Law Street Media

True Diagnostics Accused of Breach of Contract, Business Interference

female lab technician doing research with a microscope in the lab. coronavirus

On Tuesday, a lawsuit was filed in the Southern District of California by Block Scientific Inc. The suit was brought against True Diagnostics Inc., who allegedly breached a contract they had with the plaintiff and intentionally interfered with their other business ventures.

Block Scientific is a company that supplies laboratory equipment to hospitals, organizations, and educational institutions around the world. True Diagnostics, a research, development, and manufacturing company that specializes in manufacturing advanced rapid in-vitro immunodiagnostic test systems, allegedly began offering a serology test that could identify COVID-19 antibodies called the QuikPac test. The plaintiff, who had been doing business with the defendant since 2016, reached out in March 2020 to inquire about these tests and discuss a potential purchase.

Throughout multiple conversations in March and April, the plaintiff stated that the defendant addressed any concerns they expressed about the product in regards to legality, availability, and effectiveness of the antibody tests. The defendant assured them that the tests would abide by all requirements set by the Food and Drug Administration (FDA) and that they would meet and even exceed the required 90% IgG PPA sensitivity and specificity, and that they had obtained all material licenses, authorizations, approvals, consents, or permits required by applicable laws to conduct their business. The defendant also allegedly sent product insert drafts that backed up these claims. 

Following this assurance from the defendant, the plaintiff then entered into contracts with multiple other companies agreeing to supply them with the QuikPac antibody tests that had been ordered from the defendant. Hopco and Meridian Bioscience both put in high volume purchase orders for the product that were worth millions of dollars to the plaintiff. The plaintiff asserted that the defendant had knowledge of these contracts given the fact that the parties had all had multiple calls and written correspondence with Hopco and Meridian regarding the parties commitments and expectations. Throughout these calls and emails, the defendant continued to assure that this was a legal product that could be delivered in large quantities.

In the weeks following these communications, the defendant allegedly missed and altered production timelines and failed to make deliveries when promised. This resulted in loss of customers by both Block and its two clients, who had made their own distribution arrangements based around the timeline and assurance of quality on the part of the defendant. The plaintiff says they suffered irreparable reputational harm due to their inability to timely supply the product as a result of the Suppliers’ failures.

In June, it allegedly came to light that the defendant had failed to submit the QuikPac test for emergency use authorization (EUA) as required by the FDA to legally market and sell the tests in the US. The defendant stated that a third-party supplier from china had been the ones who submitted the product for EUA, which went against the FDA’s requirement that the actual manufacturer must submit the test for EUA. It was also discovered that the product did not satisfy the minimum 90% IgG PPA sensitivity and specificity. Instead they reported 73%  sensitivity and specificity, contrary to previous claims.

After this discovery, both Hopco and Meridian canceled their orders with the plaintiff and demanded a full refund. The plaintiff honored these requests in a timely manner but claims that the defendant failed to do the same when they were asked, forcing the plaintiff to take legal action.

The plaintiff accused the defendant of breach of contract, intentional interference with contractual relations, intentional interference with prospective economic relations, and negligent interference with prospective economic relations. They are seeking compensatory, punitive, and exemplary damages from the defendant as a result.

The plaintiff is represented by Norton Rose Fulbright.

Exit mobile version