In re Anthem-Cigna Merger Litigation

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN RE ANTHEM-CIGNA ) Consolidated
MERGER LITIGATION ) C.A. No. 2017-0114-JTL

MEMORANDUM OPINION

Date Submitted: March 9, 2020
Date Decided: August 31, 2020

William M. Lafferty, Kevin M. Coen, D. McKinley Measley, Zi-Xiang Shen, Thomas P.
Will, Daniel T. Menken, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington,
Delaware; Glenn M. Kurtz, Claudine Columbres, Andrew W. Hammond, Gregory Starner,
Camille M. Shepherd, Vatsala Sahay, WHITE & CASE LLP, New York, New York;
Heather M. Burke, WHITE & CASE LLP, Palo Alto, California; Dana E. Foster, WHITE
& CASE LLP, Washington, D.C.; Attorneys for Anthem, Inc.

David E. Ross, Garrett B. Moritz, S. Michael Sirkin, Adam D. Gold, Benjamin Z.
Grossberg, Anne M. Steadman, ROSS ARONSTAM & MORITZ LLP, Wilmington,
Delaware; Stephen R. DiPrima, William Savitt, Graham W. Meli, Adam M. Gogolak,
Lauren M. Kofke, S. Christopher Szczerban, Steven P. Winter, Claire E. Addis, Bita Assad,
Daniel H. Rosenblum, Jacob Miller, Jeohn Salone Favors, WACHTELL, LIPTON,
ROSEN & KATZ, New York, NY; Attorneys for Cigna Corporation.

LASTER, V.C.
 TABLE OF CONTENTS
I. INTRODUCTION ...................................................................................................... 1
II. FACTUAL BACKGROUND .................................................................................... 8
A. The Parties .............................................................................................................. 14
B. Merger Talks In 2012 ............................................................................................. 17
C. Merger Talks In 2014 ............................................................................................. 19
D. The Path To The Merger Agreement ..................................................................... 24
1. The Non-Public Negotiations ...................................................................... 27
2. Anthem’s Bear Hug Letter .......................................................................... 30
3. The Management Meetings ......................................................................... 32
4. The Agreement In Principle ........................................................................ 36
5. The Struggle Over Cordani’s Role As COO ............................................... 37
6. The Parties’ Understandings Regarding The Blues Rules .......................... 40
E. The Merger Agreement .......................................................................................... 41
F. The Need For Stockholder And Regulatory Approval ........................................... 44
1. Stockholder Approval.................................................................................. 44
2. Regulatory Approval ................................................................................... 45
G. The Integration Planning Process And The L2/L3 Selection Dispute ................... 53
1. The First Months Of Integration Planning .................................................. 54
2. The L2/L3 Selection Dispute ...................................................................... 56
3. The Dispute Letters ..................................................................................... 58
4. The Meeting On January 11, 2016 .............................................................. 61
5. The Cigna ELT’s Response ......................................................................... 63
6. Preparations For The February 16 Meeting ................................................ 65
7. The February 16 Meeting ............................................................................ 67
8. Cigna Escalates Further. .............................................................................. 68
9. The De-Scoping Of The Integration Planning Process ............................... 74
10. The Status Of The Regulatory Approval Process ....................................... 75
H. The Impasses Of March And April ........................................................................ 77
1. Swedish Pushes Forward. ............................................................................ 77

1
 2. The Continued Impasse Over Integration Planning .................................... 78
3. The Cigna Board’s March 31 Meeting ........................................................ 81
4. The Anthem Board Unsuccessfully Pursues Détente. ................................. 84
5. Cigna Changes Its Disclosure. .................................................................... 87
I. The Second Stage Of DOJ Review ........................................................................ 89
1. The DOJ Update .......................................................................................... 89
2. The White Papers ........................................................................................ 90
3. Internal Integration Planning At Anthem .................................................... 94
4. Teneo Leaks The Dispute Letters To The Wall Street Journal. ............... 100
5. Cigna Attempts To Re-Engage On Integration Planning. ......................... 105
6. “Bias-to-Blue” As A Go-To-Market Strategy........................................... 107
J. The DOJ Opposes The Merger. ............................................................................ 110
1. The June 10 Meeting With The Staff ........................................................ 110
2. The Remediation Effort ............................................................................. 112
3. The June 21 Meeting With The Front Office ............................................ 116
4. Cigna Continues To Analyze Its Standalone Options. .............................. 122
K. The Antitrust Litigation ........................................................................................ 124
1. The Parties’ Initial Responses To The Antitrust Litigation ...................... 124
2. Cigna’s Covert Communications Campaign ............................................. 126
3. The Initial Phase Of The Antitrust Litigation ........................................... 132
4. Discovery In The Antitrust Litigation ....................................................... 135
5. Pre-Trial Preparations................................................................................ 138
6. Trial In The Antitrust Litigation ................................................................ 143
L. Anthem Extends The Termination Date. .............................................................. 154
M. The District Court Enjoins The Merger. .............................................................. 155
N. Anthem Appeals. .................................................................................................. 168
O. This Litigation ...................................................................................................... 169
P. The DC Circuit Court Decision ............................................................................ 171
Q. Anthem Terminates The Merger Agreement. ...................................................... 186
R. This Litigation Proceeds To Trial. ....................................................................... 188

2
III. LEGAL ANALYSIS............................................................................................... 189
A. The Legal Framework .......................................................................................... 189
B. The Plain Meaning Of The Efforts Covenants And The No Injunction Condition ...
....................................................................................................................... 193
1. The Reasonable Best Efforts Covenant ..................................................... 193
2. The Regulatory Efforts Covenant ............................................................. 196
3. The Regulatory Cooperation Covenant ..................................................... 201
4. The No Injunction Condition .................................................................... 204
C. Anthem’s Claims For Breach Of The Efforts Covenants .................................... 204
1. Cigna’s Covert Communications Campaign Against The Merger ........... 205
2. Cigna’s Withdrawal From Integration Planning ....................................... 212
3. Anthem’s Claim Against Cigna For Obstructing A Divestiture ............... 234
4. Anthem’s Claim Against Cigna For Resisting Mediation ........................ 246
5. Cigna’s Undermining Of Anthem’s Defense In The Antitrust Litigation 251
D. Whether The No Injunction Condition Would Have Failed If Cigna Had Not
Breached ............................................................................................................... 263
1. The National Accounts Issue ..................................................................... 264
2. The Local Markets Issues .......................................................................... 270
3. Other Regulatory Approvals ..................................................................... 272
4. Judgment In Favor Of Cigna ..................................................................... 273
E. Cigna’s Claim Against Anthem For Breach Of The Regulatory Efforts Covenant ...
....................................................................................................................... 273
1. Cigna’s Claim Regarding The Blues Rules............................................... 273
2. Cigna’s Claim Regarding The $704 Million In Efficiencies .................... 288
3. The Effect-Of-Termination Provision ....................................................... 289
4. Judgment In Favor Of Anthem.................................................................. 293
F. Cigna’s Claim Against Anthem For Failing To Pay The Reverse Termination Fee .
....................................................................................................................... 294
1. The Provisions Governing The Reverse Termination Fee ........................ 294
2. Cigna’s Attempt To Invoke The Temporal Termination Right ................ 300
3. Anthem’s Obligation To Pay The Fee Under The Termination Right For A
Cigna Breach ............................................................................................. 304

3
 4. Judgment In Favor Of Anthem.................................................................. 305
IV. CONCLUSION ....................................................................................................... 305

4
 I. INTRODUCTION

Anthem, Inc., and Cigna Corporation entered into an Agreement and Plan of Merger

dated July 23, 2015 (the “Merger Agreement”). Anthem agreed to pay total consideration

of over $54 billion, reflecting a premium of 38.4% over Cigna’s unaffected market

capitalization. At the time, Anthem and Cigna were the second and third largest health

insurers in the United States. If completed, the resulting transaction would have created the

nation’s largest health insurer (respectively, the “Merger” and “NewCo”).

The Merger Agreement contained covenants that obligated the parties to try to close

the Merger (the “Efforts Covenants”). One covenant obligated the parties to use their

reasonable best efforts to satisfy all of the conditions to closing and consummate the

Merger (the “Reasonable Best Efforts Covenant”). Another covenant required that the

parties take any and all actions necessary to avoid any legal impediment to the Merger that

a governmental entity might raise (the “Regulatory Efforts Covenant”). A third covenant

obligated the parties to cooperate in various ways when seeking regulatory approval and

allocated authority over the regulatory approval process to Anthem (the “Regulatory

Cooperation Covenant”).

The parties’ obligations to consummate the Merger were subject to several

conditions. The condition most pertinent to this case was the absence of any injunction that

would prevent consummation of the Merger (the “No Injunction Condition”).

The Merger failed to close. The United States Department of Justice (the “DOJ”)

concluded that the Merger would have anticompetitive effects and declined to approve it.
In July 2016, the DOJ sued to block the Merger (the “Antitrust Litigation”). In February

2017, the United States District Court for the District of Columbia (the “District Court”)

issued a permanent injunction that prevented the Merger from closing. United States v.

Anthem, Inc., 236 F. Supp. 3d 171 (D.D.C. 2017) (the “District Court Opinion”). In April

2017, the United States Court of Appeals for the District of Columbia Circuit (the “DC

Circuit Court”) affirmed the District Court Opinion. United States v. Anthem, Inc., 855

F.3d 345 (D.C. Cir. 2017) (the “Circuit Court Opinion” and together with the District Court

Opinion, the “Antitrust Decisions”).

After the issuance of the District Court Opinion, but before the issuance of the

Circuit Court Opinion, Cigna purported to terminate the Merger Agreement. Cigna

simultaneously filed this litigation, in which it sought to establish its right to terminate the

Merger Agreement. Anthem filed its own lawsuit in this court to keep the Merger

Agreement in place so that it could appeal from the District Court’s decision, and this court

entered a temporary restraining order enjoining Cigna from terminating the Merger

Agreement. After the issuance of the Circuit Court Opinion, this court denied Anthem’s

application to convert the temporary restraining order into a preliminary injunction, but

stayed its ruling and kept the temporary restraining order in place to give Anthem an

opportunity to appeal this court’s decision to the Delaware Supreme Court.

On May 12, 2017, Anthem decided not to appeal and contemporaneously issued a

notice terminating the Merger Agreement. That same day, Cigna issued another

termination notice. The parties disagree about the effects of the competing notices, but they

agree that the Merger Agreement was terminated as of May 12.

2
 The cases that Cigna and Anthem had filed were consolidated, and this litigation

continued as a damages action. Anthem contended that Cigna breached its obligations

under the Efforts Covenants and sought expectation damages of $21.1 billion. Cigna

contended that Anthem breached its obligations under the Regulatory Efforts Covenant and

sought expectation damages of $14.7 billion. Cigna separately sought to recover a reverse

termination fee in the amount of $1.8 billion (the “Reverse Termination Fee”).

Anthem proved that Cigna breached its obligations under the Efforts Covenants.

Rather than seeking to complete the Merger, Cigna sought to derail it.

David Cordani, Cigna’s CEO, and the other members of Cigna’s executive

leadership team (the “Cigna ELT”) originally favored a deal with Anthem, but they

envisioned a transaction in which they would lead NewCo and Cordani would become

CEO. During the negotiations that led to the Merger Agreement, Cordani tried to secure

the role of CEO, but Cigna also demanded a significant premium for its stockholders.

Anthem agreed to pay a premium, but insisted that its CEO, Joseph Swedish, would serve

as NewCo’s CEO. Anthem agreed that Cordani would serve as NewCo’s President and

COO. Cordani understood that he would succeed Swedish as NewCo’s CEO.

After the parties signed the Merger Agreement, Anthem acted like an acquirer and

sought to engage in detailed integration planning. In December 2015, as part of that

process, Swedish tried to begin conducting interviews that would lead to the selection of

the NewCo executive leadership team (the “NewCo ELT”). The Cigna ELT resisted

Anthem’s approach to integration planning, and they reacted angrily to Swedish’s attempt

to start the interviews.

3
 Anthem’s executive leadership team (the “Anthem ELT”) did not take well to

Cigna’s resistance. After an exchange of accusatory emails, Swedish decided to reduce the

scope of Cordani’s responsibilities in NewCo and make clear that he was not the only

potential successor as CEO. Swedish communicated this message to Cordani during a

meeting on January 11, 2016.

The Cigna ELT perceived Swedish to be launching a hostile takeover of Cigna.

They crafted a detailed and sophisticated response, codenamed “Project Alpha,” to restore

the scope of Cordani’s responsibilities and his path to CEO. Cigna skillfully presented its

narrative of events at the first gathering of the designees who would serve on the NewCo

Board. Anthem’s designees sympathized with Cigna’s position and forced Swedish to defer

selecting the NewCo ELT, but the meeting did not result in the specific commitments that

Cigna wanted.

The Cigna ELT decided to escalate. They had identified integration planning as a

pressure point to use against Anthem. In late February 2016, Cigna withdrew from the

integration planning process and limited its efforts to “Day 1 activities,” i.e., those activities

necessary to facilitate NewCo’s ability to operate immediately after closing. Despite taking

these steps, the Cigna ELT still had not turned definitively against the Merger. They would

have supported the Merger if Anthem had stopped acting like an acquirer and started

treating the transaction as a merger of equals, including by giving substantial deference to

the Cigna ELT’s views.

Rather than causing Anthem to stand down, Cigna’s escalation reinforced the

Anthem ELT’s concerns about Cordani and his team. The parties’ positions became

4
increasingly adversarial, and the Cigna ELT turned definitively against the Merger. There

is no signpost marking exactly when this happened, but by late March and early April 2016,

the Cigna ELT wanted the transaction to fail so they could continue managing Cigna as an

independent company.

In June 2016, the DOJ informed the parties that it had major concerns about the

Merger. Anthem sought to line up divestitures to address the DOJ’s concern about

excessive concentration and monopsony in thirty-five local markets. The divestitures

would not have addressed the DOJ’s concern about excessive concentration in the market

for national accounts. It therefore was unlikely that the divestitures would have resulted in

an overall settlement, but they would have strengthened Anthem’s position with the DOJ

and in the ensuing Antitrust Litigation. Cigna obstructed Anthem’s efforts to line up

divestitures. Through its interactions with the DOJ, Cigna signaled that it opposed the

Merger, which emboldened the DOJ.

In July 2016, the DOJ filed suit. Throughout the Antitrust Litigation, Cigna

undermined Anthem’s defense. Cigna opposed Anthem’s efforts to mediate and took

litigation positions that supported the DOJ. During his deposition and at trial, Cordani gave

vivid testimony that was a boon to the DOJ. Cordani is a skilled communicator who does

not inadvertently concede points to the opposition, and yet he provided exaggerated and

unsupported testimony that bolstered the DOJ’s case. Cordani’s performance in the

Antitrust Litigation contrasted sharply with his resistance during hostile cross-examination

in this litigation. It is clear that during the Antitrust Litigation, Cordani intentionally

testified in a manner that would help the DOJ obtain a decision blocking the Merger.

5
 Cigna’s opposition to the Merger was so obvious that the District Court described

it as the “elephant in the courtroom.” Dist. Ct. Op., 236 F. Supp. 3d at 183. The District

Court noted that Cigna had joined the DOJ in “warning against” the Merger and cited “the

doubt sown into the record by Cigna itself.” Id.

Although Anthem proved that Cigna breached the Efforts Covenants, Anthem failed

to prove that Cigna’s breaches led to causally related damages. The Antitrust Decisions

caused the No Injunction Condition to fail, meaning that the parties never became obligated

to close. To prevail on a claim for breach of the Efforts Covenants, Anthem therefore had

to prove that Cigna’s breaches of the Efforts Covenants contributed materially to the failure

of the No Injunction Condition. Anthem did not have to prove that the Merger would have

been approved but for Cigna’s breaches, only that Cigna’s breaches made approval less

likely. Once Anthem made this showing, Cigna had the burden of proving that even if it

had fulfilled its obligations under the Efforts Covenants, the No Injunction Condition

would have failed.

Both steps in the causation analysis are difficult to conduct in such a complex and

multi-faceted case. On balance, Anthem proved by a preponderance of the evidence that

Cigna’s breaches of the Efforts Covenants contributed materially to the failure of the No

Injunction Condition. Cigna’s withdrawal from integration planning, its opposition to

divestitures, its resistance to mediation, and its undermining of Anthem’s defense in the

Antitrust Litigation made it less likely that the condition would be satisfied. Cigna,

however, proved by a preponderance of the evidence that even if it had fulfilled its

obligations under the Efforts Covenants, the DOJ still would have sought to block the

6
Merger based on its anticompetitive effects on the market for national accounts, the District

Court still would have enjoined the Merger on that basis, and the DC Circuit Court still

would have affirmed the District Court’s decision. Cigna thus proved that the No Injunction

Condition would have failed in any event. Judgment will be entered in Cigna’s favor on

Anthem’s claims for breach of the Efforts Covenants.

For its part, Cigna failed to prove that Anthem breached its obligations under the

Regulatory Efforts Covenant. Anthem sought at all times to complete the Merger. Cigna

disagreed with Anthem’s strategy in real time, and with the benefit of hindsight, it is easy

to criticize Anthem’s approach to obtaining regulatory approval. Anthem nevertheless

chose a sound strategy and took all of the actions necessary and appropriate to pursue it.

Judgment therefore will be entered in Anthem’s favor on Cigna’s claims.

Assuming for the sake of argument that Cigna had proved that Anthem breached the

Regulatory Efforts Covenant, Cigna still could not recover damages. Under the language

of the Merger Agreement, termination extinguished any liability on the part of any party

except for damages for “Willful Breach.” The Merger Agreement defined that term as

conduct that both constituted a material breach and which the breaching party subjectively

knew would constitute a material breach. Cigna’s breaches of the Efforts Covenants were

so strikingly egregious that Anthem would have proven a Willful Breach if those breaches

had resulted in damages. The same is not true of Anthem’s conduct. Assuming that

Anthem’s regulatory efforts fell short, the evidence demonstrates that Anthem attempted

in good faith to consummate the Merger.

7
 Finally, Cigna failed to prove that Anthem is liable for the Reverse Termination Fee.

Anthem validly terminated the Merger Agreement under a termination right that did not

trigger the fee. Anthem’s termination preceded Cigna’s termination, foreclosing Cigna’s

ability to recover the fee. Cigna understandably complains that a race to termination should

not determine its entitlement to a fee. In this case, the race only occurred because Anthem

continued attempting to close the Merger even after Cigna’s breaches of the Efforts

Covenants had caused Anthem’s termination right to ripen. Had Anthem not been so

committed to completing the Merger, then Anthem could have terminated the Merger

Agreement long before Cigna gained a right to terminate. Judgment will be entered in

Anthem’s favor on Cigna’s claim for the Reverse Termination Fee.

This outcome leaves the parties where they stand. Neither side can recover from the

other. Each must deal independently with the consequences of their costly and ill-fated

attempt to merge.

II. FACTUAL BACKGROUND

The evidentiary record is vast. During a ten-day trial, seventeen fact witnesses and

four experts testified live. The parties introduced 4,611 exhibits and lodged 111 deposition

transcripts, 103 from fact witnesses and eight from experts.1

1
Citations in the form “PTO ¶ ––” refer to stipulated facts in the pre-trial order. See
Dkt. 641. Citations in the form “[Name] Tr.” refer to witness testimony from the trial
transcript. Citations in the form “[Name] Dep.” refer to witness testimony from a
deposition transcript. Citations in the form “JX –– at ––” refer to a trial exhibit with the
page designated by the last three digits of the control number or internal page number. If a
trial exhibit used paragraph numbers or sections, then references are by paragraph or
section. Many trial exhibits consist of an email with attachments, and many of those use
inconsistent numbering systems, with control numbers appearing on the email but not on

8
 The evidentiary landscape is even more expansive than this already considerable

volume of documents and testimony might suggest, because much of this litigation

concerned the parties’ conduct during the DOJ’s investigation and the Antitrust Litigation.

The DOJ investigation was massive, involving the production of terabytes of information

and the taking of forty-one depositions, seven of which were introduced as exhibits in this

case. Discovery in the Antitrust Litigation involved another 115 depositions and fourteen

expert reports. The parties introduced seven of those depositions and three of the expert

reports as exhibits in this case. The District Court conducted a lengthy bench trial that

began on November 21, 2016, and ended on January 4, 2017. The District Court bifurcated

the trial, first addressing the market for the sale of commercial healthcare insurance to

national accounts, and then addressing the market for the sale of commercial healthcare

insurance to large employers in thirty-five local markets. The District Court heard

testimony from sixteen fact witnesses in the first phase and thirteen fact witnesses in the

second phase. Five experts testified in one phase and four in the other. See Dist. Ct. Op.,

237 F. Supp. 3d at 187. The transcript from the trial in the District Court is part of the

record in this case. The parties also introduced into evidence five depositions from a

multidistrict antitrust litigation involving the Blue Cross Blue Shield Association (the

the attachments. For those exhibits, this decision uses a compound citation format such as
“JX  at  & [subdivision] ,” where the “[subdivision] ” refers to the attachment.
To constrain the proliferation of footnotes, citations to single authorities appear in the text.
In some instances, typically involving short paragraphs or background information, the
supporting citations for a paragraph are collected in a single footnote.

9
“Blues Association”), which is pending in the United States District Court for the Northern

District of Alabama (the “Blues MDL”).

The events at issue began in early 2014 and continued through mid-2017, yet the

parties only agreed to 187 stipulated facts in the pre-trial order. Most appeared to be drawn

from the joint proxy statement that the parties prepared to obtain stockholder approval for

the Merger. The parties did not agree on any stipulations of fact for the crucial period from

January 11, 2016, to June 10, 2016, when their relationship deteriorated profoundly.

One complication of such a vast record (and the relative shortage of factual

stipulations) is a multitude of evidentiary conflicts. On many issues, a substantial body of

evidence flows in one direction, but there are invariably documents and testimony that

resist the current. When it suited their purposes, both sides proved adept at emphasizing

the contrarian evidence. It has been challenging to evaluate the record as a whole and

determine what actually occurred. This decision has erred towards the fulsome (in both

senses of the word) in an effort to present what the weight of the evidence shows.

Further complicating the fact-finding process, the key witnesses suffered from

serious credibility problems. This decision addresses some of the major issues in the text

and cites others in footnotes. A general overview is nevertheless helpful in framing the

challenges that this case presented.

Cigna’s credibility problems stemmed initially from Cordani’s self-interested

conduct during the negotiations that led to the Merger Agreement. Throughout this

litigation, Cordani denied the positions he took. From a human standpoint, that was

understandable, but it caused Cordani to give implausible testimony on a series of issues.

10
Nicole Jones, Cigna’s General Counsel, testified in lockstep with Cordani on these and

other issues, damaging her credibility as well.

Cordani and the Cigna ELT later turned against the Merger, giving rise to a different

set of credibility issues. To resist Anthem’s attempts to complete the Merger, the Cigna

ELT adopted stances that conflicted with the positions that they had taken when Cordani

thought that he had a path to become CEO. In this litigation, Cigna’s witnesses often gave

less than credible testimony when attempting to justify their changes of positon.

The Cigna ELT’s resistance to the Merger also gave rise to another credibility issue.

The Cigna ELT could not openly undermine the Merger without advertising that Cigna was

breaching its obligations under the Efforts Covenants, so the Cigna ELT worked to hide

their efforts and manufacture an alternative narrative. In that substitute storyline, Cigna

tried hard to complete the Merger but was thwarted by Anthem’s incompetence.

For help in crafting the alternative narrative, the Cigna ELT retained a cadre of

additional advisors, including Teneo Holdings, a strategic communications and consulting

firm. Evidencing the covert nature of the anti-Merger effort, the Cigna ELT treated the

hiring of the additional advisors a closely guarded secret and hid their work against the

Merger from the Cigna Board. During this litigation, Cigna withheld evidence of Teneo’s

anti-Merger activities under claims of privilege. Once revealed, that evidence eliminated

any doubt about whether the Cigna ELT had attempted to prevent the Merger from closing.

Cigna witnesses struggled when testifying about the anti-Merger work that their advisors

performed, further damaging their credibility.

11
 Anthem’s credibility problems matched Cigna’s, but had their roots in the opposite

motivation. The Anthem ELT strived to complete the Merger. Unfortunately, the Anthem

executives’ desire to consummate the transaction led them to make statements, advance

arguments, and give testimony that were at times questionable, at other times unsupported,

and on some occasions untrue.

For example, when testifying in depositions taken by the DOJ, when speaking about

the Merger in a media interview after the filing of the Antitrust Litigation, and when

testifying at trial in the Antitrust Litigation, Swedish spoke positively about his relationship

with Cordani, the level of cooperation between the parties, and the absence of any disputes

between Anthem and Cigna. Those statements were inaccurate. At trial in this action, Cigna

repeatedly impeached Swedish with his prior testimony from the DOJ investigation and

the Antitrust Litigation and with internal Anthem documents.

Thomas Zielinski, Anthem’s then-General Counsel, likewise made positive

comments to the public markets about the level of cooperation between the parties that are

inconsistent with the record. He gave optimistic predictions to the DOJ about the prospect

of settlement in the Blues MDL, but in this litigation, he was forced to concede that he had

no factual basis for those statements. Cigna successfully impeached Zielinski’s testimony

on other issues as well.

During the Antitrust Litigation, Anthem witnesses gave testimony on a variety of

subjects that the District Court found unpersuasive, and the District Court Opinion

repeatedly noted that the testimony from Anthem’s witnesses conflicted with Anthem’s

internal documents. See, e.g., Dist. Ct. Op., 236 F. Supp. 3d at 182, 19798, 210, 258 n.63.

12
Worse, in its zeal to defend the Antitrust Litigation, Anthem maintained that it was still

considering exercising the so-called “affiliate clauses” in its provider agreements, id. at

233, even though the Anthem ELT had decided not to do so. Anthem’s position was

technically accurate because Anthem could have revisited the decision or exercised the

clauses on a case-by-case basis, but Anthem was not fully candid with the District Court.

Fortunately, the District Court recognized that Anthem was unlikely to exercise the clauses

and did not credit Anthem’s litigation position. Id. at 18283, 239 & n.40, 244.

Like Cigna, Anthem took positions during discovery that undermined its credibility.

Throughout the Antitrust Litigation and initially in this litigation, Anthem claimed that the

Blues Association had created a special task force to address issues related to the Blues

MDL, making the task force’s documents privileged. That was not true. The special task

force was created to address the Merger.

Both sides anticipated this lawsuit, and they engaged in careful record-making to

prepare for it. Cigna began this process in February 2016, when it retained its cadre of

additional advisors. From that point on, it is difficult to accept at face value certain carefully

crafted and heavily vetted documents, such as Cigna’s board minutes, formal presentations,

and dispute letters with Anthem. That is not to suggest that the documents were fabricated

or fraudulent, only that the language in these documents was chosen for the impression it

would create and must be read in light of what the larger record shows.

Anthem was slower on the draw with record-making and seems to have engaged in

it to a lesser degree. By May 2016, however, Anthem had brought on a litigator who

reviewed and commented on key documents, such as Anthem’s dispute letters with Cigna.

13
Anthem’s record-making behavior was less serious than Cigna’s, both because it started

later and because the Anthem ELT and its advisors were not as skilled at it. They identified

and objected in real time to problems that Cigna was creating. Cigna manufactured a

narrative to conceal and, if necessary, justify its opposition to the Merger. Anthem operated

linearly; Cigna operated in three dimensions.

The standard of proof on all issues was a preponderance of the evidence. Because

both sides advanced claims for breach of contract, the allocation of the burden of proof was

complex. Each side claimed that its counterparty breached the Efforts Covenants. For

purposes of those claims, the party asserting breach bore the burden of (i) proving the facts

necessary to establish breach and (ii) showing that that the breach contributed materially

to the failure of the No Injunction Condition. Once a party carried that burden, then the

breaching party bore the burden of proving that the No Injunction Condition would have

failed even if the breaching party had fulfilled its obligations. Cigna bore the burden of

proving the facts supporting its claim for the Reverse Termination Fee, including the valid

exercise of a termination right that would trigger Anthem’s obligation to pay the fee.

A. The Parties

During the period relevant to this case, Anthem and Cigna were two of the nation’s

five largest providers of private health insurance. The other major players were Aetna,

United Healthcare, and Humana.

14
 As of December 31, 2015, Anthem managed health insurance plans covering

approximately 38.6 million individuals, making it the nation’s second largest health

insurer. Anthem was the largest member of the Blues Association.2

The Blues Association owns the Blue Cross and Blue Shield trademarks (the “Blues

brands”), which it licenses to thirty-six member plans to use in exclusive service areas.

Each member has the exclusive right to use the Blues brands within its service area. Outside

of its service area, each member can access its fellow members’ networks, which allows

each member’s customers to receive nationwide coverage.3

The Blues Association has established rules that its members must follow to use the

Blues brands and access their fellow members’ networks (the “Blues Rules”). Under the

National Best Efforts Rule, each member must use its best efforts to generate at least

66.67% of its total annual revenue using the Blues brands (the “NBER” or “2/3 Rule”).

The CEOs of the member companies comprise the board of directors of the Blues

Association (the “Blues Board”) and administer the Blues Rules.4

2
PTO ¶¶ 20–21, 63; see JX 846 at ’342. Until 2014, Anthem was known as
Wellpoint, Inc. See JX 39 at ’207. For simplicity, this decision refers only to Anthem.
3
See JX 581 at ’719; JX 4147 at ’676.
4
See PTO ¶ 92; JX 4147 at ’629, ’631, ’651. There is also a Local Best Efforts Rule,
which requires that each member use its best efforts to generate at least 80% of its annual
revenue using the Blues brands in the territories where it holds an exclusive Blues license.
Compliance with the Local Best Efforts Rule was not a significant issue for NewCo, and
so it did not figure prominently in this case.

15
 Anthem held exclusive licenses to use the Blues brands in all or part of fourteen

states (the “Anthem Blue States”).5 In other states, Anthem marketed its plans under non-

Blues brands, such as Amerigroup, Simply, and CareMore. Anthem enjoyed comparatively

little success marketing products under its non-Blues brands. Anthem derived the vast

majority of its revenue by selling products under the Blues brands in the Anthem Blue

States. Within those states, Anthem used its size to negotiate deep discounts from

healthcare providers. Anthem’s business model relied on its discounts to attract and retain

customers. To service national accounts, Anthem relied on its membership in the Blues

Association.6

Cigna’s business model was different. As of December 31, 2015, Cigna covered

approximately 13 million members, making it the third largest health insurer in the United

States. Unlike Anthem, Cigna had a national network of providers covering all fifty states.

Because Cigna was smaller and its members were more geographically dispersed, Cigna

often could not obtain the lowest discounts from providers. Cigna instead specialized in

“value-based” care. Under that model, Cigna worked with providers to establish measures

of overall patient health, then paid providers for improving those metrics. The value-based

5
PTO ¶ 22. The fourteen Anthem Blue States are “California (Blue Cross license
only), Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding
thirty counties in western Missouri), Nevada, New Hampshire, New York (excluding
certain areas), Ohio, Virginia (excluding certain counties near Washington, D.C.), and
Wisconsin.” Dist. Ct. Op., 236 F. Supp. 3d at 185 n.1.
6
See PTO ¶¶ 21, 63, 90; Dist. Ct. Op., 236 F. Supp. 3d at 185–86; JX 36 at ’158;
JX 581; JX 1948 at ’303.

16
model required more engagement from providers, but could lower the total cost of care

through improved health outcomes.7

Using its value-based model, Cigna nearly doubled its revenue between 2010 and

2015, growing at a rate of 14% annually. During the same period, Anthem’s growth

hovered around 3% annually, the lowest growth rate in the industry.8

B. Merger Talks In 2012

In August 2012, Cordani contacted Swedish’s predecessor about a merger. Because

Anthem derived the vast bulk of its revenue from Blue-branded plans, it was essential that

Anthem’s licenses to use the Blues brands remain in place. The Blues Rules required

consent from the Blues Association for any acquisition of a member plan. To avoid the

consent requirement and preserve its licenses, Anthem needed to be the surviving legal

entity in any transaction and continue as NewCo.9

Cordani envisioned a transaction in which Anthem would nominally be the acquirer,

but he and the Cigna ELT would manage NewCo. On December 27, 2012, Cigna proposed

a stock-for-stock merger that would result in Anthem’s stockholders owning 55% of

NewCo’s equity. Seats on the NewCo Board would be split equally between Anthem and

7
PTO ¶ 24; Dist. Ct. Op., 236 F. Supp. 3d at 178, 230–31.
8
JX 298 at ’495; JX 518 at ’792–93.
9
See PTO ¶ 90; JX 24; Zielinski Tr. 17879.

17
Cigna, and leadership would rest with Cigna. Cordani, would be the CEO, and Ike Harris,

Cigna’s Chairman, would chair the NewCo Board.10

Anthem viewed Cigna’s proposal as opportunistic: Cigna stock was trading near all-

time highs, while Anthem’s stock price was depressed. The Anthem Board decided not to

pursue a transaction.11

During the discussions, the parties recognized that NewCo would have to comply

with the 2/3 Rule. They understood that if NewCo was not initially in compliance with the

2/3 Rule, then it would have 120 days to provide the Blues Association with an action plan

for achieving compliance. A committee of the Blues Board would review the action plan

and make a recommendation to the Blues Board. The action plan then would have to be

approved by the Blues Board and the members of the Blues Association. Once the action

plan was approved, then NewCo would have two years from the date of approval to achieve

compliance.12

10
See PTO ¶ 94; JX 23.
11
See JX 24 at ’202; JX 26. Cordani testified that Anthem declined to proceed in
2012 because of “some complications with the Blues Rules that [Anthem was]
confronting.” Cordani Tr. 1751. That testimony was inaccurate. It was part of Cigna’s
effort throughout this litigation to portray the Blues Rules as always having been an
insurmountable obstacle to a transaction. Although the parties identified the Blues Rules
as an issue for consideration in 2012, they did not view them as an impediment. Anthem
declined to pursue discussions for reasons other than the Blues Rules. See JX 43; see also
JX 24; JX 25.
12
See PTO ¶ 93; JX 846 at ’357; JX 1103 at ’394 & slide 3; Serota Tr. 2826–27.

18
C. Merger Talks In 2014

In March 2013, Swedish became CEO of Anthem. In early 2014, Cordani reached

out to Swedish to see whether he would be open to a deal.13

Strategically, both Anthem and Cigna recognized that the already-consolidated

market for health insurance companies left a limited number of “pieces on the

chessboard.”14 Both Anthem and Cigna believed that the next major transaction could be

the last one that antitrust regulators would approve.15

Anthem noted that any deal would “require navigating the Blue’s [sic] quagmire . .

. .” JX 28 at ’411. As a standalone entity, Anthem easily satisfied the 2/3 Rule. But after a

combination with Cigna, NewCo would only generate 53% of its revenue using the Blues

brands, falling short of the two-thirds requirement.16 Cigna cited the Blues Rules as one of

the “Integration Considerations” for a deal with Anthem and noted that to obtain antitrust

approval, NewCo’s “[l]ocal market depth may require divestitures.”17

13
See PTO ¶¶ 96–97; Cordani Tr. 1752.
14
JX 28 at ’411 (internal quotation marks omitted); accord JX 46 (Anthem
analysis); JX 78 (Cigna analysis).
15
See JX 46 at 14; JX 78 at ’715.
16
JX 46 at ’994–95 & slide 16; JX 98 at ’964; JX 138 at ’646.
17
JX 78 at ’721; see Gray Dep. 294 (Apr. 2017) (agreeing that during 2014 and
early 2015, Cigna contemplated divestitures as part of transaction with Anthem); id. at 322
(agreeing that the divestitures “would include Cigna or Cigna-associated accounts and
clients”).

19
 Zielinski, Anthem’s General Counsel, was initially skeptical about NewCo’s ability

to comply with the 2/3 Rule. In an internal email to other Anthem executives, he offered

his “preliminary thoughts” on the risks of entering into a deal with Cigna on “an expedited

timeline.” JX 62. He explained that Anthem should assume that the 2/3 Rule would remain

in effect at closing, meaning that NewCo would have to divest business to achieve

compliance. He also identified two outside-the-box alternatives. One was for NewCo to

terminate its membership in the Blues Association, which would trigger a termination fee

of $2.4 billion, deprive NewCo of access to the Blues network, and jeopardize all of

Anthem’s Blues-based revenue. The other was for NewCo to tell the Blues Association

that it would not comply with the 2/3 Rule on the grounds that it violated the antitrust laws,

leading to a lawsuit either by the Blues Association to enforce the Blues Rules or by

Anthem to invalidate them. Zielinski believed the possibility of litigation against the Blues

Association would “cause irreparable damage and harm to [Anthem] within the

Association and amongst [the] Plans,” which would “damage [or] negatively impact

[Anthem’s] ability to do business.” Id.

Zielinski agreed that “[t]he economics of the transaction” with Cigna were “very

compelling and [would] generate substantial shareholder value” and thus concluded that

“this transaction needs to be pursued.” JX 66. But he also believed that the 2/3 Rule posed

an “insurmountable barrier to doing the transaction” in the near term because “the

economics of the transaction are NOT compelling if we need to divest assets to comply

with the [2/3 Rule].” Id.

20
 Zielinski instead identified a possible strategy for eliminating or modifying the 2/3

Rule, which would clear the way for a transaction in the future. The plaintiffs in the Blues

MDL (where Anthem was a defendant) had challenged the 2/3 Rule as an illegal restraint

on competition, and their claims had survived a motion to dismiss. See In re Blue Cross

Blue Shield Antitrust Litig., 26 F. Supp. 3d 1172, 1179 (N.D. Ala. 2014). Zielinski

recommended pursuing a transaction “AFTER the resolution of the Blues [MDL] since it

is highly likely that the resolution will substantially modify, if not eliminate, the [2/3

Rule].” JX 66.

Zielinski also recognized that the strategic situation might change and that

“[e]xternal actions/factors may dictate that we would have to pursue the transaction

BEFORE a resolution of the Blues [MDL] and thus, a modification or elimination of the

[2/3 Rule] will not have occurred.” Id. He observed that it would likely take between nine

and twelve months to get from a signed transaction agreement to closing, and that after

closing, NewCo would have at least two years to comply with the 2/3 Rule. He concluded,

“Thus, we have a window of 33 to 36 months to resolve the Blues [MDL] which [is] more

than adequate time to get the litigation settled.” Id. He posited that

In the unlikely scenario that the settlement of the litigation does not modify
or eliminate the [2/3 Rule], we need to be prepared to challenge the
enforcement of the [2/3 Rule] with respect to the transaction. Obvious risks
are (1) the hostility created w/n the Association towards [Anthem]; (2) our
challenge to the [2/3 Rule] is unsuccessful which would require us to divest
assets to become compliant with the [2/3 Rule]; or (3) the termination of our
Blue licenses which has material financial/business consequences.

Id.

21
 The Anthem ELT communicated to their Cigna counterparties that they had “looked

at many different scenarios . . . which would avoid the application of the [2/3 Rule] and

have concluded that there is no structure or design which accomplishes that goal.” JX 76

at ’649. The question therefore was whether to pursue a transaction “even if the [2/3 Rule]

applies.” Id. At that point, Anthem did not regard that path as a viable option.18

Cigna was more bullish. Cigna viewed the issues presented by the 2/3 Rule as

manageable, with the primary solution being to rebrand Cigna revenue in the Anthem Blue

States.19 In a presentation to the Cigna Board, the Cigna ELT reported that compliance

18
See JX 74; JX 76; JX 94 at ’927. Swedish inexplicably testified at trial that he did
not believe that the 2/3 Rule would affect a transaction with Cigna in any way, shape, or
form. Swedish Tr. 1144. He also claimed that he did not know whether NewCo would be
in compliance with the 2/3 Rule after closing. Id. at 1144–45. That testimony was not
credible.
19
JX 81; see, e.g., JX 79 (analyzing NewCo’s compliance with the 2/3 Rule for
Cigna CFO; noting “[t]o avoid being in default, [NewCo] would need to rebrand revenue
and members; practically this means moving [Cigna] members in [Anthem Blue States] to
a product written on a blue license and using the BlueCard network instead of ours”;
observing that “[r]egulatory divestitures would be best from Cigna and dollar for dollar
reduce the exposure to the [Blues] Rules”; commenting that “[c]omplying will mean
reduced volumes to our network outside of the license states”); JX 87 (Cigna CFO
anticipating “a high degree of success in moving the C[igna] business in the [Anthem Blue
States] to a branded status”); JX 91 at ’16364 (Cigna analysis of the 2/3 Rule); JX 97 at
’344 (talking points for update to Cigna Board; noting that there “did appear there was a
path to comply with the [Blues] rules” and that “actions to comply with the rules” included
“[r]ebranding of acquired C[igna] members,” “[a]djusting growth strategies,” and
“[p]otential deal structure alternatives”); JX 98 (Cigna executive’s summary of the 2/3
Rule for Cordani noting that NewCo would “fail the revenue test at ~57/43” and that “[t]o
resolve this, we would need to rebrand between 23 and 27% of revenue nationally and
between 64 and 73% of [Cigna] revenue in the [Anthem Blue States] (the most likely
lever)”; “Initial view [of both parties] is enough C[igna] revenue can be rebranded to come
into compliance with [2/3 Rule] in the short term”); see also JX 64 at ’182 (Cigna notes on
Blues Rules, indicating that primary lever is to “rebrand local C[igna] business”); JX 94 at
’928 (“Although more homework to be done, did appear there was a path to comply with

22
could be achieved by having “[Cigna] business in Blue licensed territories . . . substantially

migrate to Blue business, resulting in compliance with the [2/3 Rule] at or shortly after

closing.” JX 105 at ’751. The Cigna ELT also reported that “[Cigna] business in non-Blue

licensed territories may have to be divested.”20 Cigna concluded that the termination of

Anthem’s Blues licenses “would be significantly damaging to [NewCo] from a business

perspective and require a substantial out-of-pocket payment.” Id. at ’752.

Ultimately, Cigna agreed with Anthem that “the best path” was to wait until the 2/3

Rule was altered or eliminated through a settlement in the Blues MDL. Like Anthem,

however, Cigna “wanted to be ready . . . to move sooner” in response to industry

consolidation.21

The parties therefore continued moving forward with due diligence and discussing

how NewCo could comply with the 2/3 Rule.22 Cigna consistently identified the primary

levers for achieving compliance as (i) divestitures of non-Blue-branded business, i.e.,

portions of Cigna’s operations or Anthem’s non-Blue-branded plans, and (ii) “rebranding”

the [Blues Rules]”); id. at ’929 (“Agreed we likely could get into compliance, and while
growth limitations would erode some value, there was still significant value in a
combination.”).
20
Id. After the Cigna ELT began opposing the Merger, Cigna expressed different
views regarding these issues.
21
JX 81; accord JX 94 at ’928; Zielinski Tr. 1516.
22
PTO ¶ 101; see, e.g., JX 134; Zielinski Tr. 12–14, 139–41.

23
non-Blue-branded business as Blue-branded business, which generally meant moving

Cigna members in the Anthem Blue States onto Anthem plans.23

In February 2015, Anthem put the discussion on hold.24 The Blues Rules played a

role in Anthem’s decision, but not because NewCo could not achieve compliance. Both

Anthem and Cigna believed that the Blues Rules and the Blues MDL created an excessive

level of interloper risk.25 At that point, Anthem did not see a transaction happening

“anytime soon.” JX 150.

D. The Path To The Merger Agreement

After Anthem called off the talks, Cigna made a bid for Humana. Humana rejected

Cigna’s bid, but said it was launching a limited sale process.26

Anthem believed that Humana’s sale process would be the catalyst for a final round

of industry consolidation, and Anthem did not want to be left without a merger partner.

Anthem decided “it was time to reengage in discussions with Cigna about a potential

combination.” PTO ¶ 111. Although the risks that caused Anthem to call off discussions

ten weeks earlier had not changed, Anthem believed that they were outweighed by “the

risk of being left out of the remaining consolidation in the health benefits industry . . . .”27

23
See, e.g., JX 98 at ’964; JX 119 at ’88485; JX 3121 at ’376; Zielinski Tr. 1416.
24
PTO ¶ 108; JX 150; Swedish Tr. 1154.
25
See JX 150 at ’762; JX 154; see also JX 81; Zielinski Tr. 16, 18; Gray Tr. 1638.
26
See PTO ¶ 110; JX 154.
27
Id. Cigna begins its account with Anthem’s outreach to Cigna and claims it was
driven by Anthem’s need for growth. See Dkt. 700 at 7. That is a partial narrative. Cigna

24
 Swedish called Cordani to tell him that “Anthem wanted to aggressively reengage.”

PTO ¶ 112. Cordani was interested, but wanted to understand what had changed. PTO

¶ 113. The main reason was the strategic imperative of consolidation, but Swedish felt that

Anthem needed to address the 2/3 Rule. See JX 193. There was only one Blues-related

development: The court in the Blues MDL had ordered the parties to mediate. See JX 172.

The mediation order did not play a meaningful role in Anthem’s decision to re-

engage.28 Swedish nevertheless told Cordani that “[t]here have been a number of recent

developments which I was able to share with my Board last week that I would now like to

share with you.” JX 172 at ’615. Those included:

 “We are moving forward on court ordered mediation [in the Blues MDL] and have
the General Counsels of the various Blue Plans meeting in the next couple weeks to
put forward a proposed ‘offer’ regarding modifications to the existing [Blues] rules
that [the Blues Association] would be willing to offer as part of a settlement.” Id.

 “We are fully anticipating and intend to influence a modification to the current best
effort rules as part of our settlement offer.” Id.

 “While we do not know the ultimate outcome of the mediation, we have shared this
information with our Board along with the potential implications of us not being
able to come to a satisfactory resolution in the near term.” Id.

 “We have also updated [our Board] regarding the changing landscape . . . and our
belief that the timing of a proposed combination of our companies is at a uniquely
beneficial stage.” Id.

had twice approached Anthem about a deal before Anthem’s outreach to Cigna, which was
driven by strategic consolidation in the industry.
28
Zielinski Tr. 22728, 23233, 23738; Swedish Tr. 116163. Swedish and
Zielinski also told the Anthem Board that the mediation affected their views on re-engaging
with Cigna, which was, at best, an exaggeration. See JX 193; Zielinski Tr. 235–37; Swedish
Tr. 1167–69.

25
 “Our Board is comfortable with the level of interloper risk that the [Blues MDL]
had enhanced and believes that risk has diminished.” Id.

The Cigna ELT always had been more bullish than Anthem about the risks posed by the

Blues Rules, so they willingly re-engaged.

As with the talks in 2012, Cordani envisioned Anthem as “technically acquiring”

Cigna, but with Cigna management “tak[ing] control” of the combined entity.29 He

anticipated a merger like JPMorgan’s acquisition of Bank One, JX 3001, where Bank One’s

CEO, Jamie Dimon, was guaranteed the CEO role of the combined company two years

after closing, JX 8. Cordani wanted to gain control “in a more accelerated way than

BancOne [sic].”30

Cigna developed talking points to convey to Anthem the type of offer that would be

received favorably. Cigna’s number one objective was to “[c]learly articulate [its] position

on [the] CEO role,” which was that Cordani needed to be CEO. JX 184 at ’188. A related

goal was for “several of the other key management and integration positions to be identified

and sourced from the talent pools at both organizations prior to announcement.”31 Cigna’s

number two objective was to “[s]ignal expectation for meaningful premium (i.e., greater

29
JX 3001; see JX 183.
30
JX 3001; see JX 183.
31
Id. at ’189. After Cordani was unable to secure the CEO role, the Cigna ELT took
a different position regarding the timing of the leadership selection process. See Part II.G,
infra. The timing ultimately was a matter of judgment on which reasonable minds could
disagree. Cigna’s changing positions were influenced by the personal interests of Cordani
and the Cigna ELT.

26
than 10%).” Id. at ’188. Cigna’s third objective was to “creat[e] board / governance

structure that is efficient, fair and balanced.” Id.

1. The Non-Public Negotiations

On June 3, 2015, Anthem offered to pay $174 per Cigna share, reflecting a 28%

premium over the market price. The consideration would consist of 40% cash and 60%

stock, resulting in Cigna’s stockholders owning 40% of NewCo. Swedish would serve as

the CEO and chairman of the NewCo Board. Cordani would be President and COO and

serve as a director. Anthem envisioned a board of fourteen, with eight from Anthem and

six from Cigna.32

On June 7, 2015, Cigna asked Anthem to raise its offer to the mid-$180s per share.

Cigna countered that Cordani should be CEO. Cigna agreed that Swedish could chair the

NewCo Board, but wanted an equal number of directors for Cigna. Cigna also wanted

Cordani and Swedish to serve as co-chairs of the integration team, which would give

Cordani influence over how NewCo was organized. PTO ¶ 118.

Over the following weeks, the parties went back and forth on price, the executive

roles, and the board split. On June 10, 2015, Anthem raised its offer to $178 per share (a

31% premium), consisting of 46% cash and 54% stock. Anthem agreed that Cordani and

Swedish could co-chair the integration team, but did not change its other leadership and

governance terms. On June 14, Cigna reiterated its demand for a price in the $180s and

32
See PTO ¶ 116; JX 199. Anthem viewed these governance terms as “consistent
with paying a premium” for Cigna. Zielinski Tr. 20.

27
proposed a board with eight Anthem designees and seven Cigna designees. PTO ¶¶ 120–

22. Cigna also asked for “additional clarity on leadership.” PTO ¶ 121.

On June 16, 2015, Anthem stood on its prior offer. PTO ¶ 123. Internally, Swedish

viewed Cigna’s pushback as a “charade” and wanted to “get aggressive.” JX 250. Anthem’s

bankers were “surprised that [Cordani] hasn’t accepted such a shareholder friendly offer”

and encouraged Anthem to “assume he will be as aggressive as possible to either pursue

H[umana] or use the blue rules” as a reason to reject a deal with Anthem. Id. Cordani’s

insistence on the CEO role continued to be the major sticking point.33

On June 18, 2015, Cordani sent a letter to Swedish that reiterated Cigna’s demands.

PTO ¶ 125; JX 261. Although Cordani stressed that he should “assume the role of Chief

Executive Officer at closing,” Cordani referenced a proposal that Swedish had made for

Cordani to start as President and COO and then transition to CEO. JX 261. Cordani wrote

that Cigna was “open to working with [Swedish’s] proposal . . . if we can reach an

acceptable position on our specific roles and responsibilities as well as the timing of the

transition.”34

33
See JX 251; JX 254; Zielinski Tr. 24.
34
Id.; see Cordani Tr. 1908.

28
 By this point, the Anthem ELT was convinced that Cordani was blocking a deal to

secure his path to CEO.35 Zielinski believed that Anthem needed to find a way “to get rid

of Cordani, for [Swedish’s] benefit, as well as the combined company’s future.”36

Later on June 18, 2015, Anthem sent Cigna a best and final offer. Anthem met

Cigna’s price demands by offering $184 per share (a 35.5% premium), payable 68.6% in

cash and 31.4% in Anthem stock. The NewCo Board would include ten Anthem designees

and three Cigna designees. The proposal did not contemplate any role for Cordani. Anthem

asked Cigna to agree to two weeks of exclusivity, telling Cigna that it would break off

discussions if Cigna did not agree by the next day. 37

Confirming his focus on his own role, Cordani characterized Anthem’s proposal as

going “backwards in many key areas,” notwithstanding the substantial increase in price.38

Thomas McCarthy, Cigna’s CFO, dismissed the proposal as “[n]ot constructive.” JX 273.

In a letter dated June 19, 2015, Cordani rejected Anthem’s request for exclusivity.

He wrote that Cigna was willing to proceed at $184 per share, but only if Anthem agreed

to a 50/50 mix of cash and stock and a NewCo Board with eight Anthem designees and six

35
See JX 268; see also JX 231.
36
JX 268; see Zielinski Tr. 256–58.
37
PTO ¶¶ 126–27; JX 269; see Zielinski Tr. 3032; see also JX 299.
38
JX 271. Cordani testified implausibly that by referring to “key areas,” he meant
regulatory issues. Cordani Dep. 722–23. The proposal did not address regulatory issues,
and at trial, Cordani retreated from his deposition testimony. Cordani Tr. 1913–15. Cigna’s
directors understood that the “backwards” moves referred to the changes to Cordani’s
position and the number of Cigna designees. See Harris Dep. (Feb. 2019) 66–67; Partridge
Dep. 173–74; Zollars Dep. 129–30.

29
Cigna designees. He accepted that Swedish would serve as CEO and chair, but asked for a

succession plan under which Swedish would cede the CEO role after twelve months and

the chair role after twenty-four months. PTO ¶¶ 128–129.

After these exchanges, the parties discussed possible transition plans. Swedish was

willing to step down as CEO after twenty-four months, but the Anthem Board would not

commit to Cordani taking over as CEO. They were prepared to agree that if Cordani did

not become the CEO, then he could terminate his employment and would be paid

severance, but that was not acceptable to Cordani.39

2. Anthem’s Bear Hug Letter

On June 20, 2015, Anthem sent Cigna a public bear hug letter that reiterated its

offer. Cigna’s directors and the Cigna ELT rallied around Cordani. They viewed Anthem

as shortsighted for not having locked in Cordani as Swedish’s successor.40

39
See JX 281 at ’355. Despite the overwhelming evidence that Cigna focused
primarily on securing the CEO role for Cordani, either immediately or through an agreed-
upon succession plan, Cordani testified that it was Anthem who wanted him to become
CEO. See Cordani Tr. 1868–71 (impeaching Cordani with prior testimony). He also
claimed that it was Swedish who wanted more Cigna directors on the NewCo Board. See
Id. at 1871–74. At trial, Cordani claimed that Swedish never told him that the Anthem
Board would not commit in advance to transition him to the CEO role. Id. at 1872. He also
could not recall requesting supermajority voting requirements to protect his position and
the Cigna designees, see id. at 1875–76, which Cigna had requested, see JX 261 at ’137;
JX 274 at ’373; Zielinski Tr. 26. Cordani’s testimony on these points was contrary to the
factual record. Jones was the only witness who backed Cordani’s assertions. See Jones
Dep. 29–30; Jones Tr. 2708–10. Jones also claimed implausibly that she could not recall
whether Cigna was interested in securing a position for Cordani. Jones Tr. 2709.
40
See JX 289; JX 291.

30
 On June 21, 2015, Cigna responded with a public letter of its own. Cordani had

instructed his team to shift the focus away from the struggle over the CEO position by

attacking Anthem. See JX 300 at ’301. Cigna’s letter cited “Anthem’s lack of a growth

strategy, complications relating to your membership in the [Blues Association] and the

related antitrust actions, and other significant challenges, such as the massive data breach

you experienced in February.” JX 298 at ’494. None of these issues had been points of

discussion in the negotiations. See Zielinski Tr. 33–34.

Cigna’s letter also asserted that Cigna had “not been able to validate that a

combination of Cigna and Anthem could be integrated successfully under the [Blues

Rules], and the stakes are too high and the penalties too great to move forward without that

validation.” JX 298 at ’496. That was inaccurate. The Blues Rules had not been a major

negotiation point, and Cigna had been comfortable with NewCo’s ability to achieve

compliance, both during the current round of negotiations and during the two prior rounds

of discussions.41 The sticking points were Cordani’s role and the composition of the

NewCo Board.42

The media played up the power struggle between Cordani and Swedish. Cigna

investors complained that Cordani and the Cigna Board seemed to be impeding a deal

based on how it affected them personally.43

41
See Part II.B & C, supra; Zielinski Tr. 33–34; Zollars Tr. 248485.
42
See Zollars Tr. 2483–84.
43
See JX 319; JX 321; JX 325; JX 333.

31
 On June 23, 2015, Anthem made a further proposal, this time offering a mix of 60%

cash and 40% stock and a NewCo Board consisting of nine Anthem designees and four

Cigna designees. The proposal contemplated that Cordani would hold the roles of President

and COO.44

Cigna decided “not to engage” with Anthem’s offer. JX 327 at ’395. Instead, Cigna

made an offer for Humana. PTO ¶ 136. But to hedge its bets, the Cigna Board instructed

the Cigna ELT to “ask for a meeting” with Anthem to “better understand the risks of the

[Blues] rules, the Blues [MDL], and [a recent Anthem] data breach, as well as to determine

whether the companies had a common vision for the strategic direction of a combined

company.” JX 327 at ’395–96.

On June 25, 2015, Bloomberg published an article reporting that Humana had

received bids from Aetna and Cigna and that its board preferred the Aetna offer. See JX

339 at ’324. On June 27, the Cigna Board decided not to pursue Humana further. JX 340.

