11-1446 Roche Diagnostics Corp. v. Medical Automation Systems, Inc.

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Remedies
Preliminary injunctions; time value of money

Where the parties to a contract waived the protection of an injunction bond, and the party who obtained a preliminary injunction agrees to pay interest on the value of the transaction enjoined, a bond is not required.
“The reason why neither the district court nor this court required a bond is that the contract between Roche and MAS not only assigns to a court (rather than an arbitrator) the question whether to block a sale pending arbitration, but also waives both parties’ entitlement to an injunction bond. By waiving the protection of an injunction bond, MAS surrendered any right to compensation should an injunction cause the deal to fall through. But judges still should take account of the risk that their deeds creates. We could, for example, set a time limit on the injunction, though this would allocate to Roche the risk that relief would expire, and the sale close, before the arbitrator is done.”

“We asked Roche’s counsel at oral argument whether Roche is willing to compensate MAS’s investors for the time value of money. Alere has offered $43 million for all shares of MAS. That price, paid at a closing in January 2011, is worth more than the same price paid (by either Roche or Alere) at a closing in January 2012. Counsel for Roche replied that the equity investors in MAS would be fully compensated for any loss they incur because of delay in receiving the purchase price, and that if Roche eventually acquires the shares it will pay the investors at least $43 million plus interest from the time the MAS–Alere deal originally was scheduled to close. We have taken that promise into account in deciding that the hold-separate order should last until the arbitrator is done—or decides that equitable relief is no longer necessary, if that is earlier. Roche has made a financial commitment to MAS’s investors and must keep its word.”

Affirmed.

11-1446 Roche Diagnostics Corp. v. Medical Automation Systems, Inc.

Appeal from the United States District Court for the Southern District of Indiana, Barker, J., Easterbrook, J.

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