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Banas v. Volcano Corp.

United States District Court, N.D. California

March 31, 2014

CHRISTOPHER E BANAS, et al., Plaintiffs,
v.
VOLCANO CORPORATION, et al., Defendants

Page 942

[Copyrighted Material Omitted]

Page 943

Re: Dkt. Nos. 64-3, 65, 88.

For Christopher E Banas, CB Tech Ventures, LLC, Paul Castella, FLP, Ian Clements, Alexander Parker Wood, Silbiano V Gonzales, Luis F Angel, M.D., Scientific Health Development, LTD, John E Campion, Charles Martin Wender, Steven R Bailey, M.D., Scout Healthcare Fund, LP, Frank Bagatta, James F Traa, Alan H Dean, Philip J Romano, Samson Investments, LP, Stuart Fitts, Roy L White, Joe Piercy, Dan Sims, Joe M Miller, Hugo Londero, M.D., Whitney E Solcher, Former Shareholders of CardioSpectra, Inc., Plaintiffs: Matthew Joseph Zevin, LEAD ATTORNEY, Stanley Law Group, San Diego, CA; Marc R Stanley, STANLEY LAW GROUP, Dallas, TX; Martin Darren Woodward, Scott Andrew Kitner, PRO HAC VICE, STANLEY LAW GROUP, Dallas, TX.

For Kelly Castella, FLP, Plaintiff: Matthew Joseph Zevin, LEAD ATTORNEY, Stanley Law Group, San Diego, CA; Marc R Stanley, STANLEY LAW GROUP, Dallas, TX; Scott Andrew Kitner, PRO HAC VICE, STANLEY LAW GROUP, Dallas, TX.

For Volcano Corporation, a Delaware corporation, Volcano Corporation and Does 1-10, Defendants: Michael Graham Rhodes, LEAD ATTORNEY, Cooley LLP, San Francisco, CA; Amanda Alison Main, Cooley LLP, Palo Alto, CA United Sta; Mark Frederick Lambert, Ritesh Kumar Srivastava, Cooley LLP, Palo Alto, CA.

Page 944

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT; DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT

WILLIAM H. ORRICK, United States District Judge.

INTRODUCTION

Defendant Volcano Corporation merged with CardioSpectra, Inc. in 2007 in exchange for $25 million in cash to CardioSpectra's shareholders, the plaintiffs in this action, and four additional payments if certain milestones were achieved. Volcano achieved the first milestone and made the first payment of $11 million. Milestone 2 obligated Volcano to pay the plaintiffs $10 million if Volcano achieved FDA approval of a medical device system developed from CardioSpectra's assets. Milestones 3 and 4 obligated Volcano to pay the plaintiffs $17 million if Volcano achieved sales of $25 million of certain products. Volcano did not make those payments. The plaintiffs allege that Volcano breached its contractual obligation to use good faith and reasonable commercial efforts to achieve Milestone 2. The plaintiffs also allege that Milestones 3 and 4 were satisfied by sales of products developed by Volcano's subsidiary, Axsun Technologies.

I must decide on the parties' cross-motions for summary judgment whether there is a material factual dispute that would give plaintiffs the right to be paid on the second, third and fourth milestones. Because the plaintiffs have failed to present evidence on which a jury could reasonably conclude either that Volcano did not use good faith or reasonable commercial efforts to achieve Milestone 2, and because the definition of " OCT Products" in the Merger Agreement precludes plaintiffs from counting sales of the Axsun products towards Milestones 3 and 4, I GRANT Volcano's motion for summary judgment and DENY the plaintiffs' motion for summary judgment. I also DENY plaintiffs' motion for sanctions.

BACKGROUND

I. VOLCANO'S ACQUISITION OF ...


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