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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: September 18, 2016

Use of Unjustly Received Information Can be Basis for Unjust Enrichment Claim

On September 12, 2016, Justice Ostrager of the New York County Commercial Division issued a decision in Xaleron Pharmaceuticals, Inc. v. Actavis, Inc., 2016 NY Slip Op. 31708(U), refusing to dismiss an unjust enrichment claim based on the misappropriation of a business strategy, explaining:

To state a claim for unjust enrichment, a plaintiff must allege that (1) the defendant was enriched, (2) at plaintiff’s expense, and (3) that it is against equity and good conscience to permit the defendant to retain what is sought to be recovered. Further, a plaintiff cannot succeed on an unjust enrichment claim unless it has a sufficiently close relationship with the other party that could have caused reliance or inducement.

The basis of a claim for unjust enrichment is that the defendant has obtained a benefit which in equity and good conscience should be paid to the plaintiff.

The plaintiffs allegations that the defendants were unjustly enriched state a viable claim at the pleading stage. The plaintiff has alleged that, by reason of the plaintiff’s relationship with Meury, a senior executive at Allergan, the defendants acquired knowledge of the Strategy, which the defendants allegedly valued at $75 million. Although it is presently unknown whether a transaction between the plaintiff and Sanders will come to fruition, the plaintiff has made sufficient factual allegations to sustain a claim for unjust enrichment based on the use of unjustly received information that creates an unjust benefit.

(Internal quotations and citations omitted).

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