AbbVie Inc. v. Quincy Bioscience Holding Company, Inc.

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
ABBVIE, INC.,
Petitioner,
v.
QUINCY BIOSCIENCE HOLDING CO., INC.,
Respondent.
OPINION and ORDER
24-cv-679-jdp
Petitioner 	AbbVie, 	Inc., 	a 	biopharmaceutical 	company, 	agreed 	to 	manufacture
apoaequorin, the main ingredient in the dietary supplement Prevagen, for respondent Quincy
Bioscience Holding Co., Inc., which sells Prevagen. In exchange, Quincy agreed to purchase a
set amount of apoaequorin from AbbVie each year. AbbVie and Quincy’s business relationship
soured after Quincy stopped buying apoaequorin from AbbVie and purported to terminate
their agreement. An arbitration panel concluded that Quincy wrongfully terminated the
agreement and awarded AbbVie about $125 million in damages, plus fees and expenses.
AbbVie moves to confirm and enforce the arbitration award, Dkt. 1; Quincy moves to
vacate the award, Dkt. 9. 1 Quincy contends that the arbitration award violates public policy
and the parties’ agreement. The court will grant AbbVie’s motion to confirm the arbitration
award because Quincy hasn’t shown that unusual circumstances warrant vacating the award.
1 Quincy asks for oral argument on its motion, but the parties have adequately briefed the
issues, making oral argument unnecessary.
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BACKGROUND
This case involves two provisions in the parties’ agreement: (1) the minimum purchase
obligation provision, and (2) the limitation of liability provision. The minimum purchase
obligation provision requires Quincy to purchase at least 2,000 kgA of apoaequorin annually.
Dkt. 2, Ex. 1, art. I. If Quincy purchases less than 2,000 kgA of apoaequorin in a given year, it
must pay AbbVie for the remainder. Dkt. 2, Ex. 1, § 3.8. The limitation of liability provision
makes the breaching party liable for direct damages caused by the breach; however, the
breaching party is not liable for other types of damages, including lost profits. Id. § 10.8.
The term “direct damages” is not defined in the agreement.
ANALYSIS
The Federal Arbitration Act generally requires courts to confirm arbitration awards.
9 U.S.C. §§ 9–11. Courts may vacate arbitration awards only in “very unusual circumstances,”
such as when an arbitrator exceeds her powers or when the award violates public policy.
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942 (1995); see Zimmer Biomet Holdings,
Inc. v. Insall, 108 F.4th 512, 515–16 (7th Cir. 2024). As a result, arbitration awards are largely
immune from judicial scrutiny. Cont’l Cas. Co. v. Certain Underwriters at Lloyds of London,
10 F.4th 814, 816 (7th Cir. 2021). Quincy contends that the court must vacate the arbitration
award for two reasons: (1) it violates public policy; and (2) it violates the limitation of liability
provision in the parties’ agreement.
A. Public policy
Quincy argues that the arbitration award violates public policy because it is based on
the agreement’s minimum purchase obligation provision, which Quincy says is a penalty clause.
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Dkt. 10, at 10–15. Courts must not enforce arbitration awards that are contrary to well-defined
public policy, as established by laws and legal precedents. W.R. Grace & Co. v. Loc. Union 759,
Int’l Union of the United Rubber, Cork, Linoleum & Plastic Workers of Am., 461 U.S. 757,
766 (1983). Clauses awarding an unreasonably large amount of liquidated damages violate
public policy; they are unenforceable because they secure performance of contracts by
punishing parties for breaching them. See Smart Oil, LLC v. DW Mazel, LLC, 970 F.3d 856,
863 (7th Cir. 2020); River E. Plaza, LLC v. Variable Annuity Life Ins. Co., 498 F.3d 718, 722 (7th
Cir. 2007); see also Restatement (Second) of Contracts § 356 (A.L.I. 1981).
The problem with Quincy’s argument is that one must interpret the minimum purchase
obligation provision to determine whether it is a penalty clause. See Lake River Corp. v.