3. The Management Meetings

Meanwhile, on June 26, 2015, the members of the Cigna ELT (other than Cordani)

met with their Anthem counterparts for a full-day meeting that included discussion of the

Blues MDL and the 2/3 Rule. Anthem “[c]onfirmed there are potential paths forward,” but

cautioned that the “dynamic is very complex, with uncertain outcomes and the potential

for other Blues to disrupt the combined company through unforeseen changes they can

implement outside our control.” JX 339 at ’325. The Anthem ELT expressed optimism

44
PTO ¶¶ 134–35; see JX 322.

32
because they had received fourteen supportive responses from other Blues members to the

announcement of their bid for Cigna, with only three unfavorable responses. Id. Zielinski

viewed the Blues MDL as “manageable, maybe even favorable” to a merger, and he was

“optimistic” on the timing of a settlement. Id.

On June 30, 2016, the parties held a second in-person meeting between the two

CEOs (Swedish and Cordani), the two General Counsels (Zielinski and Jones), the two

CFOs (Wayne DeVeydt from Anthem and McCarthy from Cigna), and the chairs of the

two Boards (George Schaefer from Anthem and Harris from Cigna). They addressed “value

drivers” and the “vision for the combined company.”45

In a presentation for the Cigna Board, the Cigna ELT reported that “operating

outside the Blues Rules [was] not a realistic option.”46 They also reported that NewCo was

likely to be “out of compliance at closing and will need to submit a mitigation plan,” with

the first action to bring NewCo into compliance being to “[r]ebrand [Cigna] revenue as

Blue” in the Anthem Blue States. JX 351 at ’076. And they told the Cigna Board that

Anthem could not “change the rules without the support of other Blues.” Id. at ’072; see

id. at ’075.

The Cigna ELT also provided the Cigna Board with an analysis of antitrust risk.

 “Given current regulatory conditions, it is a virtual certainty that antitrust agencies
will conduct a lengthy, in-depth review of any transaction in this space, even if there

45
JX 339 at ’326; see PTO ¶ 138; JX 344.
46
JX 351 at ’072; accord Zollars Tr. 2489.

33
 is only one transaction. . . . If there are multiple transactions pending at the same
time, the scrutiny will be heightened.” JX 4000 at ’240.

o “At a minimum, divestitures in local geographies likely would be required
for antitrust clearance . . . , although litigation challenges . . . are a distinct
possibility . . . .” Id.

 “[I]f [Aetna/Humana] is announced before or roughly at the same time as [a
Cigna/Anthem transaction], the antitrust risk . . . . generally increases. The increased
risk stems from not only the potential for additional local divestiture and national
competition issues . . . , but also the optics and resulting pressure on regulators from
a perceived reduction in nationally significant health insurers from 5 to 3.” Id.

 “Given current regulatory conditions . . . , we believe that there is a 20-30% chance
that DOJ will seek to challenge a [Cigna/Anthem] transaction, despite an offer to
make local divestitures in line with our prior estimates.” Id. at ’241.

 “This risk assessment would increase if the parties do not have compelling
responses to questions we will likely face about the Blues Rules mediation [sic] plan
and the potential impact of the Blues Rules on post-merger competition . . . .” Id.

 “On the one hand, the Blues Rules could slow down the regulatory review and
increase the risk profile of a [Cigna/Anthem] transaction.” Id.

o “For example, DOJ is likely to inquire about the parties [sic] mediation plan
as well as the impact of the Blues Rules on post-merger competition.
Questions could focus on the Blues Rules [sic] effect on [NewCo’s] incentive
and ability to grow post-merger relative to the pre-merger status quo,
[NewCo’s] incentive and ability to provide access to [its] network to other
Blues, the incentive and ability of the other Blues to compete against
[NewCo], and on the final disposition of the parties’ pre-merger assets.” Id.

o “The fact that there is antitrust litigation involving the Blues Rules also will
likely provide an educated set of complainants that may be motivated to
stress to DOJ how the Blues Rules will limit competition post-merger.” Id.

 “On the other hand, the Blues Rules could provide some arguments in favor of the
transaction—for example, there are arguments that the Blues Rules enable small
Blues to compete more effectively and the [Cigna/Anthem] transaction would
strengthen that competition.” Id. at ’242.

34
Cigna thus accepted that divestitures were likely and viewed the Blues Rules as a mixed

bag, with both positive and negative implications for the transaction. Overall, Cigna’s

outside counsel thought there was a 7080% chance of securing regulatory approval.47

These assessments echoed similar conclusions in another antitrust analysis prepared

by the Cigna ELT. That analysis described “the most likely scenario (~65%-70%)” as one

in which both the Anthem-Cigna deal and the Aetna-Humana deal were “cleared subject

to local divestitures consistent with past DOJ precedent in the industry.” JX 209 at ’483.

The assessment noted that the DOJ might focus on national accounts or argue that “one of

the merger parties is a unique, procompetitive ‘maverick’ in the industry whose influence

would be removed as a result of the transaction.” Id. at ’484. The analysis explained that

[Cigna] has several arguments in response, including:

 Local [managed care organizations (MCOs)] are a serious competitive
force and cannot be discounted.

 Even assuming that nationwide “market” exists, these deals are not
properly viewed as “5 to 3” but are better viewed as “4 to 4.” . . .

 Neither [Cigna] nor [Anthem] is a uniquely disruptive maverick in the
industry.

Id. (formatting in original). The analysis stressed that “[i]n order to maximize the odds of

clearance, it should be clear to the DOJ that the parties would put up a fight in court.” Id.

47
Rule Tr. 3041; see Jones Tr. 2594. Anthem’s outside counsel shared this view,
anticipating a 75% chance of approval with divestitures in the range of 3.5 million lives.
Paul Tr. 592; see also Rosen Tr. 780 (“I thought [the Merger] was likely to get cleared.”).

35
The analysis also noted that “reasonable remedies can sometimes still be achieved after a

suit has commenced, even when national theories are asserted . . . .”48

4. The Agreement In Principle

On July 4, 2015, Anthem and Cigna reached an agreement in principle. Anthem

would pay $187 per share, consisting of 55% cash and 45% stock. The NewCo Board

would have nine Anthem designees and five Cigna designees. Swedish would serve as

CEO and Chair. Cordani would be President and COO and serve as a director.49

Although Cordani had agreed to this arrangement, he did not like it. The next

morning, Harris wrote to Cordani: “David, Congratulations to you and the team. Much

work ahead of you, but this is a major step, and the right step for our shareholders.” JX 370.

Cordani responded, “Brain knows yes. Heart is heavy.” Id. In an email to a Cigna executive,

Cordani wrote that the outcome was “correct,” but that he was “still struggling to accept it

all.” JX 369 at ’945. Cordani told Jones that his “soul [was] still unsettled.”50

48
Id. at ’485. Cigna took different positions on these issues after the Cigna ELT
turned against the Merger.
49
PTO ¶ 143; see JX 365; JX 366; JX 367.
50
JX 400 at ’299. Even though the subject line of his email to Jones was “Call on
Merger Agreement Tomorrow,” and despite the obvious context, Cordani testified in his
deposition and at trial that his soul was unsettled because of “a really dense, intense work
environment.” Cordani Tr. 1971–72 (reading from deposition transcript). Cordani also
claimed that having a “heavy heart” is not an indication of sadness. Id. 1965–66. More
generally, Cordani denied being unhappy about the Merger. See id.; Cordani Dep. 41–43,
46. Jones claimed she did not know what they were writing about. Jones Tr. 2710. Their
testimony on these points was not credible.

36
 Swedish remained uncomfortable with Cordani. Part of his concern stemmed from

the hard-nosed negotiations over the CEO role, but it also is clear that the two leaders

embodied different corporate cultures. Swedish was a traditional CEO who valued

hierarchy. Cordani was a charismatic visionary who inspired deep personal loyalty. To

Swedish, Cigna seemed like a “cult associated with [Cordani’s] ego drive.”51

5. The Struggle Over Cordani’s Role As COO

After reaching an agreement in principle, Anthem and Cigna conducted due

diligence and negotiated the terms of the transaction documents.52 From the Anthem team’s

perspective, Cigna “continue[d] to act as if it [was] the acquiring entity” by making

51
JX 375; cf. JX 925. Swedish’s assessment, although tending to the pejorative,
rings true. Cordani is successful and ambitious, and he established remarkably close
personal relationships with his directors and senior executives. Jones noted in an email that
Cordani and Harris, the chair of the Cigna Board, “are very close and Ike is incredibly
supportive of David . . . .” JX 93; see, e.g., JX 2274. Other Cigna directors displayed
considerable loyalty to Cordani. See, e.g., JX 448; JX 1024; JX 2379. So did the members
of the Cigna ELT. See, e.g., JX 369; JX 384; see also JX 1528. See generally JX 375
(reporting that Cigna employees were “‘rallying behind David’ to avoid the acquisition
[and] that ‘many employees feel that Anthem is the enemy’”); JX 1182 (“[Cordani] is the
heart and soul of our organization.”). Jones in particular appears to have prioritized her role
as Cordani’s principal supporter over the interests of her corporate client, or at least viewed
the two as one in the same. See, e.g., JX 2916 at ’746 (Jones’s performance evaluation
identifying as one of her “Watch Outs” that “Nicole supports our leader [Cordani] to feel
he is invincible and able to fight the big battles and often travels with him—all good, just
need her to also continue to be a truth teller to [Cordani] both 1:1 and in the [Cigna] ELT.”);
Jones Tr. 2705 (Jones confirming that she “intended to leave NewCo if Mr. Cordani was
not going to be given a position there”).
52
PTO ¶ 144; see, e.g., JX 410; JX 411; JX 414; JX 417.

37
demands on issues like the headquarters location and NewCo’s name.53 The Cigna team

took umbrage at Anthem acting like the acquirer. John Murabito, Cigna’s Chief Human

Resources and Services Officer and a member of the Cigna ELT, criticized Swedish for

making “zero commitments to [Cordani]” and not seeming “to get or care about the issues

[Cordani] [was] raising,” JX 384. He viewed Swedish as “a cross between unprepared,

insensitive, arrogant, and unaware.” Id. He also thought it was “ridiculous” and “[n]ot

acceptable” that Anthem planned to “run the people side of [Cigna’s] business after

signing.” JX 447.

The scope of Cordani’s responsibilities as COO became a major focal point in

discussions. Anthem turned to Vivian Riefberg of McKinsey & Company, Inc., to help

define Swedish and Cordani’s respective roles. See JX 405. Riefberg’s initial draft had the

C-suite executives reporting to Swedish as CEO and gave Swedish principal responsibility

for NewCo’s strategy, while giving Cordani principal responsibility for all of NewCo’s

operations, including all of NewCo’s lines of business. See id. at ’19194. Cordani

immediately responded that he “ha[d] a big problem with the positioning”—to the point

where he did not even want to discuss it. JX 408. Cordani instructed Murabito to research

COO roles at other Fortune 50 companies and to focus on those where the COO had

transitioned to CEO. See JX 413.

53
JX 377; see JX 440 (debating which executives would call which public officials);
see also JX 427 (Zielinski stressing that “[t]his is an acquisition; not a merger and therefore
the messaging and talking points need to state that”).

38
 Cordani’s main objection was that Riefberg gave the CEO primary responsibility

for determining NewCo’s strategy. Summarizing Cigna’s objection, Jones wrote Cordani

“must be involved and have influence over strategic [and] any other decisions that affect

the current and future direction of the company.” JX 412 (describing it as one of “3

foundational principles [to be] agreed” that the “President/COO role is viewed as a

transition role for [Cordani] to CEO – not a destination role”).

After working through several drafts, Swedish, Cordani, and Riefberg agreed to a

structure broadly consistent with the initial draft. Cordani would be responsible for all four

of NewCo’s lines of business and for product and segment marketing. Swedish and Cordani

would have “[s]hared accountability for integration (its planning and execution).” JX 439

at ’347. They agreed that “during the integration, there will be some tough calls that

[Swedish] would have to make, even with joint responsibility for the integration planning

and execution.” JX 431 at ’830.

During the final negotiations over the Merger Agreement, one of the Cigna

directors, John Partridge, wrote to Cordani:

I think [Anthem] has possibly made a tactical mistake and it gives me a ray
of hope. That mistake may be putting you on the board. During the early days
of the transition, the board will have more frequent meetings than usual. I
believe that [it] will expose the real differences between you and [Swedish]
to the board through the dialog that should ensue. There will be no way to
exclude you and no where [sic] for [Swedish] to hide. Possibly, we could
have an event similar to the one we had when I joined the board. The board
sees that a change will be needed in the CEO to extract the value and has the
courage to take that decision early in the transition.

JX 448; see also JX 400. The “similar” event was Cordani’s displacement of his

predecessor at Cigna, Ed Hanway. At the time, Cordani was serving as President and COO

39
of Cigna, the same roles that he would have at NewCo. Some members of the Cigna Board

had questioned Hanway’s leadership, and when Cordani did an excellent job presenting on

Cigna’s standalone strategy, the Cigna Board replaced Hanway with Cordani. 54 Cordani

told Partridge that his note was “very well laid out” and “[h]ard to argue” with. JX 448 at

’390. Cordani added, “as for the board room. Good points. And therefore I need the 4 best

partners possible. Keep an open mind when I come knocking.” Id. Partridge later became

one of the designees to the NewCo Board. Cordani Tr. 1964.

6. The Parties’ Understandings Regarding The Blues Rules

While the parties negotiated to finalize the transaction documents, they also

continued to discuss the Blues Rules.55 Among other things, they discussed how to rebrand

Cigna business as “Blue” to comply with the 2/3 Rule. McCarthy anticipated rebranding

all of the Cigna clients with a headquarters in an Anthem Blues State. See JX 423 at ’348.

During a Cigna Board meeting on July 15, 2016, the Cigna ELT reported that they

had conducted significant due diligence into “key risk areas,” including the Blues Rules.56

Due diligence confirmed the Cigna ELT’s earlier assessments, including on the following

points:

54
See Harris Dep. (Dec. 2018) 2627; Partridge Dep. 307–08; 332. Cordani testified
that Hanway chose to leave voluntarily, “thought it was the right time,” and was “great
with the decision.” Cordani Tr. 1959. That was not accurate. The Cigna Board “determined
that [Cordani] should be named the CEO of the company and that Ed should retire.” Id.
1960–61 (playing video of Partridge deposition).
55
See, e.g., JX 421; Zielinski Tr. 139–41.
56
JX 428 at ’304, ’312; see JX 434 at ’406.

40
 “Affiliation with Blues brings substantive benefits including access to the well
regarded [sic] Blues brand and additional provider network choices for clients and
customers.” JX 428 at ’312.

 “We would need to comply with ‘Blues Rules’ that regulate how the brand is used
and overall mix of branded and unbranded business.” Id.

 “Changes in the overall structure of the rules (‘standards’) require a double
supermajority vote. Unfavorable changes are unlikely while the current litigation is
continuing.” Id. at ’313.

 “Changes in the practical application of the rules (‘guidelines’) require a simple
majority of plans present. Unfavorable changes are similarly unlikely while the
current litigation is continuing.” Id.

Cigna identified the two most likely outcomes as either (i) “[r]ules stay in place as is and

we adapt our model to comply through a mixture of rebranding and other actions, in line

with the current business case,” or (ii) “[g]uidelines are relaxed, which is favorable to the

current business case.”57

E. The Merger Agreement

On July 23, 2015, the parties signed the Merger Agreement. It memorialized the

agreement in principle except on the issue of price, where Anthem had raised the cash

component by $1. JX 468 (“MA”); see JX 454. The final consideration of $103.40 in cash,

plus 0.5152 shares of Anthem common stock reflected total consideration of $188 per

Cigna share based on Anthem’s closing price on May 28, 2015. The package represented

a premium of 38.4% over Cigna’s unaffected closing price on the same day. On a pro forma

57
Id. at ’313. After the Cigna ELT turned against the Merger, Cigna took different
positions on these issues.

41
basis, former Anthem stockholders would own approximately two-thirds of NewCo’s

equity, and former Cigna stockholders would own approximately one-third. JX 480.

On July 24, 2015, Anthem and Cigna announced the Merger. PTO ¶ 148. During an

investor call, Swedish explained that Cordani would serve as President and COO and

“focus on operational performance, with responsibility for our domestic and international

business units across our commercial and government segments, including our core

medical and specialty solutions.” JX 490 at ’744. He also said that he and Cordani would

“share accountability for the successful integration of this transaction, both its planning

and execution.” Id. During the call, Cordani spoke positively about the Merger and

described the antitrust risk as “wholly manageable.” Id. at ’752.

Analysts and investors expressed concern about how the parties would obtain

antitrust approval and comply with the 2/3 Rule.58 In response, the parties issued a joint set

of FAQs about the Merger. One question asked, “Why do you have confidence that you

will be able to obtain regulatory approval?” JX 522 at ’806. The companies’ joint answer

stressed three points:

 “We are confident in our ability to obtain regulatory approval, as our operations are
highly complementary and will provide greater choice, increase access to care, and
deliver better affordability to current and prospective customers and clients.”
JX 522 at ’806.

 “The marketplace is, and will remain, highly competitive, and customers will
continue to have a wide range of competitors to choose from.” Id.

58
See JX 491; JX 492; JX 495; JX 505; JX 519.

42
 “Both companies have engaged antitrust counsel and economists to provide an
assessment of competitive overlap. The results of those assessments support our
confidence in the transaction obtaining DOJ approval.” Id.

The FAQs predicted that the DOJ would use “a local framework” in assessing the

combination, but explained that even if the DOJ used a national framework, “Our

businesses and the industry would be shown to be highly competitive and we’re confident

this transaction will receive clearance under either framework.” Id. at ’806–07.

The joint FAQs also addressed the Blues Rules:

 In response to a question about whether Anthem’s membership in the Blues
Association would “impact the DOJ analysis,” the FAQs stated, “We have
considered this item, and we do not think this will be an issue.” Id. at ’807–08.

 In response to questions about NewCo’s ability to achieve compliance with the
Blues Rules, the FAQs stated, “[W]e view the Blues Rules requirements as very
manageable.” Id. at ’808.

 In response to a question about how Cigna was able to “get comfort with the ability
to be in compliance with the Blues Rules,” the talking points stated that “the parties
determined after extensive analysis that the Blues Rules should not act as an
impediment to the transaction” and that Cigna had “been able to confirm that there
are adequate mechanisms to maintain compliance.”59

The Anthem-Cigna deal was not the only major transaction in the health insurance industry.

Three weeks before Anthem and Cigna announced the Merger, Aetna had announced an

acquisition of Humana that would combine two other top-five industry players. If both

deals were approved, then the five largest companies in the health insurance industry would

become three.

59
Id. at ’809; see also JX 498 at ’969; JX 505 at ’25657. After the Cigna ELT
turned against the Merger, Cigna took different positions on these issues.

43
F. The Need For Stockholder And Regulatory Approval

The signing of the Merger Agreement marked the start of a lengthy period during

which the parties sought to secure the approvals necessary for the Merger to close. Anthem

and Cigna needed to obtain approval from their respective stockholders. They also needed

to secure approvals from federal antitrust regulators and state insurance regulators.

1. Stockholder Approval

Securing stockholder approval proved relatively straightforward. In September

2016, Anthem and Cigna issued a joint proxy statement in support of the Merger.

Consistent with the conclusions that Cigna had reached before entering into the Merger

Agreement and the parties’ joint disclosures after signing, the proxy statement contained

the following statements:

 “Cigna senior management had the opportunity to resolve their diligence questions
with respect to the [Blues] rules . . . , the [Blues MDL] and the data breach disclosed
by Anthem in February 2015.” JX 793 at 124–25.

 “Due to the size of Cigna’s business, Anthem may not be in compliance with the
[2/3 Rule] immediately after completion of the merger.” Id. at 75.

 If NewCo was not in compliance with the 2/3 Rule at closing, then NewCo would
submit a plan achieve compliance to the Blues Association and would have twenty-
four months to implement the plan, starting from the date on which the Blues
Association approved it. Id.

 NewCo had multiple options to achieve compliance, including “rebranding Cigna
health care plans and related services so they are sold, marketed, administered or
underwritten under the [Blues brands], ceding national Cigna accounts from other
[Blues Association] member plans to Anthem or divesting certain business.” Id.

On December 3, 2015, both Anthem and Cigna held special meetings of stockholders, at

which their respective stockholders approved the Merger. Cigna announced that the

44
transaction was “expected to close in the second half of 2016, pending the receipt of

customary approvals.” JX 904.

2. Regulatory Approval

The far bigger task was securing regulatory approval. The process of obtaining

approval for a major transaction under the federal antitrust laws involves three different

decision-makers. The first is the DOJ, which reviews the merger and decides whether to

allow it, to condition closing on the parties making divestitures or complying with other

requirements, or to sue to block it.60 The second is a federal district court, which hears any

litigation concerning the transaction. And the third is a federal court of appeals, which hears

the appeal from the district court’s ruling. State attorneys general and state insurance

regulators also conduct reviews of health insurance company mergers, but often follow the

DOJ’s lead.

The first step in the review of a major merger is for the parties to file a notification

under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. § 18a. The

notification provides various statutorily required categories of information about the

industry and the parties’ businesses.61 If the agency takes no action within thirty days, then

60
The DOJ and the Federal Trade Commission (“FTC”) have concurrent authority
to investigate and challenge mergers, subject to certain exceptions to the FTC’s
jurisdiction. See 15 U.S.C. § 45(a). In practice, the agencies cooperate with little
duplication. Major health company mergers generally are handled by the DOJ. See JX 2971
¶ 18 & nn.2 & 3 (citing Am. Bar Ass’n Antitrust Section, Health Care Mergers And
Acquisitions Handbook 118 (2d ed. 2018) (describing the DOJ as “the primary reviewer of
health plan mergers at the federal level”)).
61
See 15 U.S.C. § 18a; JX 2971 ¶ 22; Paul Tr. 608–09.

45
the parties can close their transaction. If the agency decides to take further action, then it

issues a “second request” that seeks business documents, data, and other information.62

Once the parties certify that they have substantially complied with the second request, then

the agency has another thirty days to determine whether to take action regarding the

merger.

The agency also typically meets with the parties and receives or collects information

from customers, suppliers, competitors, and other industry participants. The agency has

authority to serve civil investigative demands—effectively administrative subpoenas—to

obtain documents and testimony from the merging parties and from third parties. JX 2971

¶ 23 & n.22.

If the DOJ is concerned about a merger, then it may negotiate a resolution that

imposes conditions before the merger can close. For example, the parties may agree to

divest certain assets in areas where their businesses overlap. Merging parties also may line

up a divestiture remedy on their own. If the DOJ challenges the transaction, then the

merging parties can argue that their divestiture remedy addresses or mitigates the DOJ’s

concerns. This is generally called “litigating the fix.”63

a. Initial Outreach To The DOJ

When the parties announced the Merger, their regulatory counsel placed courtesy

calls to the DOJ. See JX 445. Anthem used White & Case LLP and Arnold & Porter Kaye

62
See JX 2971 ¶ 23; Paul Tr. 609.
63
JX 2972 ¶ 84; Noether Tr. 3406; see Paul Tr. 657–58.

46
Scholer LLP as its regulatory counsel. George Paul led the White & Case team, and Richard

Rosen led the Arnold & Porter team. Cigna used Cadwalader, Wickersham & Taft LLP.

Rick Rule, then with Cadwalader, led its team. PTO ¶¶ 77, 79, 89.

On July 29, 2015, five days after the announcement, the DOJ opened an

investigation into the Merger. PTO ¶ 149. That same day, the DOJ sent the parties a set of

voluntary information requests, which included questions about the Blues Rules. 64 The

DOJ also sent an information request to the Blues Association. See JX 604. The parties

expected DOJ’s early interest in the Blues Rules, and Anthem’s counsel did not anticipate

that the Blues Rules would be a problem. See JX 445 at ’477.

On the same day that the DOJ opened its investigation, Anthem’s counsel circulated

a “case themes” outline to frame the plan for obtaining regulatory approval. 65 The parties

knew that the Merger would have the anti-competitive effect of reducing the number of

players in an already-concentrated industry, so the centerpiece theme of their case was the

procompetitive efficiencies that the Merger would create. Anthem’s outline stressed the

possibility of “$2 billion in efficiencies in two years,” attributable to operational

efficiencies, medical network efficiencies and medical cost management, and other

sources. JX 523 at ’926. The outline included a section on “Blues Issues,” including the

2/3 Rule. Id. at ’933–934.

64
See JX 521 at ’696–98; see also JX 588.
65
JX 523; see Paul Tr. 596–97.

47
 Cigna’s counsel prepared a similar outline.66 It described the two companies as

having complementary strengths and minimal areas of overlap. JX 567 at ’576–82. Cigna’s

counsel posited that “[l]ocalized remedies are sufficient to address both potential customer

and any provider monopsony concerns, consistent with past DOJ precedent.” Id. at ’584.

Cigna’s counsel also noted that “[d]oing the deal despite divestitures indicates the deal is

not about creating market power, but rather about creating pro-competitive efficiencies.”67

The Cigna memorandum maintained that the “Blues Structure Does Not Change

[The] Analysis.” Id. at ’589. It identified five Blues-related theories that the DOJ might

advance and offered potential rebuttals, including the argument that the Merger would

reduce competition by making Cigna “more of a collaborator and less of a full-throated

competitor against the non-Anthem Blues.”68

In addition to approval from the DOJ, the Merger also required approval from

insurance regulators in twenty-nine states and a handful of foreign countries. See JX 625

at ’984 & slide 5. The parties anticipated that the regulatory review process would take

approximately twelve months. See JX 675 at ’161.

66
JX 567; see Paul Tr. 597–99.
67
Id. After the Cigna ELT turned against the Merger, Cigna took different positions
on these issues.
68
Id. at ’590; see id. at ’58991; see also JX 550.

48
 b. The First Meeting With The DOJ

At the end of August 2016, the parties filed their notifications under the Hart-Scott-

Rodino Act. See Paul Tr. 608–09. On September 2, 2015, the parties held an initial meeting

with the DOJ. PTO ¶ 151. Approximately twenty DOJ lawyers and economists attended.

The purpose of the meeting was to provide an overview of the Merger and to

introduce Anthem and Cigna to the DOJ. Zielinski and Jones were the primary presenters.69

They described the Merger as a combination of “highly complementary businesses with

minimal overlaps.” JX 625 at 2. The presentation praised aspects of Cigna’s business, see

id. at 4, 8, but also noted that Cigna was weak in areas where Anthem had strengths:

 Cigna had “a small individual business, largely outside Anthem territory and no
small group (2-50) offering.” Id. at 9.

 Cigna had “a limited Medicaid presence,” id. at 9, where it was “a very minor
player,” id. at 10, and a “fringe competitor,” id. at 11.

 Cigna had a “very small presence” in individual accounts, id. at 10, where it was “a
minor competitor,” id. at 13.70

The presentation argued that by combining the companies’ respective strengths, the Merger

would reduce the total cost of care while improving quality and choice and “accelerat[ing]

[the] move toward [a] value-based model, building on progress each party has made.” Id.

at 7; see id. at 2. The presentation anticipated that NewCo would expand Cigna’s specialty

69
See Paul Tr. 601–02; Rosen Tr. 810; Jones Tr. 2596–97.
70
After the Cigna ELT turned against the Merger, they actively resisted any and all
negative statements about Cigna’s business.

49
insurance products, such as behavioral, pharmacy, vision, and dental, as well as Cigna’s

more stop-loss and shared-return coverage solutions. See id. at 8.

The parties projected “$2+ billion annual synergies at full run rate.” Id. at 5. They

noted that for large employers who purchased administrative services from NewCo and

self-insured for the underlying medical expenses (approximately 75% of NewCo’s

customers), any savings from NewCo achieving greater discounts from medical providers

would be passed through to the customers automatically. They argued that for employers

who purchased for full coverage from NewCo, a large portion of the savings would be

passed through to customers because of legal requirements on the amount of premiums that

had to be spent on medical care. See id. 7, 18.

The parties stated that they hoped to close “in the second half of 2016.” Id. at 5.

They also stressed that they were “committed to engagement and cooperation with the

Division.” Id. at 19.

During the meeting, the DOJ staff identified their initial areas of interest, including

“Anthem’s relationship/discussions with the [Blues Association]; and how the Blues Rules

impact the transaction.” JX 630 at ’387. The regulators specifically asked whether NewCo

would be in compliance with the 2/3 Rule if the Merger were to close the next day. 71

71
JX 4010 at ’005; Zielinski Tr. 427–29; Rule Tr. 3060–61.

50
 Coming out of the meeting, Cigna believed that one of the “key areas” for the DOJ

would be the Blues Rules. JX 630 at ’387. Zielinski understood that the implications of the

2/3 Rule would be “very critical to our discussion with the DOJ and getting approval.”72

Later in September 2015, the DOJ sent second requests to Anthem and Cigna. Many

of the requests concerned the Blues Rules.73

c. The Second Meeting With The DOJ

On November 13, 2015, Anthem and Cigna met with the DOJ for a second time.

The purpose of this meeting was to provide the DOJ with an overview of the Blues

Association and the Blues Rules.74

The parties told the DOJ that after the Merger, NewCo “likely will not be in

immediate compliance with the [2/3 Rule],” but that would not result in near-term

consequences because NewCo would have 120 days to submit a compliance plan to the

Blues Association. NewCo then would would have up to two years to implement the plan

once the Blues Association approved it. JX 846 at ’352. The parties provided the following

pro forma calculation of how NewCo could come close to complying with the 2/3 Rule:

 Immediately post-closing, $106.4 billion of NewCo’s total revenue of $201.1
million would be branded Blue, reflecting 52.9% of total revenue.

 Ceding approximately $3.5 billion in Blue-branded revenue to other Blues would
reduce the percentage to 51.2%.

72
JX 707 at ’002; see Zielinski Tr. 42829.
73
See, e.g., JX 708; JX 767; JX 1506; JX 4151.
74
See PTO ¶ 162; Rosen Tr. 817.

51
 Rebranding up to $27.1 billion of Cigna revenue in the Anthem Blue States would
increase the percentage to 64.7%.

 To achieve compliance, Anthem would have to rebrand an additional $3.9 billion of
revenue or reduce non-Blue-branded revenue by $5.8 billion.75

The parties confirmed that after the Merger, NewCo would continue to offer Cigna-branded

products and that customers would have a choice between brands. See id. at ’335–36. After

the meeting, Zielinski reported to other Anthem executives that “his biggest worry inside

the DOJ [was] the [2/3 Rule].”76

Confirming its interest in the Blues Rules, the DOJ asked for a deposition to

memorialize the parties’ representations.77 On November 20, 2015, Stephen Schlegel,

Anthem’s Vice President of Corporate Development, gave the deposition. PTO ¶ 163. He

testified that it was “very likely” that the MDL would settle during 2016, which would

result in a change to the 2/3 Rule.78

75
See id. at ’353. After the Cigna ELT turned against the Merger, they resisted the
prospect of rebranding Cigna revenue in the Anthem Blue States.
76
JX 852; see Zielinski Tr. 439–40. Although the 2/3 Rule was Zielinski’s “biggest
worry,” he remained optimistic about the prospects for obtaining regulatory approval.
Jones, by contrast, was concerned, both about the level of the DOJ’s interest and the extent
of Anthem’s preparation. She attempted to prod Zielinski and Anthem to be more
proactive, but Zielinski and his team resisted. See, e.g., JX 768; Jones Tr. 2601–08.
Zielinski viewed himself as in charge of the regulatory process, thought he had matters
under control, and regarded Jones as being overly worried and excessively focused on
process. See, e.g., JX 812; Zielinski Tr. 40003. With the benefit of hindsight, Jones’s
assessment proved correct, and she championed what could have been a better approach.
77
JX 772; JX 853.
78
JX 870 at 51. Zielinski admitted at trial that Schlegel had no factual basis for his
opinion about the timing of a settlement. Zielinski Tr. 434. Schlegel testified that he had
consulted with Zielinski on that point. See JX 870 at 16, 48. Zielinski insisted that he only
thought that the Blues MDL would settle before class certification, and he admitted that he

52
G. The Integration Planning Process And The L2/L3 Selection Dispute

After the signing, the parties faced the challenge of integration planning. This

massive process would determine how two formerly separate companies would operate as

a single entity, not only on the first day after closing, but over the long term. The magnitude

of the Merger meant that the scope of the integration process was unprecedented. The

combined company would generate over $115 billion in annual revenue and cover more

than 53 million individuals. See JX 525 at ’473 & slide 4.

The integration planning process had major implications for the regulatory approval.

To convince the DOJ to approve the Merger, or to prevail in any subsequent litigation, the

parties needed to demonstrate that the Merger created efficiencies that substantially

outweighed its anticompetitive effects. To prove those efficiencies, the parties needed to

show that the efficiencies resulted from the combined strengths of the two companies. The

parties also needed to demonstrate that the efficiencies were quantifiable and sufficiently

likely to be achieved to be credited. To making this showing, the parties had to plan how

NewCo would operate, both on “Day 1” after closing and over longer time horizons.

did not know when class certification would occur. See Zielinski Tr. at 435–36. The
evidence indicates that Zielinski was overly confident about the Blues MDL settling before
the end of 2016 and conveyed that to Schlegel, who then testified to that effect in the DOJ
deposition. Although Zielinski testified that he did not recall telling Schlegel that the Blues
MDL would settle before the end of 2016, Zielinski suggested a similar time frame for
settlement when he spoke with the DOJ in June 2016. See id. at 443–48; JX 2830. The
Blues MDL was scheduled for four days of mediation in June 2016, making the assumption
reasonable. See JX 1849 at ’002. Zielinski and Schlegel therefore do not appear to have
made misrepresentations to the DOJ, but they should have been more candid about the
limitations of their knowledge.

53
 Integration planning also had significant implications for the Anthem and Cigna

executives. The combined company would have a single executive team, so their jobs were

on the line. Determining NewCo’s business strategy would influence how NewCo was

organized, which would affect who would be selected for the NewCo ELT. Because of its

implications, the integration planning process resurrected and reinvigorated the power

struggle between the two executive teams.

1. The First Months Of Integration Planning

The early organizational meetings for the integration planning process went well.

The discussions between Swedish and Cordani, brokered by Riefberg, were productive.79

The two executives in charge of implementing the effort—Dennis Matheis of Anthem and

Chris Hocevar of Cigna—established a good working relationship. See JX 598 at ’70607.

At the end of September 2016, Swedish told the Anthem Board that the parties had

“[a]ligned on a set of key integration principles.” JX 716 at ’041 slides 1 & 2. Swedish also

told investors that Anthem was “working collaboratively [and] closely with the Cigna

team . . . .” JX 675 at ’161.

There were disagreements. One dispute involved Cordani’s role on the joint steering

committee for the integration planning process (the “Steering Committee”). Swedish and

Cordani had agreed that Swedish would chair the committee and that Cordani would serve

as “Vice Chair,” meaning that he would chair meetings that Swedish did not attend.80 Other

79
See JX 607; JX 632.
80
JX 645; Swedish Tr. 1081–82.

54
Cigna executives, led by Jones and McCarthy, convinced Cordani to back away from that

commitment.81 When Jones told Zielinski that they needed a different model, Zielinski

insisted on the agreed-upon structure.82

A similar dispute arose over the composition of the Steering Committee. Swedish

proposed four Anthem representatives, four Cigna representatives, and himself as Chair.

Cordani wanted six Cigna representatives.83 They agreed on five representatives each,

including Swedish and Cordani.84

A variant of the same issue played out over the hiring of consultants. Anthem

wanted to hire McKinsey as the sole consultant for the integration process. Cigna wanted

each company to have its own consultant. Anthem insisted on having McKinsey as the sole

consultant.85

None of these disagreements were fatal, but they were irritants and reflected the

parties’ differing views of the transaction. Anthem saw itself as the acquirer; Cigna saw

the parties as equals.86

81
See JX 648; JX 649; JX 656.
82
See JX 669; JX 672; JX 694.
83
See JX 726; Swedish Tr.1081–82.
84
See JX 778 at ’803; Swedish Tr. 1340–41.
85
See, e.g., JX 594; JX 596; JX 621; Swedish Tr. 1177. A similar dispute also played
out over the hiring of an economic expert to assist with antitrust approval. Jones wanted
the companies to retain the expert jointly. Zielinski insisted on Anthem retaining the expert.
JX 698; Zielinski Tr. 395–96; see Jones Tr. 25992601.
86
See, e.g., JX 525 at ’473 & slide 7 (“Initial transaction intent was friendly, but
feel has transitioned towards feeling more hostile, potentially negatively impacting

55
 2. The L2/L3 Selection Dispute

The first meeting of the Steering Committee took place on October 21, 2015,

followed by a kick-off meeting for the integration team leaders the next day.87 The Steering

Committee materials affirmed that “[d]ecision-making will be carried out on a shared

basis,” but “[i]f a collaborative decision can’t be reached, the final decision-making

responsibility falls to [Swedish].”88

As part of the integration planning process, Swedish wanted to lay the groundwork

for eventually selecting the NewCo ELT. Both sides used abbreviations to refer to the tiers

of executives that would constitute the team. As CEO, Swedish was “L1.” The executives

who would report to him were “L2.” The executives who would report to “L2” were “L3.”

And so on.

The Steering Committee materials for the October meeting projected that the L2/L3

selection process would begin in November and be completed in early March. JX 778 at

’830, ’846. Decisions on NewCo’s operating model and organizational design would be

integration activity.”); JX 731 (Zielinski telling Swedish that he was “growing very tired
of [Cordani’s] childish antics”); JX 754 (Anthem executive telling Swedish, “At some
point during our discussion [with Cordani], we do need to drive home that it’s not a merger
of equals, but an acquisition. . . . Cigna’s leadership is still under the misguided impression
that this is a merger.”); Cordani Tr. 1793 (“Broadly speaking, Anthem’s approach to the
integration process was to make it clear to Cigna that they were in charge . . . .”); id. at
1796 (“[T]he friction between the two organizations continued to grow [through the end of
2015], starting with the selection of the integration consultant, through the configuration
of the steering committee.”).
87
See PTO ¶ 153; JX 775; JX 778; see also Swedish Tr. 1080.
88
JX 778 at ’805; see Swedish Tr. 1082.

56
made during the same period. Id. at ’830. The presentation described the selection of the

NewCo ELT as “Joe / David’s critical decision.”89

The series of events that put the two companies on a war footing began when

Swedish tried to schedule the interviews that were an initial step in the L2/L3 selection

process. When Anthem’s head of human resources reached out to the Cigna ELT, Cordani

and his team reacted angrily. Murabito was “outraged on more than one plane.” JX 890.

Cordani called it “[w]rong on a number of accounts.”90 After Cordani objected, Swedish

met with Cordani and Murabito and explained his timeline. JX 919. Cordani and Murabito

“pushed back hard . . . .” JX 913 at ’272.

Swedish and Zielinski saw Cordani’s opposition as a threat to the success of the

integration planning process, the Merger, and themselves personally. They knew that

89
Id.; see Swedish Tr. 1081–82. Cordani similarly had told the Cigna Board that he
expected the leadership decisions to be “made in Q1” of 2016. JX 771 at ’906. Selecting
these positions early comported with what Cigna wanted to do during the merger
negotiations when Cigna had envisioned itself as acquiring Anthem. See JX 184 at
’18889. It also was consistent with advice that Cigna had received when Cordani and his
ELT thought that they would be in the driver’s seat. See id. at ’189 (Cigna’s banker telling
Cordani and Jones that because the success of the deal would depend on executive
leadership, it was “important for several of the other key management and integration
positions [in addition to chair and CEO] to be identified and sourced from the talent pools
at both organizations prior to announcement”); JX 678 at ’600 (advice to Cordani from
Heidrick & Struggles in September 2015 about the need to begin “designing the new
leadership structure/operating model” and then assessing and selecting “the best players
who best fit the requirements”); see also JX 693 at 2–3 (advice from Bain & Co., with
whom Cordani was secretly consulting, recommending that the parties “[r]esolve the power
and people issues quickly” and begin this work “even before the deal is announced”); Singh
Dep. 19–20.
90
Id.; see JX 907; JX 908.

57
Cordani had gained the CEO position at Cigna through a boardroom coup, and they

suspected that he would try it again.91 They already had discussed reducing Cordani’s

duties at NewCo because although the Merger Agreement required that Cordani be named

President and COO, it did not specify what responsibilities those positions would have.92

Cordani’s offer letter also did not specify particular responsibilities. 93 Swedish and

Zielinski hoped that if they narrowed Cordani’s role, then he might leave voluntarily.94

3. The Dispute Letters

During the same period that Cigna was resisting Swedish’s efforts to schedule the

interviews that would begin the L2/L3 selection process, McKinsey reported that Cigna

91
Nor were their concerns unfounded. See Part II.D.5, supra. Cordani secretly was
working with Ashish Singh, a consultant from Bain, on how to influence Swedish and
shape NewCo’s leadership structure to his advantage. See JX 947; JX 959; JX 964; JX 974;
JX 1007 at ’212; JX 1147 at ’397; Singh Dep. 47, 93–94, 113–14. To keep Singh’s
involvement secret, Cordani routed all communications with Singh through Hocevar,
Cordani’s “problem-solver” and right-hand man. See, e.g., JX 948; JX 974; Hocevar Tr.
2301; see also JX 680; Singh Dep. 89. On December 22, 2015, Cordani secretly met with
Singh in an airport hangar. See JX 993; JX 2746; Hocevar Tr. 2328; Hocevar Dep. 464;
Singh Dep. 88–89.
92
See MA § 1.13(b)(ii); JX 826; Zielinski Tr. 262–63; Swedish Tr. 1226, 1228–29.
93
See JX 476; JX 793 at 167; Zielinski Tr. 545–46.
94
See JX 1262; Zielinski Tr. 268–72; see also JX 1610; cf. JX 934. The direct
evidence about Anthem’s strategy of reducing Cordani’s role came later in the timeline. It
nevertheless is inferable that this was a strategy that Swedish and Zielinski had developed
earlier. At trial, Zielinski testified that there was no connection between a reduction in the
scope of Cordani’s role and any discussions about inducing him to leave, claiming it was
“just a coincidence.” Zielinski Tr. 273. That testimony was not credible.

58
was not providing access to information needed for integration planning.95 Zielinski sent a

curt email to Jones, describing the situation as “not only disappointing but disturbing.”

JX 914. Cigna believed that the problem was with McKinsey and that the data had been

provided. See JX 921. McCarthy, Cigna’s CFO, met with Riefberg to clear the air. They

also talked about the interviews for the L2/L3 selection process, with McCarthy bluntly

telling Riefberg that that Anthem needed “to find another model . . . .” JX 965.

During a call on December 22, 2015, Swedish told Cordani that he was dissatisfied

with the pace of integration planning. See JX 985. They turned to the L2/L3 selection

process, disagreeing over virtually every aspect. Swedish maintained that he had the right

to select his direct reports; Cordani wanted a voice in the selection. Swedish wanted to

announce the L2 leadership structure by March 2016, as the Steering Committee had

planned; Cordani did not want any L2 selections announced until May or June 2016.

Swedish wanted to announce the remainder of the executive team before closing; Cordani

wanted those decisions made after closing. Cordani also told Swedish that he wanted four

more areas added to his portfolio as COO.96

On December 29, 2015, Swedish sent Cordani a letter in which he took a hard line

on the L2/L3 selection, describing it as “a foundational necessity” for integration work.

JX 998 at ’390. Swedish also criticized Cigna’s involvement in “the implementation and

95
See JX 914; see also JX 874 at ’011 slides 3 & 11 (citing issues with obtaining
information and marking Value Capture in in red for “[r]equires action” because of delays
in receiving data).
96
See JX 995 at ’351–52; see also JX 986; Swedish Tr. 1083–88.

59
execution of [the] integration plan” as “unacceptable.” Id. at ’389. Swedish asserted that

Cigna’s “delays in producing data, inefficient processes for resolving data classification

disputes, never ending discussions regarding access to data, repeated postponement of

meetings, and other conflicts have collectively caused a very ineffective and slow paced

integration process.”97

On December 31, 2015, Cordani responded with a letter of his own. He maintained

that the L2/L3 selections would be “highly disruptive.” JX 1002 at ’133. He told Swedish

that he had discussed the issue with the Cigna Board and received “clear feedback” that

“creating this type of disruption . . . without agreement on approach, more insight into the

regulatory timeline and a broader supporting talent management strategy is

inadvisable . . . .” Id. He also disagreed with Swedish’s claim that “execution of the

[integration] plan has been unacceptable.” Id. at ’131. He countered with concerns about

the “de minimis amount of time” that the Steering Committee had spent “gaining insight

into the regulatory process and strategy.” Id. at ’132. To establish a path forward, Cordani

suggested “[d]ecoupl[ing] integration planning from the leadership selection decisions.”

Id. at ’134.

97
Id. Cigna points out that by the time Swedish wrote his letter, the disputed data
had been provided or otherwise addressed. See Dkt. 700 at 22 (citing Swedish Tr. 1191–
92). Swedish’s letter acknowledged that fact. JX 998 at ’389. Swedish was concerned about
the process going forward. Cigna also claims that McKinsey’s tracking documents showed
integration planning proceeding apace. Id. The dashboard as of November 16, 2015,
showed value capture and pharmacy benefits management in red for “requires action” and
three other areas in yellow for “need to monitor.” JX 874 at ’011 slide 3.

60
 On January 3, 2016, Swedish responded with a more strongly worded letter, telling

Cordani, “With all due respect, I am becoming deaf to the rhetoric.” JX 1011 at ’494. He

continued: “You and your team ‘say’ all the right things, but the conduct and actions are

inconsistent with the rhetoric. My focus is on tangible actions and results . . . .” Id. On

leadership selection, Swedish maintained that “as the CEO of Anthem, it is most

appropriate that I should determine the structure and choose the talent for the company that

I will be responsible for running post-closing, a position made known to you and verbally

supported by you during our discussions on December 4th when I presented the decision

model.” Id. Swedish dismissed Cordani’s concerns about disruption as “not compelling,”

noting that he expected “the members of your senior leadership will be professional and

dedicated to performing their duties and responsibilities if they are not selected,” and that

“Cigna has very generous Change in Control and retention benefits, which will ensure that

these individuals will remain through closing.” Id. at ’495. On the issue of integration

planning, Swedish delivered Anthem’s bottom line position: “Anthem acquired Cigna and

therefore it is Anthem’s Board that has the responsibility for overseeing Anthem’s

integration of Cigna and to ensure that Anthem’s shareholders, post-closing, realize the

value and benefit of the transaction.” Id.

4. The Meeting On January 11, 2016

Swedish met with Cordani in person on January 11, 2016. 98 The purpose of the

meeting was for Swedish to present his vision for NewCo’s organizational structure. See

98
Swedish and Cordani met briefly on January 5, 2016, just before the January
meeting of the Steering Committee. They did not discuss the letters. See JX 1025; Cordani

61
JX 1042. During the meeting, Swedish gave Cordani a set of slides and explained that he

envisioned that Cordani would be President and COO, but would serve only as the head of

NewCo’s commercial business unit. See JX 1053. Swedish explained that the commercial

business unit was twice the size of Cigna’s total business, was critical to Anthem’s success,

and needed “a senior leader’s singular focus.”99 Swedish explained that for the other lines

of business, he chose executives who had experience and expertise that Cordani did not

have. See Swedish Tr. 109194. Talking points that Swedish prepared for the meeting

noted that because Cordani could leave within two years with full severance, Anthem

needed to “diversity [its] business leaders and create multiple successor options for the

Board’s eventual consideration.” JX 1033 at ’010.

Regardless of the messaging, this was a significant reduction in Cordani’s

responsibilities. Swedish and Cordani had agreed during their discussions with Riefberg

that Cordani would have responsibility for all four business units.100 Cordani had attempted

unsuccessfully to re-trade that agreement by expanding his role. Swedish was now reducing

Cordani’s role and telling him that he was not the anointed successor as CEO.

Tr. 1803–04. The January meeting of the Steering Committee was frustrating for Jones,
who continued to seek more collaborative and proactive decision-making on the regulatory
front. Zielinski and Anthem continued to believe that they had the regulatory process under
control, and they resisted Jones’s involvement. See JX 1020; Jones Tr. 2608–14.
99
JX 1033 at ’010; see Swedish Tr. 1093–94.
100
See JX 1062 at ’501 & slide 5; Zielinski Tr. 263–70; Swedish Tr. 1229.

62
 Cordani did not react well to Swedish’s message. After hearing Swedish explain the

proposed structure, Cordani said that they had “nothing else to talk about” and left the

room.101 Cordani admitted that he was “disappointed” and “frustrated.” Cordani Tr. 1983.

5. The Cigna ELT’s Response

Cordani viewed Swedish’s attempt to cabin his role as a hostile act.102 Before the

day was over, Jones and her colleagues were reviewing the provisions of the Merger

Agreement that addressed NewCo’s officers and directors as well as the sections of

Anthem’s bylaws that described the senior officer roles.103 That evening, Jones reached out

to Wachtell Lipton Rosen & Katz LLP, which she described as “the preeminent firm on

hostile deals.”104 The Cigna executives also reached out to Moelis & Company. 105 Cigna

already had a suite of deal advisors, including Cadwalader, Cravath Swaine & Moore LLP,

and Morgan Stanley. The Cigna ELT wanted additional advisors to focus specifically on

defending against a perceived hostile takeover. See Cordani Tr. 1809–10.

Within three days after Swedish’s meeting with Cordani, the Cigna ELT had

prepared an action plan.106 Titled “Integration Planning and Engagement Framework,” its

101
Swedish Tr. 1096; see Cordani Dep. 543–44.
102
See Cordani Tr. 1808; Jones Tr. 2617–18.
103
See JX 1044; JX 1051; Cordani Tr. 1984.
104
JX 1051. At trial, Jones testified that she did not know that Wachtell Lipton had
experience with hostile deals. Jones Tr. 272934. That testimony was not credible.
105
See JX 1059; JX 1089.
106
See JX 1075; JX 1079; see also JX 1090; JX 1093.

63
goals were to (i) limit integration planning and (ii) restore Cordani’s role. JX 1075 at ’613,

’617, ’620. The two were linked because decisions about how NewCo would be organized

affected Cordani. The Cigna ELT did not want Swedish making “critical high-level

decisions for NewCo (such as overall business strategy and leadership structure) . . . .” Id.

at ’617. To stop this from happening, they wanted to “[r]efocus integration planning on

Day 1 priorities.” Id. at ’619.

To cabin Swedish’s authority, the Cigna ELT sought to “[e]nsure that critical high-

level planning decisions for NewCo are raised to and addressed by the NewCo Board.”107

The NewCo Board designees were scheduled to have their first meeting on February 16,

2016. The meeting was primarily an opportunity to socialize. Swedish Tr. 1104. Cigna

ELT planned to use it to “[r]eset current expectations and processes with respect to

integration planning.” JX 1075 at ’619.

The Cigna ELT also planned to use the February 16 meeting to re-establish

Cordani’s role. The goal again was to redirect “planning for the role of President and COO”

from Swedish “to the NewCo Board.” Id. at ’620. Cordani would send a positive letter to

Swedish, but with the “NewCo Board as the audience.” Id. at ’621. Cigna would also

identify “friendly investors to reach out to Anthem’s continuing directors to articulate

D. Cordani’s value.” Id. And Cigna would “[c]ontinue D. Cordani’s high-visibility with

investors and the media.” Id.

Id. at ’617; cf. JX 412 at ’702 (email from Jones describing strategy to involve
107

NewCo Board as a means of checking Swedish).

64
 After speaking with their advisors, the Cigna ELT developed a more detailed “go

forward path.” See JX 1095. The Cigna ELT had concluded that Swedish’s “actions don’t

likely create a path to not complete the deal.” Id. at ’002. The goal therefore was to establish

an “[a]lternative structure . . . for integration planning, Day 1 with [Cordani] in [an]

acceptable role.” Id. at ’735. Rather than Swedish, the NewCo Board would “determine

best ongoing structure post Day 1 for NewCo.”108

If all went well at the February 16 meeting, then Swedish would be checked. If

Anthem resisted, then Cigna could “escalate publically [sic],” with the expectation that

Anthem would back down “to avoid public fight.” JX 1095 at ’002.

6. Preparations For The February 16 Meeting

Over the ensuing weeks, the Cigna ELT, Moelis, and Cadwalader prepared

extensively for the February 16 meeting.109 Moelis dubbed the plan “Project Alpha,” a code

name that was “consistent with [the] objective.” JX 1104. The purpose of the plan was to

ensure that the integration plan with [Anthem] is developed and, ultimately
implemented post-closing, in a manner that maximizes the long-term success
of the combined company by ensuring [Cordani] is seated as [NewCo’s]
President and COO, with the authority, powers, duties and responsibilities
generally considered to be incident to those titles . . . and positioning
[Cordani] as the natural successor to the CEO . . . .

108
Id.; see JX 1164 at ’208 (discussing goal of slowing down integration planning).
109
See JX 1104; JX 1106; JX 1107; JX 1109 JX 1140; JX 1164; JX 1182; JX 1206;
JX 1207. Zollars, a Cigna director, testified that the Cigna Board was never told that Moelis
was advising Cordani and the Cigna ELT on positioning Cordani to become the CEO of
NewCo. Zollars Tr. 2502. He felt that paying Moelis to work toward that goal would have
been an inappropriate use of Cigna’s resources. Id. at 2503.

65
JX 1106 at ’586. In its complete form, the plan consisted of a sixty-six page “playbook”

that included lists of critical issues, scenario planning, “Hardball Q&A,” “Proposed Board

Pairings,” and a “Plan B” to deploy if the meeting did not go well.110

Throughout each phase of “[t]he overall ‘battle plan,’” the Cigna ELT and their

advisors sought to act indirectly and covertly. Moelis advised “the C[igna] continuing

directors should be the tip of [the] spear and [Cordani] should play a lead role in [the]

shadows.”111

The Cigna ELT separately mapped out the “Escalation Alternatives” to be deployed

if the February 16 meeting did not go well.112 The possible “Hostile Alternatives” included

an investor campaign, a public relations campaign, a customer/provider campaign, a

government affairs strategy, and legal action.113 The public relations campaign envisioned

that Cigna would (i) “[h]ire PR firm and identify friendly reporters,” (ii) “[o]rchestrate

press report about [Cigna] discontent,” (iii) “arrange for positive profiles of [Cordani],”

and (iv) “highlight[] merits of [Cigna] position.” JX 1186 at ’002–03.

110
See JX 1522; see also JX 1178; JX 1194
111
JX 1226; see JX 1186; JX 1224; JX 1233; JX 1251; JX 1291; see also JX 1165
at ’522–23 (Moelis recommending that Cordani “[c]onsider asking C[igna] directors to be
‘scapegoat’ and [to] explain that [Cordani] wasn’t the bad guy”).
112
JX 1186 at ’310; see JX 1215; JX 1217; JX 1223; JX 1284.
113
JX 1186 at ’002; see JX 1215; JX 1217; JX 1223; see also JX 1165 (“To use one
of David’s military analogies which he seems to like so much – with the Board, we will
use ‘aggressive diplomacy’ that could involve threats if we don’t get the right response”);
JX 1226 (“If February 16 meeting does not generate desired discussion . . . , then we should
fight.”).

66
 Meanwhile, Swedish continued to attempt to move forward with the interviews that

would enable him to select the NewCo ELT by March 1, 2016.114 Cordani steadfastly

resisted Swedish’s efforts.115 He argued that no decisions on leadership should be made

until after the parties mutually agreed that the deal was four months away from closing.116

By this point, Swedish no longer wanted Cordani to be part of NewCo.117 Swedish

called a meeting of the Anthem Board in advance of the February 16 meeting, expecting

“to get full support” for “proceeding with the process plus deleting [Cordani] from our

consideration going forward.” JX 1293. Swedish believed that “[f]urther conversation

about [Cigna’s] position [was] a total waste of time” and that Anthem needed to implement

its plans “irrespective of [Cigna’s] opinions.”118

7. The February 16 Meeting

During the February 16 meeting, the Cigna designees conveyed their concern about

Cordani’s reduced role and the timing of the leadership selection process. 119 The Anthem

114
JX 1169; JX 1189; JX 1266; JX 1293; see generally JX 1287 (collecting
communications).
115
See JX 1169; JX 1189; JX 1222; JX 1283; JX 1293.
116
See JX 1283; JX 1466 at ’368; JX 4050; Swedish Tr. 1204–06.
117
Swedish Tr. 1225, 1258–59; see JX 1293; JX 1303; Zielinski Tr. 258–59, 273–
74.
118
JX 1303. Swedish testified in the Antitrust Litigation and again at trial in this
litigation that he respected Cordani’s position on the timing of the leadership selection
process and regarded it as a constructive suggestion. See Swedish Tr. 1205–06, 1255–56.
That testimony was not credible.
119
See JX 1340 at ’001–02; Swedish Tr. 1104; Zollars Tr. 2472–73. During the
meeting, Jones raised concerns about the regulatory process. Swedish responded that

67
designees empathized with their future colleagues.120 The consensus was for Swedish to

meet with Harris to present his model and explain the underlying rationale.121

After the dinner with the Cigna designees, the Anthem Board met formally on

February 17 and 18, 2016. The Anthem directors decided that Anthem should not do

“anything to upset David or the directors at CIGNA and that the primary objective was to

keep everything on peaceful terms in order to get the deal closed.” JX 1323. To that end,

they decided that “no announcements about the organization should be made without first

discussing it with our board, and [Swedish] agreed with that.” Id. Swedish interpreted the

Anthem Board’s direction as changing the timing but not the outcome.

