Minor (Procedural) Updates: Remicade/Simponi Arbitration

I keep meaning to drop this in -- and I keep running out of time (or more-often actually, in my advancing age, forgetting it, altogether). So, it is a few days stale, now -- but last week, Johnson & Johnson filed its third quarter Form 10-Q with the SEC. And in it, at page 37, we learn that (as I had inferred, during the last quarter) the individual arbitrators have been agreed to, and are seated. So, it is now fair to infer that a "L3 Preliminary Hearing" on the matter is about to occur, or has already occured, and a truncated form of discovery, as contemplated by the rules of the American Arbitration Association, is now underway. Here is the actual quote, from J&J's latest Form 10-Q:

. . . .The arbitrators have been selected and the matter will be proceeding to arbitration. . . .

Now, here is the text of L-3, which governs arbitrations of this size, and scope:

. . . .L-3. Preliminary Hearing

As promptly as practicable after the selection of the arbitrator(s), a preliminary hearing shall be held among the parties and/or their attorneys or other representatives and the arbitrator(s). Unless the parties agree otherwise, the preliminary hearing will be conducted by telephone conference call rather than in person. At the preliminary hearing the matters to be considered shall include, without limitation:

(a) service of a detailed statement of claims, damages and defenses, a statement of the issues asserted by each party and positions with respect thereto, and any legal authorities the parties may wish to bring to the attention of the arbitrator(s);


(b) stipulations to uncontested facts;

(c) the extent to which discovery shall be conducted;

(d) exchange and premarking of those documents which each party believes may be offered at the hearing;

(e) the identification and availability of witnesses, including experts, and such matters with respect to witnesses including their biographies and expected testimony as may be appropriate;

(f) whether, and the extent to which, any sworn statements and/or depositions may be introduced;

(g) the extent to which hearings will proceed on consecutive days;

(h) whether a stenographic or other official record of the proceedings shall be maintained;

(i) the possibility of utilizing mediation or other non-adjudicative methods of dispute resolution; and

(j) the procedure for the issuance of subpoenas.

By agreement of the parties and/or order of the arbitrator(s), the pre-hearing activities and the hearing procedures that will govern the arbitration will be memorialized in a Scheduling and Procedure Order. . . .

So -- both sides ought to be moving quickly toward the exchange of the few documents that matter (which should only be a few, that the other side doesn't already possess), then it really becomes a case for the arbitrators -- largely to decide what the ambiguous language in Section 8.2(c) means.

As I've suggested in the past, if the arbitrators think the language ambiguous, or ill-defined, there are two prominent approaches: (1) seek evidence from experts in the area, as to what the words "change of Control" ordinarily mean, or (2) construe the ambiguities (whatever those might be) against the drafter. We are told that Centocor drafted this agreement, but it also contains a clause largely negating this second approach (Section 12.8, when read together with Section 12.7).

So, it will likely return to the first question -- the question of whether the arbitrators will take expert witness testimony, as to what the phrase means, in the context of Section 8.2(c).

Pop the popcorn, folks, and grab an aisle seat. Show's about to start.