel offered to pay Syngenta, all payments resulting from Drexel’s offers
instantly and irreversibly became “future payments” for which Albaugh was liable under the
contract.
Drexel’s claim that offers to pay are irrevocable wilts under scrutiny. Drexel fails to cite
any FIFRA provision that supports this contention and for good reason. The FIFRA regulatory
-8-
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
regime largely cedes payment disputes to the private sector. Once the EPA secures proof that a
party has offered to pay, it leaves the parties alone to negotiate, and if necessary arbitrate, over
compensation. See 7 U.S.C. § 136a(c)(1)(F)(iii) (“Registration action by the Administrator shall
not be delayed pending the fixing of compensation.”). Indeed, Congress amended FIFRA to
relieve the EPA of data-compensation responsibilities. Thomas v. Union Carbide Agric. Prods.
Co., 473 U.S. 568, 573 (1985) (noting that FIFRA data compensation “do[es] not require active
government involvement” and “should be determined to the fullest extent practicable, within the
private sector” (quoting 123 Cong. Rec. 25710 (1977))). Whether Syngenta ever collects on
Drexel’s offer to pay depends wholly on Syngenta—if Syngenta chooses not to demand binding
arbitration, neither the EPA nor FIFRA regulations would step in.
Evidence at trial reinforced that the private sector, not FIFRA, dictates the outcome of an
offer to pay. For example, Albaugh’s expert testified that original data submitters like Syngenta
tend not to pursue claims for data compensation against companies that abandon their
registrations and exit the pesticide market. Drexel’s Vice President of Growth and Development
agreed. He admitted that companies sometimes make offers to pay, later abandon the underlying
registration, and pay no data-compensation costs arising from that offer to pay. He also testified
that the opposite can be true—companies that abandon their registrations after an offer to pay
sometimes pay data compensation to particularly zealous original data submitters. And
Albaugh’s in-house counsel testified that original data submitters have never pursued Albaugh
for costs after Albaugh cancelled registrations for other pesticides but had previously offered to
pay.
-9-
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
The FIFRA regulatory regime provides no support for Drexel’s contention that its offer to
pay immediately and irrevocably triggered either its or Albaugh’s duty to pay data compensation.
Mixed real-world experiences on the issue also undermine Drexel’s argument.
2. Albaugh’s Reliance
Drexel next contends that the court allowed Albaugh a free ride on its atrazine
registration, with Albaugh importing 6,029,742 gallons of atrazine during the contract period but
failing to pay its share of the regulatory costs incurred. Meanwhile, Drexel maintained the
registration despite three opportunities to let it lapse. If it had refused to offer to compensate
Syngenta for the Appendix B studies, 2004 DCI, or 2005 DCI, the EPA could have cancelled or
suspended Drexel’s atrazine registration, which would have halted Albaugh’s atrazine
importation and sales. See 7 U.S.C. §§ 136a(c)(1)(F)(iii) (instructing the EPA to cancel pesticide
registrations of applicants who refuse to offer to pay for the data cited in their registration
applications), 136a(c)(2)(B)(ii) (instructing the EPA to suspend pesticide registrations for
registrants who refuse to share DCI costs). In short, Drexel incurred costs under the contract for
Albaugh’s benefit, but received nothing from Albaugh for its trouble.
Albaugh unquestionably benefitted from and relied on Drexel’s registration during the
contract period. But Albaugh’s reliance supports the trial court’s interpretation, not Drexel’s.
Albaugh relied on Drexel to maintain the atrazine registration with the EPA as provided in the
contract. Drexel performed. In turn, the court held Albaugh to its duties under the contract—
half of Drexel’s “future payments” to Syngenta. The studies Syngenta was generating and
submitting to the EPA during the contract period represented Drexel’s “future payments” to
Syngenta. The trial court ordered Albaugh to cover half those costs. Albaugh’s reliance merits
no damages beyond what Drexel has already received.