8. Cigna Escalates Further.

The February 16 meeting did not result in a commitment that Cordani would be

President and COO with responsibility for all four of NewCo’s business units and a

confirmed path to CEO. Nor did it reset expectations regarding the integration process. The

Cigna ELT decided to escalate.

On February 23 and 24, 2016, the Cigna Board held a lengthy meeting. During an

executive session, Cordani, Jones, and McCarthy reported on

certain issues that have arisen which create “red flags” that the Anthem
transaction may be trending away from the deal that the Board believed it

Zielinski was in charge of the regulatory process and was going to get the Merger approved.
Zielinski then claimed that he had not heard about Jones’s concerns before that point, which
was not accurate. This experience caused Jones’s frustration with Anthem to increase. See
Jones Tr. 2619–21.
120
See, e.g., JX 1300; JX 1487; JX 1501; JX 1568; Zollars Tr. 2472–73.
121
Swedish Tr. 1104–05; Jones Tr. 2623.

68
 was entering into at the time of signing, including . . . (1) the pace and
progress of the regulatory process; (2) the focus of the integration planning
process; (3) Anthem’s proposed post-closing organization structure; and
(4) the health of Anthem’s underlying fundamentals.

JX 1350 at ’835. Despite being listed third, the “post-closing organization structure” was

the real issue. Re-focusing the integration process was a way to protect Cordani’s role and

gain leverage against Anthem. Although Cigna was legitimately concerned about how

Anthem was handling the regulatory process, Cigna used the state of the regulatory process

as a justification for re-focusing the integration process.

At the conclusion of the two-day meeting, the Cigna Board “confirmed its desire”

on the following points regarding the Merger:

(1) a special meeting of the Board be held at the end of March devoted
exclusively to the Anthem transaction and the “red flags” discussed, as well
as any others that may emerge;

(2) the Chairman of the Board meet with the Chairman of Anthem to discuss
the organizational structure of the combined company that Anthem had
proposed;

(3) management re-assess and, as necessary, de-scope the Corporation’s
integration planning efforts in light of the concerns raised on the pace and
progress of regulatory efforts;

(4) management continue to keep the Board advised on an ongoing basis of
the current market dynamics and refresh the Corporation’s stand-alone
strategy and projections at the regularly scheduled meeting in July; and

(5) management retain additional legal and other advisors to assist the Board
in reviewing and evaluating the Corporation’s rights and obligations under
the merger agreement to ensure that shareholders are getting benefits for
which they had bargained.

Id. at ’843–44 (formatting added). Again, the principal issue was “the organizational

structure of the combined company.” To create leverage on that issue, the resolutions gave

69
the Cigna ELT the authority to “re-assess and, as necessary, de-scope” Cigna’s

involvement in integration planning, using “the pace and progress of regulatory efforts” as

a justification. Notably, the Cigna Board also called for reassessing Cigna’s “stand-alone

strategy.”

The resolutions provided authority for the Cigna ELT to formally hire Moelis and

Wachtell Lipton as additional advisors. Cigna management already had decided to hire

both firms.122

On Wachtell Lipton’s recommendation, Cordani hired Teneo, “an exceptional

communications/strategy advisory firm.”123 Skilled in the darker arts of influencing the

media and public discourse, Teneo touted that “[a] well-run communications strategy can

dramatically change the outcome of high-stakes litigation and/or enforcement action

matters,” and that “a good communications plan will not only support the overall legal

strategy, but will serve to protect a company’s reputation, as well as direct the conversation

122
See JX 1151; JX 1289; JX 1360. In his deposition, Cordani testified that Cigna
retained Wachtell Lipton to “advise the board on actions to help get the deal to the finish
line.” Cordani Dep. 201. That testimony was misleading. Wachtell Lipton technically was
hired to advise the Cigna Board, but Wachtell Lipton did not do anything to help complete
the deal. See Cordani Tr. 1985–86; Jones Tr. 2731. Wachtell Lipton helped Cigna to escape
from the deal. For example, Wachtell Lipton provided advice about terminating the Merger
Agreement and recommended that Cigna not make statements about believing in the merits
of the Merger. Jones Tr. 2731–32. Wachtell Lipton did not provide any advice about how
to convince the DOJ to approve the Merger, how to construct a remediation proposal to
clear the Merger, how to achieve a resolution with the DOJ, or how to prevail at trial. Id.
123
JX 1434; see JX 1389; JX 1430; JX 1436; JX 1437 at ’433.

70
outside of the courtroom.”124 Wachtell Lipton previously worked with Teneo when

representing another client that was seeking to avoid closing a merger.125

Only a handful of senior Cigna executives knew about Wachtell Lipton’s

involvement.126 To conceal Wachtell Lipton’s role, the executives referred to the firm as

the “Tea Company,” an allusion to Lipton-brand tea.127

124
JX 2976. After Anthem deposed a Teneo representative about this language,
Teneo revised its website. See JX 3140 (“A well run communications strategy can
dramatically change the public’s understanding of a company’s role in high-stakes
litigation and/or enforcement matters; a good communications plan will not only support
the overall legal strategy, but will serve to protect the company’s reputation outside the
courtroom.”); Cohen Tr. 2371–72.
125
Cohen Dep. 22–23. In his deposition, Cordani testified that Cigna hired Teneo to
“[s]upport and help us get the deal done.” Cordani Dep. 146. That testimony was
inaccurate. Teneo worked against the deal. Cigna never asked Teneo to develop any
arguments in favor of the Merger, and Teneo did not put together any messaging or
communications to support the Merger as pro-competitive. See Cohen Tr. 2384, 2386.
Teneo’s work ran so obviously against the Merger that Jones could not give a straight
answer as to whether Teneo worked on the Merger. See Jones Dep. 1111 (“They did work
on things that related to the merger, certainly. But -- or, well, I’m not sure if they worked
on things related to the merger. They certainly -- there were things that obviously they
were, that they were doing relating to the merger -- well, not doing relating to the merger.
The answer is, I don’t think they were working on anything specifically relating to the
merger.”). Jones testified inaccurately that Teneo was not “specifically retained to work on
merger-related items.” Id. She likewise testified inaccurately that “there wasn’t a proactive
nature to what Teneo was doing vis-à-vis the merger.” Id. at 1112. Lisa Baucus, a Cigna
executive who worked closely with Teneo as it worked against the Merger, testified
inaccurately that she was “not really clear what [Teneo] did beyond our breakfast
meetings,” which Cigna conducted to raise awareness about the opioid crisis. Baucus Dep.
318. She also testified inaccurately that Teneo did not do any work to promote Cigna’s
standalone business. Id. at 317–19. She claimed not to know or be able to infer that “[C]”
stood for Cigna and “[A]” stood for Anthem in a memorandum from Teneo. Id. at 701–09.
126
See JX 1738; Jones Tr. 2665, 2728.
127
See, e.g., JX 1530; JX 1861; JX 2333; JX 2684; JX 2717; Jones Tr. 2665–66;
Harris Tr. 3258–59.

71
 Cigna similarly restricted knowledge of Teneo’s activities. To manufacture a basis

for claiming privilege over Teneo’s work, Cigna and Teneo engaged in the ruse of having

Wachtell Lipton retain Teneo. Cigna and Teneo also used Wachtell Lipton attorneys as

conduits to provide a basis for claiming privilege.128

Consistent with the Cigna Board’s directive to resume analyzing Cigna’s stand-

alone strategy, the Cigna ELT, Wachtell Lipton, and Teneo began examining topics such

as “landscape w/ transaction completion and without” and “[p]reparation in the event

128
See JX 1437; JX 1583; JX 1642; JX 1752; Cohen Tr. 2429–30. At trial, Jones
denied that Cigna and Teneo channeled documents through Wachtell Lipton to
manufacture privilege. Jones Tr. 2780–84. The contemporaneous record contradicts her
testimony. See JX 2489; JX 3143; JX 3144; JX 4160; Jones Tr. 2784. Jones also
participated in efforts to manufacture privilege for other Cigna documents. See JX 1109 at
’395 (Project Alpha document with notation, “SUGGEST THIS GO OUT FROM NSJ
TO GET PRIVILEGE”). In this litigation, Cigna withheld numerous Teneo documents
as privileged before producing them a year later in the face of a motion to compel. See,
e.g., JX 1529; JX 1752; JX 1764; JX 2298; JX 2462; JX 2483; JX 2484; JX 2486; JX 2499;
JX 2585; JX 3110.

Anthem also asserted privilege aggressively, most notably in the Antitrust Litigation
for documents prepared by the Special Task Force. See Part II.K.4, infra. Anthem
inaccurately claimed that the Special Task Force related to the Blues MDL, and Swedish
testified to that effect. See JX 2594 at 13–17; Swedish Tr. 1303–08. The Special Task Force
had nothing to do with the Blues MDL; it was formed to analyze how the Blues Association
could respond to the Merger. Swedish Tr. 1293, 1305, 1365–66.

Anthem points out that it did not hide the existence of the Special Task Force, either
in the Antirust Litigation or in this case, and that is true. See, e.g., JX 1236; JX 3113;
JX 3114; Zielinski Tr. 519–22, 525–26. The problem was Anthem’s unfounded assertion
of privilege, which the DOJ did not challenge. In this litigation, Cigna successfully
challenged the improper assertion of privilege, and Special Task Force materials came to
light. See Dkts. 404, 551, 559.

Neither side was forthright when asserting privilege. That is yet another factor
undercutting both sides’ credibility.

72
transaction is not approved.”129 Teneo developed the following three level “Post February

16 Framework” for Cigna to follow:

See JX 1522 at ’065.

Anthem maintains that by this point, the Cigna ELT had turned definitively against

the Merger, but Cordani and his colleagues had not crossed that bridge. The Cigna ELT

had soured on how Anthem was approaching the Merger, including how the Anthem ELT

was managing the integration planning process. The Cigna ELT was drawing a line in the

sand on those issues. If Cigna could force Anthem to change its approach, restore Cordani’s

role, and treat Cigna as an equal partner, then the Cigna ELT could support the Merger.

129
JX 1468 at ’805; see also JX 1486 at ’669.

73
 9. The De-Scoping Of The Integration Planning Process

On the day after the Cigna Board meeting, Hocevar sent an email to all of the Cigna

team leaders telling them to prioritize “Day 1” planning and not to engage in detailed

planning for later periods.130 He stressed,

 “Day 1 activities are the key priority on integration planning now and if time
permits, we can work on finalizing any of the high level [sic] post close planning
assumptions. We are a long way off from locking down Day 1 requirements.”
JX 1367 at ’243.

 “We have enough information shared at this point and truly need insights at this
point rather than more information.” Id.

 “We know at a high level that there is a line of sight to the $2B of shareholder
synergies and while we need to validate high level thinking on the synergies, we do
not need to lock down on the details of any lever at this point.” Id. at ’242.

 “The details of ‘how we make money’ or ‘our secret sauce’ should continue to be
held closely to the vest at all times as it truly is the competitive advantage we have.”
Id.

 “Most importantly, neither Mckinsey [sic] nor Anthem should drive the pace of
integration planning.” Id.

He specifically noted that Cigna should not be “‘[s]igning up’ for specific growth strategies

post close” or “[a]ccelerating any requirements / development of initiatives beyond Day 1

planning items.” Id. Hocevar later described Cigna’s position to Bain & Company as “a

freeze on integration activities.” JX 1557. He also told Bain that the parties were in a

“[h]olding pattern in naming” NewCo’s leadership team that was “Cigna driven.” Id.

130
JX 1367. There is evidence that the Cigna ELT began restricting the flow of
information to Anthem before receiving formal authorization from the Cigna Board,
particularly as it related to data on medical management, utilization, and value-based care.
See, e.g., JX 1211; JX 1212; JX 1214; Drozdowski Tr. 924–47.

74
Bain’s takeaway was that Cigna “will no longer participate in the process as it is currently

be[ing] run by Anthem and McKinsey.” JX 1564.

After Hocevar sent his email, the various Cigna teams began informing their

Anthem counterparts of Cigna’s new stance.131 His Anthem counterpart, Matheis,

immediately objected and asked Swedish to intervene.132

10. The Status Of The Regulatory Approval Process

The timing of Cigna’s decision to de-scope integration corresponded with a new

phase of the regulatory approval process. Before then, the process largely involved

collecting information in response to the second requests, and the relationship between the

parties’ regulatory counsel had been constructive. During 2015, they had made “good

progress” on the regulatory strategy and were “working well together.”133 In December

2015, they conducted a preliminary review of the divestitures that might be necessary to

obtain regulatory approval.134 Both sides agreed that they were not far enough along with

DOJ to work out a specific divestiture plan, but they nevertheless discussed what the shape

of the divestitures should be, what assets might need to be included, how it could be

structured, and potential buyers.135

131
See JX 1380; JX 1382; JX 1383; JX 1390; JX 1398; JX 1432; JX 1439.
132
See JX 1382; JX 1387; JX 1392; see also Zielinski Tr. 39–40 (describing Cigna’s
limitation of integration planning to Day 1 activities).
133
Paul Tr. 613; see Zielinski Tr. 310; Rosen Tr. 780; Curran Tr. 1474.
134
See JX 901; Paul Tr. 632–633; Gray Tr. 1664–65.
135
See Paul Tr. 635–36; Rosen Tr. 784–85; Paul Dep. 70, 75–82, 86, 99.

75
 On February 9, 2016, while the drama over the L2/L3 selection was playing out,

Anthem certified that it had substantially complied with the DOJ’s second requests. See

JX 1235. As is customary, the parties entered into a “timing agreement” with the DOJ in

which they committed not to close the Merger before July 1, 2016, unless the DOJ had

completed its investigation. The agreement called for the parties to meet with the DOJ in

June to hear its views on the Merger.136 With the DOJ investigation cranking up, the

parties’ lawyers reviewed their strategy and developed a work plan.137

On February 17, 2016, Anthem and Cigna had their third meeting with the DOJ, this

time to find out what areas the DOJ might want the parties to address through white papers

or other submissions. The parties also sought to obtain preliminary insight into the DOJ’s

views on the deal.138 Anthem signaled that it was prepared to discuss divestitures, but asked

the DOJ to provide guidance on what types of divestitures might be helpful. After the

meeting, Anthem’s counsel sent a discussion document about divestiture strategies to

Cigna’s counsel, and Anthem’s economist began running screens to identify local market

areas where divestitures might be necessary.139

136
JX 1775 at ’511; see Rule Tr. 3068.
137
See JX 1246; JX 1305.
138
See JX 1292; JX 1326.
139
See JX 1304; Paul Tr. 633–634. Rosen, one of Anthem’s principal antitrust
lawyers, testified that Anthem began having issues with Cigna’s cooperation “in the
January, February time frame of 2016,” tying his recollection to “a dispute over the timing
of the submission of the Hart-Scott-Rodino responses” and explaining that “it really started
to decline after that, and accelerated after that.” Rosen Tr. 781. Cigna failed to deliver its
response to the second requests in a form that was acceptable to the DOJ, which became

76
H. The Impasses Of March And April

As the calendar turned to March 2016, the disputes between Anthem and Cigna

intensified, with Cordani’s role front and center. By the end of March, the Cigna ELT had

turned against the Merger. During April, Cigna’s opposition to the Merger became clear.

1. Swedish Pushes Forward.

During the February 16 meeting, the NewCo designees reached a consensus that

Swedish should meet with Harris to discuss the organizational structure. The Cigna ELT

prepared Harris for that meeting with pointed questions about Swedish’s plan and whether

it reflected the parties’ earlier discussions.140 After the meeting, which took place on March

7, Harris told Swedish that his proposal deviated from the parties’ agreement, that Harris

would raise the issue with the Cigna Board, and that Cigna did not consent to any

announcement on the leadership structure.141

Swedish responded to Harris on March 14, 2016. In his letter, Swedish doubled

down on his structure and Cordani’s role.142 Consistent with the Anthem Board’s

instructions, Swedish agreed to “defer the assessment and selection of Cigna’s leadership

an issue in late February. The record as a whole suggests that the level of cooperation
between the parties’ regulatory counsel began to decline after the de-scoping of the
integration process, as Cigna’s resistance to the Merger deepened. Cigna eventually
delivered its response in a form that was acceptable to the DOJ on March 4, 2016. See JX
1641.
140
See JX 1360; JX 1408; JX 1435; Swedish Tr. 1105.
141
JX 1463; Swedish Tr. 1106–07.
142
JX 1484; see Swedish Tr. 1107–10.

77
to fill L2-L4 roles in the new structure until obtaining an indication of clearance/approval

from the DOJ for the transaction.” JX 1484.

The Anthem Board met later that day, and Swedish reported on his actions. Rather

than backing Swedish, the Anthem directors felt that he had overstepped his authority.

They pushed for Swedish to call Cordani and restore his responsibility for all of NewCo’s

operating businesses.143 Swedish was not happy with that guidance and did not do anything

to implement it. See JX 1568.

2. The Continued Impasse Over Integration Planning

The disputes over integration planning were also coming to a head. At the monthly

meeting of the Steering Committee on March 11, 2016, Matheis tried to get the integration

planning process back on track. See JX 1466. In response to Anthem’s requests to restart

integration planning, Cigna generally stood by its limitation to Day 1 activities, but agreed

to reconsider its position for some activities.144

To support Cigna’s position on integration planning, Jones gave a presentation

about the regulatory process. She identified the many tasks that still needed to be

accomplished and argued that obtaining regulatory approval would take significantly

longer than expected, which would delay closing and obviate any immediate need to push

forward with leadership selection or other detailed aspects of integration planning.145 Jones

143
See JX 1480; JX 1487; JX 1501; Swedish Tr. 1111–12.
144
See JX 1492; JX 1493.
145
JX 1506 at ’119 (“The attached is the primary reason why we slowed the pace of
the integration planning.”); JX 1469 at ’884; Jones Tr. 2625–27, 2632–33.

78
criticized Anthem as having an “unclear strategy” and an “unclear remedy,” and she argued

that Anthem should begin working on a remediation strategy.146 The Anthem executives

disagreed. They felt that until the DOJ had identified its concerns, it would be premature

to begin developing a divestiture strategy,147 and they believed that it would be relatively

easy to find a buyer and complete a transaction.148 After the meeting, Matheis emailed that

“[t]here is a clear disagreement about the timing to close.” JX 1492. Anthem still believed

that a closing could happen during the summer of 2016; Cigna thought it would take longer.

Zielinski Tr. 405–06.

For the rest of the month, Anthem and Cigna went back and forth on additional areas

of integration planning where Cigna would agree to engage. Generally speaking, Cigna

insisted on limiting any detailed planning efforts to Day 1 activities; otherwise, Cigna only

would engage on “high-level strategic direction, goals / metrics for NewCo, and major

operating model decisions.”149 Based on Cigna’s broad withdrawal from everything other

146
JX 1506 at ’119 & slide 6; see Jones Tr. 2628–29; Zielinski Tr. 402–05.
147
See JX 2067; Zielinski Tr. 47, 405–07; Jones Tr. 2628–29.
148
See JX 2074; Jones Tr. 2628–29; Rule Tr. 3077–79.
149
JX 1518 at ’997; see JX 1519 (“G&A Value Capture work is being paused per
3/11 Steer Co (along with quite a few other items).”); JX 1520 at ’112 & slide 8 (“Network
– Cigna data is still incomplete to conduct full value capture analytics.”); JX 1545 at ’420
(declining to provide “details on costs”); JX 1567 at ’427 & slide 4 (noting that Cigna had
discontinued “Value capture activities”); see also JX 1502; JX 1513; JX 1577.

79
than Day 1 integration planning, Anthem decided not to engage with Cigna on some areas

where Cigna had indicated a willingness to re-engage.150

Anthem viewed Cigna’s de-scoping of the integration work as so problematic that

Anthem formed its own internal integration team. Called “Phase 2B,” the internal team

focused on “core priorities” where “select Cigna data or engagement is limited.”151 The

main areas of focus included organizational structure, value capture, ways to reduce cost

of care, NewCo’s growth strategy, and NewCo’s IT program and branding. JX 1558 at

’777. The Phase 2B team was highly confidential, even within Anthem. Swedish informed

Cordani that Anthem would continue to work on some items without Cigna’s involvement,

but Anthem did not share the list of topics with Cigna.152

At the end of March 2016, Hocevar reported to Cordani that work on work streams

that did not involve Day 1 activities remained “stopped” or was “still in replanning mode.

. . .” JX 1560 at ’437. As late as April 18, Cigna and Anthem still had not agreed on the

areas that Cigna would support.153 During this period, Cigna kept certain categories of

information “close to the vest,” including the “details of important processes such as

medical management [utilization].”154

150
See JX 1549; JX 1558 at ’783; Drozdowski Tr. 1005–08.
151
JX 1558 at ’776; see JX 1493; Zielinski Tr. 41.
152
See JX 1491; JX 1495; JX 1613 at ’699; JX 1618.
153
See JX 1670; see also JX 1611 at ’212; JX 1657.
154
See JX 1617; see also JX 1548; JX 1626 at ’124.

80
 3. The Cigna Board’s March 31 Meeting

On March 31, 2016, the Cigna Board held a meeting devoted primarily to the

Merger. As during the February 2016 meeting, the minutes identified four “red flags”:

“(1) the pace and progress of the regulatory process; (2) the focus of the integration

planning process; (3) Anthem’s proposed post-closing organization structure; and (4) the

health of Anthem’s underlying fundamentals.” JX 1570 at ’491. The real issue remained

“the proposed structure and leadership of the combined company.” Id. at ’492.

As part of the discussion, Cigna management presented a twenty-one page “Update

on ‘Red Flags.’” JX 1572 at ’077; see id. at ’077–97. It began with a lengthy discussion of

the regulatory approval process, reporting that “[c]ounsel puts chances of closing at

~ 50/50,” that the “best case scenario is we get to close by 1Q17,” and that “[d]ivestitures,

at a minimum, will be required.” Id. at ’079. The materials included an assessment by

Cadwalader of twenty different regulatory items that needed to be addressed. For seventeen

of those items, Cadwalader asserted that the work was well behind schedule or otherwise

inadequate. See id. at ’095–97.

The presentation reported that Cigna was insisting that all of the following tasks to

be deferred until the third quarter 2016:

 post-close value capture targets for Year 1,
 post-close branding approach,
 post-close [go-to-market] approach developed,
 divestiture support if needed,
 post-close human capital approach, and

81
  post-close financial and reporting approach.155

Under that timeline, the work would not resume until after the DOJ already had made its

decision on the Merger. The parties therefore would not be able to use the work product to

convince the DOJ to approve the Merger, making it more likely that the DOJ would sue to

enjoin the Merger.

The presentation critiqued Swedish’s proposed organizational structure extensively.

See id. at ’084–85. It also criticized Anthem’s business performance and claimed that

without Cigna, “Anthem does not appear to have a path to sustainable growth.” Id. at ’086.

Teneo gave a separate presentation that identified ten risks to the Merger: three from

the regulatory process, four from the standpoint of value creation, and three based on

corporate governance and Cordani’s role. JX 1561 at ’917 & slide 3. Teneo argued that

Cigna was “Well Positioned For Standalone Success,” and that if the Merger was

terminated at the end of 2016 because of regulatory issues, then Cigna would have

“[s]ubstantial ‘dry powder’” of between $6 and $8 billion. Id. at slide 5. Teneo identified

three categories of other “M&A possibilities” that would be available to Cigna if the

Merger failed. Id. The presentation carefully stated that Cigna should continue “to prepare

155
Id. at ’083 (formatting in original); accord JX 1570 at ’491 (Cordani reporting
to Cigna Board that Cigna had stopped all integration planning that did not involve Day 1
activities and would begin focusing on “(1) what will be needed for the combined company
in the first 90 days post-closing; and (2) how, together, the companies will deliver
sustainable value to all of its [sic] key stakeholders”); see JX 1560 at ’437 (Hocevar
reporting to Cordani that Cigna was working only on Day 1 activities and remained “in
replanning mode” on activities for the next ninety days).

82
for the transaction to carry on and gain all regulatory approvals,” but it stressed that Cigna

also needed to “[p]rotect downside should the transaction fall apart.” Id. at slide 8.

According to the minutes, the Cigna Board determined that “to preserve the value

of the transaction and protect the interests of the Corporation’s stockholders,” Harris would

send a letter to the Anthem Board notifying them of Cigna’s concerns. JX 1570 at ’492.

The minutes also indicate that the Board directed management to

(1) continue to support and influence the regulatory process to try to increase
the chance of a timely approval; (2) consider the Corporation’s disclosure
obligations in light of management and the Board’s concerns regarding the
pace and progress of the regulatory efforts; (3) continue to build out a robust
communication plan that is both reactive and proactive; and (4) keep the
Board informed on the “red flag” issues, as well as the market dynamics and
the Corporation’s stand-alone strategy and projections . . . .

Id.

After the meeting, the Cigna ELT and Moelis began examining Cigna’s potential as

a stand-alone company. The Cigna ELT charged Teneo with preparing a proactive

communications strategy. Teneo’s “priority assignment remain[ed] preparation for a

derailment.” JX 1691.

The carefully drafted minutes attempt to paint a picture in which Cigna still

supported the Merger. By this point, Cordani, Jones, Morabito, and other key members of

the Cigna ELT had turned against it. They saw an opportunity in the heightened risk that

the Merger would not receive regulatory approval. Their priority became to appear to

comply with the Merger Agreement, while covertly engaging in passive-aggressive

resistance to increase the chances of regulatory failure. A key part of Cigna’s strategy

involved documenting flaws in Anthem’s approach to the regulatory process so that Cigna

83
later could argue that Anthem’s incompetence—rather than Cigna’s opposition—led to the

deal’s demise.

4. The Anthem Board Unsuccessfully Pursues Détente.

On April 9, 2016, the Cigna Board sent a lengthy letter to the Anthem Board. See

JX 1627. The letter was carefully crafted, heavily vetted, and went through many cycles of

revisions by the Cigna ELT and its advisors.

The letter claimed that Cigna remained committed to the Merger. In substance, it

raised objections that read like claims for breach of the Merger Agreement:

 The Cigna Board expressed concern that Anthem had filed a lawsuit against its
pharmacy benefits manager, suggesting that the suit created issues for Anthem’s
commitment under Section 4.2 of the Merger Agreement to conduct its business in
the ordinary course and in a manner consistent with past practice.

 The Cigna Board accused Anthem of focusing on cost synergies and expense-
cutting instead of strategic planning and objected to Anthem’s position that it could
make decisions on integration unilaterally, which Cigna claimed was inconsistent
with Anthem’s commitment under Section 5.10 of the Merger Agreement to have a
joint committee for integration planning.

 The Cigna Board charged Anthem with reneging on the agreement that Cordani
would be President and COO of NewCo, citing Sections 1.13(b), 3.3, and 3.4 of the
Merger Agreement.

See JX 1627. Swedish and Zielinski were incensed. They wanted to send a strongly worded,

point-by-point response.156 The Anthem Board felt differently. They insisted that Swedish

tell Cordani that he would have responsibility for all of NewCo’s operating businesses and

send a conciliatory letter to the Cigna Board.157

156
See JX 1619; JX 1635; see also JX 1653; JX 1662.
157
See JX 1629; JX 1654.

84
 Swedish and Zielinski prepared a draft response that restored Cordani’s role, but

otherwise contained a pointed issue-by-issue rebuttal. See JX 1663. Before meeting with

the Anthem Board, Swedish recorded some notes in which he summarized his thoughts on

Cordani and the Merger:

The evidence is clear regarding [Cigna’s] intent to create a “reverse merger”
beginning with the transaction negotiations and continuing with
behaviors/integration engagement. . . .

The past is prologue - [Ed] Hanway, . . .

The complex challenge now before us - do we retain “ownership” of the
company or cede control to the minority interest . . .

We are truly at war to win or are we going to be pacifists.

Yes we will accommodate until close, but there can be no future for [Cordani]
and by definition for his loyalists.158

Swedish sent these thoughts to Riefberg, who turned them into talking points.159

158
JX 1673 (formatting in original); see Swedish Tr. 1114–24.
159
See JX 1683. Swedish did not testify forthrightly about JX 1673 and JX 1683. In
deposition, he denied knowing the source of Riefberg’s talking points or having anything
to do with them, even though they plainly came from his notes. See Swedish Tr. 1243–44,
1246–47. At trial, he was again evasive about providing his thoughts to Riefberg. Id. at
1239–40, 1242. He also maintained that he did not share any of these thoughts with the
Anthem Board. See id. at 1249–1251. Yet they clearly were intended for that purpose, and
it would have been logical for Swedish to present his thoughts given the context. See JX
1729; Swedish Tr. 1252–54.

Swedish also did not testify forthrightly about his feelings towards Cordani. He told
the DOJ that although he and Cordani had differences of opinion, they worked through
those issues constructively. See Swedish Tr. 1215. He testified that throughout 2015 and
2016, he desired to work with Cordani in the combined company. Id. at 1215–16. And he
claimed that he did not recall ever telling anyone at Anthem that he did not want to work
with Cordani. Id. at 1217. That testimony was not credible.

85
 The Anthem Board met on April 20, 2016. They insisted that Swedish make the

letter even more conciliatory. They also decided that Anthem would delay sending a point-

by-point response for at least another week and that Zielinski, not Swedish, would send

it.160

On April 25, 2016, Swedish sent the conciliatory letter. See JX 1724. The Anthem

Board hoped that the letter would end the conflict that began six months earlier when

Swedish tried to start conducting interviews to kick off the L2/L3 selection process.

Cigna rejected the olive branch. The Cigna ELT had been on high alert since

Swedish’s meeting with Cordani on January 11, 2016. During the intervening months, their

distrust of Anthem had deepened. They saw the Anthem ELT as adversaries, and they

viewed Anthem’s actions with jaundiced eyes.

The Cigna Board held its next meeting on April 26 and 27, 2016. The main subject

of the first day was to review Cigna’s performance and strategic alternatives as a standalone

company. Both Moelis and management presented on this topic. See JX 1737 at ’050.

During the second day, the Cigna Board focused on the Merger, and the Cigna ELT

again discussed “red flags.” Id. at ’051. The Cigna Board discussed the provocative move

of unilaterally making a public disclosure in Cigna’s Form 10-Q about the timeline for

regulatory approval. Id.; see JX 1786.

The Cigna ELT also presented on Cigna’s communications plan, explaining that

Cigna was planning “a steady drumbeat of actions and messaging that promotes sovereign

160
See JX 1685; JX 1700; JX 1704; JX 1711; JX 1719.

86
Cigna, our business, value proposition and leadership, to protect our current book of

business, and Cigna’s reputation in the event of a standalone future state.” See JX 1725.

After the meeting, Cordani responded to Swedish. In the conciliatory letter, Swedish

suggested involving NewCo directors to help manage future disputes. Earlier, as part of

Project Alpha, the Cigna ELT suggested something similar. Now, Cordani rejected the

idea.161 Jones sent an aggressive rebuttal to Zielinski’s letter, which kicked off an ongoing

series of accusatory letters and emails that continued through the filing of this litigation in

February 2017.162

Cigna had turned definitively against the Merger. From this point on, Cigna’s

primary goal was to prevent the Merger from closing.

5. Cigna Changes Its Disclosure.

In a Form 10-Q issued on May 6, 2016, Cigna unilaterally changed its disclosure.

Previously, the disclosure stated, “The transaction is expected to close in the second half

of 2016.” JX 1794 at ’028. Now, it stated,

While the Company continues to work toward achieving regulatory approval
as quickly as possible and to target a closing date in the second half of 2016,
the closing will ultimately be subject to the approval and timing of the
regulators. In light of the complexity of the regulatory process and the

161
JX 1763; Swedish Tr. 1126–27.
162
See JX 1771; JX 1790; JX 1801; JX 1815; JX 1894; JX 1960; JX 2021; JX 2140;
JX 2216; JX 2220; JX 2229; JX 2262; JX 2269; JX 2278; JX 2306; JX 2308; JX 2350;
JX 2368; JX 2393; JX 2395; JX 2400; JX 2407; JX 2408; JX 2411; JX 2412; JX 2429;
JX 2467; JX 2473; JX 2476; JX 2480; JX 2481; JX 2504; JX 2512; JX 2513; JX 2527;
JX 2528; JX 2581; JX 2624; JX 2635; JX 2648; JX 2659; JX 2677; JX 2699; JX 2724;
JX 2729; JX 2768; JX 2870.

87
 dynamic environment, it is possible that such approvals may not be obtained
in 2016.

Id.

Cigna’s antitrust lawyers notified Anthem’s antitrust lawyers of the change at 7:00

a.m., Jones emailed Zielinski at 7:31 a.m., and Cigna filed the Form 10-Q at 8:30 a.m.163

Cigna thus gave Anthem less than two hours’ notice before making the new language

public.

After seeing the disclosure, Zielinski accused Cigna of violating the Merger

Agreement. See JX 1800. Section 5.8 required that

Cigna and Anthem shall consult with each other before issuing, and give each
other the opportunity to review and comment upon, any press release or other
public statements with respect to the transactions completed by this
Agreement, including the Mergers, and shall not issue any such press release
or make any such public statement prior to such consultation, except as such
party may reasonably conclude may be required by applicable law or the
rules of the NYSE (or any other securities market).

MA § 5.8.

Sophisticated observers immediately noticed the change. They inferred that because

Cigna said that it still was targeting a closing in the second half of 2016, the fact that the

parties might be unable to secure regulatory approval in 2016 meant that the transaction

might not close at all.164

163
See JX 1802; JX 1803; JX 1805.
164
See JX 1805; JX 1812; cf. JX 1819 (Moelis presentation noting that in precedent
broken deals, the acquirer and target remained aligned in their public disclosures and
expressed confidence in the deal closing until receiving feedback from the DOJ).

88
 After seeing Cigna’s disclosure, Anthem supplemented its legal team with a litigator

from White & Case, who began commenting on Anthem’s communications with Cigna

and ensuring that Anthem documented its position as the burgeoning dispute unfolded.165

Cigna had taken that step months earlier, when it hired Wachtell Lipton. A fundamental

difference remained: White & Case was trying to help Anthem complete the Merger, while

Wachtell Lipton was trying to help Cigna escape from the Merger Agreement.

I. The Second Stage Of DOJ Review

Cigna’s rejection of Anthem’s conciliatory outreach closed out a phase of the

transaction process in which the principal dispute was over Cordani’s role. To gain

leverage in that dispute, Cigna had initiated Project Alpha, choreographed the February 16

meeting, and limited the integration process to Day 1 activities. To justify its withdrawal

from other integration activities, Cigna cited the pace of the regulatory process. Now, the

transaction entered a new phase in which the regulatory process became the primary forum

for the parties’ disputes.

1. The DOJ Update

On March 25, 2016, while Anthem and Cigna remained at odds over Cordani’s role

and Cigna’s withdrawal from integration planning, the regulatory lawyers received an

update from a DOJ attorney. The DOJ attorney identified four substantive issues that the

165
See, e.g., JX 4167; JX 4168; JX 4169; JX 4198; JX 4206; JX 4215; JX 4360;
JX 4368. A White & Case litigator appears on two isolated emails before this, see JX 1269
(Feb. 2016); JX 4172 (Mar. 2016), but Anthem’s White & Case litigators do not appear to
have been meaningfully involved before May 2016.

89
DOJ was examining: (i) “whether national accounts are a distinct market.” (ii) “whether

Cigna, post-merger, will compete less vigorously with the other Blues,” (iii) the “market

shares” for various customers and markets, and (iv) what would happen if the 2/3 Rule

remained unchanged by the time that the DOJ had to decide whether to approve the Merger.

JX 1550. The DOJ attorney agreed that the DOJ would meet with the parties during the

week of June 20, 2016, to provide its view on the Merger. Id.

During the Steering Committee meeting on April 7, 2016, the parties discussed the

status of the DOJ’s investigation and agreed that a “[s]ignificant amount of work is needed

in the area[] of [the] value creation story.” JX 1611 at ’211. Anthem remained optimistic;

Cigna believed that “additional time will be needed to gain approval.” Id.

2. The White Papers

By late April 2016, the hostility between the executive teams had infected the

relationship among regulatory counsel. The incipient dysfunction manifested itself in the

preparation of white papers.

After the parties met with the DOJ on February 17, 2016, the agency identified ten

topics “for white papers that would be useful for [its] investigation.” JX 1395. The topics

included (i) “[n]ational accounts, including how to define the market and the role of private

exchanges,” (ii) “[t]he sale of commercial group health insurance in local areas in [the

Anthem Blue States],” (iii) “[t]he sale of commercial group health insurance in non-

Anthem states where Cigna competes against other Blues plans,” and (iv) “[t]he effect of

the [2/3 Rule] on post-merger competition.” Id. The parties had already committed to

90
provide the DOJ with a white paper addressing efficiencies. The DOJ identified specific

information it wanted about the efficiencies derived from lower provider rates, including

(1) how the efficiencies will be achieved; (2) what products (commercial,
Medicare Advantage, etc.) will be affected by the lower rates; (3) which
geographic markets will benefit from the lower rates; (4) why the merger is
necessary to achieve the lower rates; and (5) how the lower rates will affect
the quality, quantity, and availability of in-network services for your
members.

Id.

White & Case took the lead on preparing the white papers. White & Case sent the

drafts to Cadwalader so that Cigna could provide comments and provide information about

Cigna’s business.166 White & Case solicited detailed input from the Cigna team. 167 What

they received consisted of big picture comments, thematic suggestions, and questions that

invited White & Case to substantially revise or rewrite the white papers.168

At the end of April 2016, the members of the Cigna ELT began reviewing and

commenting on the white papers.169 That complicated matters because rather than

providing detailed information, the Cigna executives raised high-level questions about the

166
See JX 1641; JX 1724 at ’086; Paul Tr. 615, 621.
167
See JX 1697; JX 1750; JX 1889 at ’021–22.
168
Paul Tr. 615, 621–23; Rosen Tr. 782–83; see, e.g., JX 1631; JX 1675; JX 1692;
JX 1717; JX 1743; JX 1760. See generally JX 1889 at ’022 (Anthem’s regulatory counsel
asking Cigna’s regulatory counsel to engage more actively in drafting and editing the white
papers).
169
See JX 1736; JX 1774; Jones Tr. 2646.

91
regulatory strategy.170 During meetings about the white papers, the Cigna team questioned

the overall direction of the white papers and their contents.171

During the drafting process, Anthem’s counsel asked Cigna for help assembling

information that had been delayed by Cigna’s withdrawal from the integration planning.

For example, Paul told the Cadwalader team,

We understood from McKinsey that Cigna has not been providing PMPM
numbers to move along IT G&A integration planning. We heard similar
concerns from the G&A team about the information required from Cigna to
help determine whether the additional $452 million is variable cost savings
or revenue opportunity or a combination of both. As you have known since
last February, our advocacy work at the agency is dependent upon
McKinsey’s ability to review information from our clients to prepare the
analysis upon which our economists can rely. Integration planning has been
slowed or stopped as a result of Cigna’s refusal to provide information
critical to integration planning and synergies analyses.172

Cadwalader did not provide the detailed information that White & Case sought. See Paul

Tr. 622–23, 626–28.

Anthem and Cigna jointly submitted a white paper on medical cost savings that

projected efficiencies of $2.35 billion, which NewCo would achieve by providing “best-

170
See JX 1761; JX 1768; JX 1781; JX 1797; JX 1838.

See JX 1780; JX 1789; JX 1850; see also Jones Tr. 2645 (“So essentially what
171

was happening is you were trying to get alignment on key issues through white papers.”).
172
JX 1697 at ’193 (requesting information about IT G&A integration planning);
see JX 1694 at ’162 (requesting information on value-based reimbursement for white
papers); JX 1716 at ’226 (noting that “information still [is] needed from Cigna” for the
medical and network synergies white paper); JX 1747 at ’932–33 (following up on request
for information on $452 million in savings and on IT efficiencies and synergies; noting
understanding that “additional work by the parties has not been done”); JX 1780 at ’782
(noting that some information for white papers was hedged “due in part to a pause on value
capture work”)

92
in-breed” discounts. JX 1953 at ’246, ’249–50. This approach meant that if Anthem had a

better discount with a particular provider, then the efficiency calculation assumed that

NewCo would benefit from Anthem’s discount. If Cigna had a better discount with a

particular provider, then the efficiency calculation assumed that NewCo would benefit

from Cigna’s discount. Anthem’s economist, Dr. Mark Israel, and his team from Compass

Lexecon used claims data to calculate the value of the resulting efficiencies.173

Because of the structure of the healthcare industry, the vast bulk of these savings

would be passed through automatically to NewCo’s customers. The white paper projected

that after closing, approximately 75% of NewCo’s members would be covered by

administrative-services-only (“ASO”) plans, a product in which a customer (i.e., an

employer) pays for claims processing and access to the insurer’s provider network, but self-

insures for the medical bills of plan participants. JX 1953 at ’257. Because those clients

self-insure for provider costs, they receive a dollar-for-dollar reduction from lower

provider rates. Zielinski Tr. 80. The white paper projected that savings of $1.8 billion

would go to ASO customers. JX 1953 at ’250. The remaining NewCo customers would be

covered by fully-insured plans, a product in which the health insurer also pays the medical

bills of plan participants. Those customers would receive some benefit at the time of re-

contracting as a result of the Affordable Care Act, under which insurers must spend at least

80–85% of every premium dollar on medical care. JX 1953 at ’258–59. The white paper

173
See JX 1573 at ’877; Zielinski Tr. 78–80.

93
projected that savings of $595 million would inure to the benefit of fully-insured

customers.174

During the May 2016 meeting of the Steering Committee, Zielinski complained

about Cigna’s contributions to the regulatory approval process. Cadwalader sent an email

to White & Case that abandoned any pretense of collaboration. See JX 1889 at ’025–26.

After White & Case responded with a detailed and comparatively measured response,

Cadwalader became even more shrill and vituperative, writing, “There are numerous false,

baseless, and misleading statements and insinuations in your e-mail. Your email has so

many inconsistencies with the factual record that we may or may not spend the time to

respond with a point-by-point rebuttal.” Id. at ’021.

3. Internal Integration Planning At Anthem

While the white papers were being prepared, Anthem worked internally on

NewCo’s go-to-market strategies, how NewCo would generate efficiencies from the

Merger, and what growth opportunities NewCo would have over the longer term. Those

strategies also had to take into account how NewCo would achieve compliance with the

2/3 Rule. See JX 1573 at ’850.

Anthem was committed to keeping the Cigna brand as an option for all customers

in all situations. At the same time, NewCo needed to comply with the 2/3 Rule, which

174
JX 1953 at ’250. Other estimates varied, but generally were in line with these
figures. See JX 1684 at ’824 & slides 5, 10–13; JX 1703 at ’759 & slide 3.

94
could be accomplished most efficiently by rebranding Cigna revenue generated by

employers with their headquarters in the Anthem Blue States. See JX 1573 at ’859.

The optimal rebranding strategy was for NewCo to offer Blue-branded products that

incorporated desirable features from Cigna’s plans, but at better rates than Cigna could

achieve on its own. See id. By February 2016, the commercial go-to-market team had

identified two lines of hybrid products that NewCo could develop.175 The first category of

offerings would target employers who provided employees with health insurance because

they felt compelled to do so. NewCo would address the “compelled” segment with an

offering called “Essentials,” which would combine a lower-priced offering closer to

Anthem’s existing products with cost-management features drawn from Cigna’s products.

The second category of offerings would target employers who were more engaged in the

health insurance market. NewCo would address the “engaged” segment with an offering

called “Signature,” which would combine a multi-feature offering closer to Cigna’s

existing products but at a lower price than Cigna could achieve on its own.176

The difficulty lay in the timeline for implementing those products. One major

impediment was the need for an IT system that could both support the new-product features

and comply with the Blues Rules. Anthem and Cigna each had incumbent IT systems that

175
See JX 1173 at ’158 (describing (i) “evolution of the Anthem group/national
account model to NewCo ‘essentials’” and (ii) “evolution of the Cigna group/national
account model to NewCo ‘signature/enhanced’”); JX 1241 at ’798 & slide 47; JX 1345 at
’743 & slide 2; DeRosa Tr. 1697–98.
176
See JX 1577 at ’013; JX 1766 at ’069–72.

95
supported their businesses. Cigna’s system supported the additional features that a hybrid

product might incorporate, but it did not comply with the Blues Rules. Modifying Cigna’s

system to comply with the Blues Rules required a major overhaul that would take more

than two years.177 Anthem’s platform complied with the Blues Rules, but it would need to

be modified to support a blended offering.178 These upgrades could be rolled out over time,

but the first features would not be in place until the second year after closing.179

Because of this timeline, the possibility of creating new products was not a source

of near-term, quantifiable merger-related efficiencies. It rather was a means for NewCo to

create additional value “in the medium/long term” by expanding into new geographies and

new market segments.180 Anthem favored using its IT system, and therefore did not

anticipate being able to begin offering blended products until the second year after closing.

It was only then that NewCo would begin offering versions of the Essentials and Signature

177
See JX 1573 at ’871–73; DeRosa Tr. 1707, 1709, 1713.
178
See DeRosa Tr. 1708; JX 1573 at ’872, ’901.
179
See JX 1573 at ’903–04; JX 1766 at ’079; DeRosa Tr. 1708–09, 1711–12;
DeRosa Dep. 307; see also JX 1573 at ’872 (“Implementation of Cigna ‘secret sauce’ may
take time (TBD).”). Exacerbating the timing problem, most of Cigna’s commercial
accounts were committed to multi-year contracts, with a portion renewing in the first
quarter of each calendar year. See JX 1573 at ’892–93, ’907; JX 4006. During the six to
nine months (or longer) leading up to the renewal, the sales force would seek to negotiate
a new contract with the customer. Anthem determined that NewCo would need to have the
necessary capabilities in place “in time for Q1 2018 sales cycle at the latest” in order to
sell a blended product that would comply with the 2/3 Rule by a 2019 deadline. JX 1573
at ’892; see Manders Tr. 2538–39 (describing sales cycle). The difficulty posed by meeting
that deadline meant that blended products would be a longer-term initiative.
180
See JX 1577 at ’007; JX 1792 at ’797.

96
products and generating incremental revenue.181 Anthem anticipated developing a go-to-

market strategy for the new products after closing. Zielinski Tr. 129.

Rather than relying on new products, Anthem planned to generate efficiencies

through “best-of-breed” discounts, which meant that NewCo would take advantage of

whichever company’s discounts were better. If Anthem received better discounts from a

particular provider, then NewCo would plan to use Anthem’ discounts. If Cigna had

obtained better discounts, NewCo would plan to use Cigna’s.

Because Anthem generally had better discounts, the bulk of the efficiencies would

be achieved by enabling Cigna’s customers to take advantage of Anthem’s discounts. There

were three main ways to achieve that outcome. The first was for Anthem to exercise the

“affiliate clauses” in its contracts with providers. As the name implied, these clauses

empowered Anthem to extend its rates to its affiliates, and after the Merger, Anthem could

designate Cigna as an affiliate for purposes of the clause. 182 The second option was not to

trigger the affiliate clauses and instead to re-contract with providers to secure lower rates

based on NewCo’s increased volume, either when the providers’ existing contracts expired

See JX 1577 at ’008, ’014–17; JX 1766 at ’073. Anthem anticipated that the new
181

products would achieve incremental reductions in medical costs. Anthem expected to pass
on 80% of those savings to its customers and to capture 20% by increasing its premiums.
See JX 1577 at ’036.

See JX 1684 at ’824 & slides 2, 18; JX 1727 at ’646 & slide 3; Zielinski Tr. 130–
182

31; Drozdowski Tr. 952.

97
or by terminating the existing contracts and forcing a renegotiation.183 A third option was

to mix and match the techniques by provider type, geography, or for specific providers.184

Triggering the affiliate clauses across the board would generate the most value for

NewCo’s customers as quickly as possible. Anthem believed that it was what providers

expected, and it would demonstrate the value of the combination to Cigna’s customers. The

main downside was that it would “make it more difficult to convert Cigna customers to

Blue.” JX 1727 at ’646 & slide 2. Once the affiliate clauses were exercised, then Anthem’s

products would no longer have a cost advantage over Cigna’s products, making it less

likely that customers would move to Blue-branded products absent other incentives.185

In late April 2016, the Anthem ELT unanimously decided not to trigger the affiliate

clauses.186 Instead, the Anthem ELT decided to continue to sell Anthem’s products and

Cigna’s products separately, with the expectation that Cigna’s customers in the Anthem

Blue States would move to Anthem products. See JX 1788.

JX 1727 at ’646 & slide 5; see JX 1684 at ’824 & slides 2, 5, 19; JX 1705;
183

Drozdowski Tr. 952.
184
See JX 1684 at ’824 & slide 2; JX 1727 at ’646 & slide 7; JX 1766 at ’063;
Zielinski Tr. 130–31; Drozdowski Tr. 952.
185
See id.; JX 1684 at ’824 & slide 15; Zielinski Tr. 130–31; Drozdowski Tr. 973–
75, 1040.
186
See JX 1788; see also JX 1705; JX 1727; JX 1783; JX 1818; JX 1823 at ’304;
JX 2096. Anthem kept open the possibility that the affiliate clauses might be exercised on
a case-by-case basis, but needed input from Cigna to make those determinations. With
Cigna having withdrawn from integration planning, no detailed work was done to
determine when or where that might happen. See Drozdowski Tr. 976–77, 1046–47, 1051.

98
 Despite having made this decision, Anthem stated in the white paper on medical

cost synergies, submitted to the DOJ on May 25, 2016, that Anthem could achieve medical

cost savings for Cigna’s customers after the merger by exercising the affiliate clauses. See

JX 1948 at ’307–08. Anthem told its counsel that no final decision had been made on

whether to invoke the affiliate clauses. Rosen Tr. 865.

Throughout the DOJ’s investigation and the Antitrust Litigation, Anthem did not

reveal that it had made that decision. During a deposition that he gave to the DOJ on June

13, 2016, Matheis de-emphasized triggering the affiliate clauses as a means of achieving

the efficiencies, pointing instead to renegotiating provider contracts and shifting Cigna

members to Anthem products, but he did not say that Anthem had already made a decision

not to invoke the affiliate clauses. See JX 2029 at 277–79. Matheis testified at trial that

Anthem could exercise the affiliate clauses. See Dist. Ct. Op., 236 F. Supp. 3d at 233.

Another Anthem witness testified that Anthem’s “current intention [was] to proceed with

a hybrid approach” that included triggering the affiliate clauses for some providers. Id.

Anthem’s position in the Antitrust Litigation on the potential use of the affiliate

clauses was technically correct because Anthem could have revisited the decision not to

exercise the clauses broadly, but Anthem should have been more candid about its plans.

The issue, however, did not affect the outcome of the Antitrust Litigation. Both the District

Court and the DC Circuit Court correctly concluded that Anthem would not exercise the

99
affiliate clauses, noting that doing so would undermine the incentive for Cigna’s customers

to switch to Anthem products, which was important for complying with the 2/3 Rule. 187

4. Teneo Leaks The Dispute Letters To The Wall Street Journal.

Beginning in late March 2016, Cigna worried that Anthem might leak information

to the press about the dispute over Cordani’s role and Cigna’s withdrawal from integration

planning. To be ready, Teneo developed a “leak strategy.”188 By early May, the strategy

called for Cigna to issue an anodyne public statement while Teneo would give reporters

different messages, such as:

 “It remains unclear that Anthem is properly managing the processes necessary to
bring the deal to completion.” JX 1860 at ’114.

 “Many of the core regulatory work streams have fallen behind schedule . . . .” Id.

 “The transaction leverages Cigna’s unique and robust capabilities.” Id.

 “In the event the merger does not obtain regulatory approval, we are well positioned
for standalone success,” citing a “[w]ell-balanced diversified business model,”
“[s]ubstantial ‘dry powder’ of $6-8 billion,” and “M&A possibilities and market
leading revenue, earnings, and capital efficiency.” Id.

Through these and other messages, Teneo would criticize the Merger and praise Cigna’s

capabilities as a standalone company.

In early May 2016, a reporter from the Wall Street Journal was speaking with one

of Cigna’s lawyers about another transaction, when the reporter mentioned that “she was

talking to Anthem and they were complaining about Cigna dragging its feet.” JX 1778. The

187
See id. at 240–41; Cir. Ct. Op., 855 F.3d at 359–60.
188
See JX 1652; JX 1860.

100
reporter also indicated that “she heard some chatter about the David/Joe relationship not

being good and asked [the lawyer] to comment.” Id. Stephen Cohen of Teneo followed up

with the Wall Street Journal. By May 12, the reporter was saying that she had heard about

a letter Cigna sent “in early April with a list of complaints.” JX 1848. She seemed to know

Anthem’s side of the story, including that one of Cigna’s issues was “nonsensical” and that

Anthem was being “aggressive” because Cigna was “dragging [its] feet.” Id.

The Cigna team believed that Anthem had been speaking with the Wall Street

Journal.189 Cohen sent the dispute letters that the parties had exchanged to the reporter.190

Around May 20, 2016, the Wall Street Journal told Anthem and Cigna that it had

the letters and would be running a story.191 After receiving this outreach, Anthem’s public

relations advisor spoke with the Wall Street Journal in an effort to make the story more

favorable to Anthem.192

189
See Cohen Tr. 2346, 2351; Jones Tr. 2677.
190
Cohen Tr. 2374. Jones was the source of the letters, but she and Cohen structured
the leak so that they could plausibly deny the existence of any direct exchange. Jones
testified that she did “not specifically” authorize Teneo to leak the letters. Jones Tr. 2677.
She also denied knowing specifically that Teneo had leaked the letters until this litigation.
Jones Tr. 2737. Based on the contemporaneous documents, it is difficult to credit Jones’s
denials as anything other than the product of willful blindness. See JX 1529; JX 1620;
JX 1763; JX 1771; JX 1810; JX 1840; JX 1897; Jones Tr. 2738–39 (agreeing that she knew
that Cigna had sent the dispute letters to Teneo and that she participated in a call with
Teneo about an upcoming story concerning the dispute letters, yet supposedly did not know
that Teneo had leaked the dispute letters). She clearly provided the letters to one of Cohen’s
colleagues, who passed them along to Cohen. See JX 1529; JX 1620; Cohen Tr. 2375–77,
2379–80. Cohen understood what he was supposed to do.
191
See JX 1903; JX 1905; Zielinski Tr. 376.
192
See JX 1919; JX 4073; JX 4074; JX 4091; JX 4307; JX 4368; Zielinski Tr. 376.

101
 In response to the Wall Street Journal inquiry, Zielinski asked Jones whether Cigna

would issue a joint statement with Anthem. JX 1907. The draft statement read,

Anthem’s acquisition of Cigna remains on track to close in the second half
of 2016 and all required steps to seek and obtain regulatory approval have
been completed in a timely manner. The transaction has already achieved key
milestones, including shareholder approvals and regulatory clearance in 11
states. . . . The parties are fully committed to closing and integrating this
transformative transaction . . . .

JX 1906. Cigna refused. Jones told Anthem that Cigna would simply say “no comment” in

response to the story. JX 1909. She also told Anthem that “any representation that Cigna

believes the transaction is on track for a closing this year or that the parties are working

cooperatively together would be misleading at best and we would be compelled to issue a

clarification.” Id. When Zielinski asked Jones to draft a joint statement that Cigna would

support, she again refused. From that point on, Cigna declined to issue any joint statements

with Anthem.193 Although Jones’s representation that Cigna itself would say “no

comment” was technically accurate, she knew that Cohen was speaking on background

with reporters to convey anti-Merger messages and the strength of “Sovereign Cigna.” See

JX 2877.

193
See JX 2032; JX 2054; JX 2159 at ’358; JX 2292; JX 2296; JX 2306; JX 2420;
see also JX 2055 (editing draft press releases so that none were joint; removing all positive
language in press releases anticipating DOJ approval of the Merger; striking all negative
language from press releases anticipating negative DOJ action toward the Merger);
JX 2095 (Cigna Vice President of Corporate Communications expressing disbelief that “if
the deal is approved, and Anthem is our new boss, we won’t issue a joint statement saying
we are pleased?”).

102
 During his exchanges with Jones, Zielinski expressed Anthem’s belief that “either

Cigna or a Cigna representative contacted the WSJ and provided the confidential letters.”

