October 2017: Resounding Victory Against Teva in Largest M&A Litigation in Latin American History
The firm represents Fernando and Leopoldo de Jesus Espinosa Abdala, two Mexican businessman who owned Representaciones e Investigaciones Médicas, S.A. de C.V. (“Rimsa”), a leading pharmaceutical company in Mexico. In 2015, the Espinosas sold Rimsa to Teva Pharmaceutical Industries Limited, one of the world’s largest pharmaceutical companies, for $2.3 billion. Teva sued the Espinosas in New York state court seeking rescission of the transaction, return of the entire purchase price and punitive damages. Teva alleged that the Espinosas defrauded it by failing to disclose that several of Rimsa’s products violated Mexican pharmaceutical regulations. This is the largest such case in Latin American history and one of the largest failed transaction litigations in U.S. history.
Quinn Emanuel has accomplished three major victories in the case to date:
First, after acquiring Rimsa, Teva filed a complaint against the Espinosas before the Mexican pharmaceutical regulator, accusing them of extensively violating Mexican regulators and consumers for years. From June 2016 to March 2017, the Mexican pharmaceutical regulator investigated these allegations in detail. In March 2017, the regulator cleared the Espinosas of any wrongdoing and refrained from taking any action against them.
Second, on May 2017, Teva sued the Espinosas and moved for a preliminary injunction in New York, seeking to freeze their assets worldwide, including the $2.3 billion purchase price. The court denied Teva’s motion, finding that Teva was not likely to succeed on the merits and that there was no evidence that the Espinosas had engaged in any conduct to dissipate their assets which would justify a freezing order.
Third, in late 2016, the Espinosas moved to dismiss Teva’s lawsuit. On August 2, 2017, the court dismissed Teva’s case almost in its entirety. Specifically, the court dismissed Teva’s fraud, rescission and punitive damages claims and allowed only a small breach of contract claim to proceed, on which, under the terms of the sale agreement, damages would be capped at $45 million. This remaining claim is worth less than 1% of Teva’s initial damages claim.