Buddy: Sidley's nets will be cast well beyond Aaron's toss. I don't quarrel with his assessment that willful malfeasance is difficult to prove compared to gross negligence or that he has accurately referenced section 9.3 of the Master Agreement between CYDY and Amarex. So I concur that proof by a preponderance of the evidence (more likely than not) that Amarex employees were grossly negligent in submitting the HIV BLA will allow CYDY to recover compensatory damages for lost profits if causation can also be established. In this setting, causation would likely require evidence demonstrating that a competently submitted application would more likely than not have been approved by the FDA and that the subsequent marketing of LL would more likely than not have generated profits within a given range to a reasonable degree of economic certainty.

Accomplishing all of the above would clearly be a tall task for Sidley. Success, however, would likely result in a jury verdict for hundreds of millions of dollars, and if the preponderance of the evidence also showed that NSF had exerted sufficient control over the submission of the BLA or that it had agreed to indemnify Amarex's creditors, NSF would be jointly liable for those damages.

Notwithstanding, however, the worthiness of pursuing the gross negligence scenario, I would expect Sidley to laser focus on the potential to prove willful malfeasance. If the evidence supported a jury finding of willful malfeasance that would bring punitive damages into play in addition to the potentially heavy compensatory damages referenced above.

As best as I've been able to determine, based on a brief search of Maryland law re punitive damages: Amarex, and possibly NSF if the control factor were to be met, could be found liable for punitive damages to punish egregiously bad behavior and to deter others from contemplating similar behavior if the jury were to find by clear and convincing evidence that defendant(s) acted with actual malice (a legal synonym for willful malfeasance). The awarding of compensatory damages (with the daunting causation element) would be a prerequisite to punitive damages, and the amount of the punitive damages would have to be proportionate to the defendant(s) ability to pay (net worth). Accordingly, only NSF would likely be a candidate for punitive damages since the compensatory damages alone would likely sink Amarex.

I believe that the scenario laid out above is plausible, but since I have no way of knowing what evidence Sidley will find as it pursues the accounting, my scenario should be regarded as highly speculative. It would require the discovery of damning evidence, and I have no idea if such evidence exists, let alone that Sidley will be able to find it. But I have little doubt that this is the type of evidence that Sidley will be seeking.

A final note: a successful outcome to a jury trial, followed by post trial motions, and the subsequent appeal would take many years. If Sidley were to find evidence of actual malice and the requisite control by NSF, the likely result would be a pre suit or pre trial settlement. And given the financial exposure to NSF if damning evidence and the control factor were. to be in play, Sidley would have enormous leverage during those negotiations. I think we'd all be quite happy with the result.