JX 1907. He asked Jones to “immediately investigate to determine who leaked these

confidential and privileged communications.” Id.

Jones had sent the dispute letters to Teneo herself,194 but she pretended to conduct

an internal investigation into the leak.195 She tasked John Bogan, Cigna’s head of litigation,

with conducting the investigation. Bogan collected and reviewed emails from Cigna

executives who might have leaked the letters, but Bogan did not know that Teneo existed,

and Jones did not mention that she had sent the letters to Teneo. She also did not tell Bogan

about Wachtell Lipton.196 As Jones admitted at trial, she had material information, central

to Bogan’s investigation, and kept it to herself.197

194
See Cohen Tr. 2374–80; Jones Tr. 2740. In her response to Zielinski, she did not
deny Cigna’s involvement. She instead took “issue with the implication that Cigna has
done anything improper with respect to the correspondence or otherwise.” JX 1909 at ’224.
195
Jones Tr. 2677–78, 2740; Jones Dep. 485.
196
See Jones Tr. 2741–43; Jones Dep. 1658–67.
197
Jones Tr. 2743. During this litigation, Anthem served interrogatories asking
whether Cigna or one of its advisors provided information to the Wall Street Journal or
New York Post. See JX 3172 at 15. Despite knowing about Teneo’s communications with
the Wall Street Journal and the New York Post, Jones verified the accuracy of a response
that did not mention Teneo. See id. at 15–16; Jones Tr. 2883–84, 2889–90. Anthem then
served follow up interrogatories asking specifically about the stories published on May 23,
2016. Jones knew that Teneo had provided information to the Wall Street Journal, yet
verified interrogatory responses which only stated generally that “Teneo and Brunswick
had regular interactions with the press, including representatives of the Wall Street Journal,
during the pendency of the Merger Agreement.” See JX 3026 at 31–32. Anthem followed
up again, and Jones verified a third set of interrogatory responses in which Cigna claimed
that “it [was] not aware of any Cigna Advisors providing or otherwise facilitating the

103
 On May 22, 2016, the Wall Street Journal ran a story titled, “Anthem, Cigna

Privately Bicker as They Seek Merger Approval.” JX 1914. The next day, the Wall Street

Journal ran a follow-up story titled “What Anthem and Cigna Are Fighting About” and

released a podcast titled “Anthem and Cigna’s Disagreeable Merger Agreement.” JX 1935.

Other media outlets picked up the story. They all projected that it would be difficult for the

parties to secure regulatory approval.198

Investors contacted Cigna and questioned why the companies had not put out a joint

statement.199 In a positioning document, Teneo recommended capitalizing on the leak to

transfer of any information or documents to the Wall Street Journal . . . .” JX 3040 at 8–
11. After Anthem impeached Jones with the interrogatory responses that she verified,
Cigna claimed that its responses were accurate because it had lodged a general objection
to the definition of Cigna as “vague and overbroad” on the ground that it included “agents
or representatives.” Dkt. 669 at 3 (internal quotation marks omitted). Cigna’s general
objection was not sufficiently specific to put Anthem on notice that Cigna was relying on
it to withhold material information. Cigna’s responses were materially misleading and
incomplete.

See JX 1920 (“Anthem, Cigna merger squabbles could delay antitrust approval”);
198

JX 1923 (“Anthem, Cigna Shares Fall After Reports of Infighting”); JX 1927 (“Health
Insurer Deals Face Market Review That Felled Past Tie-Ups”); JX 1939 (“Anthem-Cigna
May Not Get to the Altar”); JX 1951 (“Amid Doubts, Anthem-Cigna Deal Near Halfway
Home”).
199
See JX 1928; JX 1929; JX 1933. After seeing the story, Cigna’s advisors at Bain
and Deloitte inferred that Cigna had leaked the letters. See JX 1916 (Bain representative,
“They must be leaking this sh*t. Yikes.”); JX 3002 (Deloitte representative, “From the start
Cordani was working to secure his longer term role (only 50) and rather publicly lobbying
for his parochial interests. There is now more bitterness than before and Cordani has no
lock on succession and will be without board control. This is either real brinksmanship to
secure his position (something I have seen before in other consolidation discussions he was
engaged in) or an effort to derail and get the penalty cash so he can make another target
run.”).

104
reaffirm “the strength of our standalone position.”200 Moelis prepared a set of “Escalation

Strategies” for the Cigna ELT to consider, including “covert approaches” to analysts,

investors, proxy firms, the media, and customers. JX 1991 at ’904, ’907–08. Internally,

Cigna prepared a messaging document explaining why it would be entitled to the Reverse

Termination Fee if the Merger did not close.201

Meanwhile, the DOJ had started taking depositions.202 During Cordani’s deposition,

the DOJ asked whether there were dispute letters between the parties in addition to the ones

that the Wall Street Journal had discussed. Cordani had to say that there were. JX 1842 at

217. Just before the Swedish deposition, Cigna provided the DOJ with the letters that Cigna

sent to Anthem on April 9 and April 29. Cigna notified Anthem, but timed the notice so

that Anthem could neither respond effectively nor prepare Swedish.203 The DOJ questioned

Swedish about the letters during his deposition. See JX 1863 at 348–89.

5. Cigna Attempts To Re-Engage On Integration Planning.

In mid-May 2016, Cordani told Swedish that Cigna wanted to work on NewCo’s

go-to-market strategy. See JX 1856. Cordani indicated that Cigna had been working with

200
JX 1942 at ’269. Teneo contemplated putting Cigna’s “CEO and CFO in front
of investors and analysts” by having them attend “investor conferences” and conduct a
“[r]oadshow . . . to meet with top shareholders and key sell-side analysts.” Id. Teneo sent
the plan to Cordani by routing through Wachtell “for privilege purposes.” JX 1956; see
JX 1958. Teneo subsequently prepared a “David Cordani Positioning Campaign.”
JX 1984.
201
See JX 1992; JX 1994; JX 1997.
202
See JX 1749; JX 1784; JX 1842; JX 1863; JX 1973; JX 2029.
203
See JX 1855; JX 1862.

105
Bain on the issue. See JX 1858. Cordani was consulting simultaneously with Bain about

Cigna’s strategic alternatives as a “sovereign” company, including deals in which Cigna

would be the acquirer.204

The go-to-market strategy was one of the areas on which Cigna had stopped work

in February 2016. Because the go-to-market strategy was critical for NewCo’s success and

for achieving regulatory approval, Anthem’s Phase 2B team had continued to work on it.

Now, four months after stopping go-to-market-strategy work and one month before the

DOJ was slated to make a decision on the Merger, Cigna wanted to rejoin the discussions.

Later in May 2016, Cigna indicated that it wanted to resume work on value capture

and to explore the implications of the affiliate clauses.205 Because Cigna had stopped all of

its work on these subjects, Cigna’s integration team leaders scrambled to re-start the

effort.206

204
See JX 1870; JX 1884; JX 1957; JX 1965.
205
See JX 1901; Zielinski Tr. 351.
206
See JX 1926; JX 1930; JX 1934; JX 1937.

106
 6. “Bias-to-Blue” As A Go-To-Market Strategy

At a meeting of the Steering Committee on June 9, 2016, the commercial integration

team presented a go-to-market strategy for the first 180 days after closing. 207 The strategy

was developed by a team comprised of Anthem and Cigna associates.208

Recognizing that Anthem and Cigna competed for commercial accounts, the plan

contemplated an “Air Traffic Control Playbook” to determine which company would bid

which accounts. JX 2006 at ’228. The go-to-market strategy for the first 180 days

distinguished between (i) renewals of existing business and new business and (ii) clients

headquartered in the fourteen Anthem Blue States and clients headquartered in the thirty-

six other states where Cigna operated (the “Cigna Green States”).

For an existing client in a Cigna Green State that sought to renew its business,

NewCo only would quote a Cigna product. For an existing client in an Anthem Blue State,

NewCo would determine whether the client wanted to renew its existing plan or whether it

was putting the business out to bid. If the client wanted to renew its existing plan, then only

the incumbent provider (Anthem or Cigna, as applicable) would quote the business. If the

client was putting the business out to bid, then both Cigna and Anthem would submit

quotes. See id. at ’239.

207
See JX 2006; JX 2016.
208
See JX 1219; Zielinski Tr. 101–02; DeRosa Tr. 1719–21, 1725, 1742–43;
Manders Tr. 2537.

107
 For new clients, different rules applied. In a Cigna Green State, only Cigna would

quote the business, unless (i) the customer requested a quote from Anthem and (ii) there

was a strategic advantage to ceding the business to Anthem. Under this framework, Cigna

generally would provide the quote. See id.

For new clients in the Anthem Blue States, NewCo would pursue a strategy called

“Bias to Blue.” Under this strategy, if the broker for the new client expressed a preference

for Anthem, then only Anthem would provide a quote. If the broker for the new client

expressed no preference as to brand, then both Anthem and Cigna would provide quotes.

If the broker for the new client expressed a preference for Cigna, then both Cigna and

Anthem would provide quotes. See id.

The “Bias to Blue” strategy thus (i) only applied during the first 180 days after

closing, (ii) only applied in the Anthem Blue States, (iii) only applied to new clients, and

(iv) only contemplated that new clients that expressed a preference for Cigna (or no

preference) would receive quotes from both Cigna and Anthem, but then could choose

between them.209 In other words, the “Bias to Blue” strategy offered “the Blue choice to

the Cigna customers.” DeRosa Tr. 1743. It did not force customers to go Blue.

Cigna had known from the start that NewCo would need to move Cigna customers

in the Anthem Blue States to Blues-branded plans to comply with the 2/3 Rule. In 2014,

when Cigna approached Anthem about a transaction that would have resulted in the Cigna

ELT managing the combined company, the Cigna ELT told the Cigna Board that NewCo

209
See generally Zielinski Tr. 106–113; Hocevar Tr. 2337–39.

108
would need to comply with the Blues Rules, but that compliance could be achieved by

having “[Cigna] business in Blue licensed territories . . . substantially migrate to Blue

business, resulting in compliance with the [2/3 Rule] at or shortly after closing.” JX 105 at

’751. The Cigna ELT also told the Cigna Board that “[i]f compliance would not be attained,

[Cigna] business in non-Blue licensed territories may have to be divested.” Id. Before the

relationship between Anthem and Cigna fractured, Cigna ELT did not see a problem with

either option.

During the June 2016 meeting of the Steering Committee, however, Cordani and

the Cigna ELT reacted vehemently to the Bias-to-Blue strategy and categorically opposed

Cigna business in the Anthem Blue States moving to Anthem.210 Cordani claimed that “if

the Department of Justice saw this strategy, they’d kill us . . . because it’s not pro-

choice.”211 Matheis and Zielinski defended the Bias-to-Blue strategy as a reasonable first

step to achieving compliance with the 2/3 Rule.212

210
See Zielinski Tr. 104; Cordani Tr. 1828–29; Manders Tr. 2538–39, 2548–49.
After the June 2016 meeting, Cigna began portraying the Bias-to-Blue strategy as involving
“forced migrations.” JX 2018; see JX 2010 at ’685; JX 2012 at ’357; Cordani Tr. 2082–84
(asserting that “Bias to Blue” involved forced migrations). That was not accurate.
211
Cordani Tr. 1828; accord id. at 2089.
212
See DeRosa Tr. 1727–28; Zielinski Tr. 104–05. Matthew Manders, Cigna’s
business lead on the committee, also objected, but his concern was not with the Bias-to-
Blue strategy for the first 180 days. He was concerned with what NewCo would do after
the first six months. Manders Tr. 2535–38. Manders’ testimony demonstrated that there
was a considerable amount of planning that needed to be done over longer-term horizons
and that by June 2016, very little headway had been made on those issues. See Manders
Tr. 2538–39, 2551–52, 2558. That complaint was ironic, because it was Cigna’s decision
to limit integration planning to Day 1 activities that prevented the integration teams from
making progress on that work. See JX 2238 at ’859 (July 2016 Steering Committee

109
 After the discussion, Cordani asked Swedish to rework the strategy. 213 Swedish

agreed.214 During the same meeting, Anthem informed Cigna that Anthem would not

exercise the affiliate clauses to give Cigna members access to Anthem’s rates.215

J. The DOJ Opposes The Merger.

In June 2016, the parties had a series of meetings with the antitrust division. The

initial meetings were with the division staff (the “Staff”). The later meetings were with the

“front office,” which consisted of the principal decision-makers for the antitrust division

(the “Front Office”).

1. The June 10 Meeting With The Staff

On June 10, 2016, the parties met with the Staff to hear its views on the Merger.

The Staff reported that “the Division has very serious concerns.” JX 2024 at ’958.

The Staff’s pervasive concern was the “maverick” theory that the parties had

anticipated before entering into the Merger Agreement. The Staff described Cigna as

an innovative company that is disrupting Anthem’s business model. . . .
Anthem has the perception of being dominant in their states and getting by

presentation noting that for post-180-day strategy, “[a]dditional data is required to move
forward on our goal of combining the best capabilities of both companies to create more
choice and value for the marketplace”).
213
JX 2100; Zielinski Tr. 116; Cordani Tr. 1830.
214
Zielinski Tr. 113–14; Manders Tr. 2545–46, 2568. Cordani and Jones testified
that when discussing the Bias-to-Blue strategy during the June 2016 meeting, Matheis was
red in the face, pounded the table, and yelled. Cordani Tr. 2080; Jones Tr. 2651, 2721.
None of the other attendees, including two members of the Cigna ELT, agreed with their
account. See Zielinski Tr. 105; Swedish Tr. 1127; Manders Tr. 2565; McCarthy Dep. 588–
589. The testimony that Cordani and Jones gave on this point was not credible.
215
Cordani Tr. 1826; see JX 2022 at ’460–61.

110
 largely on their provider discount advantage. . . . Anthem is perceived as
being slow to innovate and has a reputation for being difficult in the industry
in terms of provider relations and customer service. By contrast, . . . Cigna
has found a way to differentiate itself based on new products, high-quality
customer service, excellent wellness programs, and leading provider
collaborative efforts.

Id. The Staff expressed concern that the Merger would “remove that pressure and the

benefits and innovation that Cigna has brought to the marketplace.” Id.

The Staff next discussed for specific areas where they had concerns.

 National Accounts. The Staff “viewed the transaction as a ‘4 to 3’ in the National
Accounts market and because of that, the merger was presumptively unlawful.” Id.
The Staff “also suggested that the efficiencies touted by the parties are insufficient
to outweigh their concerns.” Id.

 Local markets for commercial health insurance sold to large group employers.
The Staff “had concerns in at least 35 local areas” and indicated that “the transaction
would be presumptively anticompetitive in these areas . . . .” Id. at ’958–59.

 Local markets for the purchase of healthcare services. The Staff was concerned
that the Merger would “lower provider payments in a way that [would] reduce the
quality and output of medical care” because NewCo would be “so large it [could]
force providers to accept unprofitable [prices], which in turn [would] reduce the
quality and output of medical care.” Id. at ’959. The Staff viewed this theory as
“undercut[ting] the parties’ arguments that the medical cost savings that would
result from the merger [would] benefit consumers.” Id.

 Local individual public exchange markets. The Staff cited “concerns in the
individual public exchanges in St. Louis, Denver, and Boulder.” Id. Although
recognizing that Cigna was generally not a significant player in the public
exchanges, the Staff believed that Cigna could grow to become a competitor in the
future. Id.

During the meeting, “not a lot of time at the meeting was spent on Blues issues,” although

the Staff raised “Blues-related concerns . . . at various times.” Id. For example, the DOJ

mentioned that the 2/3 Rule could “constrain Cigna’s growth post-closing” and might give

111
Cigna “a reduced incentive or ability to compete as aggressively against (and an increased

incentive to collaborate with) other blues.” Id.

The Staff expressed skepticism that the Merger could be fixed, but they also said

they were open to a remedial proposal. As part of any proposal, the DOJ wanted to know

(1) what the parties propose[d] to divest; (2) who the potential buyers are;
(3) whether the parties have discussed the divestitures with any buyers and
the status of those discussions; and (4) why the remedy will not harm
competition in the short or long term, (i.e., why the divestees [sic] would
immediately restore the competitive status quo).

Id. One of Anthem’s economists from Compass Lexecon described the Staff’s reaction

bluntly: “They hate the merger.”216

2. The Remediation Effort

After the meeting with the Staff, Anthem and Cigna discussed a potential

remediation plan. See JX 2030. In May 2016, Anthem had sent a proposed framework for

a divestiture remedy to Cigna.217 McCarthy, Cigna’s CFO, had reviewed it and commented,

“This looks like a reasonable approach to me.” JX 1963 at ’950. Jones was likewise “ok

with the approach as a starting point.” Id. at ’949. When Cordani saw it, he rejected it out

of hand as “uninformed and theoretical.” Id. Cordani and Jones then spoke with Wachtell

Lipton. See JX 1963. Cigna did nothing with the framework.218

216
JX 2053; accord Rosen Tr. 884.
217
JX 1963; JX 4141; see JX 1793; JX 1904; Jones Tr. 2911–12.
218
See Jones Tr. 2930–32; Rule Tr. 3140–41. At trial, Cordani testified that he
instructed his team to support Anthem’s divestiture efforts. Cordani Tr. 1832. The record
evidence did not support that testimony.

112
 With the Staff having identified its areas of concern, Anthem began work on a

divestiture plan that focused on the thirty-five regional markets that the Staff had identified.

Anthem reached out initially to other Blues members as potential buyers, hoping “to keep

the business ‘Blue.’”219 Anthem also contacted Centene Corporation. JX 2031. Although

Cigna has denigrated Centene as a possible buyer in this litigation, Cigna’s antitrust

counsel had identified Centene as a candidate, describing Centene as “[a] large company

that, in addition to its substantial government [healthcare] presence, is a notable regional

commercial player (especially in certain western states) with the resources to grow.”220

Anthem asked Cigna to help by identifying other potential buyers. JX 2062. Rather

than cooperating, Jones sent a lengthy email to Zielinski in which she attacked how Anthem

had handled the regulatory process. JX 2074. Beginning a narrative that Cigna would repeat

many times, she claimed that Anthem had not done anything to prepare for a divestiture,

and she accused Anthem of “either misrepresenting the situation or significantly

underestimating the task at hand while being unwilling to take any suggestions from

[Cigna].” Id. She then asserted that “Cigna does not have the responsibility or the

219
JX 2070 at ’602; see JX 2046; JX 2070; JX 2104. Having a fellow Blues buyer
could have set the stage for the buyer to cede part of its Blues business to Anthem after
closing to help comply with the 2/3 Rule. JX 2104.
220
JX 567 at ’571; see Zielinski Tr. 494 (describing Centene as a primarily regional
carrier with a few national accounts).

113
information required to set up the strategy on divestitures” and therefore would not attempt

to identify qualified buyers.221

Anthem entered into a nondisclosure agreement (“NDA”) with three potential

buyers: Centene, HCSC, and Independence. PTO ¶ 169. Cigna entered into an NDA with

Centene, but then provided only a one-page spreadsheet that listed the number of lives in

the thirty-five areas and high-level revenue figures.222 Before providing any additional data

to Centene, Cigna insisted on a second, non-market NDA, which included broad standstill

provisions.223 Cigna refused to enter into an NDA with or provide due diligence to the two

Blues buyers unless the DOJ indicated that a Blues buyer was a viable option.224

Without due diligence from Cigna, the three potential buyers could not evaluate the

assets, make an offer, or advocate to the DOJ. Zielinski, Jones, and their outside counsel

exchanged contentious emails over Cigna’s refusal to sign NDAs and provide due

diligence.225 Zollars, a Cigna director, testified that Cigna refused to sign the NDAs

because “things had broken down to the point” that Cigna was “concerned that the deal

221
Id. Cigna did not take any steps to identify potential buyers. See Zielinski Tr. 63.
222
See JX 2068; Zielinski Tr. 56; Paul Tr. 640, 652–54, 750; Jones Tr. 2930.
223
Zielinski Tr. 56–57; Paul Tr. 653–54, 655.
224
See JX 2076; JX 2101; Zielinski Tr. 51; Jones Tr. 2659–60; Rule Tr. 3094–95.
225
See JX 2076; JX 2079; JX 2080; JX 2083; JX 2084; JX 2090; JX 2091.

114
may not go through and, if it didn’t go through, that we were putting ourselves at risk” by

providing due diligence to potential buyers.226

In anticipation of the June 20 meeting, Anthem sent a letter to the DOJ that identified

its proposed buyers and offered to divest all of Cigna’s assets in the thirty-five regional

markets.227 Just before the meeting, Cigna’s counsel told Anthem’s lead regulatory

counsel, George Paul, that “the viability of Blues as divestiture candidates must be raised”

with the DOJ and threatened, “If you don’t plan to raise it, we will.” JX 2101 at ’171. Paul

was “stunned, angered, and a little unsure how to proceed.” Paul Tr. 643. As he saw it,

I am going in on the first time I had the chance to talk to the Department of
Justice about, “Here is my solution to the problems you’ve raised and, by the
way, I have the best three buyers on the planet all lined up. All are going to
be great. And this is the best proposal you’ve ever seen. You need to sign on
it today. And oh, by the way, are you comfortable with the Blues as a buyer,
because there’s some question as to whether or not they would be viable or
not.” That’s just not a good way to start off a negotiation for settlement.

Id. at 644. He viewed Cigna’s insistence on raising the issue as a failure to cooperate with

Anthem and an effort to highlight Anthem’s membership in the Blues Association. See id.

at 642, 644, 647.

226
Zollars Tr. 2516. The record supports Zollars’ assertion that the Cigna ELT made
a decision not to support the divestiture process because the relationship with Anthem had
broken down. After the meeting with the DOJ Staff, Cigna’s regulatory counsel initially
appeared willing to negotiate NDAs and work on a divestiture strategy. That changed after
Cordani and Jones spoke with Wachtell Lipton about how to proceed. The meeting with
Wachtell Lipton resulted in a decision not to support Anthem’s divestiture efforts. See
JX 2030; JX 2079; Jones Tr. 2913–20, 2930–32.
227
PTO ¶ 167; JX 2087; Zielinski Tr. 49–50.

115
 During the meeting with the Staff, Anthem presented its proposal and flagged that

two of the buyers were Blues licensees. Anthem had asked Cigna to help argue that a Blues

buyer was suitable, but Cigna refused. See Paul Tr. 641–42, 647–48.

The Staff did not express any view on Anthem’s proposal. See JX 2123 at ’405. Paul

did not expect anything different. In his experience, the DOJ usually resists an initial

divestiture proposal and raises questions, expecting that the “buyer is going to come in with

a business plan, with financials that show that it can profitably run that business on day one

and step into the shoes of where the [seller] was going to be.” Paul Tr. 645. Because of

Cigna’s position on NDAs and due diligence, the proposed buyers could not do that.

3. The June 21 Meeting With The Front Office

On June 21, 2016, the parties held their first meeting with the Front Office. The top

DOJ representative was Deputy Assistant Attorney General Sonia Pfaffenroth, who was

the number two person in the antitrust division. Paul. Tr. 706, 728.

Like the Staff, the Front Office expressed “‘significant concerns’ with the

transaction both at a national and local level.” JX 2123 at ’406. Like the Staff, the Front

Office cited “the loss of 1 of 4 national competitors” and Cigna’s status as an innovator

who was “unique in some ways,” such as value-based care. Id. at ’408.

To a greater degree than the Staff, the Front Office expressed concern about Cigna

“joining a Blue” and whether that would result in coordination between Cigna and the

Blues Association. Id. at ’407. The Front Office also expressed concern that “the very

nature of the Blues network” would curtail Cigna’s growth. Id. At this point, Zielinski

represented that “he believed the [Blues] MDL in Alabama would settle and change the

116
[2/3] rule.” Id. At trial, Zielinski acknowledged that the mediation had been unsuccessful

and that he lacked any factual basis for that representation. Zielinski Tr. 44345

Anthem then presented its remediation proposal. Like the Staff, the Front Office

was skeptical that a buyer could step into Cigna’s place. The Front Office also expressed

skepticism that another Blues member could be a viable buyer.228

On June 24, 2016, the parties had a second meeting with the Front Office. This time,

the top representative from the DOJ was Associate Attorney General William Baer, the

head of the division. See Paul Tr. 728.

Anthem gave a presentation, which argued that the Merger was not anticompetitive

and provided detail about its proposed remedy. Only Anthem representatives made the

presentation. Cigna’s counsel did not even sit at the table with Anthem.229 When Baer asked

about the 2/3 Rule, Zielinski again represented that it would be eliminated or modified

through a settlement in the Blues MDL. Zielinski predicted, again without factual support,

that a settlement could happen before the end of 2016.230 Baer pushed Zielinski to agree

that absent a modification, NewCo would be “growth constrained.” JX 2193 at ’773.

During the meeting, Anthem argued that the Merger would enable Anthem to build

on Cigna’s model of integrated specialty care and wellness products. Baer asked why

Anthem had not already created similar products, and Anthem’s counsel stated that it was

228
JX 2123 at ’409; see JX 2112; Zielinski Tr. 49091.
229
See Paul Tr. 729, 762; JX 2132; JX 2193.
230
See JX 2830; JX 2193 at ’773, ’782, ’794; Zielinski Tr. 443–44.

117
not Anthem’s focus and hard to build from scratch. Zielinski also suggested that many

industry professionals questioned whether Cigna’s wellness programs actually reduced

costs, with many regarding the programs as a “waste of time.” Id. at ’774.

Baer also asked about Anthem’s ability to achieve medical cost savings, suggesting

that Cigna’s providers might not be willing to provide the more intensive services that

Cigna’s programs contemplated at the lower rates that Anthem paid to providers. Zielinski

told the DOJ that Anthem could trigger the affiliate clauses in its provider agreements,

under which the providers would be obligated to offer the same rates to Cigna customers.

That theoretically was true, but by then the Anthem ELT had decided not to exercise the

clauses broadly. See Part II.I.3, supra. Baer maintained there was the “tension” between

Anthem paying lower rates to Cigna’s providers and Anthem’s claim that it would improve

collaborative relationships with those same providers. JX 2913 at ’774.

Baer expressed skepticism about a potential remedy, noting that the DOJ had never

approved a divestiture of the scale that Anthem was proposing. Id. at ’775–76. Because of

how the DOJ viewed the Blues, the DOJ saw a divestiture to a Blues buyer as Anthem

selling to itself. Zielinski Tr. 477, 490–91.

At the end of the meeting, Baer asked to have a separate session with Cigna. That

meeting took place one week later, on June 27, 2016.231

231
See JX 2913 at ’776; JX 2149; JX 2196.

118
 Coming out of the meetings with the DOJ, Anthem and Cigna suspected that that

the DOJ would not approve the Merger.232 Anthem also received the bad news that Centene

was not interested in a potential purchase of Cigna’s assets.233 Centene had not received

any due diligence from Cigna. Paul Tr. 654, 656–67. After Centene walked away, only

Blues buyers remained as potential divestiture buyers. Anthem began to explore whether

selling assets to a combination of buyers might be a solution. See JX 2165; JX 2177.

Over the following weeks, the parties continued to meet and correspond with the

DOJ. Faced with the DOJ’s argument that Cigna was uniquely innovative, Anthem sought

to convince the DOJ that although Cigna was innovative, it was not uniquely innovative.

Anthem prepared and submitted a letter to the DOJ designed to address “the Division’s

apparent misconception that Cigna is the only insurer providing [collaborative] services”

and explaining that “many other health insurance carriers” offer similar services.234

Anthem also submitted a letter arguing that a Blues buyer would be a good candidate for a

232
Zielinski Tr. 44849; Rule Tr. 3098.
233
See JX 2163; JX 2177.
234
JX 2250 at ’671. Anthem researched Cigna’s collaborative care relationships and
began developing an argument that Anthem’s comparable programs were similarly
effective or even superior to Cigna’s. See JX 2138; JX 2139; JX 2148; JX 2153. As part of
that process, Anthem located a study that characterized Cigna’s collaborative programs as
relatively small and ineffective. See JX 2129; JX 2134. Anthem also spoke with and
obtained a declaration from Stuart Piltch, a regional consultant for large healthcare clients
who was skeptical of the value of Cigna’s collaborative programs. See JX 2127; Zielinski
Tr. 453–58. Anthem’s counsel worked with Piltch to prepare a declaration explaining that
Cigna’s collaborative care options were neither unique nor significant. See JX 2131. The
Piltch declaration did not figure prominently in the Antitrust Litigation. It was “a tree that
fell but wasn’t heard in the forest.” Curran Tr. 1511.

119
remediation proposal.235 And Anthem submitted a letter arguing that the Merger would

expand individual access to health insurance. See JX 2190. Cigna objected to Anthem’s

submissions and refused to join them.

After extensive effort, Anthem succeeded in bringing Centene back to the table.236

Anthem again asked Cigna to populate a data room so that Centene and the two Blues

buyers could conduct due diligence. Cigna objected that Anthem was “unilaterally driving

Cigna asset divestitures” and complained that Cigna’s assets were the “only ones on the

block.”237 Cigna continued to refuse to enter into customary NDAs with the two Blues

buyers on the theory that the DOJ would never approve a sale to a Blues buyer. See

235
See JX 2181; Zielinski Tr. 51–56.
236
See JX 2251; JX 2327; Paul Tr. 717.
237
JX 2219; see Zielinski Tr. 63–64 (describing Cigna’s opposition to the divestiture
of its assets). This was obstructive. The divestiture transaction would have been
conditioned on the Merger closing, at which point the divested assets would be NewCo’s
assets, not Cigna’s assets. Cigna’s opposition was also inconsistent with its analysis during
the merger discussions with Anthem, when the Cigna ELT expected to be managing
NewCo. During that phase, the Cigna ELT clearly understood that divestitures would be
necessary and that they would most likely involve Cigna assets. See JX 78 at ’721 (Cigna
analysis of transaction with Anthem; “Local market depth may require divestitures”); JX
79 (McCarthy and Gray discussing that “[r]egulatory divestitures would be best from
Cigna”); JX 99 at ’545 (Cigna ELT memorandum on deal with Anthem noting that
“Regulatory divestitures, if required, will tend to be [Cigna] revenue/membership in the
[Anthem Blue States]”); see also Zielinski Tr. 63 (explaining that “even before we signed
the Merger Agreement, we talked about that given this transaction, it was very likely that
the government would request us to do divestitures as part of the remediation plan, [and]
in order to address that, we would divest Cigna assets in our 14 Blue states”); Gray Tr.
1682–83 (anticipating in September 2015, shortly after signing of Merger Agreement, that
divestitures were manageable and likely would come from Cigna).

120
JX 2220. The DOJ had said that it had “serious concerns” about a divestiture to a Blues

buyer, but the DOJ also was willing to speak with both buyers. JX 2222.

On July 10, 2016, Anthem formally presented its divestiture proposal to the DOJ

and argued that it would address any concerns about the Merger being anticompetitive.

JX 2225. Cigna did not join the letter, which was a “red flag to the Department of Justice.”

Paul Tr. 762. Instead, Cigna’s counsel sent a detailed letter to Anthem attacking the

proposal. JX 2227. Among other things, Cigna took the position that its provider contracts

did not authorize it to rent its network to a buyer. Id. at ’659. Anthem had analyzed Cigna’s

form agreements and had not identified any restrictions on renting its network.238

With Cigna continuing to refuse to enter into an NDA with either of the Blues

buyers, Anthem charged Cigna with failing to use its reasonable best efforts to support the

Merger. Cigna’s lead counsel then contacted the Staff to find out if the DOJ would consider

a sale to a Blues buyer, explaining that Cigna did not want to provide its confidential

information to a non-viable acquirer. The Staff confirmed that “a divestiture to a Blue

plan is not a path forward.”239 The Staff added that its position would not change even if

Cigna entered into NDAs and shared information with the two Blues buyers.240

238
JX 3119 at ’779; Paul Tr. 755–57.
239
JX 2254 at ’481; accord JX 2258.
240
See JX 2254 at ’482; JX 2258.

121
 Shortly thereafter, talks broke down with Centene, which was the only potential

non-Blues buyer. Cigna never gave Centene access to the data room.241 Centene also had

asked to buy a combination of Cigna and Anthem assets, rather than just Cigna assets.

Anthem was unwilling to sell the assets that Centene wanted and believed that it could find

other buyers for the Cigna assets.242

4. Cigna Continues To Analyze Its Standalone Options.

While the meetings with the DOJ were taking place, the Cigna ELT continued to

work with Bain on the strategies available to “Sovereign Cigna.”243 Cordani and the Cigna

ELT also consulted with Moelis about its strategic options for if the DOJ blocked the

Merger, including “lessons learned on broken deals.”244 The Cigna Board spent much of

its July 2016 meeting reviewing Cigna’s standalone strategy and alternatives.245

Cigna simultaneously began preparing to shape the narrative if the DOJ challenged

the Merger. Cigna crafted a story in which the parties’ interests diverged because of

Anthem’s regulatory strategy, rather than Cigna’s opposition to the L2/L3 selection process

241
See JX 2163; JX 2177; Paul Tr. 654, 656–67; Gray Tr. 1667.
242
See JX 2330; JX 2339; Zielinski Tr. 500–01; Paul Tr. 717–19.
243
See JX 2040; JX 2125; JX 2198; JX 2213; JX 2214; JX 2224; JX 2233.
244
JX 2260; see JX 2282.
245
JX 2357; JX 2358; JX 2293.

122
and other aspects of integration planning.246 Teneo developed a communications plan that

involved “proactive outreach to key media on background.” JX 2298 at ’547. Teneo would

 attack Anthem’s regulatory strategy,

 claim that the Blues Rules would have limited NewCo’s ability to grow,

 criticize Anthem’s remediation proposal,

 argue that the Merger would have favored shareholders over customers,

 portray Anthem as financially constrained and “not a well-run company,”

 attack Swedish, including by suggesting that he made misleading statements about
the status of the transaction and the degree of cooperation between the parties, and

 praise Cigna’s potential for standalone success.

Id. at ’547–49.

Meanwhile, on July 12, 2016, the Steering Committee met for what would be the

last time. During the meeting, the commercial integration team presented a modified go-

to-market strategy for the first 180 days that replaced “Bias to Blue” with a brand-agnostic

strategy, which the Steering Committee adopted. See JX 2238 at ’861. Under the brand-

agnostic strategy, if a new client in an Anthem Blue State expressed a preference for a

Cigna product, then only Cigna would provide a quote. The full “Air Traffic Control

Playbook” confirmed that NewCo would deploy the brand-agnostic strategy, retain both

246
See, e.g., JX 2295. As part of that work, Cigna’s attorneys collected and analyzed
Delaware cases addressing “reasonable best efforts” provisions. See JX 2197; JX 2248.
Cigna also prepared for “the ‘walk away’ scenario,” in which the parties agreed to
terminate the Merger Agreement. JX 2284 at ’930.

123
the Anthem and Cigna brands, and seek to preserve NewCo’s full book of business. See JX

2303.

K. The Antitrust Litigation

On July 21, 2016, the DOJ sued to enjoin the merger. On the same day, the DOJ

sued to enjoin the pending merger between Aetna and Humana.247 The DOJ contended that

the mergers would “eliminat[e] two innovative competitors—Cigna and Humana—at a

time when the industry is experimenting with new ways to lower healthcare costs,”

reducing the number of large national health insurers from five to three.248

The DOJ’s public comments included criticisms of Anthem’s divestiture proposal.

JX 2323 at 8–9. During the press conference, a reporter asked, “[I]s there something that

[the] companies could do? Put something -- could they fix it in a way to get a settlement?”

Id. at 12. The DOJ responded, “We have seen nothing that suggests that. Absolutely

nothing.” Id.

1. The Parties’ Initial Responses To The Antitrust Litigation

Anthem responded to the filing of the Antitrust Litigation by issuing a press release

criticizing the DOJ’s decision and by running advertisements touting the Merger in major

newspapers.249 Swedish appeared on CNBC and spoke in support of the deal. 250 Swedish

247
PTO ¶ 178; JX 2304.
248
JX 2314 ¶ 4 (the “Antitrust Complaint”); accord JX 2319 ¶ 4.
249
See JX 2302; JX 2313; JX 2324; JX 2343; JX 2344; JX 2353; Zielinski Tr. 83–
84.
250
See JX 2355. During that interview, Swedish stated that Cigna had done “nothing
that has led us to believe they want[ed] to leave this deal.” Id. at ’147. At trial, Swedish

124
and Zielinski also met with the Wall Street Journal and gave them an exclusive “sources

close to Anthem” interview about the state of the deal and the disagreements with Cigna.251

Cigna declined to join Anthem’s press release.252 Cigna issued its own press release

stating that it was “evaluating its options” in light of “the concerns raised by the DOJ and

the overall status of the regulatory process,” which Cigna pointed out “was led by

Anthem.” JX 2312. Cigna said that it did “not believe the transaction [would] close in

2016” and that “the earliest it could close [was] 2017, if at all.”253 Cigna also said that it

strangely described that statement as “truthful and accurate.” Swedish Tr. 1213. He also
testified that in the fall of 2016, he thought that Anthem and Cigna were “working together”
to defend the Antitrust Litigation and that “Cigna was committed to the trial and hoping
that the deal would get approved.” Id. at 1216. Swedish’s statements to CNBC about
Cigna’s level enthusiasm were not accurate, nor was his testimony regarding his views of
Cigna in the fall of 2016.
251
Zielinski Tr. 382–83. In response to an interrogatory asking about Cigna’s
communications with the Wall Street Journal about the disputes between the parties,
Anthem failed to identify this meeting. See JX 4065 at 8. The meeting should have been
identified. During the same period, Swedish asked Zielinski and Anthem’s public relations
advisors to look into developing stories that attacked Cigna’s prospects as a standalone
entity, but Zielinski convinced Swedish not to go forward with that strategy. See Zielinski
Tr. 390–95; see also JX 2273; JX 2618.
252
See PTO ¶ 180; JX 2312; JX 2313.
253
Id.; see JX 2285; JX 2347. McCarthy, Cigna’s CFO, felt that Cigna should have
said that it was disappointed in the DOJ’s decision to sue, attributing the failure to Teneo’s
advice. McCarthy Dep. 603–04. Cigna’s head of investor relations questioned the language
of the release, writing, “Don’t know what tone we are looking for, but to me, this sounded
like we really don’t care whether or not [the Merger] gets rejected.” JX 2228. He noted that
“the conventional wisdom on the Street” was that Cigna was “not interested in this deal,”
and he explained that “[a] disclosure like this would further that thesis.” Id. One of Cigna’s
investors suspected “[b]ased on the tone of [the] release” that Cigna was “looking for a
way out.” JX 2331 at ’791. Other investors expressed similar sentiments. See JX 2334; JX
2335; JX 2354.

125
had developed “an [a]ttractive Plan B” that it would deploy if the deal did not go through.254

Cordani began meeting with Cigna’s investors to tout Cigna’s prospects as an independent

company. See JX 2402. Cigna also formally engaged to Bain to further develop its

“Sovereign strategy.”255

After the DOJ filed suit, all joint work on integration planning stopped.256 Anthem

and its consultants continued to work on integration, but without input from Cigna.257

2. Cigna’s Covert Communications Campaign

Officially, Cigna declined to comment on the Antitrust Litigation. Unofficially,

Teneo waged a covert communications campaign against the Merger.258

Because the DOJ complaint mentioned Anthem’s status as a Blues licensee, Cigna

charged Teneo with developing stories about the Blues Rules being an impediment to the

254
JX 2392 at ’391; see JX 2409.
255
See JX 2405; JX 2457; JX 2705.
256
Dist. Ct. Op., 236 F. Supp. 3d at 186, 235; Cordani Tr. 1834. The parties dispute
who stopped the joint effort first. The record shows that after the DOJ’s announcement,
Anthem instructed its integration teams to “cease all conversations with Cigna” and to
cancel all joint meetings. JX 2326; see JX 2332. Cigna followed suit. JX 2339; JX 2403.
Anthem then reconsidered and proposed continuing to work on a “90 day action plan for
Day 1 readiness that would be implemented upon receiving a positive outcome in the DOJ
litigation.” JX 2404; see JX 2403. Cordani declined, claiming that Cigna would “continue
to focus on regulatory and litigation priorities and support.” JX 2404 at ’243; see JX 2406.
Contrary to that claim, Cigna did not provide any ongoing support.
257
See, e.g., JX 2341; JX 2370; JX 2394; JX 2443.
258
Anthem also engaged in efforts to “shape pre-trial coverage” by “creating a new
narrative in the DC media market where this trial will take place.” JX 2386. The
fundamental difference was that Anthem was trying to promote a narrative that supported
the Merger and would make it more likely for the DOJ to settle. Id.; see JX 2388.

126
Merger. To that end, Teneo and Wachtell Lipton began gathering litigation filings from the

Blues MDL and using them to develop arguments against the Merger. 259

Jones used information gleaned from the Blues MDL to write a letter to Zielinski

that questioned NewCo’s ability to comply with the 2/3 Rule and “Anthem’s good faith in

its dealings with Cigna over the last year plus.” JX 2467 at ’305. She accused Anthem of

“misrepresenting the scope and nature of its relationship with the [Blues Association],

failing to provide access to Cigna to important documents regarding that relationship and

failing to brief Cigna on the extent of its ‘conflict of interest.’” Id. at ’307.

Teneo used information gleaned from the Blues MDL to prepare its “Blues [P]itch,”

a sixteen-page document, which used the Blues Rules to advance arguments against the

Merger.260 The Blues Pitch included the following messages:

 “If Cigna merges with Anthem, its freedom to compete with Blues across the
country could be constrained.” JX 2484 at ’001.

 “As a [Blues] organization, Anthem’s obligations mandate certain actions that limit
the size and resources of its non-Blues business.” Id.

 “[Blues] rules oblige Anthem to prioritize its Blues business, implying that the
legacy Cigna business will be neglected within the merged organization.” Id.

 “A merged Anthem-Cigna will empower Anthem, exacerbate the market
segmentation employed by the Blues, and cause the erosion of the innovation and
value Cigna brings, harming consumers and the healthcare market more
broadly.” Id.

 “To [comply with the Blues Rules], the company will have to decrease the
percentage of Cigna customers in the merged company. Practical implementation

259
See JX 2462; See Cohen Tr. 2405, 2407–08.
260
JX 2484; see Cohen Tr. 2408–09.

127
 implies that Anthem will get bigger and do away with Cigna plans. By shifting plans
and resources from Cigna to Blues, the merged company will limit Cigna’s
innovation.” Id. at ’002.

 “[A] merger would create a clear conflict of interest between [Anthem’s] Blues and
non-Blues plans.” Id.

 “Anthem and its Blues partners are already being accused of negatively impacting
the healthcare market and its consumers.” Id.

 “Anthem has failed to address the grave concerns outlined in this document.” Id.

 “Anthem is well aware of its obligations to the Blues. To retain its Blues license,
which is core to the company’s value, Anthem will have to either compete with
other Blues or weaken Cigna’s position.” Id.

 “To ensure a successful merger without anti-trust violations, Anthem should have
developed a solution to address these concerns. However, Anthem and its leadership
continue their refusal to tackle these pivotal issues.” Id.

Cohen developed the Blues Pitch knowing that it would support the DOJ’s position against

the Merger. He had no factual basis for the arguments in the Blues Pitch, other than what

he saw in the Blues MDL filings. See Cohen Tr. 2413–14, 2416.

Shortly after preparing the Blues Pitch, Cohen met with Jones. She told Cohen “to

play this as all roads go to the blues.” JX 2486 at ’490. She admitted that Cigna was “going

through the motions of moving this deal forward.” Id. at ’491. Cohen understood that by

“all roads go to the Blues,” Jones meant that she wanted to pursue “a strategy to blame the

Blues rules no matter what.” Cohen Tr. 2427–28.

128
 One day after receiving his marching orders, Cohen sent Jones a memorandum titled

“Strategic Positioning Initiatives,” which identified three key themes.261 The first was

“[t]he leadership style and focus of [the] Anthem CEO and its effect on the merger

process.” JX 2488 at ’888. The messages for this theme included the following:

 “The leadership style and focus of the Anthem CEO has proven a detriment to the
success of this transaction.” Id.

 “While suggesting . . . that the successful completion of the merger was his top
priority, his actions have been anything but . . . .” Id.

 “The CEO’s repeated public statements about the parties being aligned and
advancing the process together are entirely inconsistent both with realit[y] as well
as statements made by Anthem’s counsel in court . . . .” Id.

The attacks recalled earlier efforts by Teneo to undermine Swedish, including an attempt

to locate a picture of Swedish smoking a cigar on the cover of Cigar Aficionado magazine,

which Teneo believed would hurt his credibility as a healthcare CEO.262

The second theme was “[t]he emerging complexity related to the Blues and related

litigation and this complexity’s impact on the merger process as well as Anthem’s

handling/lack of handing of this complexity.” JX 2488 at ’888. The talking points for this

theme came straight from the Blues Pitch.263

261
JX 2488 at ’888; see Cohen Tr. 243032. Cohen sent the document to Jones by
routing it through Wachtell Lipton in an effort to manufacture a claim of privilege. See
JX 2489; see Cohen Tr. 242930.
262
JX 1922; see Cohen Tr. 2381–83; see also JX 2781 (Teneo developing “Story
Points” for article attacking Swedish).
263
See id. at ’889; JX 2484.

129
 The third theme was “a lack of credibility and consistency in the statements

advanced by Anthem with regard to the completion of the transaction and its approach to

so doing, particularly with regard to the lack of a remediation plan . . . .” JX 2488 at ’888.

Talking points for this theme included the following:

 “It is a widely held view in the financial community and the media that the
likelihood of completing the Anthem-Cigna merger is de minimus [sic].” Id. at ’890.

 “Anthem is not advancing a mitigating approach nor does it have time to construct
such an alternative scenario at this point if it wanted to.” Id.

 “Anthem CEO has recently left investors and other audiences wanting as to how the
company could secure a victory in completing the transaction.” Id.

Cohen reported that he was “actively pursuing and developing storylines with [the] media”

involving these themes, including with the Wall Street Journal, the New York Post, and the

Financial Times.264 Cohen spoke with reporters, attorneys, and law professors who might

help spread Cigna’s anti-Merger narrative.265 Cohen provided reporters with draft

language, quotations, and other material that reflected poorly on Anthem for the reporters

JX 2488 at ’888, ’890–91; see also JX 2578. Wachtell Lipton assisted Cohen by
264

assembling information that he could provide to reporters. See JX 2499; JX 2500; JX 2598;
JX 2600. Wachtell Lipton also connected Cohen with reporters See JX 2515.
265
See JX 2526; JX 2533; JX 2537; JX 2553; JX 2555; JX 2564; JX 2565; JX 2607.

130
to drop into their stories.266 Teneo separately worked on messaging that attacked the health

of Anthem’s business.267

Cohen’s efforts produced stories that advanced the anti-Anthem, anti-Merger

themes that he and Jones had developed.268 When Cohen forwarded one of the articles to

Teneo’s CEO, he congratulated Cohen on a job “[w]ell done.”269

266
See JX 2556; JX 2561; JX 2566; JX 2567; JX 2569. Cordani testified at trial that
the communications initiative was never “activated.” Cordani Tr. 2042–43. That testimony
was inaccurate. The record makes clear that Teneo carried it out at Cigna’s request. See
Cohen Tr. 2433, 2437; JX 2488 at ’888. Cordani also claimed inaccurately that he had not
received the Strategic Positioning Initiatives. Cordani Tr. 2039. The metadata showed that
the document was produced from his files. JX 3137; Cordani Tr. 203940. Cordani even
testified that he “had very little involvement with Teneo.” Cordani Tr. 2021. The record
shows that Cordani directly engaged with Teneo on numerous occasions, including with
its CEO, Declan Kelly. See, e.g., JX 2611; JX 2638. Cohen testified that he “worked
regularly” and “closely” with a “core team” consisting of Cordani, Jones, Baucus, and
Wachtell Lipton, and that he had “a substantial amount of contact” with Cordani and Jones.
Cohen Tr. 2373–74.
267
JX 2509 at ’101; see JX 2516. Cordani testified that Teneo did not run a campaign
criticizing the Merger. See Cordani Tr. 2020, 2027–28. Jones similarly testified that Cigna
did not hire Teneo to criticize the Merger, that there was no strategy to criticize the Merger,
and that Teneo did not perform any work to promote or generate stories about the Merger.
Jones Tr. 2760–62. That testimony was obviously inaccurate. See, e.g., JX 2565; JX 2567;
JX 2798; JX 2803; JX 2890; JX 3110; Cohen Tr. 2433. Jones went so far as to claim that
Teneo’s job was to correct any misperception that Cigna was not committed to the Merger.
Jones Tr. 274446. She was forced to admit that there is not a single Teneo document that
includes a message indicating that Cigna was interested in the Merger. Id. at 2773–74.
268
See JX 2570; JX 2571; JX 2574; JX 2576. Ironically, Cohen’s efforts resulted in
reporters asking Cigna to comment on stories Cohen had planted. See, e.g., JX 2571.
269
JX 2576. Cigna accuses Anthem of engaging in comparable conduct. There is
evidence that in July 2016, after Teneo’s initial leaks led to articles in the Wall Street
Journal and the New York Post, Swedish and Zielinski met with the Wall Street Journal
and provided information as “sources close to Anthem.” JX 2572. There also is evidence
that after the DOJ sued and as trial approached, Anthem’s public relations advisor worked
on talking points and prepared a media plan. See JX 4288; JX 4295. Just before trial,

131
 3. The Initial Phase Of The Antitrust Litigation

As it had the right to do under the Merger Agreement, Anthem took the lead in

defending the Antitrust Litigation. Cigna purported to defer to Anthem, while working to

undermine the defense.

Cigna initially undermined Anthem’s efforts to obtain a prompt schedule in the

Antitrust Litigation. Either party could terminate the Merger Agreement after April 30,

2017, so Anthem sought an expedited trial before the end of 2016 to provide the District

Court with time to rule, an opportunity for appeal, and a window to obtain other necessary

approvals. See JX 2382. To show that it was serious about moving quickly, Anthem filed

its answer on July 26, 2016. Cigna proceeded leisurely. Cigna did not file its answer until

September 19, 2016. Cigna did not make any arguments in support of an expedited trial

date, but instead submitted a one-page submission stating, “Cigna defers to Anthem’s

scheduling request . . . .”270

Anthem hired an additional public relations firm to help promote coverage that supported
the Merger. See JX 2604; JX 2618; JX 2665. And when Anthem considered sending Cigna
a formal notice of breach and making a public announcement in July 2016, Anthem also
considered having its public relations firm speak on background with reporters about the
notice. See JX 2273. Anthem, however, did not send the notice of breach and did not
proceed with the story. See Zielinski Tr. 390–95. Anthem also had its public relations firm
monitor and summarize stories in the press. See JX 4077.

There are at least two critical distinctions between Anthem’s and Cigna’s conduct.
First, Anthem’s level of activity was less extensive than Cigna’s. Second, Anthem sought
to promote the Merger and facilitate closing, while Cigna sought to undermine the Merger
and prevent closing.
270
JX 2381. Because the divergence between Anthem and Cigna’s positions on
scheduling was self-evident, Anthem’s counsel addressed it during the initial case
conference on August 4, 2016. In support of its request for an expedited schedule,

132
 Cigna also resisted mediation. During a case management conference on August 12,

2016, the District Court encouraged the parties to explore mediation, suggesting that

“potential settlement discussions” could proceed “on a parallel track” with the litigation

and potentially result in “a negotiated solution.” JX 2414 at 34. The DOJ responded that

“[there was] absolutely a willingness” to consider settlement, and clarified, “We’re always

willing to hear any [settlement] proposals that the defendants have.” Id. Anthem also

endorsed the prospects of settlement.271

Based on the District Court’s comments, Anthem proposed that the parties

mediate.272 The DOJ asked for “Cigna’s position” and expressed skepticism that mediation

would be productive. JX 2451. Anthem later asked Cigna to support a motion to appoint a

mediator and to assist with a local market divestiture. Cigna refused, asking Anthem “how

Anthem’s counsel explained, “[W]e have a situation here where Anthem, the acquiror [sic],
wants to do the deal, [and] Cigna, at least its top management, is . . . no longer interested .
. . .” JX 2424 at 32. Cigna’s counsel did not argue in favor of an expedited trial, saying
only, “[W]e would defer to Anthem.” Id. at 40.
271
Id. at 36. During the conference, the District Court recognized the adversity
between Anthem and Cigna and asked, “Does it makes sense to force the government and
the Court and the special master and the third parties and the state regulators to abide by
an extremely ambitious schedule in order to review a merger between two parties that don’t
seem to want to merge?” Id. at 24; see id. at 40; see also JX 2418. Anthem’s counsel
indicated that Anthem wanted to complete the deal. See JX 2414 at 37. The District Court
then turned to Cigna’s counsel and asked whether there was flexibility as to the
Termination Date, commenting that it was “a bizarre situation that we are doing all of this
for the benefit of a merger that may not be desired.” Id. at 52. Cigna’s counsel claimed that
Cigna was committed to the Merger, but noted, “On April 30th either party can withdraw.”
Id. at 54.
272
See JX 2451; Curran Tr. 1606–07; Rule Tr. 3186–88.

133
a local market divestiture plan that addresses the DOJ’s concern [could] reasonably be

executed within the current Anthem requested court schedule.” JX 2476.

During a case management conference on September 30, 2016, the District Court

again endorsed mediation, describing it as an “excellent idea.”273 Cigna’s counsel

disagreed, arguing that mediation would distract from trial preparation. Cigna’s counsel

also posited that it would be difficult to support a mediation effort “without understanding

sort of the path that the mediator is going to take.” Id. at 58. The District Court pushed

back, expressing skepticism that the parties lacked the resources to proceed on two tracks

and observing that “it’s difficult to anticipate what the proposals would be or how the

mediation would proceed without actually initiating mediation.” Id. at 59. In a subsequent

call, the DOJ made clear that it regarded mediation “as a waste of time.” JX 2540.

During the early phases of the case, Anthem tried to speak with potential NewCo

customers to identify witnesses who might give trial testimony in favor of the Merger. 274

Under Anthem’s confidentiality agreement with Cigna, Anthem could not contact Cigna’s

clients without Cigna’s consent.275 Cigna opposed any effort by Anthem to contact nineteen

entities that Cigna identified as its customers. JX 2438.

273
JX 2523 at 59; see id. at 57.
274
See JX 2423; JX 2435.
275
JX 2416 at ’532; see JX 2428; JX 2436.

134
 4. Discovery In The Antitrust Litigation

During discovery, Anthem did all the work. Anthem prepared all the discovery

requests, took or defended 109 out of 115 depositions, and identified, retained and worked

with all of the experts. The only depositions that Cigna defended were those of its six

witnesses. Cigna did not take any depositions, and it asked limited questions of only three

witnesses—Cordani and two Anthem witnesses—in each case eliciting testimony that

supported the DOJ’s case and harmed the defense.276

Instead of helping, Cigna continued to undermine Anthem’s efforts. During a

teleconference on August 16, 2016, Cigna volunteered that the parties’ in-house counsel

had exchanged additional dispute letters.277 The DOJ moved to compel production of the

letters, and Anthem asserted privilege. Cigna submitted a response in which it argued that

only parts of the documents were privileged and asked the Special Master to review the

documents in camera. Anthem believed that only eleven documents were at issue, but

Cigna had submitted fifty documents to the Special Master and argued in favor of the

broader submission.278 Cigna then disputed Anthem’s proposed redactions, and when

Anthem stated its position to the Special Master in neutral terms, Cigna responded with an

over-the-top email about the “inaccurate insinuations of Anthem’s counsel.” JX 2514. The

276
See Curran Tr. 1416–25, 1434–35; ADX 9; see also Rule Tr. 3168–69.
277
See JX 2494 at 2; see also JX 3065; Curran Tr. 1410–14, 1434–35.
278
See JX 2501 at ’03435; JX 2534; Curran Tr. 1425.

135
Special Master recommended that many of the documents be produced, and the court

adopted the recommendation.279

One of the more significant developments during discovery was Cordani’s

deposition. Cordani was shown an advertisement that Anthem had run in support of the

Merger after the DOJ filed suit, JX 2353, then asked about an email in which Jones wrote,

“Not only are these ads misguided as a tactical matter, they contain statements which we

do not believe to be true,” JX 2596 at 147. When asked about what was untrue, Cordani

launched into talking points from the Blues Pitch, including the theme that the Merger

would damage Cigna outside the Anthem Blue States:

An example, to answer your question, is our prior dialogue—a prior topic of
the proposed forced migration of Cigna customers that we talked about
earlier, which took place either a month or two prior to this event transpiring,
raised significant concern in our corporation that choice would be
constrained and the ability to harness our clinical programs and our
collaboratives would not only be constrained but essentially disrupted and
further concern that our network outside of the 14 states would ultimately
systematically be dismantled as the volume in the 14 states in [sic] the Cigna
platform decreased.