- 10 -
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
3. Arbitration Costs and Attorney’s Fees
Finally, Drexel argues that the court erred in refusing to award Drexel attorney’s fees and
costs from the Syngenta arbitration as part of the “costs of all future payments” to Syngenta.
Drexel maintains that Albaugh’s $750,000 initial contract payment represented half of Drexel’s
total costs from the first arbitration with Novartis, attorney’s fees and costs alike. Because
Albaugh’s $750,000 initial contract payment included arbitration costs, Drexel presses, the
“costs of all future payments” must also include such costs. Further, Drexel notes that the
contract differentiates between the “payments” to Syngenta and the “costs” of those payments.
To give effect to all the contract terms, Drexel claims, Albaugh must pay Drexel’s arbitration
costs and attorney’s fees—the “costs” of the data-compensation “payments.”
Drexel fails to convince. To begin, as the court noted, Drexel never told Albaugh that its
$750,000 initial contract payment encompassed Drexel’s out-of-pocket costs for the first
Novartis arbitration, and Drexel may not unilaterally impose its understanding on Albaugh.
Next, Drexel first advanced its demand for fees and costs in the second bench trial. Indeed, its
pre-suit demand letter to Albaugh asked for “fifty percent of any future payments Drexel makes
to Syngenta (Novartis’ successor) to maintain the atrazine registrations,” omitting costs and fees.
Finally, Tennessee contract law demands more specificity to award attorney’s fees. “The only
way parties to a contract have been able to specifically and expressly create a right to recover
attorney fees has been by incorporating the phrase ‘including reasonable attorney fees’ or some
other similar, yet equally specific, contractual language.” Cracker Barrel Old Country Store, Inc.
v. Epperson, 284 S.W.3d 303, 310 (Tenn. 2009) (finding that a contract provision for “expenses”
lacked the specificity necessary to award attorney’s fees). Drexel offers no reason to question
the court’s refusal to award fees and costs.
- 11 -
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
C. Damages
The parties having failed to undermine the trial court’s contract interpretation, we turn to
the damages calculation. Though the court purported to calculate damages based on the costs of
studies Syngenta generated or submitted to the EPA before the September 2006 termination, it
eventually included all 2006 studies. It justified its award in two ways. First, given that Albaugh
terminated well into the latter half of 2006, the court found “that it is more likely than not that
the studies dated 2006 were generated or submitted by Syngenta prior to Albaugh’s termination.”
Second, the court found that Albaugh relied on Drexel’s registration to sell its atrazine inventory
for all of 2006 and into 2007.
We review awards of money damages under an abuse-of-discretion standard. Hance v.
Norfolk S. Ry. Co., 571 F.3d 511, 517 (6th Cir. 2009) (citing United States v. City of Warren,
138 F.3d 1083, 1094–97 (6th Cir. 1998)). “A court abuses its discretion when it relies on clearly
erroneous findings of fact, or when it improperly applies the law or uses an erroneous legal
standard.” Id. (quoting City of Warren, 138 F.3d at 1096). In Tennessee, “[d]amages for breach
of contract are permissible even when the plaintiff is unable to prove the exact amount of those
damages.” BancorpSouth Bank, Inc. v. Hatchel, 223 S.W.3d 223, 230 (Tenn. Ct. App. 2006)
(citing Provident Life & Accident Ins. Co. v. Globe Indem. Co., 3 S.W.2d 1057, 1058 (Tenn.
1928)). The party seeking damages must provide sufficient evidence for the trier of fact, “using
its discretion, to make a fair and reasonable assessment of damages . . . within a reasonable
degree of certainty.” Id. (internal citations and quotation marks omitted).
Citing Syngenta’s imprecise dating, Albaugh argues that Drexel failed to show that any
of Syngenta’s 2006 studies were generated or submitted to the EPA before Albaugh’s September
29 termination. Moreover, Albaugh claims its post-termination atrazine sales prove nothing—it
- 12 -
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
relied on an EPA policy allowing supplemental distributors to sell inventory “up to 18 months
after termination of the [supplemental-distributor] Agreement.” Because Drexel failed to carry
its burden of proof on damages, Albaugh asks us to subtract the costs of all 2006 studies
($204,869.18) from the damages award.
