Law360 (April 9, 2021, 4:28 PM EDT) -- The Federal Trade Commission urged a D.C. federal judge not to move its challenge to Illumina's planned $8 billion merger with Grail Inc., planned as a remote hearing before the D.C. district court, to California where in-person hearings are permitted, saying the move would trigger "undeniable risk" from COVID-19.
San Diego-based Illumina Inc. wants the district court in Washington to transfer the case, in which the FTC is seeking a preliminary injunction to block its acquisition of Grail, because the biotech firm says the suit has no direct ties to D.C.
Illumina argues the Golden State is a more fitting venue because its headquarters are in San Diego, and Grail, a cancer detection firm that Illumina founded, is based in Menlo Park, California.
In its April 2 motion to transfer the case, Illumina said an in-person hearing with live witnesses is preferable "because it enhances the ability of the [the court] to make credibility determinations that will be vital in this case."
But the FTC said in April 8 court papers that the D.C. court's remote hearings are better suited to the ongoing risk of coronavirus infection, and also reduce travel expenses. The agency argued that "even assuming that defendants are correct that there is some benefit to having witnesses testify in person, that benefit will only inure to Illumina's own San Diego-based employees."
"Defendants' preference for an in-person hearing is insufficient to tip the scales in favor of transfer and their claim that the Southern District of California is 'more convenient' is patently false," the FTC said.
Aside from the company's employees, "all other witnesses will be faced with the choice of whether to testify remotely or face potential exposure to the COVID-19 virus in order to testify in person. Facing that Faustian dilemma, many third-party witnesses will, understandably, be loath to risk their health and safety to testify live in the Southern District of California," the FTC said.
The FTC added that courts throughout the country have rejected the argument that in-person hearings are necessary for credibility determinations.
Given a recent surge of infections, there is also no guarantee that the California court will continue to have in-person proceedings, and even if it did, the companies' preferred forum "inconveniences nearly every witness and lawyer associated with this case," the filing says.
"The dichotomy of in-person and remote proceedings is relevant to this court's review, and the FTC submits it weighs significantly against transfer across virtually every factor that the court will consider," the agency said. "Moreover, even if this district decides to hold an in-person hearing, the facts of this case and the legal precedent decisively favors plaintiff."
The case centers on whether, as the FTC contends, the deal would stifle innovation in multi-cancer early detection tests that can screen for multiple types of cancer at very early stages through DNA sequencing. Illumina says the agreement would actually accelerate Grail's development of such tests. The agency launched an in-house administrative challenge to the merger on March 30, and the next day filed suit in D.C. federal court under its statutory power to also pursue a court-ordered injunction.
Illumina has countered the FTC's concerns by saying the deal will accelerate the development of a "revolutionary blood test" that can simultaneously detect more than 50 cancers, most of which currently have no approved screening test.
The parties agreed to a temporary restraining order to delay Illumina and Grail closing the transaction during the court case.
The FTC declined to comment Friday beyond the court filing.
An Illumina representative did not immediately respond to a request for comment.
The FTC is represented by its own Susan Musser.
Illumina is represented by Preston Burton and Veena Viswanatha of Buckley LLP and Christine A. Varney, Richard J. Stark, David R. Marriott, J. Wesley Earnhardt and Sharonmoyee Goswami of Cravath Swaine & Moore LLP.
Grail is represented by Michael G. Egge, Marguerite M. Sullivan, Roman Martinez, Anna M. Rathbun, Carla Weaver and Alfred C. Pfeiffer of Latham & Watkins LLP.
The district court case is FTC v. Illumina Inc. et al., case number 1:21-cv-00873, in the U.S. District Court for the District of Columbia. The FTC case is In the Matter of Illumina Inc. and Grail Inc., docket number 9401, before the Federal Trade Commission.
--Additional reporting by Matthew Perlman and Benjamin Horney. Editing by Alyssa Miller.
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