By definition you would be taking volume outside of the 14 states, so choice.
And then, secondly, we continued to register concerns just in terms of how
the $2 billion was being estimated on medical cost savings because the
combination of network optimization but clinical program optimization
assumptions continued to change on a regular basis there.

JX 2596 at 148–49. Later in his deposition, Cordani claimed that the “migration strategy”

was called “Bias [to] Blue.”280

279
See JX 2541; JX 2580.
280
Id. at 164, 195. During the June 2016 Steering Committee meeting, Cordani had
claimed that “if the Department of Justice saw this strategy, they’d kill us . . . because it’s

136
 The contemporaneous documents contradict Cordani’s testimony that Bias to Blue

was a forced migration strategy. The Bias-to-Blue strategy contemplated that new

customers within the Anthem Blue States who expressed a preference for a Cigna product

would receive quotes for both an Anthem product and a Cigna product. After Cordani

objected to this approach, Anthem shifted to a brand-agnostic strategy in which the

customer in that scenario only would receive a quote for a Cigna product. See Part II.I.6 &

II.J.4, supra.

The DOJ lawyers were sufficiently pleased with Cordani’s testimony that they were

ready to wrap up the deposition by lunchtime. Anthem’s counsel asked to resume the

deposition after lunch, thinking that he might “try to offset the tremendous damage that

Mr. Cordani was doing.” Curran Tr. 1433–34. After lunch, Curran asked a limited line of

questions about Cordani’s role as CEO of Cigna and his potential responsibilities as

NewCo’s COO. See JX 2596 at 175–79. Cigna’s counsel then cross-examined Cordani and

elicited additional testimony that was favorable to the DOJ’s case. Despite knowing that

the DOJ was pursuing a theory that Cigna was a uniquely innovative competitor, Cigna’s

counsel asked a series of leading questions about Cigna’s innovation:

Q: So earlier today in response to some questions by Mr. Severt, you
talked about -- you mentioned an example of innovation at Cigna
called, I think, Health Esystem?

A: Health Eview.

not pro-choice.” Cordani Tr. 1828. During his deposition, Cordani voluntarily brought up
the issue. See Curran Tr. 1431. Cordani was the only witness to bring up the Bias-to-Blue
strategy. See Rule Tr. 3174–76.

137
 ...

Q: Would someone be able to re-create the innovativeness or the
innovations of Cigna by simply taking a license to Health Eview?

A: I don’t believe so.

Q: Is there any other single innovation that you could license that
essentially would create a -- basically the innovations of Cigna?

A: No. I don’t believe so.

Q: Is there any way to realize or appropriate the innovativeness of Cigna
other than taking its management team or its employee team, the
people, in other words, that you talked about, who basically achieved
that innovativeness in those innovations?

A: I guess the way I’d answer that is the intellectual property is the
important part of what makes the engine run and, again, the cadre of
people are the field to make the intellectual property run. . . . [Y]ou
need the people to take technology and turn it into actionable
information and then engage an employer, an individual, a health care
professional and drive an action or outcome.

That’s what we are -- we are all about. We are about driving the action
of the outcome, not perpetuating technology.

JX 2596 at 186–88. Anthem’s lead counsel concluded after Cordani’s deposition that

“Cigna . . . and their legal team were dedicated to killing the merger.” Curran Tr. 1439.

5. Pre-Trial Preparations

During the pre-trial phase, Cigna became more aggressive and obstructionist. Cigna

also shifted its anti-Merger communications campaign into overdrive.

As trial approached, Cigna continued to oppose mediation. On November 11, 2016,

during an impromptu office conference, the District Court asked the parties to consider

mediation. Rule Tr. 3190. Two days later, Richard Levie, a retired federal judge who had

been serving as the Special Master for the case, offered to mediate. Anthem asked Cigna

138
to agree, but Cigna declined.281 On November 23, Judge Levie reached out again, but Cigna

still would not agree to mediation.282 Cigna insisted that Anthem first had to propose “a

credible path (i.e., proposal) to a settlement” and the DOJ had to “indicate[] a willingness

to mediate.” JX 2672. Because the DOJ opposed mediation, Cigna would not even express

support for the idea. Rule Tr. 3193. Cigna’s refusal meant that the DOJ never faced any

pressure to mediate. See Curran Tr. 1605, 1607–08.

During the trial preparation, Cigna proposed trial exhibits that (i) undermined

Anthem’s case on efficiencies and (ii) supported the DOJ’s position that there was a distinct

market for national accounts with only four major participants. See JX 2602. Cigna did not

provide any comments on Anthem’s pre-trial brief and did not sign the pre-trial brief.283

One week before trial, Cigna reversed course on the handling of its witnesses. Four

weeks earlier, on October 13, 2016, Cigna had told Anthem that Cigna’s counsel would

“take the lead in defending Cigna employees who are called as trial witnesses, including

putting those witnesses on for direct (to the extent they are called by the defense) and

crossing them to the extent they are called by plaintiffs.”284 At the same time, Cigna

asserted that Anthem was

pursuing an unsupportable and fundamentally flawed argument that could
undermine the parties’ defense of the transaction. Namely, Anthem appears
to be pursuing the specious argument that Cigna’s total medical cost

281
Id. at 3191; Zielinski Tr. 67.
282
Zielinski Tr. 7174; Rule Tr. at 3191–93.
283
See JX 2627; Curran Tr. 1441, 1520; Rule Tr. 3180–83.
284
JX 2579; see Curran Tr. 1441.

139
 containment efforts (e.g., customer and provider collaboration, wellness
programs specialty integrations, etc.) are basically a marketing sham (or
worse), that Cigna is not really a competitive force in the market, and that
Anthem will be doing Cigna’s customers a favor by moving them to the
Anthem model.

Such an argument would be both contrary to fact and a violation of the
merger agreement.

JX 2579. That assertion mischaracterized Anthem’s argument. Anthem was attempting to

show that Cigna was not a maverick with uniquely innovative products, as asserted by the

DOJ.285

Cigna understood Anthem’s argument, and the Cigna ELT previously had

anticipated making that exact argument. Before the Merger Agreement was signed, when

Cigna was analyzing the Merger’s prospects for antitrust clearance, Cigna recognized that

the DOJ might argue that Cigna was a “unique, procompetitive ‘maverick.’” JX 209 at

’484. Cigna also identified the obvious response: arguing that Cigna was not “a uniquely

disruptive maverick.” Id. Now, Cigna’s interests were different, and by creating a

strawman version of Anthem’s argument, Cigna manufactured grounds for introducing

evidence adverse to Anthem’s theory of the case. Cigna told Anthem that it was “planning

on putting into evidence the fact that Cigna is an effective and innovative competitor that

goes to market differently from Anthem.” JX 2579. Cigna also told Anthem that if

Anthem attempt[ed] to disparage Cigna and dispute[] our competitive
prowess, we will have to respond by pointing out how Cigna’s strengths . . .
compare to Anthem’s competitive weaknesses. That is, we will highlight for
the court the anachronistic features and weaknesses of Anthem’s (and the

285
See JX 2601; Zielinski Tr. 453, 458, 46163, 468; Paul Tr. 661–62; Rosen Tr.
836–37, 907–08; see also JX 1836; JX 2148; Curran Tr. 139395.

140
 Blues as a group) model and the “holes” in Anthem’s model that Cigna’s
strengths will fill.

Id. Based on a contrived interpretation of Anthem’s argument, Cigna’s counsel threatened

to litigate openly against Anthem during the trial.286

Four weeks later, on November 17, 2016, Cigna told Anthem to prepare and present

the three Cigna witnesses whom the DOJ intended to call at trial.287 Cigna gave Anthem

only one hour to prepare each witness.288 When Anthem asked for additional time, Cigna

refused, characterizing Anthem’s request as an “abuse of a courtesy.”289

Cigna foisted responsibility for preparing its witnesses onto Anthem just one day

before Cordani was scheduled for preparation. Despite the fast turnaround, Anthem quickly

prepared witness outlines.290 For Cordani, Anthem’s counsel noted that the DOJ appeared

interested in the “Bias to Blue” strategy and asked Cigna’s counsel to remind Cordani that

the concept had “evolved into a brand agnostic strategy.” JX 2649.

286
Cigna’s threat expanded on a position that Cigna took during a case management
conference on September 30, 2016, when Cigna asked the District Court to confirm that
Cigna could object to questions that Anthem asked at trial. JX 2523 at 40. Judge Jackson
regarded the request as “completely extraordinary” and said that it was something that she
had “never seen.” Id. at 41; accord id. at 42. Judge Jackson declined to rule it out, but held
that Cigna would need to “clearly present . . . the justification and legal authority” for any
objection. Id. at 42; see also Curran Tr. 1414–16 (describing exchange).
287
JX 2647; Curran Tr. 1441–43.
288
See JX 2647 at ’792; Curran Tr. 1444–46.
289
JX 3084 at ’794; see Rule Tr. 3228–29; see also JX 3126; Curran Tr. 1446–50.
290
See JX 2646; JX 3082; Curran Tr. 1442–43.

141
 Anthem’s lead trial counsel personally handled Cordani’s preparation, which Cigna

limited to approximately forty-five minutes. During the session, Anthem’s counsel gave

Cordani a copy of Anthem’s pre-trial brief, which Cordani had never reviewed. Anthem’s

counsel then went over the Bias-to-Blue strategy in an effort to remind Cordani that it did

not involve forced conversions. Cordani resisted, maintaining that the Bias-to-Blue

strategy was much more extensive and harmful to Cigna. After the session, Anthem’s

counsel emailed the relevant presentations to Cigna’s counsel and with an explanation of

what they showed.291

In contrast to the limited preparation time that it provided to Anthem, Cigna spent

twenty-one hours preparing Cordani. JX 2908 at 14. As discussed below, Cordani gave

testimony that was damaging to Anthem’s defense. Cigna’s lawyers agreed that he testified

consistently with how he was prepared.292

Meanwhile, Teneo intensified its anti-Merger campaign.293 Teneo engaged in

“Proactive Pre-Trial Activity” and “[w]ork[ed] with reporters” to write “curtain raisers”

for the trial, which would “[h]ighlight [Cigna] as innovative and positively impacting

health outcomes.”294 Consistent with the DOJ’s theory, Teneo sought to portray Cigna as

291
See JX 2652; Curran Tr. 1444–46, 1450–52, 1558–60.
292
See Jones Dep. 448–50; Rule Dep. 614–16; Jones Tr. 2803.
293
See JX 2611; JX 2613; JX 2629; JX 2636; JX 2715. Cigna’s public position was
“to refrain from litigating in [the] media.” JX 2585 at ’521.
294
JX 2613 at ’581; see JX 2617.

142
uniquely innovative, describing this messaging as a “Trojan horse” because Cigna was

attacking the Merger from inside the defense.295

6. Trial In The Antitrust Litigation

As late as November 15, 2016, the Cigna ELT believed that “[i]t is possible that

Anthem gets a favorable ruling on the national markets issue,” a possibility that the Cigna

ELT described as “very unsettling for our team.” JX 2639. To mitigate this risk, Cigna

provided additional assistance to the DOJ during trial.

Anthem sought to defeat the DOJ’s argument that Cigna was an innovative

maverick by showing that Cigna was not uniquely innovative in the area of value-based

care. Colin Drozdowski, an Anthem executive and the network integration team lead,

testified that Anthem had “a unit price advantage and a medical management advantage”

over Cigna. JX 2660 at 1650. He also testified that Anthem had “a better discount than

Cigna,” “more ACO [(i.e., collaborative care)] relationships than Cigna,” and “more

enhanced personal healthcare, [i.e.,] patients who have medical home relationships, than

Cigna.” Id. at 1667. Shubham Singhal, a McKinsey representative who had worked on

integration, testified that “Anthem’s medical management results in a medical utilization

that is 4 to 6 percent better than Cigna’s.” Id. at 1820.

Anthem’s economist, Dr. Mark Israel, testified about the magnitude of the

efficiencies that NewCo could achieve. Cigna’s counsel cross-examined Israel, questioning

his credentials and undercutting the projections on which the efficiencies were based. See

295
See JX 2614; Cohen Tr. 2443–44.

143
id. at 2067–94. Anthem’s counsel specifically asked Cigna’s counsel not to cross-examine

Israel, but Cigna’s counsel did so anyway.296 At trial in this action, Cigna’s counsel claimed

that he had to make a quick decision about whether to cross-examine Israel, but Israel’s

direct examination had finished at the end of the trial day. Contrary to counsel’s testimony,

he could have conferred with Anthem, pointed out issues for clarification, and coordinated

on strategy. Instead, Cigna’s counsel developed his own cross-examination, consulted with

Jones, and carried out the cross-examination the next day. See Rule Tr. 3197–3207. Cigna’s

counsel sought to “blow Dr. Israel’s testimony out of the water” on the question of whether

Cigna had better utilization. Id. at 3202. Cigna’s counsel did not elicit from Israel the fact

that if Cigna had better utilization, and if NewCo used Cigna’s medical management

programs, then the efficiencies actually would be greater than what Israel had estimated.

See id. at 3203.

Cigna’s counsel also cross-examined Swedish, highlighting the dispute over

Cordani’s responsibilities at NewCo and bolstering the DOJ’s argument that the

efficiencies could not be achieved because of disputes between the parties. See JX 2660 at

378–86. As he had before Cigna’s counsel cross-examined Israel, Anthem’s counsel

specifically asked Cigna’s counsel not to cross-examine Swedish.297 During trial, Cigna’s

counsel did not question any witnesses other than Israel and Swedish. Curran Tr. 1460.

296
JX 2732; Curran Tr. 1454–55.
297
JX 2732; Curran Tr. 1454–56.

144
 Through his testimony at trial, Cordani became the DOJ’s “star witness.” Curran

Tr. 1442. Expanding on the testimony that he gave in his deposition, Cordani claimed that

the Bias-to-Blue strategy was the “framework in terms of how we would go to market, the

so-called go-to-market with existing clients and new clients in the overlap 14 states and

then outside those 14 states.” JX 2660 at 429. That was not accurate. It was an option that

the go-to-market team presented, and it was promptly changed to a brand-agnostic strategy

after Cordani objected to it. The Bias-to-Blue strategy did not apply to existing clients, nor

did it apply outside of the Anthem Blue States. See Part II.I.6 & II.J.4, supra.

Cordani testified that the Bias-to-Blue strategy would be “extraordinarily disruptive

in the marketplace” and “make the existing [Cigna] offering less competitive in both

Anthem and non-Anthem states.” JX 2660 at 432, 440. Elaborating on these points,

Cordani agreed with a series of leading questions from the DOJ:

Q. And, as I think you said, the Bias Blue strategy will destroy the value
of Cigna?

A. It will erode it pretty rapidly.

Q. Including the network?

A. Correct.

Q. Provider relationships?

A. Correct.

Q. Customer choice will be reduced?

A. Correct.

Q. Innovation will be at risk?

A. I think it would be at risk.

145
 Q. And one plus one will not equal three?

A. To be determined, but harder to achieve.

Id. at 441.

Cordani also helped the DOJ’s case with a colorful metaphor, describing the

rebranding of Cigna members in the Anthem Blue States as pulling a string that would

unravel the entire network.

Q. Okay. And the way Bias Blue works is those lives will also be
rebranded from Cigna to Blue, right?

A. That was a concern that we raised as we were working through that
strategy as it was presented because it would be the risk of unwinding or
pulling a string and unwinding it. . . .

So, yes, you’d pull a thread, and it would have an unwinding effect on
the network, not just in the overlap states, but in the stand-alone states.

Q. So it’s fair to say that the Cigna network would be harmed, not just in
the Anthem states, but also the non-Anthem states?

A. That was the concern we registered, correct.

Q. And it would also harm provider collaborations in the non-Anthem
states?

A. That was the concern we registered, correct.

Q. And as the Cigna network becomes weaker, fewer clients will find
that network attractive?

A. That’s correct.

Q. Which will, in turn, cause the network to become even weaker?

A. Correct.

Q. In other words, the effects will snowball?

A. Correct. That was a concern, again, we registered.

Q. And all of this will make Cigna less competitive in the Anthem states?

146
 A. Well, it would make the existing offering less competitive in both
Anthem and non-Anthem states.

Q. The Cigna branded products would be less competitive?

A. For medical.

Q. And then for medical, the Cigna branded product would also be less
competitive in the non-Anthem states?

A. That’s correct.

Id. at 430–32. The District Court understood Cordani to have testified “quite adamantly,

that branding Blue will drain members from his provider networks and, therefore, do harm

to the value-added proposition that is Cigna’s contribution to the marketplace . . . .” Id. at

1540.

Cordani’s vibrant testimony ran contrary to the conclusions that Cigna had reached

when Cordani still expected the Cigna ELT to manage NewCo. Then, Cigna did not view

moving its members in the Anthem Blue States to Blues-branded products as a problem,

regarding it instead as a logical and manageable solution to address the 2/3 Rule. 298

Cordani’s testimony also ran counter to the statements that Cigna and Anthem jointly made

in a white paper submitted to the DOJ, in which the parties represented that if a national

account was headquartered in an Anthem Blue State, then plan members located inside the

Anthem Blue States could use the Blues Association network, and plan members located

See, e.g., JX 79; JX 91 at ’163–64; JX 98 at ’964; JX 100 at ’451; JX 119 at
298

’884–86; JX 351 at ’076; JX 565 at ’215; JX 590 at ’835; JX 732 at ’552; JX 3121 at ’376.

147
outside the Anthem Blue States could continue to use the Cigna network.299 Cordani

admitted at trial in this action that Cigna had not done any analysis to support his claims

about the effects of moving Cigna members to Blue products in the Anthem Blue States.

See Cordani Tr. 2108–10.

Cordani also testified against the opportunity to achieve $2.4 billion in efficiencies

through medical cost savings:

It’s not our number, so it’s hard to agree with it. . . . [The calculation] ignores
both utilization in terms of the number of services, but the mix of the services,
as well as the venues in which the services are consumed. . . . So the point is,
it’s an incomplete -- it’s an important -- the discount’s important, but an
incomplete part of the equation. . . . So all that being said, we view that it is,
at best, incomplete and, therefore, inaccurate.

JX 2660 at 442–43. The efficiencies figure came from a white paper that Cigna and Anthem

submitted jointly. JX 1948 at ’299–300. Cordani had not done any work to assess the

number and was not familiar with the analysis that Anthem’s expert had conducted. See

Cordani Tr. 2130–35. Cordani had not read the expert report, and during the antitrust trial,

testified, “I was told [Dr. Israel’s] name, but I do not know the analysis nor the

gentleman.”300

Reporters observing the trial immediately perceived how damaging Cordani’s trial

testimony was. The Wall Street Journal wrote,

Some of Mr. Cordani’s testimony appeared to cut against Anthem’s defense
of the deal. He said the integration strategy favored by Anthem, not

299
See JX 2075 at ’906, ’912, ’919; Cordani Tr. 2107–08 (impeaching with
deposition testimony).
300
JX 2660 at 505; Cordani Tr. at 2135

148
 supported by Cigna, could hurt competition by eroding Cigna’s offerings—
an argument being posed by the Justice Department.

In fact, he said, Cigna disagreed with an ad run by Anthem that touted the
merger’s competitive benefits, because Cigna believed “choice would
potentially be constricted” for insurance clients under Anthem’s preferred
setup.

JX 2682. After Cordani’s testimony was unsealed, a Cigna investor wrote that “Cordani’s

testimony to [the] DOJ seems designed to give the agency ammunition to block this value

creating merger.” JX 2687 at ’910. Commenting on the email to his team, Cordani wrote,

“[H]aving read the testimony, this is a concern I had.” Id. at ’906. Cordani’s solution was

to rev up the Cigna narrative machine to pump out talking points about Cigna’s supposed

commitment to integration and Anthem’s purported lack of commitment. See id. The Cigna

team jumped into action, responding that they would get “talking points . . . coupled with

some previously approved language” out quickly. Id.

During trial in the Antitrust Litigation, Anthem renewed its effort to mediate.

JX 2674 at ’005. Cigna refused, asserting that it would not mediate unless Anthem put a

specific settlement structure on the table for the DOJ to consider. JX 2673 at ’674–75.

During trial, Anthem prepared 159 pages of proposed findings of fact, which it sent

to Cigna on December 1, 2016. Anthem prepared thirty-six pages of proposed conclusions

of law, which it gave to Cigna on December 2. The submissions were not due until

December 13. Cigna never commented on the drafts. Just two days after receiving

Anthem’s first draft, and ten days before the filing was due, Cigna told Anthem that it

would not sign them and instructed Anthem to remove Cigna’s name from the signature

149
block.301 Cigna’s counsel asserted that “[t]he case Anthem has put on at trial with its own

personnel and its own retained consultants (and without consulting Cigna) has raised

serious questions about whether Anthem is more focused on harming Cigna rather than

actually securing clearance for the transaction.” JX 2712. The evidence in this case does

not support that assertion.302

Cigna’s litigation counsel did not do any of the things that a party supporting a

Merger typically would do. Cigna did not make an opening statement in support of the

Merger. Cigna did not make a closing argument in support of the Merger. Cigna’s counsel,

however, did make a point of rebutting an argument that Anthem’s counsel made during a

question-and-answer session with the court that took place between the two phases of the

trial. In response to the court’s questions about the dispute letters, Anthem’s counsel

represented that the letters reflected disagreements between the CEOs and would not

301
JX 2712; JX 2717 at ’786; JX 2737; Curran Tr. 1462–66. Cigna had been
working on proposed findings of fact and conclusions of law for months, but neither shared
them with Anthem nor submitted them to the District Court. Rule Dep. 413–15. Jones
denied that Cigna had prepared any findings of fact at any point in time. Jones Dep. 369–
70. That testimony was inaccurate.
302
To justify its refusal, Cigna claimed that Anthem’s proposed findings and
conclusions contained statements that Cigna believed were inaccurate, citing a quotation
from an Anthem witness who said that Anthem “lead[s] the competition” in value-based
care, JX 2796 ¶ 295 (alteration in original) (internal quotation marks omitted), and a section
heading stating “There Is Nothing Uniquely Innovative About Cigna,” id. at 150. Cigna
exaggerated the problematic nature of Anthem’s proposed language. Anthem was not
asserting that Cigna was not innovative, only that Cigna was not uniquely innovative. Paul
Tr. 661–62. Rather than coordinating and cooperating with Anthem to develop an
acceptable set of proposed findings of fact and conclusions of law, Cigna refused to engage.

150
impair Anthem’s ability to integrate the two companies if the Merger closed.303 Cigna’s

counsel disagreed:

[W]hile deferring to my colleague, Mr. Curran, I would take issue with the
notion that the dispute that’s in the record simply reflects a disagreement
between CEOs.

I think Your Honor can tell from the letters that have gone back and forth,
those were written and provided on behalf of Cigna [C]orporation and
reflects the views, not just [of] senior management, but the board and the
company as a whole.304

Cigna’s counsel also highlighted the fact that Cigna would not be signing Anthem’s

proposed findings of fact. JX 2660 at 2706. The District Court was incredulous, asking,

What am I supposed to make of that? I wasn’t going to ask you that question
in open court because they’re just drafts to this point, but since you brought
it up, your name isn’t on them; Cigna’s name isn’t on them.

What am I supposed to think that tells me? What does that mean?

Id. at 2705–06. Cigna’s counsel stated that Cigna was not signing them because they

“reflect Anthem’s perspective” and “certain of those findings of fact . . . are inconsistent

with the testimony of Cigna witnesses.”305 By taking this position, Cigna instantiated its

opposition to the Merger. Curran Tr. 1463.

Cigna’s actions inside the courtroom made it fairly easy for observers to perceive

what Cigna was doing. Law360 published a story titled, “Anthem, Cigna Discord Could

Give DOJ Edge In Merger Trial.” JX 2749. The story noted,

303
JX 2660 at 2701; see Curran Tr. 1468–69.
304
JX 2660 at 2706; see Curran Tr. 1472–73.
305
Id. at 2706; see JX 2734; JX 2735; JX 2761.

151
 One of Anthem’s critical defenses in the case has been that the merger will
generate billions of dollars in savings from reduced medical costs and
administrative efficiencies. However, the DOJ has homed in on the well-
documented contentiousness between Anthem and Cigna to argue otherwise.

Now a matter of public record, the discord is potentially fatal to Anthem’s
efficiencies defense, various competition and health care lawyers tell
Law360.

“If efficiencies is your major defense, and one of the parties is not willing to
work on integrating the two companies, how in the hell can you work on
achieving the efficiencies?” said Jeff Miles, an antitrust lawyer in the
Washington office of Ober Kaler Grimes & Shriver PC.

Andrea Murino, an antitrust lawyer for Goodwin Procter LLP, said merging
partners are normally expected to be “cheerleaders for each other.” . . .

The tension between Anthem and Cigna, however, doesn’t appear to be
limited to the back office. During a “question and answer” session on Dec.
13, Cigna attorney Charles F. Rule of Paul Weiss Rifkind Wharton Garrison
LLP openly disavowed an assertion from Anthem’s attorney that the “rift”
the government had made so much of was in reality nothing more than a
dispute between the two companies’ CEOs.

Remarkably, Rule said Cigna’s misgivings stretch all the way down the
board of directors and represent the views of the company itself.

Hearing about Rule’s statements, Ober Kaler’s Jeff Miles was incredulous.
“To put it in certain vernacular, if I were Anthem, I would be pissed off out
of my mind,” Miles said.

JX 2749. The story predicted that “Cigna’s antics might . . . be the merger’s undoing.” Id.

The Wall Street Journal similarly observed that “during trial proceedings that began in

November, Anthem mounted a legal defense of the merger singlehandedly. Cigna lawyers

said very little during the proceedings, and when they did, it usually didn’t help Anthem’s

position.” JX 2845.

Meanwhile, outside the courtroom, Cigna and Teneo continued their efforts to

control the narrative. Cohen had numerous exchanges with reporters, in which he provided

152
them with talking points and quotations that criticized Anthem and the Merger. 306 In one

example, Cohen asked a Teneo colleague to help place a story “W. No fingerprints” about

“how poorly [A]nthem and its CEO have run process.”307 A set of Teneo talking points

included the overall message that “[a]s [J]udge Jackson prepares to rule, by all accounts,

the Government has proven its case and is likely to prevail.”308 Jones admitted that parties

generally do not tell the press that their adversary proved its case. Jones Tr. 2794.

Teneo also prepared a communications strategy to be deployed if the District Court

enjoined the Merger.309 It contemplated limited on-the-record statements while in the

background Teneo would explain “how the situation played out and all of Anthem’s

shortcomings that led to this point.” JX 2760 at ’697. Teneo’s themes were as follows:

 “The merger agreement makes clear that Anthem had responsibility for completing
the regulatory process. . . . Anthem did not fulfill this obligation and is therefore in
breach of the agreement.” Id.

 “Anthem’s approach to the regulatory process was disorganized and insufficient.
They made numerous missteps during the litigation, did not adequately prepare for
priority topics such as the Blues obligations, and would not even consider potential
actions such as divestitures . . . .” Id.

 “Anthem’s approach to the integration process was inadequate and poorly-led. It
focused predominantly on cost synergies, with little coordination and minimal

306
See, e.g., JX 2694; JX 2727; JX 2769; JX 2773; JX 2781; JX 2783; JX 2784;
JX 2785; JX 2793; JX 2794; JX 2798; JX 2803; JX 2805; JX 2806; JX 2807; JX 2810; see
also JX 2812.
307
JX 2782. Wachtell Lipton, Cordani, Jones, and the Cigna ELT remained deeply
involved in the process. See JX 2766; JX 2780; JX 2786; JX 2788; JX 2789; JX 2788.
308
JX 2780 at ’451; see JX 2793 (Cohen providing talking points to reporter).
309
See JX 2760; JX 2778.

153
 planning for other key value-drivers that were promised to the financial markets and
the public.” Id.

Teneo also began developing a communication plan for “potential break fee litigation.” Id.

at ’697–980

L. Anthem Extends The Termination Date.

On January 18, 2017, Anthem notified Cigna that it was extending the Termination

Date from January 31 to April 30. JX 2800; see MA § 7.1(b). Zielinski informed Jones that

if the District Court ruled in favor of the Merger and if the DOJ appealed, then “Anthem

intends to resist the appeal vigorously.” JX 2801. He also informed Jones that if the District

Court ruled against the Merger, then Anthem “intends promptly to seek an expedited appeal

of the decision.” Id. He added that Anthem intended to pursue settlement with the newly

elected Trump administration. See id.

Cigna issued a Form 8-K announcing its receipt of Anthem’s notice. Cigna did not

express any commitment to the Merger. Instead, Cigna stated, “Following the issuance of

the Court’s opinion, Cigna intends to evaluate its options in accordance with the Merger

Agreement.” JX 2799.

During a meeting on January 30, 2017, the Cigna Board resolved to terminate the

Merger Agreement following “any issuance of a decision . . . to enjoin the Merger.”

JX 2824 at ’471. The Cigna Board also authorized a lawsuit against Anthem “to assert

[Cigna’s] rights under the Merger Agreement.” Id. On January 31, Cigna issued another

Form 8-K in which it stated:

As Cigna previously disclosed, Cigna still intends to evaluate its options in
accordance with the Merger Agreement once the Court issues its opinion in

154
 the pending civil antitrust lawsuit. Cigna has made no determination with
respect to Anthem’s notice seeking to extend the termination date, including
whether Cigna will seek to terminate the Merger Agreement, and has
informed Anthem that it is reserving all of its rights in this regard.

JX 2826. Cigna’s disclosures about “evaluat[ing] its options” and having “made no

determination” were inaccurate. The Cigna Board had decided on Cigna’s course of action

the day before.

M. The District Court Enjoins The Merger.

On February 8, 2017, Judge Amy Berman Jackson issued an order that permanently

enjoined the Merger and summarized her reasoning for doing so. See United States v.

Anthem, Inc., 2017 WL 527923 (D.D.C. Feb. 8, 2017). Judge Jackson also entered a

lengthy and detailed opinion that incorporated the order as its introduction. A redacted copy

of the memorandum opinion was released publicly on February 21. See Dist. Ct. Op., 236

F. Supp. 3d 171.

The District Court permanently enjoined the Merger because the transaction would

have a substantial anticompetitive effect in two product markets: (i) the market for national

accounts in the fourteen Anthem Blue States and (ii) the local market for large employers

in Richmond, Virginia. See id. at 178–79. In light of these findings, the District Court did

not reach the questions of whether the Merger would have substantial anticompetitive

effects on the markets for (i) national accounts in the United States as a whole, (ii) large

group employers in thirty-four other local regions within the Anthem Blue States, or

(iii) the purchase of healthcare services from hospitals and physicians in those locations.

155
 The District Court Opinion began by explaining the general legal principles that

governed the case.

Section 7 of the Clayton Act prohibits mergers or acquisitions “where in any
line of commerce or in any activity affecting commerce in any section of the
country, the effect of such acquisition may be substantially to lessen
competition.” 15 U.S.C. § 18. “Congress used the words ‘may be
substantially to lessen competition’ . . . to indicate that its concern was with
probabilities, not certainties.” Brown Shoe Co. v. United States, 37 U.S. 294,
232 . . . (1962).

Id. at 191 (emphasis and alteration in original). The opinion used a burden-shifting

framework, under which “Plaintiffs bear the initial burden to prove that the merger would

result in ‘undue concentration in the market for a particular product in a particular

geographic area.’” Id. (quoting United States v. Baker Hughes, Inc., 908 F.2d 981, 982

(D.C. Cir. 1990)). “If plaintiffs establish the prima facie case, defendants must present

evidence to rebut the presumption by ‘affirmatively showing why a given transaction is

unlikely to substantially lessen competition, or by discrediting the data underlying the

initial presumption . . . .’” Id. at 192 (citations omitted). At that point, the burden shifts

back to the plaintiffs to “prove the alleged Clayton Act violation by a preponderance of the

evidence.” Id.

The District Court Opinion first defined the relevant market. The court held that

“the market for the sale of health insurance to national accounts is a properly drawn product

market for purposes of the antitrust laws . . . .” Id. at 179; see id. at 195–202. The Court

also held that Anthem Blue States constituted “a relevant geographic market for that

product.” Id. at 179; see id. at 202–06. In reaching the latter conclusion, the District Court

156
cited the effects of the Blues Rules, which it concluded “have a significant impact on the

commercial conditions governing the sale of medical coverage to national accounts.”310

For purposes of the market for national accounts headquartered in the Anthem Blue

States, the District Court found that the DOJ had established a prima facie case by showing

that the Merger would create a “high level of concentration” that was “presumptively

unlawful.” Id. at 179; see id. at 206–12. The District Court also found that the defendants

rebutted the DOJ’s prima facie case by introducing evidence that showed that the Merger

would promote competition, including evidence showing the existence of competition

between health insurers, customer sophistication and bargaining, new market entrants and

competitors, and innovation. Id. at 213–15. The District Court therefore had to determine

based on the totality of the circumstances whether the Merger was likely to substantially

lessen competition. Id. at 215.

The District Court found that the Merger would have the anticompetitive effect of

“eliminating direct competition” for national accounts between Anthem and Cigna in the

310
Id. at 179. Anthem disputed whether those were the proper markets, but the
District Court explained that its findings were supported by “how Anthem conducts its
business on a day to day basis.” Id. at 203. The Blues Rules gave Anthem an exclusive
territory, barred other Blues from pursing national account customers within Anthem’s
territory, and prohibited Anthem from competing for customers headquartered outside its
fourteen states without obtaining a “cede” (meaning permission) from the Blues licensee
in that state. Id. at 189, 203; see id. at 210 (describing “the Blue network” as “an integral
part of Anthem’s ability to win and woo national accounts and the source of Anthem’s
greatest competitive strength: its discounts”); id. (“The evidence shows that Anthem and
the other Blues work together to win national business.”); id. (“It is the combination of
Blue networks that enables Anthem’s customers to obtain a single national network for
their employees.”).

157
Anthem Blue States by “reducing the number of national carriers from four to three . . . .”

Id. at 216. As part of its defense, Anthem attempted to show that Cigna was not its closest

competitor among the other national carriers, but the District Court rejected that

characterization as “beside the point,” explaining that “the acquired firm need not be the

other’s closest competitor to have an anticompetitive effect.” Id. The District Court found

that “[t]he evidence in this case, including Anthem records and testimony from Anthem

witnesses, firmly establishes that United, Cigna, Aetna, and the Blues compete against each

other for national accounts, and that together, they dominate the market.” Id. Anthem also

tried to show through its expert that Anthem and Cigna did not compete to a significant

degree, but the District Court found that “Anthem’s ordinary course documents tell a

consistent story that contravenes the firm’s litigation position” and which showed that

“Anthem unquestionably competes directly and aggressively against Cigna for national

accounts.” Id. at 219. The District Court found that the Merger would eliminate Cigna as a

competitor and that “reducing the number of national carriers from four to three is

significant.”311 The District Court also found that the sophistication and bargaining power

311
Id. at 220; accord id. at 203 (“[R]ight now, Anthem competes directly against
Cigna for national accounts in the fourteen states at the very least, and . . . the merger would
eliminate Cigna as a direct competitor there.”).

In passing, the District Court observed that although it was not determining whether
the Merger would affect competition for national accounts outside the fourteen Anthem
Blue States, there were reasons to think that competition in those areas also might be
diminished:

It was also established that there are important aspects of Blue Cross Blue
Shield Association membership—in particular, the mutuality and
cooperation involved in the cedes, the potential for Blue card revenue, and

158
of national account customers would not offset the anticompetitive effects; that new

entrants would not compete effectively in the relevant market with NewCo; and that other

means of servicing national account customers, such as by slicing business, were not a

viable solution. See id. at 221–29.

The District Court separately found that the Merger would reduce innovation in the

Anthem Blue States. Id. at 180, 229–31. Citing Cordani’s testimony, the District Court

found that “because its provider discounts were not as strong as other carriers’ discounts,

particularly those offered by Anthem and the Blues, Cigna has relied upon innovation to

compete, directing its focus on ways to improve member health and employer cost

outcomes.” Id. at 230. “Cigna’s innovation in the market, in turn, spurred even those

carriers with strong provider discounts to improve their products.” Id. at 231–32. By

eliminating Cigna as a separate competitor in the Anthem Blue States, the Merger also

would eliminate this source of innovation.

In response, Anthem contended that “any anticompetitive effects will be outweighed

by the efficiencies [that the Merger] will generate.” Id. at 181. As “the centerpiece of its

defense,” Anthem cited the medical cost savings that NewCo’s national account customers

the best efforts rules—that redound to the benefit of the Association as a
whole, and that these give rise to an inherent conflict of interest that could
affect Cigna’s competitive conduct in the 36 states.

Id. at 220 n.22. By contrast, the District Court rejected the argument that there would be
coordination between Cigna and the non-Anthem Blues after the Merger, finding that the
plaintiffs had not met their burden to prove that the Merger would result “in a greater risk
of collusion or coordination.” Id. at 231 n.28.

159
would receive. Anthem contended that the Merger would achieve a total of $2.4 billion in

savings: Cigna’s customers would save approximately $1.5 billion by accessing the more

favorable rates that Anthem has negotiated with its provider network, see id. at 212–13,

and Anthem’s customers would save approximately $874 million by accessing services for

which Cigna had obtained lower rates, see id. at 233–34. Anthem also cited “substantial

general and administrative (‘G & A’) cost savings” that the Merger would achieve. Id. at

181.

The District Court noted in passing that the Supreme Court of the United States has

yet to recognize an efficiencies defense and has stated that “[p]ossible economies cannot

be used as a defense to illegality” under the Clayton Act. Id. at 235 n.33 (quoting FTC v.

Procter & Gamble Co., 386 U.S. 568, 579 (1967)). But several circuit courts and district

courts, including the DC Circuit Court and its trial courts, had considered evidence of

efficiencies, and the District Court therefore credited Anthem’s argument that they should

be considered. Id. at 235–36. The District Court, however, noted, “The law is clear that a

defendant must both substantiate any claimed efficiencies and demonstrate that they are

‘merger-specific,’ which means that it must show that the savings cannot be accomplished

by either company alone in the absence of the proposed merger.” Id. at 181; see id. at 236–

37.

The District Court found that the claimed medical cost savings were not merger-

specific. Id. at 237. In the only ruling that would be reversed on appeal, the District Court

noted that “Anthem and Cigna have already obtained the provider discounts alone.” Id. at

181; see id. at 238. Therefore, the Merger was not necessary to achieve them.

160
 The District Court also found it plain that “the companies do not have to merge for

customers to be able to access Anthem’s lower provider rates,” which provided the bulk of

the efficiencies. Id. at 181. This was because “any customers that value the discounts above

other aspects of the contractual arrangement can choose Anthem as their carrier today.”

Id.; see id. at 238. The District Court separately found that Anthem’s principal method for

achieving the savings—convincing Cigna customers in the Anthem Blue States to move

from Cigna products to Anthem products—did not result in merger-specific efficiencies

because it was “no different from Anthem’s ongoing marketing of its products on a daily

basis.” Id. at 181; see id. at 239.

In evaluating whether to credit the claimed efficiencies that Cigna’ customers would

receive, the District Court found that because of NewCo’s need to comply with the 2/3

Rule, rebranding would be NewCo’s principal strategy. Id. at 239–40. Anthem witnesses

had testified that the opportunity to purchase an Anthem product was a pro-choice

opportunity that could be accomplished “by offering such an attractive Anthem product

that Cigna customers would choose to switch, or by simply declining to renew existing

Cigna contracts.” Id. at 241. The District Court noted that if Anthem chose not to renew

existing Cigna contracts, then those customers would not have a choice. Id. The District

Court also cited testimony from Cordani, which “cast doubt on whether there would be

much value to the choice if it were offered” because “the only way a client of Cigna, current

client of Cigna, would get access to the improved medical costs of NewCo is to migrate

the business to a Blue Cross offering.” Id. The District Court concluded that “[t]hus, a large

portion of the projected $1.5 million of Cigna customer medical cost savings is attributable

161
to the planned transfer of existing Cigna customers to the Anthem brand to comply with

the best efforts rules, and since rebranding cannot be considered to be merger-specific,

those dollars should not have been included” in the claimed efficiencies. Id. at 241.

Having concluded that the medical cost savings were not merger-specific, the

District Court next analyzed whether they were achievable. Anthem argued to the District

Court that it could deliver the savings by triggering the affiliate clauses in its contracts with

providers. The District Court correctly inferred that Anthem was unlikely to trigger the

affiliate clauses because doing so would not help Anthem comply with the 2/3 Rule. 312

Assuming that Anthem exercised the affiliate clauses, the District Court questioned

whether the efficiencies were achievable because Anthem’s providers might terminate their

agreements rather than extend their lower fee schedules to Cigna’s customers. On this

point, the District Court again cited Cordani’s testimony, this time for the proposition that

“Anthem’s predicted cost savings are unreliable in part because they are based on an

unproven assumption that providers will not react and renegotiate their fee schedules

upwards.” Id. at 243. The same problem would exist if Anthem attempted to negotiate with

its providers to establish lower rates. Renegotiation also would take time, meaning that the

efficiencies might take years to be realized. Id. at 243–44.

312
Id. at 182–83; see id. at 233, 244–45. As noted previously, Anthem’s witnesses
in the Antitrust Litigation implied that Anthem had not yet determined whether NewCo
would exercise the affiliate clauses. At the end of April 2016, the Anthem ELT
unanimously determined not to trigger the affiliate clauses. See Part II.I.3, supra. That
decision was not set in stone, and Anthem could have revisited it, but Anthem was not fully
candid with the DOJ or the courts in pressing its argument about the affiliate clauses.

162
 The District Court also noted that Cordani had described Anthem’s cost savings

estimates as “‘narrow-minded’ and ‘incomplete’” because they did “not factor in

utilization.” Id. at 244. The District Court observed that Cigna’s counsel had cross-

examined Anthem’s expert on the same issue:

Despite the fact that he was testifying as the defense expert, Dr. Israel was
subjected to a not particularly friendly cross examination conducted by
counsel for Cigna. . . . . This unusual exercise underscored that the expert’s
analysis of Anthem’s cost advantage was based strictly on Anthem’s fee
schedules and that it did not take into account any savings generated by the
reductions in utilization that result from Cigna’s collaborative approach.

Id. at 244 n.46 (quoting from cross-examination).

Having cited difficulties verifying that Cigna’s customers could access Anthem’s

rates, the District Court noted that “the record is devoid of plans specifying what method

could be employed to enable existing Anthem members . . . to enjoy any existing superior

Cigna discounts.” Id. at 244. Cigna’s provider agreements did not contain affiliate clauses,

and if they did, the Blues Rules would prevent Anthem from invoking them. Id. at 244–45.

The District Court noted that some of Cigna’s discounts were obtained as a means of

supporting collaborative, making it unlikely that the same providers would extend their

rates to NewCo. Id.

The District Court then turned to the hostility between the two parties, which it

concluded undermined the likelihood that the efficiencies could be achieved. In the

introduction to its opinion, the District Court had referred to this issue as “the elephant in

the courtroom” and cited “the doubt sown into the record by Cigna itself.” Id. at 183.

In this case, the Department of Justice is not the only party raising questions
about Anthem’s characterization of the outcome of the merger: one of the

163
 two merging parties is also actively warning against it. Cigna officials
provided compelling testimony undermining the projections of future
savings, and the disagreement runs so deep that Cigna cross-examined the
defendants’ own expert and refused to sign Anthem’s Findings of Fact and
Conclusions of Law on the grounds that they “reflect Anthem’s perspective”
and that some of the findings “are inconsistent with the testimony of Cigna
witnesses.” Anthem urges the Court to look away, and it attempts to
minimize the merging parties’ differences as a “side issue,” a mere “rift
between the CEOs.” But the court cannot properly ignore the remarkable
circumstances that have unfolded both before and during the trial.

Id. The District Court summarized the state of the parties’ integration efforts and its effect

on the verifiability of merger-related efficiencies as follows:

The documentary record and the testimony reflect that the pre-merger
integration planning that is necessary to capture any hoped-for synergies is
stalled and incomplete. Much of the work has not proceeded past the initial
stage of identifying goals and targets to actually specifying the steps to be
taken jointly to implement them. Moreover, the relationship between the
companies is marked by a fundamental difference of opinion over the effect
the Anthem strategy to impose lower rates on providers and move members
away from Cigna’s network will have on the collaborative model of care that
is central to the Cigna brand. Both Cigna witnesses and providers have
testified that effective collaboration requires more of the physicians and
hospitals, and they expect to be paid for it, and the engage with members to
improve behaviors that can affect wellness requires an investment of
resources on the part of the insurer. All of this raises serious questions about
when, how, and whether the medical savings can be achieved whether the
G&A savings can be verified, and whether there is any basis in the record to
believe in the rosy vision being put forward by Anthem of a new national
carrier that delivers the Cigna product at the Anthem price.

Id.

Returning to this issue later in the opinion, the District Court observed that

“Anthem’s internal documents make it clear that the [integration] effort has not yet

proceeded from general ‘high level’ planning to the essential progress of detailing actual

strategies and ‘budget level’ initiatives,” that “Cigna’s input is required before the real

164
work can be done,” and that “the two parties have not been working together for some

time.” Id. The District Court then summarized the problems that began in December 2015,

when Cordani and Cigna responded to Swedish’s effort to begin interviewing candidates

for the L2 and L3 roles by withdrawing from integration planning.

The record contains compelling evidence of the deterioration of the merging
parties’ relationship. On December 29, 2015, five months after the two firms
publicly announced their plans to combine, Joe Swedish voiced a series of
complaints to David Cordani and Cigna. In an email in early March, he
reiterated his concerns that the companies were not yet aligned. Cigna
responded with its objections to Anthem’s proposals for the new company’s
organization and management structure, and by April 2016, Cigna’s
disengagement was so complete that Anthem established an independent
team to proceed with integration planning on its own. Meanwhile the two
companies through counsel, began to exchange increasingly heated letters
accusing the other of being the first to breach the terms of the merger
agreement.

All of these circumstances impair the Court’s ability to credit the total
estimated network cost savings and G&A efficiencies. Anthem’s former
CFO . . . testified that having the leadership in place is fundamental to
undertaking an integration, but the two firm here have not yet agreed on the
identity of a single member of the new company’s management structure
beyond naming the “NewCo” President . . . and CEO . . . . And even that
basic allocation of authority has not been fully negotiated; the parties have
been at odds since March 2016 over Swedish’s proposed diminution of
Cordani’s span of control.

What’s more, Anthem’s own leadership has predicted that given these
circumstances, it may be extremely difficult to get back on track. . . . So
Anthem is hard pressed to argue that a green light from the Court will be
sufficient to cure the problems caused by the disruption in the integration
effort.

Id. at 246. The District Court cited “the highly unfinished nature of the planning to capture

the G&A efficiencies in particular” and noted that “the final quantification of the synergies,

the development of detailed implementation plans, and the establishing of an

165
organizational structure remain in abeyance.” Id. The District Court also cited the absence

of a detailed plan for achieving the medical cost savings for Cigna customers and the lack

of anything more than a general plan for coming into compliance with the 2/3 Rule. Id. at

247.

The District Court then returned to the problem of convincing providers to engage

in the collaborative efforts required by Cigna’s programs if they were forced to accept

Anthem’s lower rates. Id. Here again, the District Court cited Cordani’s testimony:

The testimony of the CEO of Cigna, David Cordani, inflicted significant
damage on the synergies defense when he advanced his opinion that both
rebranding Cigna customers and imposing lower fee structures would
unravel the collaborative relationship with providers that are essential to
accountable care and better clinical outcomes. Cordani Tr. 492–93.

Cordani explained that given the rate and the amount that healthcare costs
have been rising, the healthcare industry recognized that it had to change. In
his view, the approach could not be limited to lowering the cost of care when
a patient got sick—the effort had to be refocused on encouraging and
sustaining health. . . . Cigna has endeavored to differentiate itself and become
more competitive with a two-sided model that engages both the customer and
the provider . . . , and Cordani maintained that replacing an old structure of
remuneration based on volume with a new structure of value based care
requires working closely with providers to be sure that the risk is shared and
both parties’ incentives are aligned.

Id.

Again citing Cordani’s testimony, the District Court discussed how rebranding

Cigna’s lives would hurt Cigna’s collaborative model.

Cordani voiced concerns that a post-merger Blue Bias strategy to rebrand
Cigna lives—especially if it included lives outside the fourteen states as part
and parcel of the rebranding of their employers headquartered within the
fourteen states, would reduce the volume Cigna could bring to its providers.
This would, according to Cordani, “dramatically unwind” Cigna’s
collaborate relationships, and rapidly destroy the Cigna value proposition,

166
 diminishing Cigna’s prospects for growth in the non-Anthem states and
weakening its offerings to existing customers. It would also diminish Cigna’s
ability to innovate.

Id. at 248 (citing Cordani Tr. 492–93). The District Court found that “[e]ven if one

discounts the Cordani testimony in recognition of the fact that a certain amount of

marketing, along with some posturing for potential breach litigation, was on display on the

part of both companies in the courtroom, it becomes clear when one considers the entire

record . . . that people ‘like something Cigna offers.’” Id. at 249. Returning to Cordani’s

testimony for support, the District Court rejected the idea that Anthem could make the

Cigna product available to customers at an Anthem price as “an oversimplification that is

not supported by the evidence.” Id. (citing Cordani Tr. 437).

Finally, the District Court questioned “whether Anthem’s ability to drive a hard

bargain with providers by virtue of its size” even could be “characterized as an

‘efficiency.’” Id. at 181. The opinion noted that NewCo would sell ASO plans to most of

its customers. The District Court saw “no evidence that the claimed network savings

[would] rise because of the cost of what the merged firm produces, and what it sells in the

relevant market, will go down.” Id. Instead, NewCo would have the market power to force

providers to accept lower fees for their services. See id. at 182. The District Court expressed

concern that the claimed efficiencies resulted from market concentration, rather than

competition. Id. The court also noted that “Anthem’s own documents reveal that the firm

has considered a number of ways to capture the network savings for itself and not pass

them through to its customers as it insisted to the court that it would.” Id.

167
 The District Court reached similar conclusions regarding the market for large

employers in Richmond, Virginia. Id. at 254. The DOJ presented substantial evidence of

market concentration, and “Anthem witnesses did little to refute these undeniable

statistics.” Id. at 258. The District Court did not rely on any testimony from Cordani in this

section of its opinion. The District Court cited evidence from only two Cigna witnesses,

and only did so when defining the relevant market. Id. at 255.

N. Anthem Appeals.

On February 9, 2017, Zielinski told Jones that Anthem was filing an appeal and

would seek an expedited schedule. He asked Jones whether Cigna would join in the appeal.

Jones responded that “until we have had an opportunity to receive and review with counsel

the full decision, we believe that it is premature and imprudent to take any action.”

JX 2851.

Later that day, Anthem filed its notice of appeal. PTO ¶ 200. Anthem

simultaneously issued a press release announcing the appeal and stating that it would

“request an expedited hearing of its appeal to reverse the Court’s decision so that Anthem

may move forward with the merger . . . .” JX 2841.

Cigna did not join in the appeal. Cigna issued its own press release, which stated,

“Cigna intends to carefully review the opinion and evaluate its options in accordance with

the merger agreement.” PTO ¶ 200. On February 11, 2017, the Cigna Board reaffirmed its

earlier decision to terminate the Merger Agreement and authorized the Cigna ELT to

“send[] notice of termination to Anthem and fil[e] litigation to assert the Corporation’s

rights under the Merger Agreement.” JX 2860.

168
 On February 13, 2017, Anthem asked the DC Circuit Court to consider its appeal

on an expedited basis and filed its opening brief on the same day. PTO ¶¶ 201, 205. Cigna

did not join Anthem’s papers. Jones Tr. 2898, 2900.

O. This Litigation

On February 14, 2017, Cigna delivered notice that it was terminating the Merger

Agreement under Section 7.1(b) because the Merger had not been consummated on or

before the original Termination Date of January 31, 2017. Cigna claimed that Anthem’s

notice extending the Termination Date until April 30, 2017, was invalid because Anthem

had not complied with its contractual obligations. JX 2872. Cigna simultaneously filed suit

in this court, seeking a declaratory judgment that it could terminate the Merger Agreement,

recover the Reverse Termination Fee, and obtain damages for breach of contract.

Later that day, Anthem filed suit in this court seeking a temporary restraining order

that would block Cigna from terminating the Merger Agreement. Anthem contended that

Cigna did not have a right to terminate because Anthem validly extended the Termination

Date. Anthem also argued that Cigna could not terminate because Cigna breached its

contractual obligations under the Merger Agreement. Dkt. 226 at 67. Anthem contended

that it would suffer irreparable harm if Cigna were permitted to terminate the Merger

Agreement and thereby to jeopardize Anthem’s prospects for appeal. The DOJ already was

169
arguing that the DC Circuit Court should not expedite Anthem’s appeal because Cigna had

terminated the Merger Agreement and rendered the appeal moot.313

On February 15, 2017, this court entered a temporary restraining order that blocked

Cigna from terminating the Merger Agreement. The court directed the parties to engage in

expedited litigation in anticipation of a hearing to determine whether the temporary

restraining order would be converted into a preliminary injunction that would keep the

Merger Agreement in place pending a final decision on the merits.314

With the Merger Agreement still in place, the DC Circuit Court expedited Anthem’s

appeal. JX 2886. On February 17, 2017, Cigna finally filed its own appeal from the District

Court’s decision, which was consolidated with Anthem’s. JX 3096. In support of its appeal,

Cigna filed a five-page brief. It repeatedly asserted a single substantive statement: “In

accordance with the merger agreement, Cigna has appealed, and defers to Anthem.”315

Anthem’s antitrust counsel described Cigna’s filing as “probably worse than nothing

because it signal[ed] a lack of interest in getting relief.” Curran Tr. 1481.

While these efforts were underway, Donald Trump took office. Anthem reached out

to members of the new administration, including Jeff Sessions, the new Attorney General.

313
JX 2877 at ’504. Jones sent the DOJ’s opposition to Teneo, writing, “In case you
did not see—this is very good.” Id.
314
See PTO ¶ 203; Dkt. 74 at 45, 48–49.
315
JX 2894 at 6. Jones testified that Cigna “tried as best we [] could to support
Anthem in . . . whatever arguments they were making on appeal.” Jones Tr. 1602–03. Given
that Cigna did not make any arguments in support of the appeal, that testimony was not
persuasive.

170
Anthem also contacted the DOJ to re-open settlement discussions. The DOJ declined to

engage. Anthem then opened up a line of communication with Vice President Mike

Pence.316

Cigna and Teneo continued to try to sabotage Anthem’s efforts. After seeing a news

report about Anthem’s efforts to engage with the Trump administration to salvage the deal,

Teneo’s CEO instructed Cohen to work with contacts at a lobbying firm to “kill this

immediately.”317

P. The DC Circuit Court Decision

The DC Circuit Court issued its decision on April 28, 2017. The DC Circuit Court

affirmed the District Court’s decision in a majority opinion authored by Circuit Judge

Judith W. Rogers and joined by Circuit Judge Patricia Ann Millett (the “Majority”). Then-

Circuit Judge Brett Kavanaugh wrote a lengthy dissent (the “Dissent”). Judge Millett wrote

a concurring opinion that amplified her reasoning on some of the issues raised by the

Dissent.

Anthem’s appeal focused only on a subset of the issues addressed in the District

Court Opinion. The Majority noted that, based on Anthem’s arguments,

It is undisputed that the government met its burden to demonstrate a highly
concentrated post-merger market, which would be reduced from four to just
three competing companies. Anthem also does not dispute the definition of
the national accounts market, nor that such a market will be even more highly

316
See JX 2862; JX 2903; JX 2912; JX 2914.
317
See JX 2914; Cohen Tr. 2463–65; see also JX 2890 (Teneo trying plant stories
with reporters who would write that the Blues Association was “monopolistic.”).

171
 concentrated post-merger. Anthem’s appeal instead hinges on the district
court’s treatment of its efficiencies defense.

855 F.3d at 353 (emphasis added).

Like the District Court, the Majority questioned whether efficiencies could be used

to justify the Merger, observing that notwithstanding “widespread acceptance the potential

benefit of efficiencies as an economic matter, it is not at all clear that they offer a viable

legal defense to illegality under Section 7.” Id. at 353 (citation omitted). Like the District

Court, the Majority observed that in Procter & Gamble, the Supreme Court of the United

States held that “[p]ossible economies cannot be used as a defense to illegality.” Id.

(citations omitted). The Majority explained that no matter what may be the more-accepted

view of efficiencies today, “the Supreme Court held otherwise, and no party points to any

subsequent step back by the Court.” Id. (citation omitted). Responding to the Dissent’s

argument that Procter & Gamble was old law and no longer controlling, the Majority

explained that none of the Dissent’s authorities explicitly or implicitly suggested that the

Supreme Court had overruled Procter & Gamble. Id. at 354.

