Johnson & Johnson (NYSE:JNJ) on Monday reportedly secured a partial legal victory after Delaware's highest court overturned a portion of a $1 billion damages award tied to its acquisition of surgical robotics company Auris Health.
In a unanimous ruling issued Monday, Reuters reported that the Delaware Supreme Court set aside part of a September 2024 judgment that had favored former Auris shareholders.
In 2019, Johnson & Johnson acquired Auris Health for approximately $3.4 billion in cash. Additional contingent payments of up to $2.35 billion, in the aggregate, may be payable upon reaching certain predetermined milestones.
What Happened
The lawsuit filed in 2024 claimed that Johnson & Johnson was struggling to develop its own surgical robot, Verb, despite significant investment.
With Verb behind schedule and surgical robotics strategically critical, Johnson & Johnson viewed Auris as a solution.
Auris agreed after securing Johnson & Johnson's commitment to apply commercially reasonable efforts consistent with a "priority medical device."
Following the acquisition, Johnson & Johnson failed to honor that commitment. Instead of supporting Auris' iPlatform's regulatory progress, Johnson & Johnson forced it into direct competition with Verb under "Project Manhattan." This halted regulatory momentum and diverted engineering resources. Although iPlatform ultimately outperformed Verb, Johnson & Johnson merged the two programs, effectively subordinating iPlatform to salvage its Verb investment.
Auris's former shareholders sued for breach of contract, breach of the implied covenant of good faith and fair dealing, and fraud.
In 2024, the court found that Johnson & Johnson breached its obligations by failing to prioritize iPlatform, undermining the regulatory milestones, and acting to avoid the earnout. Johnson & Johnson also breached the implied covenant by failing to support a revised regulatory pathway. Separately, Johnson & Johnson was found to have committed fraud by failing to disclose a regulatory investigation tied to a Monarch milestone it had represented as virtually guaranteed.
Damages, including interest, exceed $1 billion, compensating Auris's former shareholders for lost earnout payments.
Why It Matters
Reuters noted that Justice Abigail LeGrow rejected a key finding made by the Chancery Court. She ruled that the lower court erred in concluding Johnson & Johnson had an implied obligation to secure regulatory approval by the end of 2021 for an iPlatform product related to abdominal procedures.
The Supreme Court said the language of the merger agreement did not support that requirement.
Despite that reversal, the justices upheld most of the findings issued by Vice Chancellor Lori Will, leaving intact conclusions that Johnson & Johnson failed to meet other contractual obligations.
The case was remanded to Will to reassess damages in light of the ruling.
What's Next
Johnson & Johnson said it is reviewing its options following the decision.
The court's decision on Monday sends the case back to the Delaware Chancery Court for a recalculation of damages. As a result, the total award, including interest, could decline by a couple of hundred million dollars.
In December 2025, a Baltimore jury ordered Johnson & Johnson and its subsidiaries to pay over $1.5 billion to a woman who claimed that decades of exposure to asbestos in the company's talc-based products caused her peritoneal mesothelioma, a form of cancer.
JNJ Price Action: Johnson & Johnson shares were up 0.46% at $210.68 at the time of publication on Tuesday. The stock is approaching its 52-week high of $215.18, according to Benzinga Pro data.
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