Albaugh misconstrues the EPA policy. That policy allows “a supplemental distributor
18 months to sell and distribute existing stocks after the basic registrant terminates the
supplemental registration.” In other words, the policy protects distributors from unexpected
registration cancellations. The policy is silent on the cancellation of the supplemental
distributorship by the supplemental distributor. Nothing in the record indicates that Drexel ever
terminated the atrazine registration, so Albaugh was, in fact, relying on Drexel’s registration in
selling out its inventory.
The court’s observation that Syngenta likely generated or submitted the 2006 studies
before September plus Albaugh’s post-termination reliance on the registration situate the
damages award within a reasonable range of damages. The court therefore did not abuse its
discretion in awarding damages for all 2006 studies.
D. Evidentiary Ruling
The court excluded on relevance grounds a handwritten note by Albaugh’s president,
stating “1/2 of Drexel out of pocket + 50% forward,” finding that no witness could establish
when or why the president wrote the note. The note therefore had no tendency to make any
relevant fact more probable.
Drexel protests this ruling but fails to show that the trial court abused its discretion in
excluding the note and that the court’s error affected Drexel’s substantial rights. See United
States v. Al-Din, 631 F. App’x 313, 323 (6th Cir. 2015) (citations omitted). The note duplicates
- 13 -
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
evidence already in the record and sheds no light on the contract’s meaning, rendering its
exclusion irrelevant.
III.
Neither party convinces us that the court reversibly erred. We accordingly AFFIRM.
- 14 -
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
BERNICE BOUIE DONALD, concurring in part and dissenting in part. While I
agree with most of the majority’s analysis, I would conclude that Albaugh is liable for half of the
cost of all of the studies in Appendix B as well as those related to the two DCIs, as opposed to
only those studies Syngenta submitted or generated prior to the termination of the Agreement.
Significantly, the language of the Agreement required Drexel to “maintain” its atrazine
follow-on registration. In 2003 when the EPA cancelled all atrazine registrations, the only way
that Drexel could have reregistered (and therefore “maintain[ed]” its atrazine registration per the
Agreement) was to sign a Memorandum of Agreement (“MOA”) with the EPA and other
atrazine registrants. The MOA required follow-on registrants to rely on Syngenta’s Appendix B
data. It also required follow-on registrants to agree to pay for any future DCIs, which, we now
know, constitutes the 2004 and 2005 DCIs.
The majority reasons that “[t]he studies Syngenta was generating and submitting to the
EPA during the contract period represented Drexel’s ‘future payments’ to Syngenta.” Maj. Op.
at 11. That is not quite true. When Drexel signed the MOA, those “future payments” were
definitively determined: the Appendix B studies as well as any DCIs. Further, per the
Agreement, Drexel and Albaugh were to split the costs of data compensation paid “in order to
maintain” the atrazine registration. As the majority explained, Drexel “performed” by ensuring
the continuation of the atrazine registration—namely, by obligating itself to pay for the
Appendix B studies and any future DCIs. See Maj. Op. at 11. Therefore, Drexel would be
deprived of the benefit of the bargain if Albaugh was not required to split the data compensation
costs incurred “in order to maintain” the atrazine registration while the Agreement was in force.
Perhaps if the EPA had not required Drexel to commit to paying for the DCIs under the
MOA, it would make sense to parse between the studies, as the majority does, and obligate
- 15 -
Case Nos. 14-6340/6363, Drexel Chem. Co. v. Albaugh, Inc.
Albaugh for only those studies that Syngenta generated or submitted to the EPA before it
terminated the Agreement. But that is not what happened. Instead, the EPA required atrazine
follow-on registrants to agree to pay for the DCIs in advance, and the Agreement calls for Drexel
and Albaugh to split those costs, as they were required “in order to maintain” the registration.
Therefore, contrary to the majority, I would require Drexel and Albaugh to split the costs of all
the studies in Appendix B and related to the two DCIs.
- 16 -