The Majority then acknowledged that “[d]espite the clear holding of [Procter &

Gamble], two circuit courts, and our own, have subsequently recognized the use of

efficiencies evidence in rebutting a prima facie case.” Id. The Majority noted that none of

the decisions had relied on efficiencies to permit an otherwise anticompetitive merger to

proceed. Id. The Majority interpreted these decisions as recognizing only that “evidence of

efficiencies could rebut a prima facie showing, which is not invariably the same as an

ultimate defense to Section 7 illegality.” Id. The Majority thus read the precedents as

172
consistent with the rule that “once it is determined that a merger would substantially lessen

competition, expected economies, however great, will not insulate the merger from a

[S]ection 7 challenge.” Id. (citation and internal quotation marks omitted).

Although the Majority’s reasoning suggested that efficiencies could not be used to

justify the Merger as a matter of law, the Majority did not reach that holding. Instead, the

Majority held that “this court, like our sister courts, can simply assume the availability of

an efficiencies defense to Section 7 illegality because Anthem fails to show that the district

court clearly erred in rejecting Anthem’s efficiencies defense.”318 The Majority also found

it unnecessary to decide whether the type of “redistributional savings” that Anthem claimed

were cognizable as efficiencies, but noted that “those other issues pose potentially

substantial additional obstacles to this merger.” Id. at 356.

The Majority instead held that the District Court had not clearly erred “in rejecting

Anthem’s purported medical cost savings as an offsetting efficiency.” Id. at 355. The

Majority also held that “the efficiencies defense failed” because once non-cognizable

efficiencies were eliminated, “the amount of cost saving that is both merger-specific and

verifiable would be insufficient to offset the likely harm to competition.” Id. at 355–56.

Like the District Court, the Majority started from the premise that efficiencies must

be “merger-specific, meaning that they cannot be achieved by either company alone.” Id.

318
Id.; see id. (“[P]rudence counsels that the court should leave for another day
whether efficiencies can be an ultimate defense to Section 7 illegality. We will proceed on
the assumption that efficiencies as presented by Anthem could be such a defense under a
totality of the circumstances approach.”).

173
(citation and internal quotation marks omitted). The Majority described “[t]he crux of

Anthem’s argument” as “the theory that the combined company will allow Anthem to

create a ‘new product’ that is ‘unavailable on the market today’” and which “features both

‘Cigna’s customer-facing programs’ and Anthem’s ‘generally lower . . . rates.” Id. Anthem

argued that it could achieve this result through rebranding, but the Majority cited evidence

in the record that supported the District Court’s finding that in the short term, rebranding

simply would mean offering Anthem products to Cigna customers. Id. at 357. It was only

“over the long haul” that rebranding “might result in a former Cigna customer obtaining

some semblance of the former Cigna product at the new Anthem rate.” Id. Any short-term

switching of Cigna customers to Anthem products was therefore “just more successful

marketing of the existing Anthem product” and not a merger-specific efficiency. Id.

On the question of whether the Merger would permit Anthem to roll out an

improved, Cigna-like product over the long haul, the Majority agreed with the District

Court that “the evidence offered by Anthem is woefully insufficient to show that it cannot

develop better customer-facing programs” on it its own. Id. Two Anthem witnesses

testified that Anthem had encountered difficulty replicating Cigna’s products “for reasons

unknown.” Id. The witnesses “did not indicate how intensive the effort has been, how many

hours were devoted to it, or how much money Anthem has allocated toward it.” Id. The

Majority concluded that “rebranding does not create a merger-specific benefit in either the

short- or long-term.” Id. at 358; accord id. at 365 (“Those who rebrand with Anthem will

see no merger-specific savings.”).

174
 The Majority suggested that Anthem potentially could have created “some brief,

interim benefit in the mid-term by integrating Cigna’s product faster than it could develop

a comparable product of its own,” but the Majority found that Anthem failed to make the

necessary factual showing. Anthem “offered no evidence to show how long it would take,

once the necessary resources were allocated, to develop an improved product. Nor has it

shown how long it would take to roll out a hybrid Anthem-Cigna product.” Id. at 358. The

Majority cited Matheis’s trial testimony indicating that Anthem “might not be able to do

so within two-and-a-half years.” Id.

Out of the $2.4 billion in medical cost savings that Anthem claimed the Merger

would achieve, the Majority noted that $1.517 billion resulted from Cigna members

accessing Anthem’s rates. Without a viable mechanism for delivering those efficiencies,

the posited savings were not achievable. The Majority regarded rebranding as “the linchpin

of Anthem’s post-merger strategy, because it is the only option that helps Anthem comply

with its ‘Best Efforts’ obligations” under the Blues Rules. Id. But rebranding did not

generate merger-specific savings, and as a result, “the inability to credit rebranding savings

seriously undermine[d] Anthem’s efficiency defense.” Id.

The Majority, however, disagreed with the District Court’s conclusion that “none

of the medical cost savings are merger-specific because they are based on an application

of rates that each of the Company has already achieved on its own.” Id. The record showed

that Cigna had been unable to match Anthem’s rates, so “a true Cigna product at Anthem

rates would not be achievable absent the merger.” Id. Thus, although the District Court was

correct to find that customers shifting to an Anthem product did not give rise to merger-

175
specific efficiencies, the Majority found that the District Court “clearly erred in finding

that the application of Anthem rates to customers that choose to remain with Cigna is not

merger-specific.” Id. at 359. In other words, if Anthem had triggered the affiliate clauses

to extend its rates to Cigna products, then those medical cost savings would have been

merger-specific, and if NewCo had renegotiated any of Cigna’s rates to achieve greater

discounts for Cigna’s products, then those medical cost savings would have been merger-

specific.

The District Court’s error, however, was “immaterial” because the medical savings

as a whole were “not sufficiently verifiable.” Id. Anthem claimed that it could achieve the

savings using three mechanisms: (i) exercising the affiliate clauses to require Anthem’s

providers to extend their rates to Cigna customers, (ii) renegotiating provider contracts, and

(iii) moving Cigna customers to Anthem products. Id. The Majority agreed with the District

Court’s finding that exercising the affiliate clauses was not a viable option for Anthem

because of “the potential for provider discontent if the lower Anthem rates are forced on

providers that must expend extra effort and resources to deliver the Cigna product.” Id. The

Majority agreed with the District Court that some providers who were forced to accept

lower Anthem rates would terminate their contracts or decline to renew them when they

expired. Id. In support of this threat, the Majority cited Cordani’s testimony that “some

providers will eventually ‘react [by] renegotiating . . . and putting upward pressure on rates,

which has been a market force to date.’” Id.

The Majority also found that the District Court properly had rejected the affiliate

clauses as a viable option because it would not help Anthem comply with the Blues Rules,

176
citing Matheis’s testimony that Anthem intended to rebrand the “lion’s share” of Cigna’s

customers in the Anthem Blue States, and “widespread exercise of the affiliate clause[s]

would remove any incentive for Cigna customers to convert to Anthem because those

customers would then be receiving the Cigna product at Anthem prices.” Id. The Majority

observed that Anthem’s expert had assumed that the affiliate clauses could be used to

deliver 80% of the anticipated efficiencies—an assumption that was contrary to the facts.

The Majority similarly found that the District Court properly had rejected

renegotiation as a viable option, explaining that if Anthem could not cause providers to

extend their lower rates to Cigna under the affiliate clauses—when the providers would be

contractually required to do so—“then it is speculative that Anthem could get them to agree

to do the same thing through negotiations absent compulsion.” Id. at 360. Anthem and its

expert had assumed that renegotiation would result in providers accepting Anthem’s lower

rates, but the Majority regarded that assumption “as questionable in the case of a provider

that has just terminated a contract because Anthem mandated, through an affiliate clause,

the acceptance of those very rates.” Id. Here again, the Majority relied on Cordani’s

testimony, noting that he had predicted that “renegotiation would put upward pressure on

the Anthem rate, and to the extent Anthem were to adopt a take-it-or-leave-it approach, the

provider could simply choose to walk away.” Id.

The Majority further found that the District Court properly had questioned “how

long” any savings from renegotiation “would take to be realized.” Id. The Majority

observed that “[t]he longer it takes for an efficiency to materialize, the more speculative it

177
can be, so the district court was on solid ground to give less weight to the claimed

renegotiation savings.” Id.

The Majority concluded that although renegotiation could lead to a decrease in

Cigna’s rates, it was “farfetched” for Anthem and its expert to argue that “it will in every

instance lead to the Anthem rate.” Id. On this point, the Majority quoted the District Court’s

observation that “‘the Department of Justice is not the only party raising questions about

Anthem’s characterization of the outcome of the merger’ because Cigna itself had

‘provided compelling testimony undermining the projections of future savings.’” Id.

(quoting Dist. Ct. Op., 236 F. Supp. 3d at 182).

The Majority next explained that whatever mechanism Anthem planned to use to

achieve the medical cost savings, the District Court had not erred by finding that the quality

of the Cigna offering “‘will in fact degrade’ as a result of the merger,” quoting a snippet of

Cordani’s testimony on which the District Court had relied. Id. (quoting Dist. Ct. Op., 236

F. Supp. 3d at 251 (quoting Cordani’s testimony)). For customers who stayed with Cigna

and accessed lower rates through contract renegotiation or affiliate clauses, the abrasion

problem would arise “because providers would be asked to continue offering the high-

touch collaborative Cigna service . . . for less money.” Id. at 361. The Majority cited

Cordani’s testimony for the related point that “the value of the Cigna offering will be

diminished because Anthem’s rebranding strategy will siphon business away from Cigna,

leaving behind an atrophied Cigna customer base that is less attractive to providers,” which

would “in turn diminish Cigna’s capacity for further renovation with its collaborative

model.” Id. The Majority also saw a problem of provider abrasion for Cigna customers that

178
migrated to Anthem products because Anthem’s providers would be asked to offer “better,

and more resource-intensive, collaborative service for the same rates they have historically

received.” Id. The Majority therefore concluded that the District Court had not erred by

finding it “‘dubious’ that Anthem would be able to offer a true Cigna-like product, or that

legacy Cigna would be able to maintain the quality of its own product.” Id. (citing Dist. Ct.

Op., 236 F. Supp. 3d at 247). The Majority considered the resulting “threat to innovation”

to be “anticompetitive in its own right” and “neither answered by Anthem’s evidence nor

offset by its purported efficiency of offering a degraded Cigna product at a lower rate.” Id.

The Majority next turned to the projected $874.6 million in savings that would be

realized if Anthem’s customers could access superior rates that Cigna had negotiated. Id.

The Majority saw no evidence that Anthem’s customers could access these rates through

rebranding or under an affiliate clause. The Blues Rules “would prohibit Anthem” from

using the Cigna rates under an affiliate clause, and rebranding Anthem customers to Cigna

“would only exacerbate Anthem’s ‘Best Efforts’ problem.” Id. Renegotiation would be the

only way to achieve the projected savings for Anthem’s customers, but the Majority

questioned how Anthem could achieve any incremental savings, noting that “Anthem,

unlike Cigna, has already achieved whatever economies of scale are available.” Id. If Cigna

had a better discount, it was due to factors other than patient volume, and the District Court

“reasonably questioned whether those atypical discounts would remain available post-

merger.” Id. at 362. The Majority therefore concluded that the District Court correctly had

rejected as unverifiable the $874.6 million in efficiencies that ostensibly would come from

delivering Cigna discounts to Anthem customers. Id.; see id. at 365 (“[T]he few [Cigna

179
customers] that Anthem fails to rebrand will see far fewer savings than Anthem claims,

due in large part to provider abrasion and big hospital systems that will stand their ground

in renegotiation.”).

Continuing, the Majority held that the District Court “rightly cast doubt” on the

assumption made by Anthem’s expert that 98% of the medical cost savings would be

passed through to Anthem’s customers. The Majority agreed that “[b]ecause ASO

customers pay their employees’ medical costs directly, any reduction in medical rates

would result in savings that automatically pass through,” at least “absent some

corresponding price increase by Anthem.” Id. But the Majority noted that the District Court

had cited evidence that Anthem was exploring ways to keep the savings for itself, and the

Majority agreed that this evidence “corroborates rather than remediates anticompetitive

concerns.” Id.

For the $619.8 million in projected medical cost savings from fully insured

customers, the Majority found that “the estimated pass-through is even less likely given

that the savings would automatically inure to Anthem’s benefit absent some corresponding

price decrease to consumers.” Id. at 363. The Majority saw no evidence of any mechanism

by which customers could learn about the savings, and thus could not seek to extract a

share of them through a lower negotiated price. The Majority also saw no evidence as to

when the renegotiation would occur, given that existing contracts would not pass through

any savings. Id.

The Majority finally found that the District Court had not clearly erred in criticizing

Anthem for failing “to account in its projected savings for utilization which is a signature

180
aspect of the Cigna product.” Id. For the importance of utilization, the Majority relied on

the following testimony by Cordani: “‘[I]f you’re looking [only at] a discount calculation,

if [Anthem has a 2 percent lower discount for the emergency room savings, you would

assume that’s a savings,’ unless Cigna’s wellness program helps the patient avoid the

emergency room visit altogether.” Id. The Majority held that “the failure to account for

utilization “undermined the district court’s confidence in the reliability and factual

credibility of those savings calculations.” Id. The Majority also criticized Anthem’s

projections as having used a different market definition than the District Court, meaning

they were “unmoored from the actual market at issue.” Id. at 364.

Although Anthem’s claimed efficiency figures “were without a doubt enormous,”

the Majority concluded that “those projections fall to pieces in a stiff breeze.” Id. Having

considered “the totality of the circumstances,” the Majority held that the District Court

“reasonably determined that Anthem failed to show the kind of extraordinary efficiencies

that would be needed to constrain likely price increases in this highly concentrated market,

and to mitigate the threatened loss of innovation.” Id. The Majority rejected the argument

that the District Court was supposed to make a “dollar-for-dollar comparison” of

efficiencies with anticompetitive effects, noting that such a rule would have required the

District Court “to calculate, for instance, a more realistic pass-through rate than the rejected

98% figure, or to estimate what percentage of the claimed $2.4 billion was attributable to

customers with fewer than 5,000 employees.” Id. More generally, the Majority observed

that “because the state of the science does not permit such refined showings, commentators

have recommended simply giving the government the benefit of the doubt in a close case.”

181
Id. (citation and internal quotation marks omitted). For the Majority, the evidence on

efficiencies meant that “this [was] not a close case.” Id.

The Majority also observed that Anthem had not meaningfully challenged the

District Court’s “independent and alternative determination” that the Merger should be

enjoined “on the basis of it anticompetitive effect in the Richmond, Virginia market for the

sale of health insurance to ‘large group’ employers with more than fifty employees.” Id. at

367. “There, the government’s prima facie case was even stronger than in the market for

national accounts in the fourteen Anthem states.” Id. In response, Anthem challenged the

District Court’s reliance on aspects of testimony by the DOJ’s expert, and the Majority

held that the District Court had not clearly erred in relying on that testimony. See id. at

367–68. The District Court also properly concluded that the Merger would have

anticompetitive effects by giving NewCo’s control over 64% to 78% of an already

concentrated market, with “two or three other companies fighting to maintain relevance.”

Id. at 368.

In its opinion, the Majority included an extensive section that responded to

arguments advanced by the Dissent See id. at 364–66. Among other things, the Dissent

criticized the Majority for ostensibly relying “on friction between the Anthem and Cigna

CEOs” as undermining the efficiencies. Id. at 365. Retorting that it “did not so rely,” the

Majority cited the opening footnote to its opinion, which stated,

Cigna has become a reluctant supporter of the merger, stating in its appellate
brief that “[i]n accordance with the merger agreement Cigna has appealed
and defers to Anthem.” Indeed, the district court noted the “elephant in the
courtroom,” for at trial Cigna executives dismissed various of Anthem’s
claims of savings, cross-examined the merging parties’ expert witness, and

182
 refused to sign Anthem’s proposed findings of fact and conclusions of law.
Anthem suggested this is a “‘side issue,’ a mere ‘rift between CEOs.’” That
their relationship may have deteriorated has little to do with the
anticompetitive effects of the proposed merger.

Id. at 348 n.1.

Judge Millett filed a concurring opinion that largely responded to points raised by

the Dissent. She stressed that the District Court properly had found that “even accepting

all of Anthem’s claimed cost savings,” the Merger “would still have substantial

anticompetitive effects.” Id. at 369. She observed that “to have any legal relevance, a

proffered efficiency cannot arise from anticompetitive effects.” Id. As a result, the generic

possibility that prices might go down as a result of the merger “proves nothing by itself,”

and she noted that NewCo’s medical cost savings could result from extracting price

concession through anticompetitive behavior. Id. She also observed that whether any

medical cost savings would be passed through to customers was “very much denied.” Id.

And she agreed with the District Court’s finding that decreased provider rates “would lead

to an inferior health care product,” noting that “[p]aying less to get less is not an efficiency;

it is evidence of the anticompetitive consequences of reducing competition and eliminating

an innovative competitor in a highly concentrated market.” Id. at 370. She observed that to

the extent the Dissent claimed there was overwhelming evidence that NewCo would

deliver health care for less, “one half of this merger disagrees,” citing the District Court’s

finding that Cigna was “actively warning against” the Merger. Id.

The Dissent diverged from the Majority (as well as from the District Court) by

arguing at length that the federal courts were obligated to consider the value of efficiencies

183
and balance them against any anticompetitive effects. See id. at 373, 375–77, 379. The

Majority (like the District Court) had questioned whether Procter & Gamble permitted

reliance on efficiencies to validate an otherwise anticompetitive merger. The Dissent

asserted strongly that later decisions called for a balancing of procompetitive efficiencies

against anticompetitive effects. Id.

Using this analytical framework, the Dissent concluded that the District Court had

“clearly erred” by concluding that the Merger “would substantially lessen competition in

the markets in which insurance services are sold to large employers.” Id. at 375. According

to the Dissent, “the record convincingly demonstrates” that the Merger “would

significantly reduce healthcare costs for the large employers that purchase insurance

services from Anthem and Cigna” across all of the fourteen Anthem Blue States, including

in the Richmond market. Id. at 375. From the Dissent’s perspective, those efficiencies

outweighed the increased costs that customers might pay to the combined firm. Id.

Unlike the Majority (and the District Court), the Dissent expressed confidence that

NewCo could generate efficiencies of $1.7 to $3.3 billion annually by obtaining reduced

rates from healthcare providers. Id. at 374. The Dissent maintained that because Anthem

and Cigna largely sold ASO policies to large employers who self-insured for the underlying

costs, any savings from lower provide rates necessarily would be passed through to their

employer-customers, resulting in customers capturing nearly all of these efficiencies. Id. at

374, 380. The Dissent recognized that some portion of the provider savings would inure to

fully insured plans and not necessarily be passed through, but the Dissent maintained that

the savings passed through to self-insured employers “would still be at least $1.7 billion

184
annually.” Id. The Dissent accepted that NewCo would charge its customers more as the

price of delivering those savings, but it viewed the record as indicating that large employers

would pay increased fees of $48 million to $980 million annually, far less than the $1.7

billion in anticipated savings. Id. at 373.

Unlike the Majority, the Dissent did not credit arguments that the DOJ had advanced

to question whether the efficiencies were verifiable. See id. at 380. The Dissent did not

differentiate between the lower provider rates that would be generated by moving Cigna

members to Anthem plans versus those resulting from moving Anthem members to Cigna

plans; the Dissent viewed both types of synergies as resulting from “enhanced bargaining

power [that] would come from the merger.” Id. at 373. The Dissent dismissed the idea that

Anthem or Cigna could achieve the savings on their own as a “made-up notion.” Id. at 375.

The Dissent rejected the DOJ’s argument that lower prices would degrade the quality of

healthcare as “speculation and guesswork.” Id. at 374 n.1; accord id. at 380. The Dissent

similarly rejected the argument that utilization could increase, undermining the savings

projections, as “highly speculative” and a fear that “does not square with the record, which

shows that current Anthem employer-customers have lower utilization rates than the

current Cigna employer-customers.” Id.; accord id. at 380–91. Summarizing its view of

the evidence, the Dissent wrote,

The majority opinion offers up a smorgasbord of reasons to think that
provider rates would not be lower or would not really be passed through,
ranging from provider “abrasion,” to secret Anthem plans to dramatically
raise the fees it charges employers, to Anthem’s supposed inability to fore or
negotiate with providers to obtain Anthem rates for Cigna customers, to
friction between the Anthem and Cigna CEOs. All of that seems at best,
highly speculative. The plural of anecdote is not data. Of course, lots of bad

185
 things could happen after the merger. But the courts have to assess what is
likely.

Id. at 380. According to the Dissent, the Majority was “accepting the worst-case

possibility.” Id. As the Dissent saw matters, “the overwhelming evidence of what is likely

is that provider rates would go down, that the saving would be passed through to employers,

and that the savings to employers would greatly exceed any increase in fees paid by

employers.” Id.

The Dissent nevertheless agreed that if the increased provider savings resulted from

NewCo exercising monopsony power in the provider market, then the medical cost savings

could not be considered. Id. at 377. The Dissent proposed remanding the case to the District

Court to rule on whether the medical cost savings would result from ordinary bargaining

power or unlawful monopsony power. Id. at 378, 381.

Q. Anthem Terminates The Merger Agreement.

While the appeal was pending, the parties engaged in expedited litigation in this

court in anticipation of a hearing on Anthem’s application for a preliminary injunction to

bar Cigna from terminating the Merger Agreement pending a final decision on the merits

in this action. The hearing took place on May 11, 2017, after the DC Circuit Court issued

its opinion. In light of the DC Circuit Court’s ruling, this court denied Anthem’s

application, holding that Anthem had not demonstrated a reasonable likelihood that the

Supreme Court of the United States would issue a writ of certiorari and reverse the DC

Circuit Court, which in turn made it futile to enjoin Cigna from terminating the Merger

Agreement when the parties could not close with the District Court’s injunction in place.

186
Dkt. 226 at 1314. This court stayed its decision to deny the application for a preliminary

injunction and lift the TRO so that Anthem could pursue an expedited appeal to the

Delaware Supreme Court.

While this court was in the midst of issuing its ruling, Cigna hurriedly delivered a

second notice of termination, again relying on Section 7.1(b) of the Merger Agreement.

JX 2927. After the court stayed its ruling to permit Anthem to appeal, Cigna claimed that

the notice had been inadvertent. JX 2930. Discovery proved that statement to be inaccurate.

See Jones Dep. 1589–90. Consistent with Cigna’s behavior during other stages of the

process, Cigna sought to get the jump on Anthem by issuing its termination notice while

the court was in the midst of its ruling, then had to walk back its actions after the court

stayed its decision. Because the TRO remained in effect when the notice was issued, Cigna

violated the TRO by sending it.

On the morning of May 12, 2017, while the TRO remained in place, Cigna

delivered a third notice of termination, again relying on Section 7.1(b) of the Merger

Agreement. JX 2928. Because the TRO remained in effect when the third notice was

issued, Cigna violated the TRO by sending it.

Several hours later, on May 12, 2017, Anthem notified this court that it would not

appeal the denial of the preliminary injunction, causing the TRO to lift. Dkt. 206. Anthem

simultaneously delivered a notice of termination to Cigna that relied on Section 7.1(i) of

the Merger Agreement. JX 2929.

With the Merger Agreement terminated, the Anthem Board began searching for a

new CEO to replace Swedish. He resigned effective November 5, 2017. JX 2953.

187
 In March 2018, Cigna announced that it was acquiring Express Scripts in a

transaction valued at approximately $67 billion. JX 2958. Cordani became CEO of the

combined company, and Cigna appointed a majority of the board. Cigna hired Teneo for

the public relations work on the merger. Teneo did not solicit a single negative story about

the deal. See Cohen Tr. 2461.319

R. This Litigation Proceeds To Trial.

Over the course of two years, the parties conducted discovery and prepared for trial.

During discovery, Bain produced emails that showed Hocevar acting as a conduit for

backchannel advice to Cordani about becoming CEO of NewCo. Cordani viewed the

emails as having “created difficulties for us in the litigation.” JX 3099 at ’121. Hocevar

had worked at Cigna for over sixteen years, was promoted at least five times, and ended up

on the Cigna ELT as President, of Strategy, Segments, and Solutions. He was identified as

one of a handful of possible successors to Cordani as CEO.320 Cordani waited until Hocevar

had been deposed, then fired him.321

Trial took place from February 25 through March 4, 2019. After extensive post-trial

briefing, post-trial argument took place on November 26, 2019. The court requested

supplemental submissions on causation, which were filed on March 6, 2020. Shortly after

those submissions were received, the novel coronavirus and the resulting COVID-19

319
Cordani denied that Teneo worked on the Express Scripts deal. Cordani Tr. 2049.
That testimony was not accurate. Cohen Tr. 2461.
320
See JX 715 at ’221; JX 3077 at ’663; Hocevar Tr. 2299–300, 2303–07.
321
See JX 2963; Hocevar Tr. 2304–06.

188
pandemic affected the court’s operations and delayed this decision. The preparation of this

decision also required additional time given the magnitude of the record. As a result of

these factors, this overly lengthy opinion was sadly too long delayed.

III. LEGAL ANALYSIS

Despite high-profile protagonists, a sprawling record, and billions of dollars in

damages claims, this is a breach of contract case. Each side claims that the other breached

its obligations under the Merger Agreement. All but one of the claims involve the Efforts

Covenants. In the remaining breach of contract claim, Cigna contends that Anthem

breached its contractual obligation to pay the Reverse Termination Fee.

This decision begins by setting out the legal framework that governs a claim for

breach of contract. It next describes the plain meaning of the Efforts Covenants and the No

Injunction Condition. The decision then analyzes the parties’ claims for breach of the

Efforts Covenants. It finally turns to Cigna’s claim for the Reverse Termination Fee.

A. The Legal Framework

The Merger Agreement is a contract governed by Delaware law. See MA § 8.6(a).

Delaware law accordingly governs the parties’ breach of contract claims.

“Under Delaware law, the elements of a breach of contract claim are: 1) a

contractual obligation; 2) a breach of that obligation by the defendant; and 3) a resulting

damage to the plaintiffs.” WaveDivision Hldgs. v. Millennium Digital Media, 2010 WL

3706624, *13 (Del. Ch. Sept. 17, 2010). When determining the scope of a contractual

obligation and measuring the parties’ conduct against that obligation to determine breach,

“the role of a court is to effectuate the parties’ intent.” Lorillard Tobacco Co. v. Am. Legacy

189
Found., 903 A.2d 728, 739 (Del. 2006). Absent ambiguity, the court “will give priority to

the parties’ intentions as reflected in the four corners of the agreement, construing the

agreement as a whole and giving effect to all its provisions.” In re Viking Pump, Inc., 148

A.3d 633, 648 (Del. 2016) (internal quotation marks omitted). “Unless there is ambiguity,

Delaware courts interpret contract terms according to their plain, ordinary meaning.” Alta

Berkeley VI C.V. v. Omneon, Inc., 41 A.3d 381, 385 (Del. 2012).

For the claims based on the Efforts Covenants, the complexity surrounds the issue

of “a resulting damage.” See WaveDivision, 2010 WL 3706624, at *13. Put more plainly,

the complexity involves the element of causation. Both sides seek damages measured by

the benefits that they expected to receive from the completion of the Merger. Each side

thus seeks damages resulting from the other side’s failure to perform at closing. The

parties’ obligations to perform at closing were subject to the No Injunction Condition. The

District Court enjoined the Merger from closing, and the DC Circuit Court affirmed that

ruling, which caused the No Injunction Condition to fail. As a result, neither side become

obligated to perform.

To guide the analysis of causation in this setting, Delaware has adopted the

framework set forth in the Restatement (Second) of Contracts. See Williams Cos. v. Energy

Transfer Equity, L.P., 159 A.3d 264l 273 (Del. 2017); WaveDivision, 2010 WL 3706624,

at *14-15. That framework recognizes that “[p]erformance of a duty subject to a condition

cannot become due unless the condition occurs or its non-occurrence is excused.”

Restatement (Second) of Contracts § 225(1) (1981); accord id. § 235 cmt. b. But the

framework also recognizes that “[w]here a party’s breach by non-performance contributes

190
materially to the non-occurrence of a condition of one of his duties, the nonoccurrence is

excused.” Id. § 245.

To establish that a party’s breach contributed materially to the non-occurrence of a

condition, “it is not necessary to show that [the condition] would have occurred but for the

lack of cooperation. It is only required that the breach have contributed materially to the

non-occurrence.” Id. § 245 cmt. b. A breach “contributed materially” to the non-occurrence

of a condition if the conduct made satisfaction of the condition “less likely.” WaveDivison,

2010 WL 3706624, at *18. But “if it can be shown that the condition would not have

occurred regardless of the lack of cooperation, the failure of performance did not contribute

materially to its non-occurrence and the rule does not apply. The burden of showing this is

properly thrown on the party in breach.” Restatement (Second) of Contracts § 245 cmt. b.

Under this framework, if the non-breaching party proves by a preponderance of the

evidence that the breach contributed materially to the failure of the condition by making

its satisfaction less likely, then the non-occurrence is excused, and the breaching parties’

obligations were due even if the condition was not satisfied. Id. §§ 225(1), 245. In those

circumstances, the breaching party is liable for the failure to perform its obligations. Id.

§§ 235, 346. “When the non-occurrence of a condition of a duty is excused . . . the obligor

is liable for the same damages for which he would have been liable had the duty originally

been unconditional.” Id. § 225 cmt. c. But if the breaching party proves by a preponderance

of the evidence that its breach could not have contributed materially to the non-occurrence

of the condition because the condition would have failed regardless, then the breaching

party is not liable in damages. Id.

191
 The Restatement includes helpful illustrations of these principles. One illustration

shows how the failure of a condition can be excused, resulting in liability for the party

whose conduct made the satisfaction of the condition less likely:

A contracts to sell and B to buy A’s rights as one of three lessees under a
mining lease in Indian lands. The contract states that it is “subject only to
approval by the Secretary of the Interior,” which is required by statute. B
files a request for approval but A fails to support B’s request by giving
necessary cooperation. Approval is denied and A cannot convey his rights.
B has a claim against A for total breach of contract. A’s breach of his duty
of good faith and fair dealing contributed materially to the non-occurrence
of the condition, approval by the Secretary of the Interior, excusing it.

Id. § 245 cmt. a, illus. 4. A later illustration shows how a party can avoid liability, despite

having made the satisfaction of the condition less likely:

The facts being otherwise as stated in Illustration 4, A shows that even if he
had given his cooperation, the Secretary of the Interior would have withheld
approval on other grounds. B has no claim against A for breach of contract.
A’s breach of his duty of good faith and fair dealing did not contribute
materially to the non-occurrence of the condition, and its non-occurrence is
not excused.

Id. § 245 cmt. b, illus. 7. Avoiding liability thus requires a showing that even if the

breaching party “had given his cooperation,” i.e., fulfilled its contractual obligations, the

condition nevertheless would have failed “on other grounds.”

These rules only apply where the breaching party’s lack of cooperation in satisfying

the condition “constitutes a breach, either of a duty imposed by the terms of the agreement

itself or of a duty imposed by a term supplied by the court. There is no breach if the risk of

such a lack of cooperation was assumed by the other party or if the lack of cooperation is

justifiable.” Id. cmt. a. In the Restatement’s illustrations, the obligation to cooperate flowed

from the implied covenant of good faith and fair dealing, which is “a duty imposed by a

192
term supplied by the court.” Id. In this case, the obligation to cooperate flows from the

Efforts Covenants, which are duties “imposed by the terms of the agreement itself.” Id.;

see id. cmt. b.

B. The Plain Meaning Of The Efforts Covenants And The No Injunction
Condition

All but one of the claims in the case concern the Efforts Covenants and the No

Injunction Condition. The language of these provisions is plain and unambiguous.

1. The Reasonable Best Efforts Covenant

The Reasonable Best Efforts Covenant generally required that both parties use their

reasonable best efforts to complete the Merger. In pertinent part, the provision stated,

Upon the terms and subject to the conditions hereof (including Section
5.3(c)), each party will use its reasonable best efforts to take, or cause to be
taken, all actions, to do, or cause to be done, all things reasonably necessary
to satisfy the conditions to Closing set forth herein and to consummate the
Mergers and the other transactions contemplated by this Agreement.

MA § 5.3(a).

Under this provision, each side was obligated to “use its reasonable efforts” to

accomplish two goals: (i) “satisfy the conditions to Closing set forth herein” and (ii)

“consummate the Merger[].” Id. The first goal focused on the specific conditions to closing

set forth in Sections 6.1, 6.2, and 6.3. The second goal addressed the Merger generally and

committed the parties to work together to achieve its consummation.

The mandatory requirement that “each party will use its reasonable best efforts” was

“subject to the conditions hereof (including Section 5.3(c)).” MA § 5.3(a). That section

stated,

193
 Nothing contained in this Section 5.3 or in any other provision of this
agreement shall be construed as requiring Anthem to agree to any terms or
conditions that would

(i) impose any limitation on Anthem’s ownership or operation of all
or any portion of its or Cigna’s . . . business or assets or compel [Anthem] to
dispose of or hold separate all or any portion of its or [Cigna’s] businesses or
assets,

(ii) impose any limitations on the ability of Anthem to acquire or hold
or to exercise full rights of ownership of Cigna Common Stock,

(ii) impose any obligations on [Anthem] or [Cigna] in respect of or
relating to [their] facilities, operations, places of business, employment
levels, products or businesses,

(iv) require [Anthem] or [Cigna] to make any payments or

(v) impose any other obligation, restriction, requirement, limitation,
qualification, condition, remedy or other action

which, in the case of any such term or condition described in clauses (i)
through (v) above, would have, or would reasonably be expected to have,
individually or in the aggregate with all other such terms and conditions, a
material adverse effect on Anthem, Cigna and their respective subsidiaries,
taken as a whole, after giving effect to the Mergers, including the synergies
expected to be realized from the Mergers.

MA § 5.3(c) (the “Burdensome Condition Exception”). Under its plain terms, the

Burdensome Condition Exception only protected Anthem. Cigna did not enjoy similar

protection.

A “reasonable best efforts” obligation requires a party “to take all reasonable steps

to solve problems and consummate the transaction.” Williams, 159 A.3d at 273. It does not

require a party “to sacrifice its own contractual rights for the benefit of its counterparty.”

Akorn v. Fresenius, 2018 WL 4719347, at *91 (Del. Ch. Oct. 1, 2018), aff’d, 198 A.3d 724

(Del. 2018) (ORDER). Recently, this court found that the defendant breached a best efforts

194
obligation during the period leading up to a purported termination. Channel Medsystems,

Inc. v. Boston Sci. Corp., 2019 WL 6896462, at *38 (Del. Ch. Dec. 18, 2019). The

defendant contended that it had received material information that made termination

necessary, but the court found that the defendant “made no reasonable efforts to engage

with [its counterparty] or to take other appropriate actions to keep the deal on track.” Id.

Among other things, the defendant did not seek additional information from its

counterparty, did not engage in forthright discussions with its counterparty, and did not

conduct a meaningful analysis of the grounds it raised for termination. Id. The court found

that the defendant’s actions showed both a failure to use reasonable best efforts and a lack

of good faith. The court further observed that “[t]he lack of good faith here is corroborated

by contemporaneous evidence that [the defendant] was looking for a way out of its deal.”

Id. The evidence of the defendant’s motives added “credence to and corroborat[ed] other

robust facts demonstrating that [the defendant] did not fulfill its obligations to engage with

[its counterparty] in a commercially reasonable manner to vet any concerns . . . and to keep

the transaction on track.” Id. at *39.

Applying these principles to this case, the Reasonable Best Efforts Covenant

obligated Cigna “to take all reasonable steps to solve problems and consummate the

transaction.” Williams, 159 A.3d at 273. Cigna would breach the Reasonable Best Efforts

Covenant by failing to take reasonable steps to consummate the transaction or by not

attempting to solve problems. Cigna certainly would breach the Reasonable Best Efforts

Covenant by working actively against the Merger and trying to prevent it from closing.

Anthem faced the same obligations, albeit subject to the Burdensome Condition Exception.

195
 2. The Regulatory Efforts Covenant

The Regulatory Efforts Covenant imposed a stronger contractual duty than

“reasonable best efforts,” but that duty was limited to the narrower task of addressing legal

impediments to the Merger. In pertinent part, the provision stated,

Without limiting the foregoing, but subject to Section 5.3(c), the reasonable
best efforts of Anthem and Cigna shall include Anthem and its Affiliates and
Cigna and its Affiliates taking any and all actions necessary to avoid each
and every impediment under the HSR Act, any Healthcare Law, antitrust law,
insurance law or other applicable law that may be asserted by or on behalf of
any Governmental Entity with respect to this Agreement, the Mergers and
the other transactions contemplated hereby or . . . so as to enable the Closing
to occur as promptly as practicable . . . .

MA § 5.3(b).

The Regulatory Efforts Covenant was thus stronger than the Reasonable Best

Efforts Covenant in that it required the parties to “tak[e] any and all actions necessary to

avoid each and every impediment.” Id. The concept of “reasonable best efforts” recognizes

that some extreme actions may be beyond a party’s best efforts. The obligation to “tak[e]

any and all actions” does not admit exclusions. Id.

At the same time, the Regulatory Efforts Covenant was narrower than the

Reasonable Best Efforts Covenant in that it did not obligate the parties to use this level of

effort to close the Merger by satisfying all of the conditions to closing. The Regulatory

Efforts Covenant applied only with respect to the “discrete regulatory subject” covered by

the provision.322 It thus only obligated the parties to use this level of effort to address

322
See All. Data Sys. Corp. v. Blackstone Capital P’rs V L.P., 963 A.2d 746, 763
(Del. Ch. 2009), aff’d, 976 A.2d 170 (Del. 2009); see also ABA Model Merger Agreement

196
“impediments” that a Governmental Entity could assert “under the HSR Act, any

Healthcare Law, antitrust law, insurance law or other applicable law that may be asserted

by or on behalf of any Governmental Entity.” In framing the obligation in this fashion, the

Regulatory Efforts Covenant did not use the concept of “impediment” in the general sense

of any hurdle or obstacle to be overcome.323 The provision used the concept of

“impediment” to refer specifically to a legal objection that a Governmental Entity could

raise.

Unlike the more general Reasonable Best Efforts Covenant, the Regulatory Efforts

Covenant also identified categories of actions that the parties were required to take to the

extent they were either “requested by or on behalf of any Governmental Entity” or

“necessary and appropriate” to achieving three enumerated goals:

(I) obtain[ing] all Necessary Consents;

(II) resolv[ing] any objections that may be asserted by or on behalf of any
Governmental Entity with respect to the mergers and the other
transactions contemplated hereby; and

(III) prevent[ing] the entry of, and have vacated, lifted, reversed or
overturned, any order that would prevent, prohibit, restrict or delay

for the Acquisition of a Public Company 197 (2011) (explaining that provision applies if
“the antitrust agency demands divestiture or other action to avoid an antitrust challenge”).

Impediment, Oxford English Dictionary, (3d ed. 2020) (“The fact of impeding or
323

condition of being impeded; hindrance, obstruction; concrete something that impedes,
hinders, or obstructs; a hindrance, an obstruction”); Impediment, Merriam-Webster Online
Dictionary, (accessed August 21, 2020) (“something that impedes”); Impediment,
Cambridge Dictionary, (2020 update) (“[S]omething that makes progress, movement, or
achieving something difficult or impossible”).

197
 the consummation of the Mergers and the other transactions
contemplated hereby.

MA § 5.3(b) (formatting added). In the current case, a Governmental Entity never made

any requests, so the operative test is whether any of the three specified categories of actions

were “necessary and appropriate” to achieve any of the three enumerated goals.

Under the first category of actions, if necessary and appropriate to achieving an

enumerated goal, the parties were required to

comply with all restrictions and conditions, if any, imposed, compelled,
required, or requested by any Governmental Entity in connection with
granting any Necessary Consent of any such Governmental Entity or in
connection with the expiration or termination of any applicable waiting
period under the HSR Act or any other antitrust laws or any clearance under
any Healthcare Laws, insurance laws, or other applicable laws . . . .

MA § 5.3(b)(i) (the “Compliance Requirement”). The Merger Agreement defined

“Necessary Consents” to encompass eight categories of legally required consents,

including any those required under “the Hart-Scott-Rodino Antitrust Improvements Act of

1976.” MA § 3.1(c)(iii). The Compliance Requirement never came into play because

neither the DOJ nor any other Governmental Entity ever “imposed, compelled, required or

requested” that Anthem or Cigna take any action.324

324
If the DOJ or any Governmental Entity had imposed, compelled, required, or
requested any action, then the range of action that the parties were required to take was
quite broad, including

(I) proposing, negotiating, committing to and effecting, by consent decree,
hold separate order or otherwise, the sale, divestiture, disposition, license or
other disposition of any Subsidiaries, operations, divisions, businesses,
product lines, contracts, customers or assets of Anthem or any of its Affiliates
(including Cigna or any of its Subsidiaries),

198
 Under the second category of actions, if necessary and appropriate to achieving an

enumerated goal, the parties were required to

agree to . . . enter into, suspend, amend or terminate any contract or other
business relationship of Anthem or any of its Subsidiaries or Affiliates or
Cigna or any of its Subsidiaries or Affiliates (including any contract with any
Governmental Entity) . . . .

MA § 5.3(b)(ii) (the “Contracting Requirement”).325

Under the third category, if necessary and appropriate to achieving an enumerated

goal, the parties were required to oppose fully and vigorously

(II) taking or committing to take such other actions that may limit or impact
Anthem’s or any of its Subsidiaries’ or Affiliates’ (including Cigna’s or any
of its Subsidiaries’) freedom of action with respect to, or its ability to retain,
any of Anthem’s or any of its Subsidiaries’ or Affiliates’ (including Cigna’s
or any of its Subsidiaries’) operations, divisions, businesses, product lines,
contracts, customers or assets and

(III) entering into any orders, settlements, undertakings contracts, consent
decrees, stipulations or other agreements to effectuate any of the foregoing
or in order to vacate, lift, reverse, overturn, settle or otherwise resolve any
order that prevents, prohibits, restricts or delays the consummation of the
Mergers and the other transactions contemplated hereby, in any case, that
may be issued by any court or other Governmental Entity.

MA § 3.1(c)(iii) (formatting added).
325
The Contracting Requirement also obligated the parties to “agree to . . . any
additional obligations relating to any contract imposed by any Governmental Entity, in
each case in connection with granting any Necessary Consent of any such Governmental
Entity or in connection with the expiration or termination of any applicable waiting period
under the HSR Act or any other antitrust laws or any clearance under any Healthcare Laws,
insurance laws or other applicable laws.” Id. This aspect of the Contracting Requirement
never came into play because a Government Entity never imposed any additional
obligations in connection with granting any Necessary Consent.

199
 (I) any administrative or judicial action or proceeding that is initiated
(or threatened to be initiated) challenging this [Merger] Agreement, the
Mergers or the other transactions contemplated hereby and

(II) any request for, or the entry of, and seek to have vacated or
terminated, any order that could restrain, prevent or delay the consummation
of the Mergers and the other transactions contemplated hereby,

including, in the case of either clause (I) or clause (II), by defending through
litigation, any action asserted by any Person in any court or before any
Governmental Entity, and vigorously pursuing all available avenues of
administrative and judicial appeal.

MA § 5.3(b)(iii) (the “Litigation Requirement”) (formatting added).

As with the Reasonable Best Efforts Covenant, the Regulatory Efforts Covenant

was subject to the Burdensome Condition Exception. The condition again protected

Anthem and not Cigna, making the parties’ obligations asymmetrical. Cigna was

contractually obligated to “tak[e] any and all actions necessary to avoid each and every

impediment under . . . antitrust law . . . that may be asserted by or on behalf of any

Governmental Entity with respect to this Agreement, the Mergers and the other transactions

contemplated hereby.” MA § 5.3(c). Anthem was not obligated to agree to take any action

or agree to any terms or conditions that would have a material adverse effect on NewCo.

The parties dispute whether the overarching obligation in the Regulatory Efforts

Covenant qualifies as a “hell or high water” provision. Cigna contrasts the Regulatory

Efforts Covenant with the provision at issue in Akorn, which expressly stated that the

parties’ regulatory efforts “shall be unconditional.” 2018 WL 471937, at *46. Anthem cites

decisions in which the court described provisions containing language substantially

identical to the Regulatory Efforts Covenant as a “hell or high water” provision. See

200
Vintage Rodeo Parent, LLC v. Rent-A-Center, Inc., 2019 WL 1223026, at *6 (Del. Ch.

Mar. 14, 2019) (describing an obligation to use “commercially reasonable efforts” to take

“any and all action necessary or advisable” to obtain regulatory approvals” as a “hell or

high water” provision); Hexion Specialty Chems., Inc. v. Huntsman Corp., 965 A.2d 716,

756 (Del. Ch. 2008) (describing an obligation to “take any and all action necessary” to

obtain antitrust approval as a “come hell or high water” obligation).

The label does not matter. What counts is the plain language of the provision. Under

the Regulatory Efforts Covenant, the parties were obligated to “tak[e] any and all actions

necessary to avoid each and every” legal impediment that a Governmental Entity could

raise. MA § 5.3(a). To the extent that an action fell within the scope of the provision, the

parties were required to take it.

3. The Regulatory Cooperation Covenant

The Regulatory Cooperation Covenant was an important adjunct to the other Efforts

Covenants. That provision generally gave Anthem the authority to take the lead in

communicating with regulators and developing a regulatory strategy, including for

purposes of any litigation. It did so by stating that “Anthem, in consultation with Cigna,

shall take the lead in coordinating communications with any Governmental Entity and

developing strategy for responding to any investigation or inquiry by any Governmental

Entity related to any of the Necessary Consents.” MA § 5.3(e). A necessary corollary of

this grant of authority to Anthem was that Cigna was obligated to follow Anthem’s lead

and adhere to Anthem’s strategy.

201
 Like the Regulatory Efforts Covenant, the Regulatory Cooperation Covenant

contained more specific requirements. First, the parties agreed that “each party shall as

promptly as practicable make such filings with Governmental Entities as are required in

connection with this Agreement and the transactions contemplated hereby on its respective

behalf.” Id.

Second, the parties agreed that

[p]rior to submitting any filing, substantive written communication,
correspondence or other information or response by such party or any of its
representatives, on the one hand, to any Governmental Entity, or members of
the staff of any Governmental Entity, on the other hand, subject to Section
5.2, the submitting party shall permit the other party and its counsel a
reasonable opportunity to review in advance, and consider in good faith the
comments of the other party provided in a timely manner, in connection with
any such filing, communication, correspondence, information, or
response. . . .

To the extent practicable under the circumstances, none of the parties hereto
shall agree to participate in any substantive meeting or conference with any
Governmental Entity, or any member of the staff of any Governmental
Entity, in respect of any filing, proceeding, investigation (including any
settlement of the investigation), litigation, or other inquiry related to the
mergers unless it consults with the other party in advance and, where
permitted, allows the other party to participate.

Id.

Third, the parties agreed to exchange information and provide assistance to each

other:

Subject to Section 5.2 and the terms and conditions of the Confidentiality
Agreement, Anthem and Cigna shall coordinate and cooperate fully with
each other in exchanging such information and providing such assistance as
the other party may reasonably request in connection with the foregoing.

202
Id.326

326
Titled “Access to Information,” Section 5.2 provided as follows:

Upon reasonable notice, each of Anthem and Cigna shall . . .

[1] afford to the other party hereto and its officers, employees, accountants,
counsel, financial advisors, and other representatives of the other party
reasonable access during normal business hours, during the period prior to
the Effective Time, to such of its properties, books contracts commitments,
records, officers, employees and consultants as the other party may
reasonably request and,

[2] during such period, each of Anthem and Cigna shall . . . furnish promptly
to the other party, subject in the case of competitively sensitive information,
to any “clean room” arrangement between the parties

(a) to the extent not publicly available, a copy of each report, schedule,
registration statement, and other document filed, published, announced or
received by it during such period pursuant to the requirements of federal or
state securities laws as applicable . . . , and

(b) consistent with its legal obligations, all other information
concerning it and its business, properties and personnel as such other party
may reasonably request;

provided, however, that either may restrict the foregoing access to the extent
that, in such party’s reasonable judgment, (i) providing such access would
violate such party’s . . . obligations under the terms of a confidentiality
agreement with a third party . . . , (ii) providing such access would result in
the waiver of any attorney-client privilege . . . or (iii) any law, treaty, rule or
regulation of any Government Entity . . . requires such party . . . to restrict
access to such properties or information.

MA § 5.2. Section 5.2 thus provided a separate avenue for the parties to obtain information
from each other. By making aspects of Section 5.3(e) “subject to Section 5.2,” the Merger
Agreement made clear that these requirements did not displace Section 5.2. Although the
record suggests that Anthem might have been able to assert a claim for breach of Section
5.2 based on Cigna’s withdrawal from integration planning and failure to provide
assistance during the Antitrust Litigation, those claims largely would parallel Anthem’s
existing claims for breach of the Efforts Covenants. Neither side has asserted a breach of
Section 5.2.

203
 4. The No Injunction Condition

The parties’ obligations to perform at closing and consummate the Merger were

subject to conditions that appeared in Sections 6.1, 6.2, and 6.3 of the Merger Agreement.

For purposes of the claims for breach of the Efforts Covenants, the key condition was the

No Injunction Condition, which states,

No Injunctions or Restraints, Illegality. (i) No Governmental Entity or
federal or state court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, judgment, injunction or other order (whether temporary,
preliminary or permanent), in any case that is in effect and that prevents or
prohibits consummation of the Mergers (collectively, the “Legal
Restraints”) . . . .

JX 468 § 6.1(a).

The permanent injunction against the Merger constituted a Legal Restraint within

the plain language of the No Injunction Condition. The District Court was a “federal . . .

court of competent jurisdiction.” By entering the permanent injunction, it “issued [an] . . .

order . . . that prohibit[ed] consummation of the Merger[].” PTO ¶ 199. The DC Circuit

Court affirmed its decision. PTO ¶ 206. The No Injunction Condition therefore was not

satisfied, bringing into play the Restatement framework for analyzing causation.

C. Anthem’s Claims For Breach Of The Efforts Covenants

For its claims against Cigna, Anthem sought to prove that Cigna breached the

Efforts Covenants by engaging in conduct that fell into five broad categories:

(i) conducting a covert communications campaign against the Merger, (ii) withdrawing

from integration planning, (iii) opposing a divestiture, (iv) resisting mediation, and

(v) undermining Anthem’s defense in the Antitrust Litigation. The first two categories

204
implicate Cigna’s obligations under the Reasonable Best Efforts Covenant. The next three

categories implicate Cigna’s obligations under the Regulatory Efforts Covenant and the

Regulatory Cooperation Covenant.327

1. Cigna’s Covert Communications Campaign Against The Merger

Anthem proved that Cigna breached the Efforts Covenants by conducting a covert

communications campaign against the Merger. But Anthem failed to prove that Cigna’s

covert communications campaign contributed materially to the failure of the No Injunction

Condition. Anthem therefore failed to establish a basis to recover damages under this

theory.

a. Cigna’s Contractual Obligations Regarding A Covert
Communication Campaign

To state the obvious, Cigna had a contractual obligation not to run a covert

communication campaign against the Merger. The two Cigna directors who testified at trial

understood this fact.328

As a technical matter, the underlying obligation arose under the Reasonable Best

Efforts Covenant, not the Regulatory Efforts Covenant. The Reasonable Best Efforts

covenant obligated Cigna to support the Merger and seek to consummate it. Taking action

with the goal of undermining the Merger breached the Reasonable Best Efforts Covenant.

327
Anthem’s presented its arguments in a different order and combined Cigna’s
opposition to a divestiture and its resistance to mediation into a single category. When
addressing these claims, the parties did not clearly distinguish among Cigna’s obligations
under the different Efforts Covenants. This decision strives to be more precise.
328
Zollars Tr. 2510–12; Harris Tr. 3268–69.

205
 Because Cigna sought to influence the regulatory approval process, it is possible to

conceive of the obligation as implicating the Regulatory Efforts Covenant. That covenant,

however, committed Cigna to take action to avoid any legal impediment that could be

asserted by or on behalf of any Governmental Entity. MA §5.3(b). The covert

communication campaign was not specifically part of the regulatory approval process, nor

did it respond to a legal impediment. It therefore falls under the Reasonable Best Efforts

Covenant.

b. Cigna Breached The Reasonable Best Efforts Covenant By
Conducting A Covert Communications Campaign.

Anthem proved that Cigna conducted a covert communications campaign against

the Merger. Through Teneo, Cigna carried out a campaign that depicted the Merger as anti-

competitive, anti-consumer, and anti-innovation, which were the very grounds on which

DOJ was seeking to block it. See Cohen Tr. 2386.

The idea to conduct a covert communications campaign originated in January 2016

as part of Project Alpha. The playbook for Project Alpha included escalation strategies if

Anthem did not make the commitments Cigna wanted. One escalation strategy was a covert

communications campaign. See Part II.G.34, supra.

Teneo’s campaign against the Merger began in May 2016, after Cohen leaked the

dispute letters to the Wall Street Journal. See Part II.I.3, supra. Teneo began speaking with

reporters on background to spread the following anti-Merger messages:

 “It remains unclear that Anthem is properly managing the processes necessary to
bring the deal to completion.” JX 1860 at ’114.

 “Many of the core regulatory work streams have fallen behind schedule.” Id.

206
 “The transaction leverages Cigna’s unique and robust capabilities.” Id.

 “In the event the merger does not obtain regulatory approval, we are well positioned
for standalone success,” citing a “[w]ell-balanced diversified business model,”
“substantial ‘dry powder’ of $6-8 billion,” and “M&A possibilities and market
leading revenue, earnings, and capital efficiency.” Id.

See generally JX 2298 (circulating and discussing a “Communications Campaign and

Execution Plan”).

After the DOJ filed suit, Cigna instructed Teneo to develop stories that the Blues

Rules would prevent the Merger from being cleared. See Part II.K.2, supra. Jones told

Cohen “to play this as all roads go to the blues.” JX 2486 at ’490. Cohen understood that

Jones wanted “a strategy to blame the Blues rules no matter what.”329

Teneo and Cigna knew that the DOJ was challenging the Merger as anti-

competitive.330 Teneo sought to spread the message that “the combined company will not

compete as vigorously against the Blues . . . and that this will inhibit the growth of the

combined company.”331

329
Cohen Tr. 2427–28; see JX 2488; Cohen Tr. 2432.
330
See Cordani Tr. 2190–91; Cohen Tr. 2392.
331
JX 2298 at ’547; see JX 2484 at ’835.001 (“If Cigna merges with Anthem, its
freedom to compete with Blues across the country could be constrained.”).

207
 Teneo and Cigna knew that it would hurt the prospects for antitrust clearance if the

Merger harmed consumers.332 Teneo sought to spread the message that the Merger was

“anti-consumer” and “does not take the best internet of customers in mind.”333

Teneo and Cigna knew that the DOJ was attacking the Merger because it would

reduce Cigna’s capacity for innovation.334 Teneo sought to spread the message that “the

transaction is being largely viewed by customers as . . . non-innovative.”335

Cohen spoke with reporters, attorneys, and law professors to spread the anti-Merger

narrative.

 As trial approached, Teneo engaged in “Proactive Pre-Trial Activity” and “worked
with reporters” to write “curtain raisers” that would “[h]ighlight [Cigna] as
innovative and positively impacting client health outcomes.”336

 During and after trial, Cohen spoke with reporters and provided them with talking
points and quotations that criticized Anthem and the Merger.337

332
See Cohen 2394–96; Jones Tr. 2766–67.

JX 2298 at ’548; see JX 2484 at ’002 (“Anthem and its Blues partners are already
333

being accused of negatively impacting the healthcare market and its consumers.”).
334
Cohen Tr. 2394–96; Jones Tr. 2767.

JX 2298 at ’548; see JX 2484 at ’002 (“The merged company will limit Cigna’s
335

innovation”).
336
JX 2613 at ’581; see JX 2617; see also JX 2611; JX 2613; JX 2629; JX 2636;
JX 2715.
337
See, e.g., JX 2694; JX 2727; JX 2769; JX 2773; JX 2781; JX 2782; JX 2783; JX
2784; JX 2785; JX 2793; JX 2794; JX 2798; JX 2803; JX 2805; JX 2806; JX 2807; JX
2810; see also JX 2812.

208
 Teneo continued its communication campaign after the District Court enjoined the
Merger.338

Cohen’s efforts produced stories that advanced anti-Anthem, anti-Merger themes. See

Part II.K.5, supra.