Carborundum Co., 769 F.2d 1284, 1290 (7th Cir. 1985); Checkers Eight Ltd. P’ship v. Hawkins,
241 F.3d 558, 561 (7th Cir. 2001). When parties choose to resolve contractual disputes in
arbitration, they elect to have arbitrators rather than courts decide the meaning of contractual
language. Quality Custom Distrib. Servs. LLC v. Int’l Bhd. of Teamsters, Loc. 710, 131 F.4th 597,
599 (7th Cir. 2025); Hill v. Norfolk & W. Ry. Co., 814 F.2d 1192, 1194–95 (7th Cir. 1987).
Courts are bound by how the arbitrators interpret the contractual language. Zimmer Biomet
Holdings, Inc., 108 F.4th at 517.
In this case, the arbitration panel implicitly rejected the argument Quincy makes here.
During arbitration, Quincy argued that the minimum purchase obligation provision was an
unenforceable penalty clause:
AbbVie’s damages claim is premised on unenforceable liquidated
damages. 	“Unreasonably 	large 	liquidated 	damages 	[are]
unenforceable 	on 	grounds 	of 	public 	policy 	as 	a 	penalty.”
Section 3.8 	of 	the 	[agreement] 	is 	exactly 	this 	type 	of
unenforceable damages clause.
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Dkt. 11, Ex. 8, at 10 (cleaned up). But the arbitration panel applied the minimum purchase
obligation provision to determine AbbVie’s damages. Dkt. 1, Ex. 6, at 2. In doing so, the
arbitration panel tacitly concluded that the provision was a permissible liquidated-damages
clause, not an unenforceable penalty clause. So construed, the agreement’s minimum purchase
obligation provision doesn’t violate public policy. Quincy’s argument fails.
B. Limitation of liability
Quincy argues that the arbitration award violates the parties’ agreement because it
requires Quincy to pay for AbbVie’s lost profits, which the agreement’s limitation of liability
provision explicitly prohibits. Dkt. 10, at 15–17. But Quincy forfeited this argument by failing
to raise it during the arbitration proceedings. 2 Quincy resists this conclusion for two reasons.
First, Quincy contends that it raised its limitation of liability argument in the brief it
filed after the arbitration hearing. Here is the pertinent part of that brief:
Alternatively, if AbbVie seeks lost profits, AbbVie’s analysis is
speculative and cannot form the basis for damages. . . . Mr. Rule
was unable to explain the impact profit had, if any, on his
damages. . . . AbbVie’s choice to obscure any ability for Quincy
or the panel to evaluate AbbVie’s damages claim is fatal, as it is
AbbVie’s 	burden 	to 	present 	evidence 	which 	establishes 	a
reasonable basis for computing them.
Dkt. 11, Ex. 8, at 10. Quincy’s post-hearing brief put the validity of AbbVie’s damages claim
into question by raising concerns about the reliability of AbbVie’s evidence. But that’s not the
argument that Quincy seeks to make here. A party can’t raise some validity issues before the
arbitration panel and save others for the district court. See Nat’l Wrecking Co. v. Int’l Bhd. of
2 AbbVie contends that Quincy waived this argument. Dkt. 22, at 18. But the court understands
AbbVie to be contending that Quincy inadvertently failed to raise its limitation of liability
argument during arbitration, which would mean that Quincy forfeited the argument. United
States v. Flores, 929 F.3d 443, 447 (7th Cir. 2019).
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Teamsters, Loc. 731, 990 F.2d 957, 960 (7th Cir. 1993). To avoid forfeiture, a party must give
an arbitration panel a meaningful opportunity to consider all the issues. See Lippert Tile Co., Inc.
v. Int’l Union of Bricklayers & Allied Craftsmen, Dist. Council of Wis. & Its Loc. 5, 724 F.3d 939,
944–46 (7th Cir. 2013). Quincy’s post-hearing brief didn’t give the arbitration panel a
meaningful opportunity to consider its contract interpretation argument: the brief neither
alerted the arbitration panel to the limitation of liability provision, nor explained how that
provision might impact AbbVie’s damages claim.
Second, Quincy contends that it raised its limitation of liability argument in the
arbitration proceedings because its counsel asked AbbVie’s expert whether his analysis
accounted for AbbVie’s lost profits, see, e.g., Dkt. 11, Ex. 5, at 22, and the parties’ agreement
was part of the evidence before the arbitration panel. See Dkt. 30, at 11–12. Basically, Quincy
is arguing that the arbitration panel had all the information it needed to conclude that the
limitation of liability provision barred AbbVie from seeking lost profits as damages, so the court
should conclude that Quincy properly preserved its argument.