Teneo developed and implemented the covert communications campaign with the

understanding that Cigna was not interested in obtaining antitrust approval for the Merger.

Cohen Tr. 2391, 2403. Cigna never asked Teneo to develop any messaging or

communications to support the Merger. Id. at 2384.

Cigna has argued that its conduct could not have breached the Merger Agreement

because Cigna did not subjectively believe that Teneo’s work would or could influence

DOJ or the courts. Dkt. 700 at 68. Intent is not a requirement for a breach of the Reasonable

Best Efforts Covenant. MA § 5.3(b). Regardless, Cigna sought to do precisely that. Before

Teneo’s activities became a focus in this litigation, its website advertised its “strategy and

communications advisory” capabilities relating to “litigation and enforcement actions” and

argued that “[a] well-run communications strategy can dramatically change the outcome

of high-stakes litigation and/or enforcement action matters.” JX 2976 (emphasis added).

Jones argued to Anthem that an “effective advocacy strategy” required “public relations

support.” JX 1763 at ’909. Cigna’s head of public relations recognized that Cigna was

trying to “influence what the judge thinks.” Sandberg Tr. 343.

338
See JX 2760; JX 2778; JX 2760.

209
 Cigna also invokes a form of preemptive self-defense, claiming that it unleashed

Teneo “to counter any investor perception that Cigna was the cause of the Merger being

blocked.” Dkt. 700 at 78. If Cigna wanted to be perceived as supporting the Merger, then

Cigna could have actively supported it. If Cigna wanted to criticize Anthem, Cigna could

have waited until it was no longer bound by the Merger Agreement. Cigna instead chose

to attack its merger partner and the Merger in secret.

In any event, Cigna did not in fact seek to “counter . . . investor perception.” Cigna

sought to shape investor perception and, if possible, influence the DOJ and the courts by

attacking Anthem and the Merger.339

Cigna’s covert communications campaign breached the Reasonable Best Efforts

Covenant. Attacking the Merger was the exact opposite of “us[ing] its reasonable best

efforts to take, or cause to be taken, all actions, to do, or cause to be done, all things

reasonably necessary to satisfy the conditions to Closing set forth herein and to

consummate the Merger[].” MA § 5.3(a).

c. Cigna’s Covert Communications Campaign Did Not Contribute
Materially To The Failure Of The No Injunction Condition.

Although Anthem proved that Cigna’s covert communications campaign breached

the Reasonable Best Efforts Covenant, Anthem did not prove that the breach contributed

materially to the failure of the No Injunction Condition. There is no evidence that the covert

339
See, e.g., JX 1522 at ’065; Cohen Tr. 2384–86, 2402.

210
communications campaign actually affected the DOJ, the District Court, or the DC Circuit

Court.

The strongest evidence in the record indicates that the District Court was not

influenced by Cigna’s communication strategy. During a status conference on August 12,

2016, the District Court engaged with counsel about whether Anthem and Cigna would

extend the termination date of April 30, 2017. Cigna’s counsel claimed that Cigna was

committed to the Merger, but that the termination date was nevertheless “a real deadline.”

JX 2414 at 55. Anthem’s counsel started to explain the implications of the termination date

and referenced press accounts about the parties’ disputes, but Judge Jackson interrupted

him, stating, “I have enough materials on the docket, I’m not going to make any decisions

based on what I read in the press. I think that would be completely inappropriate.” Id. at

56–57. At trial in this litigation, Anthem’s antitrust counsel would not say that the court

was influenced by the press. Curran Tr. 1496 (“Q: But you believe that Judge Jackson was

influenced by the press; is that right? A. I think that’s—it’s hard for me to know that.”).

One of Anthem’s antitrust experts similarly testified that the DOJ would be not influenced

by press accounts. Baker Dep. 57–58.

Ultimately, there is no reliable way to assess how much of an impact Cigna’s covert

communication campaign had. Anthem bore the burden of proving that Cigna’s breach

materially contributed to the failure of the No Injunction Condition. Anthem failed to meet

that burden. Anthem thus failed to prove that Cigna’s covert communications campaign

had a significant effect on the DOJ or the courts. Instead, Cigna’s covert communications

211
campaign provides powerful evidence of Cigna’s intent to oppose the Merger and

undercuts the credibility of Cigna’s positions.

2. Cigna’s Withdrawal From Integration Planning

Anthem proved that Cigna breached the Reasonable Best Efforts Covenant by

withdrawing from integration planning. Anthem also proved that Cigna’s withdrawal from

integration planning contributed materially to certain rulings in the Antitrust Decisions.

But Anthem failed to prove its two key theories: first, that Cigna’s withdrawal prevented

Anthem from advancing an efficiencies defense based on NewCo offering hybrid products,

and second, that Cigna’s withdrawal prevented Anthem from relying on additional medical

cost savings driven by Cigna’s medical utilization programs.

a. Cigna’s Contractual Obligations Regarding Integration
Planning

Under the Reasonable Best Efforts Covenant, Cigna was contractually obligated to

support the Merger by engaging in integration planning. The Reasonable Best Efforts

Covenant required that Cigna “use its reasonable best efforts” to satisfy the conditions to

closing and consummate the Merger. MA § 5.3(a). One condition to closing was the receipt

of government approvals, including antitrust approvals. See MA § 6.1(b) (the

“Governmental Approval Condition”).

Integration planning was necessary to make the case for the Merger to government

regulators, and Cigna understood that regulatory approval and integration planning were

212
deeply intertwined and interdependent.340 From the outset, Anthem and Cigna planned to

argue to the DOJ and, if necessary, litigate based on the theory that the Merger would

generate substantial efficiencies.341

Because of the connection between integration planning and regulatory approval, it

is possible to argue that the Regulatory Efforts Covenant obligated Cigna to engage in

integration planning. That provision, however, focused narrowly on actions necessary “to

avoid” any legal impediments that a Governmental Entity could raise. MA § 5.3(a).

Reinforcing this narrow purpose, the provision listed categories of actions that the parties

were obligated to take, but only if they were “requested by or on behalf of any

Governmental Entity” or “necessary and appropriate” for achieving three objectives:

(I) obtain[ing] all Necessary Consents;

(II) resolv[ing] any objections that may be asserted by or on behalf of any
Governmental Entity with respect to the mergers and the other
transactions contemplated hereby; and

(III) prevent[ing] the entry of, and hav[ing] vacated, lifted, reversed or
overturned, any order that would prevent, prohibit, restrict or delay
the consummation of the Mergers and the other transactions
contemplated hereby.

MA § 5.3(b) (formatting added).

Participation in integration planning was at least one step removed from the subjects

addressed by the Regulatory Efforts Covenant. The integration planning process provided

the informational foundation necessary for the parties to evaluate what actions needed to

340
See, e.g., Harris Tr. 3252; JX 1522 at 3, 7. See generally Part II.G, supra.
341
See, e.g., JX 522 at ’806–07. See generally Part II.G, supra.

213
be taken in response to the legal impediments that a Governmental Entity could raise. It

was essential preparatory work, but it was not itself a response to an actual or potential

legal impediment. The obligation to participate in integration planning therefore did not

arise under the Regulatory Efforts Covenant, but rather under the Reasonable Best Efforts

Covenant.

b. Cigna Breached The Reasonable Best Efforts Covenant By
Withdrawing From Integration Planning.

Anthem proved that Cigna withdrew from integration planning. By withdrawing,

Cigna did not “take all reasonable steps to solve problems and consummate the

transaction.” See Williams, 159 A.3d at 272. Cigna sought to create problems that would

give it leverage against Anthem.

In February 2016, Cigna “de-scoped” its integration planning efforts. See Part

II.G.9, supra. The dominos that led to that decision started falling in December 2015, when

Swedish tried to schedule the interviews of Cigna executives that would kick off the L2/L3

selection process. Cordani and the Cigna ELT reacted angrily and defensively. Anthem

viewed leadership selection as necessary for a successful integration (as would the District

Court), and Anthem believed that the integration process already was running 30–40%

behind schedule. Swedish’s attempts to get the process back on track produced the initial

dispute letters between Swedish and Cordani. See Part II.G.13, supra. Those exchanges

in turn led to the fateful meeting on January 11, 2016, when Swedish reduced Cordani’s

responsibilities as President and COO and informed him that Anthem would develop

214
alternative CEO candidates. See Part II.G.4, supra. Cordani and the Cigna ELT viewed this

as a hostile act, and they embarked on Project Alpha in response. See Part II.G.56, supra.

The initial goals of Project Alpha were to (i) limit Swedish’s authority over

integration planning and (ii) restore Cordani’s role and path to CEO. See id. The Cigna

ELT viewed the two as linked because the scope of integration planning included selecting

NewCo’s ELT and determining NewCo’s organizational structure. The Cigna ELT did not

want Swedish making “critical high-level decisions for NewCo (such as overall business

strategy and leadership structure).” JX 1075 at ’617. To stop this from happening, they

wanted to “[r]efocus integration planning on Day 1 priorities.” Id. at ’619.

Project Alpha initially targeted the February 2016 meeting of the designees to the

NewCo Board. See Part II.G.67, supra. When that meeting failed to produce the

commitments that the Cigna ELT wanted, they decided to escalate. See Part II.G.8, supra.

During a meeting on February 23 and 24, 2016, the Cigna Board authorized the Cigna ELT

to “de-scope the Corporation’s integration planning efforts.” JX 1350 at ’843–844.

Ostensibly that de-scoping was a response to “the pace and progress of regulatory efforts.”

Id. at 844. The real reason was to create near-term leverage against Anthem.

On the day after the Cigna Board meeting, Hocevar sent an email to all of the Cigna

integration team leaders telling them to prioritize Day 1 planning and not engage in detailed

planning for later periods. JX 1367. He stressed,

 “Day 1 activities are the key priority on integration planning now . . . . We are a
long way off from locking down Day 1 requirements.” Id. at ’253.

 “We have enough information shared at this point and truly need insights at this
point rather than more information.” Id.

215
 “We know at a high level that there is a line of sight to the $2B of shareholder
synergies and while we need to validate high level thinking on the synergies, we do
not need to lock down the details of any lever at this point.” Id. at ’252.

 “The details of ‘how we make money’ or ‘our secret sauce’ should continue to be
held closely to the vest at all times as it is truly the competitive advantage we have.”
Id.

The Cigna integration team followed these instructions.342

At the monthly meeting of the Steering Committee on March 11, 2016, Anthem

tried to get the integration plaining process back on track, but Cigna stood firm. Anthem

and Cigna spent the next six weeks debating what areas Cigna would support beyond Day 1

activities. The District Court found that “Cigna’s disengagement was so complete that

Anthem established an independent team to proceed with integration planning on its

342
See, e.g., JX 1338 at ’028 (“The primary focus of our activities right now should
be on Day 1 and Day 2-180[.]”); JX 1344 at ’452 (emphasizing work on “Day 1 activities”
was “where we should plan to focus more of our time as a project team”); JX 1348 at ’049
(Hocevar reporting that he told Matheis that Cigna’s priorities were “to lock the book and
growth agenda down, day 1 planning and put the stakes in high level assumptions”);
JX 1382 at ’278 (“We had a Cigna integration team call this morning and we were
instructed that our efforts are to be focused on Day One objectives . . . . This current focus
on value levers and corresponding information requests goes well beyond Day One
objectives.”); JX 1387 (Cigna team lead reporting that “our plan for the immediate future
should be focusing on Day 1 activities”); see also JX 1398 (Anthem noting Cigna’s
reorientation to Day 1 activities); JX 1432 (same). See generally Part II.G.9, supra.

216
own.”343 That was a reference to Anthem’s “Phase 2B” team, an internal group that

continued planning in areas where Cigna refused to help.344

As Cordani testified, Anthem “wanted to expend more energy on detailed expense

synergy analysis, planning, and detailed operational planning.” JX 1842 at 205. That was

the detailed planning that was necessary to support the regulatory approval process. Cigna

only was willing to take that “body of work . . . to a certain threshold level, but then, stop.”

Id. As a result of Cigna’s withdrawal, by May 2016, integration planning was running

approximately a quarter behind schedule. JX 1830 at ’076.

The integration planning that Anthem wanted to conduct was necessary to support

the regulatory approval process and consummate the Merger. By withdrawing from

integration planning, Cigna breached the Reasonable Best Efforts Covenant.

c. The Effect Of Cigna’s Withdrawal From Integration Planning
On The Efficiencies Defense

To prove that Cigna’s withdrawal from integration planning contributed materially

to the failure of the No Injunction Condition, Anthem sought to prove that Cigna’s

withdrawal impaired the efficiencies defense by (i) depriving Anthem of its ability to

343
Dist. Ct. Op., 236 F. Supp. 3d at 246. The District Court, like this decision, found
that Cigna withdrew from the integration planning process. Based on the record in the
Antitrust Litigation, the District Court found that “Cigna began to disengage from the
process in April of 2016, and Cigna ceased participation completely in July when the [DOJ]
sued to stop the merger.” Id. at 235 (internal citation omitted). The extensive record
developed in this case shows that Cigna’s withdrawal began even earlier, in February 2016.
344
See Zielinski Tr. 41; Drozdowski Tr. 947–48; Matheis Dep. 315. See generally
Part II.H.2, supra.

217
defend the Merger based on NewCo’s ability to introduce hybrid products and

(ii) preventing Anthem from obtaining the information necessary to show that NewCo

would generate efficiencies by improving medical utilization. The evidence on both issues

is mixed. Ultimately, the evidence indicates that Anthem made tactical decisions on both

issues that were independent of Cigna’s withdrawal from the integration planning process.

i. New Products

The Antitrust Decisions primarily analyzed the medical cost savings that the Merger

would generate based on the assumption that NewCo would offer Cigna’s existing products

at Anthem’s discounted rates. Both the District Court and the Majority found it implausible

that Cigna’s providers would keep doing the same work for less money, or that Anthem’s

providers would do more work for the same money. An obvious solution would have been

for Anthem to show that NewCo would offer new products that blended aspects of Cigna’s

existing offerings (i.e., some value-based care, but less than the full Cigna product) at a

cheaper price than Cigna could achieve on its own (i.e., better discounts than Cigna

standing alone, even if not as low as what Anthem could obtain for its traditional offerings).

Cigna correctly points out that Anthem did not attempt to defend the Merger based on

blended products. Dkt. 700 at 66. The question is, “Why?” If Cigna’s withdrawal from

integration planning interfered with Anthem’s ability to defend the Merger based on

blended products, then Cigna’s breach caused Anthem to advance the efficiencies defense

in the form it did.

Viewed at a high level, the evidence could support a finding that Cigna’s withdrawal

from integration planning prevented Anthem from relying on new products to defend the

218
Merger. At trial in this action, Anthem witnesses testified that the parties planned to present

an efficiencies defense based on blended products, but that Cigna never provided the

information necessary to advance that defense.345 The commercial integration team

developed two lines of blended products—Essentials and Signature—each of which

provided a different mix of features from Anthem and Cigna’s offerings.346 But NewCo’s

Day 1 go-to-market plan did not contemplate any new products; only go-to-market plans

over longer time horizons would incorporate new products.347 When Cigna limited

integration planning to Day 1 activities, Cigna shut down the planning for new products.

Although this account is plausible, the record demonstrates that Anthem never

viewed the blended products as sources of efficiencies that could be used to defend the

Merger. Developing and introducing those products would take time. Before NewCo could

sell them, it needed an IT system that could both support the new product features and

comply with the Blues Rules. Cigna’s system supported the features, but did not comply

with the Blues Rules. Anthem’s platform complied with the Blues Rules, but did not

support the features. Anthem determined that using its system was the best option, but the

upgrades would be rolled out over time, with the first features not in place until the second

345
See Zielinski Tr. 37, 128; see also Rosen Tr. 836 (“I was clearly in agreement
that we should emphasize the way in which Cigna’s strength complemented Anthem’s and
would lead to a better combined product. That was always our argument. We never got the
ammunition to make that argument effectively.”).
346
See DeRosa Tr. 1697–98; JX 1173 at ’158; JX 1241 at 47; JX 1345 at 2. See
generally Part II.I.3, supra.
347
See Hocevar Tr. 2335–36; Manders Tr. 2573–74; DeRosa Dep. 123–36.

219
year after closing. Because of this timeline, Anthem viewed the new products as a source

of additional value that NewCo could create over a medium to long-term horizon, not as a

source of efficiencies. See generally Part II.I.3, supra.

The record also demonstrates that Anthem’s lawyers made the decision to ground

the efficiencies defense on “best-of-breed” discounts when preparing the white papers in

April and May 2016. After consulting with McKinsey and Anthem’s economics expert,

Anthem’s lawyers believed that this was the strongest and most straightforward way to

present the efficiencies defense. The record does not contain evidence of Anthem’s lawyers

meaningfully exploring a way to ground the efficiencies defense on new and blended

products. See Part II.I.2, supra.

Anthem’s approach was logical. The underlying economic theory was easy to

comprehend: NewCo would get the best discounts that each company could obtain on its

own. The basis for calculating the medical cost savings was straightforward. The resulting

medical cost savings was large. And the approach did not emphasize Cigna’s status as an

innovative company, meaning that it did not play into the DOJ’s theory that Cigna was a

uniquely innovative maverick.

Anthem’s actions during trial in the Antitrust Litigation demonstrated that it did not

give meaningful consideration to a defense based on new products. As the District Court

noted, it was not until the last days of trial that Anthem made noises about a hybrid product.

See JX 2660 at 4911–12.

220
 Anthem failed to prove that Cigna’s withdrawal from integration planning affected

Anthem’s ability to present an efficiencies defense based on new products. Anthem made

a tactical choice to present an efficiencies defense based on best-of-breed discounts.

ii. Utilization

The Antitrust Decisions found that Cigna had developed innovative programs that

reduced the total cost of care by improving the utilization of medical services. Both the

District Court and the Majority criticized Anthem’s efficiencies defense for failing to

account for utilization. In this action, Anthem sought to prove that Cigna’s withdrawal

from integration planning deprived Anthem of data on utilization, which prevented Anthem

from defending the Merger based on efficiencies that accounted for utilization.

Whether Cigna’s withdrawal from integration planning impaired Anthem’s

efficiencies defense presents a close question. Cigna provided Anthem with some

information, but Cigna also withheld information. Ultimately, as with new products,

Anthem’s lawyers made a tactical decision to argue that Anthem had a better total cost of

care, including better utilization, in an effort to defeat the DOJ’s argument that Cigna was

uniquely innovative.

The record supports a finding that Cigna did not provide Anthem with meaningful

information on how utilization affected its cost of care. At trial in this action, Anthem

witnesses testified that Cigna failed to provide sufficient information about its utilization

programs.348 Colin Drozdowski was the Anthem executive who led an integration team

348
See Zielinski Tr. 90–91; Paul Tr. 626–28, 736–39; Drozdowski Tr. 924–47.

221
responsible for evaluating the parties’ provider networks, including their medical

management programs and value-based care offerings. Drozdowski testified that Cigna

refused to provide detailed information about value-based care.349 Cigna resisted providing

the information when integration began in October 2015, and by January and February

2016, the flow of information had stopped. Drozdowski Tr. 936, 938, 947. Drozdowski

correctly inferred that Cigna was attempting to defer sharing information until after closing

“and trust/hope that David Cordani as President and Chief Operating Officer will have

more direct control and influence and thus will prevent the ‘Cigna disruption’ that they

anticipate.” JX 3105 at ’899. The integration teams were able to make calculations based

on high-level assumptions, but they could not conduct more detailed analyses.350 Cigna

formalized its withdrawal from integration planning in February 2016, when the Cigna

349
See Drozdowski Tr. 924–47; JX 3105; JX 1211; JX 1212; JX 1214; JX 1256 at
’499.
350
See Drozdowski Tr. 937–38. At trial, Drozdowski was shown internal analyses
that Cigna and Bain prepared to evaluate how Cigna’s value-based care programs would
operate using Anthem rates. He explained that Anthem had wanted that type of analysis,
but that it was never provided. See id. at 940–46; JX 879.

There was tension between Drozdowski’s testimony in this action and his testimony
at trial in the Antitrust Litigation, where he described the working relationship between his
team and their counterparts at Cigna as follows: “It was good. We worked very well. They
were engaged. As I mentioned, we had 100 meetings.” JX 2660 at 1644. During the
Antitrust Litigation, Anthem sought convince the District Court that the integration
planning process provided credible support for its medical cost savings calculations, giving
Anthem an incentive to gloss over problems. Having failed to convince the District Court,
Anthem sought in this action to explain how Cigna contributed materially to that failure.
The two positions are not fatally inconsistent, but they suggest a willingness to shade the
truth depending on the goal.

222
ELT stopped work on everything other than Day 1 activities. As a result of this instruction,

work on value-capture and medical costs savings was delayed, and Cigna continued to

withhold information about the cost implications of its value-based programs.351

In response to this significant evidence, Cigna assembled what appears at first blush

to be a powerful response.352 Upon close review, much of that evidence was either not on

point or unpersuasive, and a critical aspect of it supports Anthem’s position.353

Cigna’s strongest evidence came from Shubham Singhal, a McKinsey executive

who led the integration team’s analysis of medical cost savings. After his direct

examination during trial in the Antitrust Litigation, the District Court asked, “Was there

information you sought from either side that you weren’t able to obtain?” JX 2660 at 1793.

Singhal responded, “No, Your Honor. I think we—we had all of the detailed information

that we needed.” Id. at 1793. He later testified during cross-examination that his team used

See JX 1548; JX 1617; JX 1626 at ’124; JX 1937; JX 3109; Drozdowski Tr.
351

1036–39, 1052–56, 1060–61, 1063–68. See generally Part II.G.9 & II.H.23, supra.
352
See Dkt. 700 at 67; Dkt. 711 at 7; see also CDX 4 (collecting testimony).
353
In one example, Cigna cites an email between an Anthem representation and his
Cigna counterpart from May 2016 in which they “confirmed that we are agreed to proceed
with the Med cost value creation across network, Med mgmt., claims editing, and Med
policy including the refinement of analysis.” JX 1937. Cigna claims that this email shows
that Cigna continued to work on the implications of utilization. Dkt. 700 at 67. What
actually happened is that Cigna withdrew from the integration planning process, and
Anthem and its consultant, McKinsey, continued the work. Cigna then sought to resume
participating in integration planning on certain subjects. See Part II.I.5, supra. The email
refers to Cigna’s efforts to resume participation. See JX 1937 at ’510; JX 4063; JX 2096.

223
the data that it received to calculate the savings achieved by both companies’ utilization

programs.354

A closer review of the record reveals that Singhal was testifying about the claims

data that Anthem and Cigna submitted to the clean room for McKinsey to analyze. In a

declaration in the Antitrust Litigation, Singhal explained that

[t]o determine the amount of annual medical cost savings available to the
Combined Company, McKinsey’s Clean Team collected detailed claims,
enrollment, and provider data from both Anthem and Cigna for claims with
service dates of January 1, 2014 through September 30, 2015, and paid by
September 30, 2015. This data consisted of 2.4 billion claim line items which
captured all the claims payments between Anthem, Cigna, and their
contracted and out-of-network providers; 250 million enrollment records
defining product, segment, enrollment period, and other membership
information; and 2 million provider records, including all Anthem and Cigna
participating and nonparticipating providers for the period.

JX 2547 ¶ 1. McKinsey thus received twenty-one months’ worth of claims data. For its

analyses, McKinsey primarily used data for the eight months from January through August

2015. Id. ¶ 5.

354
JX 2660 at 1820–21; see JX 2546, ¶¶ 51–52, 78–87. On appeal, Anthem’s lead
counsel represented to the DC Circuit Court that McKinsey’s analysis of medical cost
savings took utilization into account. Relying on Singhal’s testimony, Anthem’s counsel
stated, “All the data was in there, and McKinsey analyzed the data and confirmed the two
point whatever billion dollar medical cost savings that were achievable.” JX 2904 at 81.
During post-trial argument in this case, Cigna claimed that Anthem’s counsel had invented
a missing data story for trial, because the same lawyer testified that Israel, Anthem’s
economist in the Antitrust Litigation, did not have data on utilization. See Curran Tr. 1619.
Cigna’s argument was misleading. The Anthem lawyer was talking about two different
analyses. Consistent with the Anthem lawyer’s testimony, Israel testified in the Antirust
Litigation that he did not have or use any data on utilization. See JX 2660 at 2087–89;
Curran Tr. 1581–82.

224
 The admittedly massive amount of claims data that McKinsey received was

basically a data dump:

The total database exceeded 7 terabytes of data for claims only. The Clean
Team members wrote hundreds of queries and scripts to summarize the
information. These queries and scripts were written in SQL and were
programs that summarized the data so that it could be further organized and
analyzed. These scripts queried the different databases containing claims,
enrollment, and provider information, and merged information together,
summarizing the billions of rows of information until the Clean Team
members got to a small enough output, usually a few hundred thousand
output lines. These outputs were put into Microsoft Excel Worksheets, from
which the team performed additional analysis to get to the efficiency
amounts. . . . Many of these queries took several days to process. In addition,
prior to and in writing these queries and scripts, the Clean Team spent
countless hours with Anthem and Cigna SMEs understanding each
company’s precise data definitions, and the criteria needed to get an “apples-
to-apples” comparison of Anthem and Cigna data.

JX 2547 ¶ 5. At trial, Paul explained the difference between a data dump and what Anthem

wanted:

It’s the equivalent of saying -- if somebody wanted a book on how to repair
a bike and they went to the library, the librarian saying it’s in here
somewhere, go find it. And what we wanted them to do was to pull up the
book and take us to the page and show us how to repair a bike. So it was
inadequate.

Paul Tr. 630.

McKinsey did not receive any Cigna analyses of how its utilization programs

reduced the cost of care. McKinsey also did not receive longitudinal data showing how

Cigna’s value-based programs improved patient health and reduced cost over time, which

was Cigna’s core value proposition. See DeRosa Tr. 1694–96. Cordani testified at trial in

this action that Cigna typically used the rate of growth in medical expenses as its principal

benchmark for cost trends. Cordani Tr. 1749. During trial in the Antitrust Litigation,

225
Cordani explained that a brief snapshot of claims data fails to take into account the long-

term benefits of improved utilization, “both utilization in terms of the number of services

[and] in the mix of the services, as well as the venues in which the services are consumed.”

JX 2660 at 442. Cigna’s counsel emphasized the same points when cross-examining Israel

in an effort to undermine his efficiency estimates. See JX 2660 at 2077–90. Cigna therefore

cannot persuasively rely on Singhal’s testimony to claim that it provided Anthem with

information about utilization. Analyzing claims data could provide a basic level of insight,

but not the more nuanced and detailed analysis that Cigna could have conducted.

Cigna also cites the testimony of Israel, Anthem’s economics expert, who performed

his own analysis of medical cost savings.355 Israel testified that his team calculated potential

medical cost savings using the claims data that was produced to the DOJ. JX 2660 at 1844.

The District Court asked about any differences between the claims data that Israel used and

what McKinsey possessed. Id. Israel responded that the claims data was “fairly complete”

and that he had no need to rely on McKinsey’s data. Id. When Cigna’s counsel cross-

examined Israel and sought to impeach his analysis by establishing that he did not have

access to data on utilization, Israel responded that the purpose of his analysis was “to

calculate the effect of reduced discounts.” JX 2660 at 2088. He testified that he did not

conduct “an analysis to compare the success of [the companies’] programs or to claim any

additional benefit from applying those the merged firm.” Id. at 2087. When Israel testified

that he had sufficient data for his analysis, he was speaking about the analysis he conducted,

355
See CDX 4; Dkt. 700 at 67; Dkt. 711 at 7.

226
not the analysis that Cigna now tries to imply that he conducted.356 Cigna therefore cannot

persuasively rely on Israel’s testimony to claim that it provided Anthem with information

about utilization. Israel only had claims data.

In this litigation, Cigna has argued that claims data is sufficient to calculate the

effect of utilization. See Dkt. 711 at 8. Cigna executive Matthew Manders testified that the

standard measure of utilization is expenditures per member, per month (“PMPM”), and

that claims data is sufficient to perform that calculation.357 Manders made the same point

that Singhal made in the Antitrust Litigation, namely that claims data is sufficient to

compare two different programs (or plans or service categories) based on total spending

PMPM. If the populations are comparable and the analysis was normalized for different

discounts, then any remaining variation in spending should be due to utilization. See

JX 2546 ¶ 82. The resulting comparison reveals which program saved more healthcare

expense during the relevant period. The resulting comparison does not show whether

additional benefits could be achieved by combining aspects of the two programs, nor does

it show how spending would change over a longer time horizon.358

356
See JX 2660 at 2087; Curran Tr. 1619.
357
Manders Tr. 2560–62. Manders also testified that Cigna used a different measure
of risk-adjusted expenses, which requires information about health risks in the underlying
population. Id. at 2561. He did not testify that Anthem received that data. Id. at 2652.
358
Cigna also cites Hocevar’s trial testimony about providing detailed data to
Anthem, but the cited testimony does not support this assertion. See Dkt. 711 at 8 (citing
Hocevar Tr. 2285–87). Hocevar only testified that Cigna provided “utilization claim data,”
then testified could not recall what was included in the data. See Hocevar Tr. 2286–87.

227
 Cigna thus provided claims data that was sufficient to enable Anthem to compare

spending on a PMPM basis over a short time horizon. Cigna did not provide Anthem with

its own analyses of utilization or with longer-term data. That finding is supported by direct

testimony by Anthem witnesses.359

Cigna separately argues that even if it did not otherwise provide Anthem with

information on utilization, Cadwalader provided the necessary information in May 2016

when commenting on the medical cost synergies white paper. See Dkt. 700 at 33–34. On

May 4, 2016, Cadwalader sent a lengthy email to White & Case that was highly critical of

the draft white paper and argued that Anthem should use data on Cigna’s risk-adjusted cost

of care (PMPM) to show that the Merger could achieve additional efficiencies by applying

Cigna’s strategies. See JX 1789. Anthem asked for the data to make this argument. In

response, Cadwalader emailed to White & Case and Anthem’s economist approximately a

dozen PowerPoint presentations from 2012, 2013, and 2014. See JX 4070. The

presentations were high-level materials that Cigna used when pitching potential customers

to argue that Cigna could lower their cost of care despite not having the best network

discounts.360 In a subset of those presentations, Cigna compared its claims data from with

third-party claims data to show how its total cost of care (PMPM) compared with third-

party claims data in the New York, Atlanta, Houston, and Southern California markets. See

JX 4070.

359
See Paul Tr. 625–27; Rosen Tr. 909–10; Curran Tr. 1618–20.
360
See Paul Tr. 628–29, 674, 737–39; see also Rosen Tr. 913–14.

228
 Using these materials, Anthem’s economists suggested the following language for

the white paper:

[I]n 2015 the allowed charges for Cigna members were $252 PMPM, while
Anthem’s were $295 PMPM, or l7 percent more. Cigna estimates that its
medical cost trend is between 2 percent and 6.75 percent less than some of
its competitors on a cumulative basis. Cigna’s estimates indicate that
between 2008 and 2015 Anthem’s medical costs increased by 7.1 percent,
while Cigna’s grew by 5.8 percent, or 1.3 percentage points less. If this
reduction in medical cost growth could be applied to Anthem’s in footprint
medical costs, total medical costs could be reduced by $704 million.

JX 4096 at ’984 (footnotes omitted).

Anthem’s lawyers, however, could not verify the calculation, which conflicted with

the analyses that Anthem’s experts had developed based on claims data.361 Anthem’s

lawyers viewed the information that Cigna had provided as too generalized to be persuasive

to the DOJ.362 Cadwalader failed to provide additional detail in response to Anthem’s

requests.363 Anthem’s lawyers therefore dropped the language from the white paper.364

Cigna argues that this incident shows that it fulfilled its obligation to provide

information on utilization to Anthem, but the back-and-forth suggests the opposite. If

Cigna already had provided sufficient information about its utilization programs, then

361
See JX 4098; JX 4184; Paul Tr. 674, 737–38; Rosen Tr. 840–50, 858–59, 909–
10, 915–16.
362
See Paul Tr. 737–38; Rosen Tr. 859, 913–15. Rosen explained that some of the
cost-trend information in the decks relied on numbers from Cigna analyst calls, which was
not sufficient for a submission to the DOJ. Rosen Tr. 913–14.
363
JX 3118; Paul Tr. 39–40.
364
JX 4098; see JX 1953; Rosen Tr. 855.

229
Cadwalader would not have needed to email a handful of PowerPoint presentations to

White & Case and suggest that Anthem use them to revise a white paper. The exchange

also illuminates a particular type of information that Cigna failed to provide: how its

programs reduced health care spending over time by limiting the rate of growth. That was

information that McKinsey could not derive from a snapshot of claims data.365

Although the record shows that Cigna did not provide Anthem with important data

on utilization, Cigna proved that Anthem made a tactical choice not to pursue an

efficiencies defense based on NewCo’s ability to use Cigna’s programs to limit the total

cost of care. As the DOJ’s investigation unfolded, it became clear that the DOJ sought to

portray Cigna as a uniquely innovative maverick. To respond to this argument, Anthem

sought to prove that Anthem, not Cigna, was the more innovative company and had

developed better programs to control the total cost of care. When drafting the white papers,

Anthem prioritized its own medical management programs and utilization rates. Anthem

365
Cigna also relies on an email that Zielinski sent to Jones in early May 2016 in
which he stated that Anthem was not seeking additional information for the efficiencies
white papers but only seeking to share data which already existed in the data room. See
Dkt. 700 at 67 (citing JX 1815). This email addressed the actual analyses in the white paper,
which were based on claims data, not other analyses that Anthem might have conducted
with additional data. See Paul Tr. 694–95, 736. To similar effect, Matheis testified during
a deposition taken by the DOJ in July 2016 that he believed Anthem had all the data that it
needed from Cigna to analyze efficiencies. See JX 2593 at 178–79. The District Court cited
this testimony, writing that “[a]ccording to Matheis, the fact that Cigna disengaged from
the integration planning effort in the spring of 2016 should not undermine confidence in
the projected medical cost savings since they were based on actual claims data.” Dist. Ct.
Op., 236 F. Supp. 3d. at 233. Like Israel, Matheis was describing the analyses that Anthem
prepared using claims data, not other analyses that Anthem might have conducted with
additional data. Drozdowski testified to the same effect in this litigation. See Drozdowski
Tr. 991–94.

230
did not want to emphasize Cigna’s programs on the provider side because it risked playing

into the DOJ’s argument that Cigna was uniquely innovative.366 During trial in the Antitrust

Litigation, Anthem continued this strategy.367

Anthem failed to prove that Cigna’s withdrawal from integration planning affected

Anthem’s ability to present an efficiencies defense that relied on NewCo’s ability to use

Cigna’s programs to control the total cost of care. Anthem made a tactical choice to de-

emphasize Cigna’s programs on utilization in response to the DOJ’s claim that Cigna was

uniquely innovative.

d. Cigna’s Disengagement From Integration Planning Contributed
Materially To The Failure Of The No Injunction Condition.

Anthem proved that Cigna’s withdrawal from integration planning contributed

materially to the failure of the No Injunction Condition by leading to at least two findings

in the Antitrust Decisions. But as discussed below, Cigna’s withdrawal did not contribute

materially to the principal bases for the Antitrust Decisions, which were that the medical

cost savings were not merger-specific and that Anthem had not shown a viable means of

achieving them. See Part III.D, infra.

Anthem’s principal defense in the Antitrust Litigation was that “any anticompetitive

effects will be outweighed by the efficiencies [that the transaction] will generate.” Dist. Ct.

366
See JX 1886; Curran Tr. 1389; Rule Tr. 3076. See generally Part II.I.2 & II.J.3,
supra.
367
See, e.g., JX 2660 at 1650, 1820, 1978; see also Rule Tr. 3111–12 (describing
testimony of Ken Goulet). See generally Part II.K.6, supra.

231
Op., 236 F. Supp. 3d. at 181. As “the centerpiece of its defense,” Anthem asserted that

NewCo’s national account customers “will save a combined total of owner $2 billion in

medical expenditures because Cigna members will be able to access the more favorable

discounts that Anthem has negotiated with its provider network” and vice versa. Id.; see

id. at 231.

For this defense to prevail, Anthem needed to prove that the medical cost savings

were both merger-specific and verifiable. Dist. Ct. Op., 236 F. Supp. 3d. at 181; see id. at

236–37. The District Court identified multiple reasons why the medical cost savings were

neither merger-specific nor verifiable.

Anthem proved that Cigna’s withdrawal from integration planning led to one of the

District Court’s reasons for finding that the medical cost savings were not verifiable. After

discussing the hostility between the two companies, the District Court described the

integration planning process as “stalled and incomplete” and noted that “[m]uch of the

work has not proceeded past the initial stage of identifying goals and targets to actually

specifying the steps to be taken jointly to implement them.” Id. at 183. The District Court

also observed that “the [integration] effort has not yet proceeded from general ‘high level’

planning to the essential progress of detailing actual strategies and ‘budget level’

initiatives,” that “Cigna’s input is required before the real work can be done,” and that “the

two parties have not been working together for some time.” Id. The District Court later

mentioned “the highly unfinished nature of the planning to capture the G&A efficiencies

in particular” and noted that “the final quantification of the synergies [and] the

development of detailed implementation plans, and the establishing of an organizational

232
structure remain in abeyance.” Id. at 246. Cigna’s withdrawal from the integration planning

process led directly to these findings.

When discussing why the parties were not likely to be able to generate the claimed

efficiencies, the District Court also cited the disputes over the leadership selection process,

which was an aspect of integration planning. See id. at 243. The District Court found that

“having the leadership in place is fundamental to undertaking an integration, but the two

firms here have not yet agreed on the identity of a single member of the new company’s

management structure” beyond Swedish and Cordani. Id. Cigna had refused to cooperate

with the leadership selection process and had restricted the integration planning process as

a means of blocking leadership selection. See Part II.G, supra. Cigna’s actions led directly

to these findings.

In affirming the District Court’s finding that the savings that Anthem claimed were

not sufficiently verifiable, the Majority quoted the District Court’s observation that “‘the

Department of Justice is not the only party raising questions about Anthem’s

characterization of the outcome of the merger’ because Cigna itself had ‘provided

compelling testimony undermining the projections of future savings.’” Cir. Ct. Op., 855

F.3d at 360 (quoting Dist. Ct. Op., 236 F. Supp. 3d. at 182). Cigna’s actions led directly to

the findings that the Majority adopted.

Cigna points out that in the first footnote in its decision, the Majority de-emphasized

the personal disputes between Anthem and Cigna executives, writing “[t]hat their

relationship may have deteriorated has little to do with the anticompetitive effects of the

proposed merger.” Id. at 348 n.1. As to the DOJ’s prima facie case, that was true. The

233
disputes did not affect the market concentration calculations or the fact that the Merger

would combine two of the four largest health care insurers. But the disputes had

implications for Anthem’s ability to support its efficiencies defense, and it led to Cordani

and other Cigna witnesses giving the “compelling testimony undermining the projections

of future savings” on which the District Court and the DC Circuit Court relied. Id. at 360

(quoting Dist. Ct. Op., 236 F. Supp. 3d at 182).

In light of these aspects of the Antitrust Decisions, Cigna’s withdrawal from

integration planning contributed materially to the issuance of the Antitrust Decisions and

led directly to certain findings in those decisions. Cigna’s withdrawal from integration

planning did not, however, cause Anthem to decide to ground its efficiencies defense on

best-of-breed discounts, nor did it cause Anthem to de-emphasize NewCo’s ability to use

Cigna’s medical management programs to reduce the total cost of care. As discussed

below, Anthem’s tactical decisions on those points have critical implications for the

Cigna’s ability to prove that the No Injunction Condition would have failed even if Cigna

had fulfilled its contractual obligations under the Efforts Covenants. See Part III.D, infra.

3. Anthem’s Claim Against Cigna For Obstructing A Divestiture

Anthem proved that Cigna breached the Regulatory Efforts Covenant and the

Regulatory Cooperation Covenant by opposing a divestiture. Anthem also proved that

Cigna’s opposition contributed materially to the failure of the No Injunction Condition by

making it less likely that the DOJ would approve the Merger and more likely that the DOJ

would file the Antitrust Litigation. Cigna’s opposition to divestitures also prevented

Anthem from pursuing a divestiture on its own and “litigating the fix.” The absence of a

234
divestiture addressing the DOJ’s claims regarding competition in local markets made it less

likely that the District Court would approve the Merger and that the DC Circuit Court

would take a different view on appeal.

a. Cigna’s Contractual Obligations To Support A Divestiture

Cigna was contractually obligated under the Efforts Covenants to support a

divestiture. Although both the Reasonable Best Efforts Covenant and the Regulatory

Efforts Covenant could provide the source of that obligation, the Regulatory Efforts

Covenant speaks to it directly.

Under the Reasonable Best Efforts Covenant, Cigna was obligated to “use its

reasonable best efforts to take, or cause to be taken, all actions, to do, or cause to be done,

all things reasonably necessary to satisfy the conditions to Closing set forth herein and to

consummate the Merger[].” MA § 5.3(a). One of the conditions to closing was the

Governmental Approval Condition, which required that the parties obtain regulatory

approval. If a divestiture was reasonably necessary step to obtain regulatory approval, then

Cigna was obligated to use its reasonable best efforts to achieve a regulatory divestiture.

For purposes of seeking regulatory approval, the Regulatory Efforts Covenant

defined reasonable best efforts to include “taking any and all actions necessary to avoid

each and every impediment under the HSR Act . . . so as to enable the Closing to occur as

promptly as practicable . . . .” MA § 5.3(b). Cigna further was obligated to take any action

“necessary and appropriate” (i) to “obtain all Necessary Consents,” including antitrust

approval, (ii) to “resolve any objections that may be asserted by or on behalf of any

Governmental Entity with respect to the mergers and the other transactions contemplated

235
hereby,” and (iii) to “prevent the entry of . . . , any order that would prevent, prohibit,

restrict or delay the consummation of the Merger[].” Id. If the DOJ raised an objection to

the Merger and a divestiture was “necessary and appropriate” to resolve the objection, then

Cigna was obligated to pursue the divestiture. MA § 5.3.

The Regulatory Cooperation Covenant allocated responsibility for the regulatory

strategy to Anthem. See MA § 5.3(e). To comply with the Regulatory Cooperation

Covenant, Cigna was obligated to follow Anthem’s strategy. If Anthem believed that

making a divestiture was necessary and appropriate, then Cigna was obligated to pursue

that strategy. Cigna could not refuse simply because it disagreed with Anthem’s strategy

or thought the strategy was unlikely to succeed.

Cigna’s obligation to support a divestiture thus could arise under either the

Reasonable Best Efforts Covenant or the Regulatory Efforts Covenant, but the latter is the

better fit. Anthem’s efforts to pursue a divestiture responded to specific areas of concern

that the Staff identified on June 10, 2016. See Part II.J.12, supra. One of the Staff’s

concerns was the local market for commercial health insurance sold to large group

employers in thirty-five areas in the Anthem Blue States. Another concern was the local

market for purchasing provider services in the same thirty-five areas. Anthem sought to

address those concerns through a divestiture. Cigna’s opposition to a divestiture therefore

is best analyzed under the Regulatory Efforts Covenant.

236
 b. Cigna Breached The Regulatory Efforts Covenant And The
Regulatory Cooperation Covenant By Opposing A Divestiture.

Anthem proved that Cigna opposed Anthem’s efforts to complete a divestiture.

Cigna’s opposition to a divestiture both breached the Regulatory Efforts Covenant and

constituted a reversal of Cigna’s position on whether divestitures were warranted.

From the outset of their discussions, Anthem and Cigna expected the DOJ to clear

the Merger, conditioned on NewCo divesting overlapping business in local markets within

the Anthem Blue States. When Cigna was evaluating a transaction with Anthem, the Cigna

ELT identified divestitures as one of the primary means of both complying with the Blues

Rules and obtaining antitrust approval.368 Before approving the Merger, the Cigna Board

understood that divestitures likely would be required:

 In June 2015, the Cigna ELT told the Cigna Board that if the DOJ had to confront
both an Anthem-Cigna deal and an Aetna-Humana deal, then “the most likely
scenario (~65%~75%) is that both are cleared subject to local divestitures consistent
with past DOJ precedent in the industry.” JX 209 (emphasis added). The analysis
stressed that “[i]n order to maximize the odds of clearance, it should be clear to the
DOJ that the parties would put up a fight in court,” noting that “DOJ has a mixed
record in litigation and the Front Office may be dissuaded from suing based on

368
See JX 78 at ’721 (Cigna analysis noting that “[l]ocal market depth may require
divestitures”); JX 79 (McCarthy and Gray discussing that “[r]egulatory divestitures would
be best from Cigna”); JX 78 at ’721 (Cigna evaluation of transaction with Anthem; “Local
market depth may require divestitures”); JX 99 at ’545 (Cigna ELT memorandum on deal
with Anthem noting that “Regulatory divestitures, if required, will tend to be [Cigna]
revenue/membership in the license states”); JX 531 (Cigna executive writing “any
divestitures more likely from our side”); Zielinski Tr. 63 (explaining that “even before we
signed the merger agreement, we talked about that given this transaction, it was very likely
that the government would request as to do divestitures as part of the remediation plan
[and] in order to address that, we would divest Cigna assets in our 14 Blue states”); Gray
Dep. 294 (agreeing that during 2014 and early 2015, Cigna contemplated divestitures as
part of transaction with Anthem); id. at 322 (agreeing that the divestitures “would include
Cigna or Cigna-associated accounts and clients”). See generally Part II.C & D, supra.

237
 concerns about arguments that are more likely to resonate in a court than with Staff.”
Id. ’484. The analysis also noted that “reasonable remedies can sometimes still be
achieved after a suit has commenced, even when national theories are asserted.” Id.
at ’485.

 Later in June 2015, the Cigna ELT told the Cigna Board that “[a]t a minimum,
divestitures in local geographies likely would be required for antitrust clearance . .
. , although litigation challenges . . . are a distinct possibility . . . .” JX 4000 at ’240.

 In August 2015, approximately one month after the Merger Agreement was signed,
Cigna’s regulatory counsel expressed similar views. Cigna’s counsel posited that
“[l]ocalized remedies are sufficient to address both potential customer and any
provider monopsony concerns, consistent with past DOJ precedent.” JX 567 at ’584.
Cigna’s counsel anticipated the possibility of agreeing to divestitures and litigating
the fix, noting that “[d]oing the deal despite divestitures indicates the deal is not
about creating market power, but rather about creating pro-competitive
efficiencies.” Id.; see also JX 1020 (Cigna timeline for regulatory approval from
January 2016, noting that “[r]emedies could include divestitures”).

After the Staff identified its areas of concern, Anthem moved quickly to develop a

divestiture proposal that focused on the thirty-five local markets that the DOJ had

identified. A divestiture could have addressed the DOJ’s concern about excessive

concentration in the sale of commercial health insurance in those markets and the concern

about monopsony in the purchase of healthcare services in those markets. A divestiture

also would have shown the DOJ that the parties were committed to the Merger. No one

regarded the DOJ’s concern about public exchanges as terribly serious, and the DOJ later

dropped that claim voluntarily. See Dist. Ct. Op., 236 F. Supp. 3d at 187 n.2. A divestiture

thus could have substantially narrowed the Antitrust Litigation to a dispute over national

market issues.

238
 By June 2016, however, the Cigna ELT had turned solidly against the Merger, and

they saw the failure to obtain regulatory approval as their ticket out. Rather than helping

with the divestiture plan, Cigna raised roadblocks:

 Anthem asked Cigna to help identify buyers. Cigna refused.

 After Cordani put a stop to divestiture planning in May 2016, Cigna made no effort
to develop a remediation plan.

 Cigna entered into a standard NDA agreement with Centene, but only provided
Centene with a one-page spreadsheet of information.

 Before Cigna provided additional data to Centene, Cigna insisted on a second and
non-market NDA that included broad standstill provisions.

 Even after entering into a second NDA with Centene, Cigna refused to provide
meaningful due diligence.

 Cigna refused to enter into an NDA with the two Blues buyers unless the DOJ
indicated that a Blues buyer was a viable option.

 Cigna forced Anthem to raise the viability of a Blues buyer with the DOJ.

 Cigna contacted the Staff unilaterally to find out if the DOJ would consider a sale
to a Blues buyer.

 Cigna objected that Anthem’s divestiture proposal only involved Cigna’s assets,
which had been the plan all along.

 Cigna refused to advocate in favor of a Blues buyer.

 Once Anthem made a specific divestiture proposal, Cigna refused to advocate in
favor of it.

See Part II.J.2–3, supra. Taken as a whole, Cigna’s actions breached the Regulatory Efforts

Covenant.

Cigna also took actions that independently breached the Regulatory Efforts

Covenant. Under the Contracting Requirement, Cigna was obligated to “agree to . . . enter

239
into . . . any contract” if “necessary and appropriate” to obtain regulatory approval. MA §

5.3(b)(iii). Entering into NDAs with the potential buyers met this standard. Under the

Regulatory Cooperation Covenant, deciding whether or not buyers were viable was not

Cigna’s decision to make.

In addition, under the Regulatory Efforts Covenant, Cigna was obligated to advocate

in favor of a Blues buyer. As a company that competed daily for business against the non-

Anthem Blues, Cigna could have explained that it had lost business to non-Anthem Blues

and made compelling arguments in favor of them as divestiture buyers. See Paul Tr. 647–

48; Zielinski Tr. 55. Cigna breached its obligations under the Regulatory Efforts Covenant

by refusing to support a Blues buyer. Cigna also breached the Regulatory Cooperation

Covenant by forcing Anthem to raise the viability of the Blues buyers when introducing its

divesture proposal to the DOJ, then by contacting the DOJ unilaterally to ask whether a

Blues buyer was viable.

In its post-trial briefing, Cigna never goes so far as to maintain that its opposition to

a divestiture did not breach the Regulatory Efforts Covenant and the Regulatory

Cooperation Covenant. Cigna instead argues that its actions could not have been

problematic because the DOJ was not interested in a divestiture remedy and Anthem’s

proposal would not have addressed all of the DOJ’s concerns. Those are causation

arguments and addressed in the next section.

Cigna also attacks Anthem for not engaging earlier and to a greater degree with the

DOJ. Based on what the parties knew at the time, Anthem pursued a viable regulatory

strategy. The parties’ regulatory counsel had discussed divestitures in August 2015, then

240
again in December 2015. The lawyers decided that the process was not far enough along

to plot out specific divestitures and agreed to wait to make a proposal until the DOJ had

evaluated the Merger and identified its concerns.369

Cigna stresses a discussion during a meeting of the Steering Committee in March

2016, when Cigna argued for submitting a remediation proposal to the DOJ. Using one of

the escalation strategies set out in Project Alpha, Cigna had withdrawn from the integration

planning process two weeks earlier, citing the premise that resources needed to be allocated

to regulatory approval. During the meeting, Jones thoroughly criticized Anthem’s strategy

for obtaining regulatory approval, including Anthem’s plan to wait for the DOJ to identify

its concerns before making a divestiture proposal. Anthem continued to believe that it was

better to wait for the DOJ to identify its concerns before making a proposal.370

369
See Part II.G.10, supra. Consistent with this strategy, Swedish stated in an
interview with the press in October 2015 that Anthem had not made a divestiture proposal
and that Anthem was “not expecting divestitures.” JX 4186; see JX 1863 at 258. Cigna
regards this statement as a blunder, but that assessment seems overblown. Swedish only
said that Anthem was not expecting divestitures, not that Anthem would not agree to or
consider divestitures. Anthem and Cigna’s joint proxy statement had identified as a risk
factor that divestitures could be required, and in their September 2015 presentation to the
DOJ, the parties stressed their commitment to engagement and cooperation with the DOJ.
See Part II.F.1 & II.F.2.b, supra. That said, reasonable minds could differ about the effect
of Swedish’s comment, and by February 2016, some within Anthem viewed the statement
as a mistake. JX 1352; see Zielinski Tr. 480–81. Later that month, in a meeting with the
DOJ on February 17, 2016, Anthem made a point of signaling that it was prepared to
discuss divestitures, but asked the DOJ to provide guidance on what types of divestitures
would be helpful. See JX 1292; JX 1326. After the meeting with the DOJ, Anthem’s
counsel prepared and sent Cigna’s counsel a discussion document about potential
divestiture strategies that built on concepts that counsel had discussed in December 2015.
See JX 901; JX 1304.
370
See Part II.H.2, supra. Even before Cigna started criticizing Anthem’s regulatory
strategy as part of its effort to escape from the Merger Agreement, the contemporaneous

241
 Given how badly the regulatory process turned out, it is easy to question Anthem’s

strategy, but Anthem adopted a reasonable approach.371 Under the Regulatory Efforts

Covenant, Anthem had the right to determine the regulatory strategy. Cigna was obligated

to accept Anthem’s judgment and follow Anthem’s lead. Once the DOJ identified the

thirty-five local markets as an area of concern, and once Anthem opted to pursue a

divestiture involving those markets, Cigna was required to support Anthem’s divestiture

efforts by identifying potential buyers, assisting with the development of a divestiture plan,

entering into NDAs, providing due diligence, and advocating for the buyers and the

divestiture proposal to the DOJ. Cigna breached its obligations by doing none of those

things.

c. Cigna’s Opposition To A Divestiture Contributed Materially To
The Failure Of The No Injunction Condition.

Anthem proved that Cigna’s opposition to a divestiture contributed materially to the

failure of the No Injunction Condition. First, Cigna’s opposition made it less likely that the

DOJ would settle in exchange for a divestiture remedy. Second, Cigna’s opposition

prevented Anthem from lining up a divestiture and litigating the fix. Among other things,

a divestiture would have eliminated one of the bases on which the District Court enjoined

documents support a finding that Cigna wanted greater and more proactive engagement
with the DOJ. See, e.g., JX 768 at ’844; JX 991 at ’002; JX 1020 at ’130; JX 1359; JX
1368; Zielinski Tr. 478–79. Zielinski does appear guilty of giving short shrift to Jones’
input. See, e.g., JX 769 at ’954; JX 814 at ’506; JX 2067 at ’505.
371
See JX 2972 ¶¶ 55–56; JX 2973 ¶¶ 32, 84.

242
the Merger—the degree of concentration in the commercial healthcare market for large

employers in Richmond, Virginia.

Anthem’s antitrust experts explained persuasively that divestitures play a critical

role in obtaining regulatory approval and are the principal means by which challenges to

mergers are resolved.372 The DOJ favors settlements to conserve resources and minimize

litigation risk. See JX 2972 ¶¶ 48–49. Although most settlements take place at the pre-

complaint stage, cases are often resolved consensually even after the DOJ files suit.373

Parties also can improve their negotiating leverage by lining up a divestiture and litigating

the fix. See id. ¶¶ 84–87. For serious settlement negotiations to take place, the parties to a

merger need to identify committed, qualified buyers who can provide a structural solution

by acquiring overlapping assets. See JX 2972 ¶¶ 48–49. The parties’ regulatory counsel

372
See JX 2972 ¶¶ 20, 47, 60 (estimating that the DOJ resolves over 96% of the
merger investigations in which it has identified competitive concerns, typically without
filing litigation, by approving a voluntary modification of the transaction or by entering
into a consent decree); JX 2973 ¶¶ 6, 25, 66–68 (calculating that federal antitrust regulators
only challenge 2.6% of HSR-notified mergers, with about 58% of those challenges being
resolved).
373
See JX 2972 ¶¶ 20, 48. 50. Between 2002 and 2017, the DOJ challenged
approximately 246 mergers. Only nine cases, or less than 4%, were litigated to judgment.
Id. ¶¶ 51–52. Of the 246 challenges, fifty-nine were resolved without the filing of a formal
complaint. The DOJ filed suit in 140 cases, but in 106 of those cases, filed a proposed
consent decree along with the complaint. In other words, those were cases in which a
settlement already had been reached. The DOJ settled eleven other cases after the
complaint was filed. See id. ¶ 54. Most notably, in the US Airways-American Airlines
merger case in 2013, the DOJ settled two weeks before trial and three months after the
DOJ, six states, and the District of Columbia had filed suit. Id. ¶ 79. The DOJ also sued to
block Anheuser-Busch’s acquisition of Grupo Modelo, but agreed to a settlement three
months later. Id.

243
expressed similar views when evaluating the Merger before the Cigna ELT turned against

it. See Part II.D.3, supra.

Most clearly, Cigna’s opposition to a divestiture contributed materially to the failure

of the No Injunction Condition by preventing Anthem from mooting the District Court’s

alternative basis for issuing the permanent injunction: the degree of market concentration

in the commercial healthcare market for large employers in Richmond, Virginia. See Dist.

Ct. Op., 236 F. Supp. 3d at 258; see also Cir. Ct. Op., 855 F.3d at 367. A divestiture could

have removed Richmond and other local markets from the case, making it less likely that

the District Court would enjoin the Merger.