But the court of appeals rejected a similar argument in Ganton Technologies, Inc. v.
International Union, United Automobile, Aerospace & Agricultural Implement Workers of America,
358 F.3d 459 (7th Cir. 2004). The plaintiff in Ganton Technologies, Inc., a company that owned
machining and die casting facilities, wanted to present a contract interpretation argument
during the enforcement proceeding in the district court, but the district court held that the
company had forfeited the argument by failing to present it to the arbitrator. See Ganton Techs.,
Inc., 358 F.3d at 462. On appeal, the company contended that it preserved its contract
interpretation argument because it presented the information underlying the argument during
the arbitration proceeding; specifically, the company gave the arbitrator a copy of the collective
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bargaining agreement at issue. See id. The Seventh Circuit rejected the company’s contention
and held that merely presenting information isn’t sufficient to avoid forfeiture; instead, a party
must present its arguments to the arbitrator by explaining why the presented information leads
to the outcome sought by the party. See id. at 463.
The same result follows here. It doesn’t matter whether Quincy elicited testimony from
AbbVie’s expert that AbbVie’s damages claim might include lost profits. Nor does it matter
that the arbitration panel might have found the limitation of liability provision by reading the
parties’ agreement. Both are bits of information, not a full-fledged argument. To preserve its
argument, Quincy needed to explain why the arbitration panel should reject AbbVie’s damages
claim based on the presented information. But Quincy didn’t build a logical bridge between
the information that it presented and the conclusion that it wanted the arbitration panel to
reach, namely, that the limitation of liability provision precluded AbbVie from recovering its
requested damages because they included lost profits. Quincy didn’t present its argument to
the arbitration panel, so it has forfeited the argument here.
Even if Quincy didn’t forfeit its argument and adequately presented it to the arbitration
panel, the argument would nevertheless fail because the arbitration panel applied the parties’
agreement to determine AbbVie’s damages, and the court is bound by the arbitration panel’s
interpretation of the agreement. See E. Assoc. Coal Corp. v. United Mine Workers of Am., Dist. 17,
531 U.S. 57, 62 (2000). Specifically, the panel applied the agreement’s minimum purchase
obligation provision to determine the damages award:
Under Section 3.8 of the Master Agreement, Quincy is obligated
to pay AbbVie $187,100,522 in minimum purchase obligations[.]
Dkt. 1, Ex. 6, at 2. The arbitration panel ultimately awarded AbbVie damages of $124,476,095.
Id. at 3. The arbitration panel reached this figure by adding the lower end of the range of
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AbbVie’s “direct damages after accounting for costs it may be able to avoid and capacity it may
be able to replace by finding one or more new customers” ($119,659,095) to the cost of the
lots of apoaequorin that Quincy did not pay for ($4,817,000). Id. at 2–3. The panel also
awarded AbbVie fees and expenses of $2,054,253.44. In total, the panel awarded AbbVie
$126,530,348.44. Id. at 3–4. To reach this conclusion, the arbitration panel implicitly rejected
Quincy’s argument that AbbVie’s damages claim included lost profits. Stated another way, the
arbitration panel tacitly concluded that the term “direct damages” as used in the parties’
agreement encompassed all the damages AbbVie sought. The court will not disturb the
arbitration panel’s decision.
One final point. AbbVie asks the court to schedule a status conference, Dkt. 40, but
given the court’s decision, a status conference is unnecessary. The court will deny the motion.
ORDER
IT IS ORDERED that:
1. 	Petitioner AbbVie Inc.’s motion to confirm arbitration award, Dkt. 1, is GRANTED.
2. 	Respondent Quincy Bioscience Holding Company, Inc.’s motion to vacate, Dkt. 9,
is DENIED.
3. 	AbbVie’s motion for status conference, Dkt. 40, is DENIED as moot.
4. 	The clerk of court is directed to enter judgment in favor of AbbVie and close this
case.
Entered March 26, 2026.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge
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