More broadly, by refusing to help identify buyers, by putting up roadblocks through

a non-market NDA, and by resisting due diligence, Cigna eliminated any chance that a

divestiture could be used to achieve regulatory clearance.374 Instead, Cigna questioned the

viability of the Blues buyers, thereby signaling to the DOJ that Cigna opposed the

Merger.375

To contend that its opposition to a divestiture could not have had any effect, Cigna

has asserted that by the time the Staff identified its concerns about the Merger on June 10,

2016, it already was too late to craft a divestiture remedy. See Dkt. 700 at 74–75. That is

not accurate. Despite Cigna’s opposition, Anthem formally presented the DOJ with a

374
See JX 2972 ¶ 77; JX 2973 ¶¶ 76, 92–93.
375
See JX 2972 ¶¶ 69–70; Paul Tr. 644–47, 649, 658; Rosen Tr. 791–92.

244
divestiture proposal on July 10, 2016. See JX 2225. With Cigna’s cooperation, there was

adequate time to complete a deal. See Paul Tr. 637-38.

Cigna also argues that the DOJ was skeptical about Anthem’s proposed remedy. See

Dkt. 700 at 84. Anthem’s lead regulatory counsel testified credibly that this was the DOJ’s

customary approach. In his experience, whenever regulatory counsel presented a

divestiture proposal to the DOJ, they would resist and raise questions, and “what they are

anticipating and fully expecting is that that buyer is going to come in with a business plan,

with financials that show that it can profitably run that business on day one.” Paul Tr. 645.

Cigna’s opposition to a divestiture prevented any potential buyers from advocating in favor

of a deal. Anthem’s antitrust expert opined persuasively that Anthem’s proposal “offered

a promising resolution of the investigation” and “was very much in line with what the DOJ

had accepted in other horizontal merger cases.”376

Cigna ultimately hangs its hat on the fact that the DOJ eventually said that a Blues

buyer was not suitable. See Dkt. 700 at 84. Whether the DOJ believed a Blues buyer was

unsuitable was not dispositive because Anthem could have entered into a divestiture

agreement with a Blues buyer and litigated the fix. Cigna’s opposition to a divestiture

prevented Anthem from pursuing this strategy and contributed materially to the failure of

the No Injunction Condition.

376
JX 2972 ¶¶ 62–63; see id. ¶ 64 (“Anthem’s strategy was exactly what I would
expect experienced antitrust counsel to pursue as appropriate.”); id. ¶¶ 64–65 (opining that
the proposal “should have opened the door to the type of ongoing dialogue between the
merging parties’ counsel and DOJ . . . over possible settlement proposals to resolve the
investigation”).

245
 4. Anthem’s Claim Against Cigna For Resisting Mediation

Anthem proved that Cigna breached the Efforts Covenants by resisting mediation

during the Antitrust Litigation. Anthem also proved that Cigna’s refusal to mediate during

the Antitrust Litigation contributed materially to the failure of the No Injunction Condition

by making it less likely that the DOJ would settle. Particularly when considered in

conjunction with Cigna’s opposition to a divestiture, Cigna’s opposition to mediation made

it significantly more likely that the No Injunction Condition would fail.

a. Cigna’s Contractual Obligations To Engage In Mediation

Cigna was contractually obligated under the Efforts Covenants to support

mediation. As with Cigna’s obligation to support a divestiture, this obligation can be

derived from either the Reasonable Best Efforts Covenant or the Regulatory Efforts

Covenant. The Regulatory Efforts Covenant is more specific and therefore is the more

appropriate clause to analyze.

The Regulatory Efforts Covenant obligated Cigna to “tak[e] any and all actions

necessary to avoid each and every [legal impediment] so as to enable the Closing to occur

as promptly as practicable . . . .” MA § 5.3(b). Cigna further was obligated to take any

action “necessary and appropriate” to “resolve any objections that may be asserted by or

on behalf of any Governmental Entity” and to “prevent the entry of . . . , any order that

would prevent, prohibit, restrict or delay the consummation of the Merger[].” Id. Cigna

was obligated to engage in mediation as a step that was “necessary and appropriate” to

resolve the objection raised by the Governmental Entity and to “prevent the entry of . . . ,

any order that would prevent, prohibit, restrict or delay the consummation of the Merger.”

246
MA § 5.3. Under the Regulatory Cooperation Covenant, once Anthem determined that

engaging in mediation was necessary and appropriate, then Cigna was obligated to support

that strategy. Cigna could not refuse simply because Cigna disagreed with Anthem’s

strategy or thought it was unlikely to succeed.

b. Cigna’s Breached The Regulatory Efforts Covenant And The
Regulatory Cooperation Covenant By Resisting Mediation.

Anthem proved that Cigna resisted mediation. On multiple occasions, both the

District Court and a special master appointed by the Court encouraged the parties to

mediate. Anthem repeatedly asked Cigna to mediate. Cigna never agreed.

The District Court encouraged mediation on at least three occasions: (i) during early

case management conference on August 12, 2016, (ii) during a case management

conference on September 30, and (iii) during an office conference on November 11. The

special master in the case contacted the parties about mediation on November 13, and again

on November 23. Each time, Anthem supported mediation. Each time, Cigna obstructed

Anthem’s efforts to mediate. Anthem also tried to initiate mediation on its own, but Cigna

refused to support Anthem’s efforts. See Part II.K.3 & 5, supra.

In this litigation, Cigna claimed that it was willing to mediate. Dkt. 700 at 76 (citing

JX 2523 at 60). But Cigna always conditioned mediation on Anthem first providing a viable

divestiture proposal that the DOJ would consider. By doing so, Cigna effectively insisted

that the parties reach agreement on a framework for settling the case before engaging in

mediation to develop a possible framework for settling the case. Because of the conditions

that Cigna imposed, its claims that it supported mediation were illusory.

247
 Cigna also argues in this litigation that a letter sent by Anthem on November 16,

2016, demonstrates that Anthem was not serious about mediation, but only trying to create

a record for purposes of this litigation. See Dkt. 700 at 58 (citing JX 2648). Cigna points

out that on November 14, after the DOJ refused to mediate in response to the District

Court’s third invitation, Zielinski wrote to Swedish in an email, “Mediation is dead. DOJ

has no interest.” JX 2637. After Zielinski expressed that view, Anthem’s litigation counsel

sent Zielinski a privileged email, and Anthem then sent the November 16 letter, which

Zielinski described as “[b]ased on [litigation counsel’s] suggestion.” JX 4176. Anthem

responds that Judge Levie had just proposed mediation, which prompted the letter. See

Dkt. 707 at 14–15. It is possible to view Anthem’s letter as having a tactical component

without discharging Cigna from its obligations to support mediation at earlier points in the

process.

There was no conceivable harm to Cigna from supporting mediation. See Curran Tr.

1601–02. Cigna’s persistent refusal to mediate demonstrates that Cigna was actively

opposing the Merger.

c. Cigna’s Opposition To Mediation Contributed Materially To
The Failure Of The No Injunction Condition.

Cigna’s failure to support mediation contributed materially to the failure of the No

Injunction Condition. Cigna’s resistance to mediation made settlement less likely. If the

case had settled, then the No Injunction Condition would have been satisfied.

The District Court strongly encouraged the parties to mediate. There was no

guarantee that mediation would produce a settlement, but Cigna’s opposition to mediation

248
foreclosed that possibility. Cigna’s resistance reduced the chances of settlement from

something to zero.

To justify its opposition to mediation, Cigna argues that the DOJ never was willing

to settle. See CDX 2. For starters, Cigna contributed to the environment in which the DOJ

took that position by signaling that it was not aligned with Anthem and resisting a

divestiture remedy. And Cigna’s description of the DOJ’s position is not fully accurate.

When the District Court first suggested mediation in August 2016, the DOJ responded that

“[there was] absolutely a willingness” to consider settlement, and clarified, “We’re always

willing to hear any [settlement] proposals that the defendants have.” JX 2414 at 34. Anthem

and Cigna could have capitalized on this response. The DOJ’s willingness to settle other

major cases after filing suit, including on the eve of trial, shows that settlement was not out

of the question.377

Cigna’s consistent opposition to mediation took the pressure off the DOJ and made

it less likely that the No Injunction Condition would be satisfied through a mediated

resolution. Because Cigna opposed mediation, the DOJ did not face any risk that Anthem

and Cigna would go to the District Court jointly, complain about the DOJ’s refusal to

377
See JX 2972 ¶ 80; see id. ¶¶ 81–82 (describing DOJ’s public opposition to the
US Airways and Grupo Modelo acquisitions); see also id. ¶ 81 (noting that the settlement
in the US Airways litigation did not directly address “[m]ost of the competitive harms
trumpeted in the complaint and in public statements); id. ¶ 82 (making same observation
regarding Grupo Modelo acquisitions).

249
mediate, and make the DOJ look unreasonable. Cigna’s refusal to mediate meant the DOJ

never faced any pressure to reconsider its stance.378

Cigna’s resistance to mediation was particularly significant in light of Cigna’s

earlier opposition to a divestiture. If Cigna had supported a divestiture that addressed the

problems with the thirty-five local markets, then Anthem could have argued that its

proposed remedy mooted the DOJ’s claims about excessive market concentration and

monopsony in those areas. The DOJ dropped its claim about the public exchange markets

after the District Court questioned the strength of the DOJ’s position. See Dist. Ct. Op.,

236 F. Supp. 3d at 187 n.2. After a local market divestiture, the DOJ would have been left

with only its challenge to the market for national accounts. Under those circumstances, if

Cigna had supported mediation when the District Court repeatedly encouraged it, then the

DOJ would have been more likely to mediate, and the case would have been more likely

to settle. By both opposing divestitures and resisting mediation, Cigna made it less likely

that the DOJ would settle.

The strongest evidence that Cigna’s conduct did not affect the DOJ’s position on

settlement comes from the DOJ’s approach to the Aetna/Humana deal. When advising the

Cigna Board before entering into the Merger Agreement, the Cigna ELT believed that the

Merger was “likely to appear to regulators as relatively more complex.” JX 209 at ’483.

The Aetna/Humana deal was somewhat smaller, weighing in at $37 billion compared to

the Merger’s $54 billion, and Aetna and Humana were the fourth and fifth largest insurers

378
See JX 2972 ¶ 78; Curran Tr. 1605, 1607–08.

250
of national accounts rather than the second and third. See JX 2314 ¶ 4. There also is

evidence that Aetna and Humana took a more proactive approach to settlement. See

Zielinski Tr. 480. Yet the DOJ also sued to enjoin Aetna’s acquisition of Humana. JX 2319.

These high-level similarities are not enough to defeat Anthem’s showing that

Cigna’s opposition to mediation contributed materially to the failure of the No Injunction

Condition. The Aetna/Humana deal doubtless had many twists and turns of its own. At

most, the example of the Aetna/Humana deal suggests that Cigna’s breaches of the Efforts

Covenants were not a but-for cause of the DOJ’s failure to settle, but Anthem did not have

to show causation in fact. Anthem only had to show that Cigna’s breaches made it less

likely that the No Injunction Condition would be satisfied. Anthem proved that Cigna’s

conduct had that effect by making settlement less likely.

5. Cigna’s Undermining Of Anthem’s Defense In The Antitrust Litigation

Finally, Anthem proved that Cigna breached its obligations under the Efforts

Covenants by undermining its defense in the Antirust Litigation. Anthem also proved

Cigna’s conduct contributed materially to the failure of the No Injunction Condition by

making it less likely that the District Court would deny the DOJ’s application for a

permanent injunction or that the DC Circuit Court would take a different view on appeal.

a. Cigna’s Contractual Obligations Regarding The Antitrust
Litigation

Under the Efforts Covenants, Cigna was obligated to defend against the Antitrust

Litigation. Here again, Cigna’s obligation could be derived from the Reasonable Best

Efforts Covenant, but the Regulatory Efforts Covenant addresses the matter explicitly. The

251
Litigation Requirement obligated Cigna to “oppose [the Antitrust Litigation] fully and

vigorously,” including “by defending through litigation . . . and vigorously pursuing all

available avenues of administrative and judicial appeal.” MA § 5.3(e).

Within this framework, the Regulatory Cooperation Covenant allocated

responsibility for litigation strategy to Anthem. See MA § 5.3(e). Cigna was therefore

obligated to follow Anthem’s chosen litigation strategy. The Regulatory Cooperation

Covenant also required that Cigna to make its legal filings “as promptly as practicable”

and “provide such assistance as [Anthem] may reasonably request.” Id.

b. Cigna Breached The Regulatory Efforts Covenant And The
Regulatory Cooperation Covenant By Undermining Anthem’s
Defense.

Anthem proved that Cigna undermined Anthem’s defense in the Antitrust

Litigation. Although certain aspects of Cigna’s conduct would not have breached its

obligations if considered in isolation, the totality of Cigna’s conduct breached its

contractual commitments by a wide margin.

During the Antitrust Litigation, Cigna undermined Anthem’s defense in numerous

ways:

 Cigna failed to file its answer to the DOJ’s complaint in the Antitrust Litigation as
promptly as practicable.

 Cigna failed to make any arguments in support of an expedited trial date.

 Cigna blocked Anthem from contacting seventeen Cigna customers to determine
whether they would testify as witnesses in support of the Merger.

 Cigna failed to take or defend any depositions other than defending the depositions
of the six Cigna witnesses.

252
 Cigna elicited deposition testimony from Cordani and two Anthem witnesses that
was favorable to the DOJ’s case and harmed the defense.

 Cigna proposed trial exhibits that undermined Anthem’s case on efficiencies and
supported the DOJ’s position that there was a distinct market for the sale of
insurance for national accounts..

 Cigna reversed position one week before trial on who would present Cigna’s
witnesses.

 Cigna gave Anthem only one hour to prepare each of the three Cigna witnesses and
discourteously rejected Anthem’s request for more time to prepare the three Cigna
witnesses.

 Cigna cross-examined Swedish, highlighting the disagreement over Cordani’s
responsibilities at NewCo and bolstering the DOJ’s argument that the claimed
efficiencies could not be achieved because of the parties’ disputes.

 Cigna counsel cross-examined Israel, Anthem’s key expert on medical cost savings,
questioning his credentials and undercutting the projections on which the
efficiencies were based.

 Cigna did not help Anthem with its proposed findings of fact or conclusions of law.

 Cigna claimed during oral argument that the dispute letters between the parties
reflected the views of the boards of directors and the companies as a whole, rather
than disagreements between the CEOs, as Anthem had argued.

 Cigna did not make an opening statement in support of the Merger.

 Cigna did not make a closing argument in support of the Merger.

Viewed collectively, these actions permit only one conclusion: Cigna undermined

Anthem’s defense by litigating against its merger partner.

Cigna inflicted the most damage on Anthem’s defense through Cordani’s testimony.

Cigna’s witnesses were legally obligated to testify truthfully. See 18 U.S.C. §§ 1621, 1623.

It therefore could not have been a breach of the Merger Agreement for Cigna’s witnesses

to testify truthfully in the Antitrust Litigation, even if it lessened the likelihood of

253
regulatory approval.379 But under the Merger Agreement, Cigna’s witnesses could not

testify untruthfully, nor could they provide exaggerated and embellished testimony against

the Merger or offer unsupported opinions that harmed it.

Cordani provided exaggerated and embellished testimony and expressed

unsupported opinions that helped the DOJ’s case and harmed Anthem’s defense. During

his deposition in October 2016, Cordani worked in themes from the Blues Pitch. One of

the goals of the Blues Pitch was to expand the DOJ’s focus beyond the Anthem Blue States

to encompass “other markets where Cigna competes with non-Anthem [Blues]

members.”380 During his deposition, Cordani claimed that if the Merger closed, Cigna’s

“network outside the 14 states would ultimately be systematically be dismantled,” “choice

would be constrained” and Cigna’s clinical programs would be “essentially disrupted.” JX

379
See Restatement (Second) of Contracts § 178 (“A promise or other term of an
agreement is unenforceable on grounds of public policy if legislation provides that it is
unenforceable . . . .”); 17A Am. Jur. 2d Contracts § 290 (2019) (“No court will lend its
assistance in any way toward carrying out or enforcing the terms of a contract . . . that is
illegal . . . .”).
380
JX 2484 at ’001. Cigna points out that the DOJ had identified markets beyond
the Anthem Blue States in its complaint. See Dkt. 700 at 73 (citing JX 2314 ¶ 23 (DOJ
complaint alleging that “[t]he proposed merger would harm national accounts . . . in the
United States generally.”)). Cigna then argues that the DOJ did not need Cigna or Teneo’s
help to identify that argument. Id. That is misleading. In the Blues Pitch, Teneo expressed
concern that “[o]n September 1st, the DOJ dropped its claim concerning competition in
public exchanges” and “is now largely focused on competition in the 14 states where
Anthem operates its Blues license.” JX 2484 at ’001. Teneo thought that although the DOJ
might originally have identified the issue, by that point the DOJ was “neglecting to consider
the severe impact this merger could have on other markets.” Id. By stressing the themes
that appeared in the Blues Pitch, Teneo and Cigna hoped to reinvigorate this aspect of the
DOJ’s case.

254
2496 at 148–49. Cordani also testified that the NewCo’s go-to-market strategy was a

forced-migration strategy called “Bias to Blue.” Cordani Tr. 164. After the DOJ lawyer

completed his examination, Cigna’s counsel walked Cordani through a series of leading

questions that supported the DOJ’s theory that Cigna was uniquely innovative. See JX 2484

at 186–88. Cordani’s testimony was so favorable to the DOJ’s case that the DOJ’s expert

relied on it in his rebuttal report. See JX 4219 ¶ 78.

During trial, Cordani expanded on the harmful testimony he gave in deposition. He

claimed that the Bias-to-Blue strategy was the “framework in terms of how we would go

to market, the so-called-go-to-market with existing clients and new clients in the overlap

14 states and then outside of those 14 states.” JX 2660 at 428–29. He claimed that the

strategy would be “extraordinarily disruptive in the marketplace” and make “the existing

[Cigna] offering less competitive in both Anthem and non-Anthem states.” Id. at 439–40.

Elaborating on these points, Cordani agreed with a series of leading questions from the

DOJ in which he asserted that the Bias-to-Blue strategy would “erode the value of Cigna,”

reduce customer choice, and put Cigna’s innovation at risk. Id. at 441. He compared the

rebranding of Cigna’s members in the Anthem Blue States to pulling a string that would

unravel Cigna’s entire network. Using the theme from the Blues Pitch, he claimed that

Cigna’s network would be harmed not only in the Anthem Blue States, but also in the non-

Anthem states. See id. at 430–42. He also questioned the Merger’s ability to deliver $2.4

billion in medical cost savings. See id. at 442–43.

Cordani’s testimony about Bias to Blue conflicted with the weight of the evidence.

255
 The Bias-to-Blue strategy was not NewCo’s actual go-to-market strategy. It was an
option that the go-to-market team presented. It was never adopted as NewCo’s
strategy. After Cordani objected, it was changed to a brand-agnostic strategy.

 The Bias-to-Blue strategy only addressed (i) new customers who were (ii) within
the Anthem Blue States and (iii) expressed a preference for a Cigna product.

 The only consequence of the Bias-to-Blue strategy was to provide that subset of
customers with a quote for a Cigna product and a quote for an Anthem product.

 The Bias-to-Blue strategy was not a forced migration strategy.

See Part II.I.6 & II.J.4, supra.

Cordani knew the truth about the Bias-to-Blue strategy. He participated in the

Steering Committee meetings when it was proposed and changed. And during the forty-

five minutes during which Cigna permitted Anthem to prepare Cordani, Anthem’s counsel

specifically covered the Bias-to-Blue strategy. After the session, Anthem’s counsel

supplied the relevant presentations and walked through how they demonstrated that the

Bias-to-Blue strategy did not involve forced conversions, only applied to new business in

the Anthem Blue States, and was replaced with a brand-agnostic strategy. See Part II.I.6 &

II.J.4, supra.

At trial in this action, Cordani claimed that he subjectively believed that Anthem

was pursuing a forced migration strategy with all of the connotations he had described.

Cordani’s credibility problems in other areas make it difficult to accept that assertion,

particularly given the clarity of the contemporaneous record. But accepting that Cordani

did not consciously lie under oath, he nevertheless gave testimony that was embellished

and exaggerated in an effort to harm the Merger.

256
 The same is true for other aspects of Cordani’s testimony, such as his metaphor

about the string that would unravel Cigna’s network. That vivid testimony was a boon for

the DOJ’s case, yet Cordani admitted that he did not know of any analysis that Cigna had

performed on that subject. Cordani Tr. 2109–10. His opinion conflicted with the

conclusions that Cigna had reached about rebranding its members in the Anthem Blue

States when Cordani thought that he had a path to become the CEO of NewCo. At that

juncture, Cigna did not view the move as a problem, regarding it instead as a logical and

manageable solution to address the 2/3 Rule.381 It also conflicted with a white paper about

the Blues Rules, in which Cigna and Anthem jointly represented that the Merger would not

weaken Cigna outside of the Anthem Blue States. JX 2075 at ’914 (“Nor will the merger

weaken Cigna as a competitor outside of Anthem’s 14 Blue States.”). The fact that

381
See, e.g., JX 79 (email from Gray to McCarthy dated October 22, 2014 (“To
avoid being in default [under the 2/3 Rule], we would need to rebrand revenue and
members; practically this means moving members in license states to a product written on
a blue license”; “Complying will mean reduced volumes to our network outside of the
license states”); JX 91 at ’163 (November 2014 presentation suggesting need to rebrand
approximately all of Cigna revenue in Blues States); JX 98 at ’964 (Cigna analysis of
Merger in November 2014, “[W]e would need to rebrand between 23 and 27% of revenue
nationally and between 64 and 73% of [Cigna] revenue in the [Anthem] license areas (the
most likely lever”); JX 119 at ’884 (Cadwalader analysis of Merger for Cigna in December
2014, “Cigna membership associated with a client contract in [Blue] state rebranded to
Blue”); id. at ’885 (“Rebranding will divert volumes from [Cigna’s] network”); JX 351 at
’076 (Cigna Board presentation dated July 1, 2015, “Rebrand [Cigna] revenue as Blue in
[Anthem] license markets”); JX 565 at ’215 (Cigna Board presentation dated July 1, 2015,
predicting that “Rules stay in place as is and we adopt our model to comply through a
mixture of rebranding and other actions, in line with the current business case”); JX 590 at
’835 (Hocevar notes of meeting with Cordani, “Will CIGNA have any legacy [networks]
in 14 states? No”); JX 732 at ’552 (Cordani notes, “Bias in 14 State  Rebrand Anthem”);
JX 3121 at ’376 (Cigna presentation for meeting with Anthem in December 2014, “[Cigna]
membership associated with a client contract in a license state rebranded to Blue”).

257
Cordani’s testimony tracked a theme from the Blues Pitch further undermines its

credibility. JX 2484 at ’001.

Similar problems undercut Cordani’s testimony about the $2.4 billion in efficiencies

posited by Anthem’s expert. Cigna and Anthem jointly submitted that figure to the DOJ.

See JX 1948. Cordani did not do any work to assess the number and was not familiar with

the analysis. See Cordani Tr. 2130–3529. Cordani had not even read Israel’s report. Id. at

2135. Logically, if Cigna had superior utilization rates and a better mix of services than

Anthem, then incorporating those variables would have made the medical cost savings

figure higher, not lower, but Cordani portrayed the omissions as a problem.

So too with Cordani’s testimony about Cigna being uniquely innovative. Before the

Merger Agreement was signed, Cigna anticipated that the DOJ might argue that Cigna was

a “unique, procompetitive ‘maverick’” and identified the obvious response—arguing that

Cigna was not “a uniquely disruptive maverick.” JX 209 at ’484. Cordani did not have to

agree that Cigna was not innovative. Cordani only had to concede that Cigna was not

uniquely disruptive.

After listening to Cordani testify in this case and reviewing his depositions, it is

clear that he is a skilled communicator who can resist hostile questioning by becoming

evasive, obfuscating with complex jargon, or simply sticking to his guns on a not-credible

point that helps his side. When the DOJ questioned Cordani, he testified eagerly, as if he

were a friendly witness offering supportive testimony during direct examination. Cordani

could have been a powerful defender of the Merger. Instead, he attacked it.

258
 After the issuance of the District Court Opinion, Cigna continued to undermine

Anthem’s defense. The Litigation Requirement obligated Cigna to “vigorously pursu[e] all

available avenues of administrative and judicial appeal.” MA § 5.3(b)(iii). Instead of

pursuing an appeal, Cigna took the following actions:

 Cigna declined to support Anthem’s appeal.

 Cigna filed a misleading press release saying that it was reviewing the District Court
Opinion and evaluating its options.

 Cigna issued a termination notice.

 Cigna filed a lawsuit in this court.

 After this court issued a TRO blocking Cigna from terminating the Merger
Agreement, Cigna filed a five-page brief that stated only that Cigna deferred to
Anthem.

 Cigna sought to interfere with Anthem’s efforts to reach a deal with the new Trump
administration.

See Part II.L, N & O, supra.

Cigna’s actions, taken as a whole, establish a clear pattern. Cigna engaged in a

knowing and intentional effort to undermine Anthem’s position in the Antitrust Litigation.

c. Cigna’s Actions During The Antitrust Litigation Contributed
Materially To The Failure Of The No Injunction Condition.

Anthem proved that Cigna’s litigation conduct contributed materially to the results

in the Antitrust Decisions and hence the non-occurrence of the No Injunction Condition.

Both of the Antitrust Decisions evidence the effects of Cigna’s actions.

The District Court Opinion highlighted Cigna’s opposition to the Merger, calling it

“the elephant in the courtroom” and citing “the doubt sown into the record by Cigna itself.”

259
Dist. Ct. Op., 236 F. Supp. 3d 171 at 183. The District Court explained that “[i]n this case,

the Department of Justice is not the only party raising questions about Anthem’s

characterization of the outcome of the merger: one of the two merging parties is also

actively warning against it.” Id. This characterization was accurate: Cigna actively litigated

against Anthem and in support of the DOJ.

The District Court noted the significance of the testimony given by Cordani and

other Cigna witnesses, as well as the message sent by Cigna’s conduct during the litigation:

Cigna officials provided compelling testimony undermining the projections
of future savings, and the disagreement runs so deep that Cigna cross-
examined the defendants’ own expert and refused to sign Anthem’s Findings
of Fact and Conclusions of Law on the grounds that they “reflect Anthem’s
perspective” and that some of the findings “are inconsistent with the
testimony of Cigna witnesses.” Anthem urges the Court to look away, and it
attempts to minimize the merging parties’ difference as a “side issue,”
a mere “rift between the CEOS.” But the court cannot properly ignore the
remarkable circumstances that have unfolded both before and during the trial.

Id.

The District Court explained that Cigna’s opposition to the Merger affected its

ability to credit Anthem’s claimed efficiencies. Id. at 183. Later in the opinion, the District

Court addressed these issues in detail, frequently relying on Cordani’s testimony.

 The District Court relied on Cordani’s testimony when finding that the Merger
would have the anticompetitive effect of reducing innovation in the Anthem Blue
States. Id. at 230.

 The District Court relied on Cordani’s testimony when finding that NewCo would
not give Cigna customers in the Anthem Blue States a meaningful choice to remain
with a Cigna product. Id. at 241.

 The District Court relied on Cordani’s testimony when questioning whether
Anthem’s providers might be unwilling to extend their lower fee schedules to
Cigna’s customers. Id. at 243.

260
 The District Court relied on Cordani’s testimony when questioning Anthem’s
estimates of medical cost savings because they did “not factor in utilization.” Id. at
244.

 The District Court cited the cross-examination of Anthem’s expert by Cigna’s
counsel. Id. at 244 n.46.

 The District Court relied on Cordani’s description of the Bias-to-Blue strategy when
holding that the Merger would harm Cigna’s network and its products. Id. at
24748.

The District Court Opinion would have looked quite different without the discussion of

Cigna’s litigation conduct and without the references to Cordani’s testimony.

The DC Circuit Opinion also was influenced significantly by Cigna’s litigation

conduct. The Majority affirmed the District Court’s factual findings as supported by the

record and not clearly erroneous. Because Cigna’s litigation conduct contributed materially

to those factual findings by the District Court, Cigna’s litigation conduct likewise

contributed materially to the outcome before the DC Circuit Court.

 The Majority cited Cordani’s testimony when affirming the District Court’s finding
that Anthem faced a substantial risk of provider abrasion if Anthem attempted to
use the affiliate clauses to force its providers to offer services under Cigna’s existing
products at Anthem rates. Cir. Ct. Op., 855 F.3d at 365.

 The Majority cited Cordani’s testimony when holding that the District Court had
not erred by finding that Anthem would not be able to induce its providers to extend
their rates to Cigna products by renegotiation. Id. at 360.

 The Majority quoted the District Court’s observation that “‘the Department of
Justice is not the only party raising questions about Anthem’s characterization of
the outcome of the merger’ because Cigna itself had ‘provided compelling
testimony undermining the projections of future savings.’” Id. (quoting Dist. Ct.
Op., 236 F. Supp. 3d at 182).

 The Majority relied on Cordani’s testimony when holding that the District Court
had not erred by finding that the quality of the Cigna offering would degrade as a
result of the Merger. Id.

261
 The Majority relied on Cordani’s testimony when holding that the District Court
had not erred by finding that the value of Cigna’s offerings would be diminished by
Anthem’s rebranding strategy. Id. at 361.

 The Majority relied on Cordani’s testimony when holding that the District Court
had not erred by finding that Cigna’s capacity for innovation would be diminished
by Anthem’s rebranding strategy. Id.

 The Majority relied on Cordani’s testimony when holding that the District Court
had not clearly erred in criticizing Anthem for failing to account in its projected
savings for the effects of utilization. Id.

Like the District Court Opinion, the Majority’s opinion would have looked quite different

without the references to Cordani’s testimony.

Cigna relies heavily on a footnote in the Majority’s opinion to argue that it

opposition to the Merger could not have contributed materially to the outcome. The

Majority included an extensive section in its opinion that responded to arguments advanced

by the Dissent See id. at 364–66. Among other things, the Dissent criticized the Majority

for ostensibly relying “on friction between the Anthem and Cigna CEOs” as a factor that

undermined the claimed efficiencies. Id. at 365. Retorting that it “did not so rely,” the

Majority cited a footnote in its opinion, which stated that

Cigna has become a reluctant supporter of the merger, stating in its appellate
brief that “[i]n accordance with the merger agreement Cigna has appealed
and defers to Anthem.” Indeed, the district court noted the “elephant in the
courtroom,” for at trial Cigna executives dismissed various of Anthem’s
claims of savings, cross-examined the merging parties’ expert witness, and
refused to sign Anthem’s proposed findings of fact and conclusions of law.
Anthem suggested this is a “‘side issue,’ a mere ‘rift between CEOs.’” That
their relationship may have deteriorated has little to do with the
anticompetitive effects of the proposed merger.

Id. at 348 n.1.

262
 Although this passage indicates that the DC Circuit Court placed less weight on

Cigna’s opposition to the Merger than the District Court, it does not change the fact that

the Majority (i) affirmed the District Court’s factual findings, which were influenced by

Cigna’s litigation conduct and (ii) repeatedly cited Cordani’s testimony against the Merger.

Judge Millett’s concurring opinion further demonstrates this reality. Her opinion largely

responded to points raised by the Dissent, and she noted that to the extent that the Dissent

claimed that there was overwhelming evidence that NewCo would deliver health care for

less, “one half of this merger disagrees,” citing the District Court’s finding that Cigna was

“actively warning against” the Merger. Id. at 370. She also wrote, “Importantly, ‘Cigna

officials provided compelling testimony undermining the projections of future savings’ that

Anthem proffered and the dissenting opinion embraces.” Id. The footnote in the Majority’s

opinion thus does not prevent Cigna’s litigation conduct from having contributed

materially to the DC Circuit Court’s affirmance.

Anthem proved that Cigna’s litigation conduct contributed materially to the

issuance of the Antitrust Decisions. Cigna’s litigation conduct made the issuance of those

decisions more likely and the satisfaction of the No Injunction Condition less likely.

D. Whether The No Injunction Condition Would Have Failed If Cigna Had Not
Breached

Once Anthem proved that Cigna’s breaches of the Efforts Covenants contributed

materially to the DOJ’s failure to approve the Merger, the District Court’s issuance of a

permanent injunction, and the DC Circuit Court’s affirmance of the District Court Opinion,

the burden then shifted to Cigna to prove that even if Cigna had fulfilled its obligations

263
under the Efforts Covenants, the No Injunction Condition still would have failed.

Restatement (Second) of Contracts § 245 cmt. a, illus. 4 & cmt. b, illus. 7. Cigna met its

burden by proving that even if Cigna had fulfilled its obligations under the Efforts

Covenants, the DOJ would not have approved the Merger because of its effect on the

market for the sale of commercial insurance to national accounts, the District Court would

have enjoined the Merger on that basis, and the DC Circuit Court would have affirmed.

1. The National Accounts Issue

The principal basis on which the DOJ challenged the Merger was its effect on the

market for the sale of commercial insurance to national accounts, where the Merger would

reduce the number of carriers from four to three and create presumptively unlawful levels

of market concentration. See JX 2314 ¶ 8. The DOJ reached its conclusion regarding the

market for national accounts after conducting a year-long investigation. As Zielinski

recognized, Cigna’s conduct did not play any role in causing the DOJ to view the market

for national accounts as a distinct market. Zielinski Tr. 411.

Anthem sought to convince the DOJ that the Merger would generate sufficient

efficiencies to overcome its anticompetitive effects. As this decision has found, Cigna’s

conduct did not lead Anthem to ground its defense of the Merger on efficiencies created

on medical cost savings derived by applying best-of-breed discounts. See Part III.C.2.c,

supra. The DOJ rejected that defense because it doubted that providers would agree to

deliver the same services for less pay. Anthem’s plan, the DOJ alleged, would lead to “less

access to medical care, reduced quality, and fewer value-based provider collaborations.”

JX 2314 ¶¶ 64, 75, 77.

264
 The District Court viewed the national accounts issue the same way. The District

Court concluded that the market for the sale of commercial insurance to national accounts

in the Anthem Blue States was a distinct market. See Dist. Ct. Op., 236 F. Supp. 3d at 179.

Cigna’s breaches of the Efforts Covenants did not have any effect on the District Court’s

finding that the market for national accounts was a distinct market.

Once the District Court made that finding, it was essentially undisputed that the

Merger would have the anticompetitive effect of reducing the number of competitors from

four to three.382 The District Court also found that the sophistication and bargaining power

of national account customers was not enough to offset the anticompetitive effects; that

new entrants would not be able to compete in the relevant market with NewCo; and that

other means of serving customers, such as by slicing business, were not a viable solution.

See Dist. Ct. Op., 236 F. Supp. 3d at 221–29. Cigna’s breaches of the Efforts Covenants

did not contribute to these findings.383

In the face of this evidence of anticompetitive effects, it was incumbent upon

Anthem to provide evidence of “extraordinary” efficiencies that were merger-specific and

382
Id. at 216; see JX 2660 at 2014, 2018.
383
The District Court separately found that the Merger would reduce innovation in
the Anthem Blue States. Id. at 180, 229–31. The District Court cited Cordani’s testimony
when reaching this conclusion, and so this decision does not rely on the District Court’s
findings regarding harm to innovation when analyzing whether Cigna met its burden to
show that the No Injunction Condition would have failed in any event.

265
verifiable.384 The question thus became whether the $2.4 billion in efficiencies that Anthem

claimed could overcome the anticompetitive effect.

As presented, Anthem’s claimed efficiencies had two components: (i) $1.5 billion

from applying Anthem’s discounts to Cigna’s customers, and (ii) $900 million from

applying Cigna’s discounts to Anthem’s customers. In the only aspect of the District Court

Opinion that would be reversed on appeal, the District Court held that the projected

efficiencies attributable to Cigna customers benefitting from Anthem rates were not

merger-specific because they resulted from rates that each of the companies already had

384
Dist. Ct. Op., 236 F. Supp. 3d at 236. Both the District Court and the DC Circuit
Court were skeptical of the efficiencies defense as a matter of law. Both courts noted that
in FTC v. Procter & Gamble Co., 386 U.S. 568, 579 (1967), the Supreme Court of the
United States had stated that “[p]ossible economies cannot be used as a defense to
illegality” under the Clayton Act. See Cir. Ct. Op., 855 F.3d at 353; accord Dist. Ct. Op.,
236 F. Supp. 3d at 235 n.33. Ultimately, neither court relied on this precedent. The District
Court cited it in passing, in the course of observing that several circuit courts and district
courts, including the DC Circuit Court and its trial courts, had balanced procompetitive
efficiencies against anticompetitive effects. Dist. Ct. Op., 236 F. Supp. 3d at 235–36. On
appeal, the Majority placed more emphasis on Procter & Gamble and interpreted the
decisions that had relied on efficiencies as recognizing only that “evidence of efficiencies
could rebut a prima facie showing, which is not invariably the same as an ultimate defense
to Section 7 illegality.” 855 F.3d at 353–54. But the Majority did not rule on this ground,
explaining that “prudence counsels that the court should leave for another day whether
efficiencies can be an ultimate defense to Section 7 illegality.” Id. The Dissent responded
at length to the Majority’s potential reliance on Procter & Gamble, explaining why it would
be dubious to use that precedent to reject the efficiencies defense as a matter of law. See
id. at 373, 375–77, 379. The DOJ did not argue that an efficiencies defense was not
cognizable as a matter of law, and the guidelines that the DOJ and the FTC use to review
mergers contemplate considering efficiencies to offset anticompetitive effects. It thus
seems unlikely that the District Court or the DC Circuit Court would have rejected the
efficiencies defense as a matter of law. Nevertheless, it caused them to approach the
efficiencies defense with skepticism. Cigna’s conduct had no effect on the outcome of this
legal issue.

266
achieved on its own. See Dist. Ct. Op., 236 F. Supp. 3d at 181, 238. The DC Circuit Court

explained that Cigna had been unable to match Anthem’s volume-based discounts, so

medical cost savings generated by extending Anthem’s discounts to Cigna’s customers that

were receiving a Cigna product would be merger-specific. Cir. Ct. Op., 855 F.3d at 358.

Importantly, the DC Circuit Court’s disagreement on this one issue did not extend

to the principal reason why the District Court held that the projected efficiencies

attributable to applying Anthem’s discounts to Cigna’s customers were not merger-

specific, which was the means by which Anthem planned to achieve those efficiencies.

Anthem planned to convince Cigna customers in the Anthem Blue States to move from

Cigna products to Anthem products. Dist. Ct. Op., 236 F. Supp. 3d at 181; see id. at 239.

The companies did not have to merge for Cigna customers to switch to Anthem products,

which they could do just as easily without the Merger. Id. at 181. The District Court found

that Anthem’s principal method for achieving the savings was “no different from Anthem’s

ongoing marketing of its products on a daily basis.” Id. at 181. Cigna’s conduct did not

contribute to the finding that these medical cost savings were not merger-specific. It

resulted from Anthem’s decision to continue offering separate Cigna and Anthem products

and to encourage Cigna customers to move to Anthem products. See Part II.I.3, supra.

If Anthem had attempted to show that NewCo would achieve medical cost savings

by designing and selling new products, then the resulting savings would have been merger-

specific. There still would have been an issue about whether the resulting savings were

verifiable, but Anthem would have at least cleared the initial hurdle. This decision has

found that Anthem made a tactical decision not to defend the Merger based on NewCo’s

267
ability to create and sell new products, and that Cigna’s actions did not cause Anthem to

make that decision. See Part III.C.2.c.i, supra.

The District Court also rejected the medical cost savings as not verifiable. The

District Court found that requiring Anthem providers to extend their discounts to Cigna

customers would result in some level of provider abrasion, meaning that providers would

not accept the new lower rates. See Dist. Ct. Op. 236 F. Supp. 3d at 243, 247, 249. The

District Court reached this finding independent of any breach by Cigna, noting that

“Anthem’s own witnesses” doubted that providers would continue to provide Cigna-style

services at lower rates.385 Anthem could have avoided this problem by attempting to show

that NewCo would achieve medical cost savings through new products that provided some

Cigna features (but less than the full product) with better discounts than Cigna could

achieve alone (albeit not as low as Anthem’s full discounts), but Anthem chose not to

pursue that strategy for reasons unrelated to Cigna’s conduct. See Part III.C.2.c.i, supra.

385
Id. at 247. The District Court also found that the $1.5 billion from applying
Anthem’s discounts to Cigna’s customers was not verifiable because it did not take into
account Cigna’s utilization. See Dist. Ct. Op., 236 F. Supp. 3d at 244. The record supports
a finding that Cigna withheld utilization information from Anthem during the integration
process. See Part III.C.2.b, supra. Nevertheless, as this decision has found, Anthem made
a tactical decision not to emphasize Cigna’s medical management programs and their effect
on utilization because it would play into the DOJ’s argument that the Merger would
eliminate Cigna as a unique competitor. See id. Anthem made its tactical decision
independently, and Cigna thus proved that this aspect of the Antitrust Decisions was not
caused by its conduct. But because the effect of the utilization information is a close call,
this decision does not consider the District Court’s reasoning on this point when analyzing
whether the District Court would have ruled the same way if Cigna had fulfilled its
contractual obligations.

268
 The District Court rejected wholesale the $900 million in projected savings that

Anthem customers could achieve by moving to Cigna products. The District Court found

that Anthem had not identified any means of delivering those savings to its customers. See

Dist. Ct. Op. 236 F. Supp. 3d at 244–45. Cigna’s breaches of the Efforts Covenants did not

contribute to that finding.

Finally, the District Court questioned whether the full $2.4 billion in medical cost

savings was verifiable because Anthem’s internal documents showed that Anthem had

considered ways to keep a portion of those savings for itself. See Dist. Ct. Op., 236 F. Supp.

at 182, 237 n.36, 251. Cigna’s breaches of the Efforts Covenants did not contribute to that

finding.

On appeal, Anthem only challenged the District Court’s treatment of the medical

cost savings. Cir. Ct. Op., 855 F.3d at 353. The DC Circuit Court agreed that the projected

efficiencies attributable to moving Cigna customers to Anthem plans were not merger-

specific because they simply reflected the continued marketing of Anthem’s product to

existing Cigna customers. See id. at 357. The DC Circuit Court also agreed that the savings

that Anthem customers could achieve by moving to Cigna products were not verifiable

because Anthem had not identified any means of delivering these savings to its customers.

See id. at 361. And the Majority held that the District Court “rightly cast doubt” on the

assumption made by Anthem’s expert that 98% of the medical cost savings would be

passed through to Anthem’s customers. Id. Cigna’s breaches of the Efforts Covenants did

not contribute to these holdings.

269
 The Antitrust Decisions thus concluded that the Merger was likely to reduce

competition in the market for national accounts and rejected Anthem’s efficiencies defense

for reasons unrelated to Cigna’s breaches of the Efforts Covenants. It follows that the

Antitrust Decisions would have reached the same result even if Cigna had complied with

its obligations under the Efforts Covenants.

Anthem’s strongest argument against this outcome rests on the pervasiveness of

Cigna’s breaches and the reasoning in the Dissent. Cigna’s breaches were so extensive that

it seems possible that if Cigna and its advisors had truly expended their best efforts to

achieve regulatory approval, then the process might have come out differently. The

Dissent’s reasoning shows how the analysis of the national accounts issue could have come

out differently.

It is possible that the Antitrust Decisions could have come out differently. It is more

likely than not, however, that District Court and DC Circuit Court would have reached the

same conclusion on the national accounts issue, even if Cigna had fulfilled its obligations

under the Efforts Covenants. Two of Cigna’s experts submitted persuasive reports on that

topic.386 Cigna therefore met its burden of proof to show that the No Injunction Condition

would have failed even if Cigna had fulfilled its obligations under the Efforts Covenants.

2. The Local Markets Issues

Cigna separately argues that the District Court would have enjoined the Merger

based on harm to competition in the market for large-group commercial insurance in

386
See JX 2969; JX 2971; JX 2978; JX 2979.

270
Richmond even if Cigna had complied with its obligations under the Efforts Covenants.

Dkt. 700 at 88. Cigna did not carry its burden of proof on that issue. The problems in the

Richmond market could have been addressed by a local-market divestiture, which is what

Anthem sought to achieve. See Part III.B.3, supra. Cigna’s opposition to a divestiture

prevented Anthem from making headway in that direction. In a world in which Cigna

fulfilled its obligations under the Efforts Covenants, the problem with concentration in the

Richmond market could have been rendered moot or at least substantially mitigated. Cigna

therefore failed to carry its burden of proving that the harm to the large-group market in

Richmond would have doomed the Merger even if Cigna had not breached its obligations

under the Efforts Covenants.

The same is true for Cigna’s observation that the District Court did not reach two

other grounds on which the DOJ challenged the Merger: (i) anticompetitive effects in

thirty-four local markets other than Richmond and (ii) anticompetitive effects on the

market for the purchase of medical services (monopsony) in all thirty-five local markets.

In a world in which Cigna fulfilled its obligations under the Efforts Covenants and

supported a divestiture of the overlapping business in those thirty-five markets, those issues

would have been rendered moot or at least substantially mitigated. In addition, one of

Anthem’s antitrust experts opined persuasively that monopsony claims “are almost never

litigated to judgment.” JX 2972 ¶ 91. Cigna failed to carry its burden of proving that the

DOJ would have prevailed on either of the challenges that the District Court did not reach

even if Cigna had not breached its obligations under the Efforts Covenants.

271
 3. Other Regulatory Approvals

Finally, Cigna argues that the Merger needed additional approvals from state

regulators, contending that “[e]ven if the District Court had not enjoined the merger, it still

could not have closed by the Termination Date [because] 13 state approvals remained

outstanding.” Dkt. 700 at 90. In August 2016, when seeking an expedited trial from the

District Court, Anthem representatives testified that state approvals could take 120 days

after a favorable judgment, while also representing that Anthem would keep working on

the state-approval front to reduce that timeframe.387 If a 120-day period started from

February 8, 2017, the date of the District Court decision, then it would not end until June

8, 2017, after the Termination Date. See CDX1.

Cigna did not carry its burden of proof on this issue because the timeline on which

Cigna relied is an artificial construct. In a world in which Cigna complied with the Efforts

Covenants, antitrust approval could have been achieved earlier, potentially without the

DOJ filing suit, through a settlement, or through an earlier victory in court. If Cigna had

supported a divestiture that addressed the DOJ’s challenges based on local markets, then

there would not have been a need for a second phase of trial before the District Court, and

the entire timeline would have shifted forward. Both Cigna’s and Anthem’s regulatory

counsel believed that even after the District Court’s decision on February 8, 2017, it was

387
See JX 2382 at 3; JX 2383 ¶ 5; Curran Tr. 1491–95.

272
possible to obtain the necessary state regulatory approvals by April 30.388 Cigna failed to

carry its burden of proving that the need for other approvals would have been an

impediment even if Cigna had not breached its obligations under the Efforts Covenants.

4. Judgment In Favor Of Cigna

Because Cigna proved that the DOJ would have sued to enjoin and the Antitrust

Decisions would have ruled against the Merger on the national markets issue even if Cigna

had complied with its obligations under the Efforts Covenants, the No Injunction Condition

would have failed in any event, and Cigna never would have become obligated for the

performance that was due at closing. Anthem therefore is not entitled to a damages award

to remedy Cigna’s breaches of the Efforts Covenants. Judgment will be entered in favor of

Cigna on Anthem’s claims for breach of the Efforts Covenants.

E. Cigna’s Claim Against Anthem For Breach Of The Regulatory Efforts
Covenant

Cigna claims that Anthem breached the Regulatory Efforts Covenant by (i) failing

to pursue every option to change the Blues Rules and (ii) omitting $704 million of potential

merger-specific synergies from its white paper on medical cost savings. Cigna failed to

prove its claims.

1. Cigna’s Claim Regarding The Blues Rules

Cigna contends that Anthem failed to pursue all available avenues to change the

Blues Rules. Cigna maintains that by not taking all possible steps to change the Blues

388
See Danilson Dep. 52–53, 248–49; Holland Tr. 3288–89, 3291; JX 2792; see
also Curran Tr. 1406–07 (expressing view that the states who were parties to the lawsuit
would approve the Merger if Anthem prevailed in the lawsuit).

273
Rules, Anthem breached its obligation under the Regulatory Efforts Covenant to take “any

and all actions necessary to avoid each and every impediment” to regulatory approval.

Cigna failed to prove this claim. Cigna’s argument instead is a manifestation of its own

tactic of “play[ing] this as all roads go to the blues.” JX 2486 at ’490.

a. Anthem’s Interactions With The Blues Association

The length of the Factual Background makes it hard to fathom that there could be a

dimension of the story that this decision has not yet described, but that is the case for

Anthem’s interactions with the Blues Association. Because those interactions were

ultimately collateral to the Antitrust Litigation, the Factual Background did not address

them. But evaluating Cigna’s claim that Anthem breached its obligations under the

Regulatory Efforts Covenant implicates them.

As discussed in the Factual Background, the parties entered into the Merger

Agreement knowing that Anthem derived the vast majority of its revenue from its exclusive

licenses to sell products using the Blues Brands in the Anthem Blue States. It therefore was

essential that Anthem be the surviving entity and that NewCo comply with the Blues

Rules.389

389
See PTO ¶ 90; JX 105 at ’752 (Cigna analysis of the consequences for NewCo
of losing access to the Blues licenses, concluding that “[t]ermination of license would be
significantly damaging to [Anthem] from a business perspective and require a substantial
out-of-pocket payment”); JX 428 at ’303, ’312 (talking points for Cigna Board meeting on
July 15, 2015, “Affiliation with Blues brings substantive benefits including access to the
well regarded Blues brand and additional provider network choices for clients and
customers.”); id. at ’312 (talking points for Cigna Board meeting on July 15, 2015, “We
would need to comply with the ‘Blues Rules’ that regulate how the brand is used and
overall mix of branded and unbranded business.”); JX 4034 at ’138 (Cigna Board
presentation dated July 1, 2015, advising that “[o]perating outside the Blues Rules is not a

274
 Throughout their discussions and when entering into the Merger Agreement, the

parties anticipated that immediately after closing, NewCo would be out of compliance with

the 2/3 Rule and would need to take steps to re-establish compliance.390 The Cigna ELT

viewed the issues presented by the 2/3 Rule as manageable, primarily by rebranding Cigna

business in the Anthem Blue States.391

realistic option” and would result in “[f]inancial penalties . . . and loss of brand and out of
area networks”); Gray Tr. 1677; Zollars Tr. 2489. See generally Part II.B, supra.
390
See JX 351 at ’076 (Cigna Board presentation observing that it was “[l]ikely that
New[C]o will be out of compliance and closing and will need to submit a mitigation plan”);
Zielinski Tr. 149 (explaining that Anthem and Cigna both understood that NewCo would
be out of compliance with the 2/3 Rule and would need to come back into compliance);
Cordani Tr. 2235–36 (same). See generally Part II.D.3 & 6, supra.
391
See Part II.C, II.D.3 & II.D.6, supra; JX 64 at ’182 (Cigna notes on Blues Rules,
identifying primary lever as “rebrand local C business”); JX 79 (analyzing NewCo’s
compliance with Blues Rules for Cigna CFO; noting that “[t]o avoid being in default,
[NewCo] would need to rebrand revenue and members; practically this means moving
[Cigna] members in license states to a product written on a blue license and using the
BlueCard network instead of ours”; observing that “[r]egulatory divestitures would be best
from Cigna and dollar for dollar reduce the exposure to the Rules”; commenting that
“[c]omplying will mean reduced volumes to our network outside of the license states”);
JX 87 (McCarthy anticipating “a high degree of success in moving the C business [in the
Anthem Blue States] to a branded status); JX 91 at ’16364 (same); JX 94 at ’928
(“Although more homework to be done, did appear there was a path to comply with the
[Blues Rules].”); id. at ’929 (“Agreed we likely could get into compliance, and while
growth limitations would erode some value, there was still significant value in a
combination”); JX 97 at ’344 (talking points for update to Cigna Board; noting that there
“did appear there was a path to comply with the [Blues] rules” and that “actions to comply
with the rules” included “[r]ebranding of acquired CI members,” “[a]djusting growth
strategies,” and “[p]otential deal structure alternatives”); JX 98 (Cigna executive’s
summary of 2/3 Rule for Cordani, noting that NewCo would “fail the revenue test at
~57/43” and that “[t]o resolve this, we would need to rebrand between 23 and 27% of
revenue nationally and between 64 and 73% of [Cigna] revenue in the [Anthem] license
areas (the most likely lever)”; “Initial view [of both sides] is enough C[igna] revenue can
be rebranded to come into compliance with [2/3 Rule] in the short term”); JX 105 at ’751
(Cigna ELT presentation to Cigna Board advising that compliance with Blues Rules could

275
 The parties entered into the Merger Agreement expecting that the Blues Rules were

unlikely to change.392 The Cigna Board knew that Anthem could not “change the rules

without the support of other Blues.”393 Cigna’s primary concern when entering into the

Merger Agreement was that the Blues Association would change the Blues Rules to make

it more difficult for NewCo to deliver value. From that standpoint, the pending Blues MDL

was an advantage because it made it less likely that the Blues Association would make

unfavorable changes to the Blues Rules.394

be achieved by having “[Cigna] business in Blue licensed territories . . . substantially
migrate to Blue business, resulting in compliance with the [2/3 Rule] at or shortly after
closing” and that “[i]f compliance would not be attained, [Cigna] business in non-Blue
licensed territories may have to be divested”); JX 351 at ’076 (presentation to Cigna Board
identifying the most likely action to bring NewCo into compliance with the 2/3 Rule as
“[r]ebrand [Cigna] revenue as Blue” in the Anthem Blue States).
392
See JX 134; JX 793 at 75; Gray Tr. 1674; Cordani Tr. 1864, 2108–09, 2236;
Zollars Tr. 2490; Jones Dep. 269.
393
JX 351 at ’072; see id. at ’072, ’075 (explaining that changes required both
(i) 75% of unweighted vote, a metric in which each of the 36 licensees had one vote, and
(ii) 75% of the revenue-weighted vote, where Anthem held 16% of the voting power, to
make changes in the rules); JX 428 at ’313 (talking points for Cigna Board meeting on July
15, 2015, “Changes in the overall structure of the rules (‘standards’) require a double
supermajority vote”; “Changes in the practical application of the rules (‘guidelines’)
require a simple majority of plans present”). See generally Part II.D.3 & 6, supra.
394
See JX 99 at ’546 (Cigna analysis noting that the Blues Association “has the
ability to change the rules retroactively and interpret them in a way contradictory to the
clear reading; they will likely be constrained by the current legal action, i.e. not giving the
appearance of reducing competition; but could seek to negatively impact the deal through
other amendments or guidelines”); JX 428 at ’303, ’313 (talking points for Cigna Board
meeting on July 15, 2015, noting that “[u]nfavorable changes are unlikely while the current
litigation is continuing”); id. at ’313 (identifying the two most likely outcomes as either
(i) “[r]ules stay in place as is and we adapt our model to comply through a mixture of
rebranding and other actions, in line with the current business case,” or (ii) “[g]uidelines
are relaxed, which is favorable to the current business case”); JX 4034 at ’130, ’138

276
 The parties understood and agreed that the best solution for changing the 2/3 Rule

was through a settlement in the Blues MDL.395 Anthem had told Cigna that the “[t]iming

of resolution [in the Blues MDL] is unclear,” but that Anthem “anticipate[d] a settlement

within three years.” JX 4034 at ’146. No one thought that the Blues Association would act

gratuitously to make it easier for NewCo to maintain its licenses.

The Blues Association responded to the Merger as the parties expected. When Scott

Serota, the CEO of the Blues Association, saw media accounts suggesting that Anthem and

Cigna were talking about a deal, he told Anthem that the Blues Board would discuss the

potential merger as its first agenda item on June 19, 2015, one month before the Merger

Agreement was signed. JX 263. He intimated that the Merger was an issue and that some

members were “worried about competition in their own markets from a fellow [Blues]

member.” Id. He told Anthem that the Blues Association’s staff had “done the math” and

that NewCo would fail the 2/3 Rule, which “would result in Anthem losing its Blue

license.” Id. During the meeting, the Blues Board received a presentation about the

(presentation to Cigna Board on July 1, 2015, advising that “[i]t is possible but very
difficult to make unfavorable changes to the Blues Rules”); Zielinski Tr. 148 (describing
discussions with Cigna about risk of adverse change in Blues Rules); id. at 167 (discussing
benefits of Blues MDL as curb on adverse rule changes); Gray Tr. 1645 (same). See
generally Part II.C, II.D.3 & II.D.6, supra.
395
See JX 81 (referring to settlement in Blues MDL as best path for changing 2/3
Rule); JX 94 at ’928 (same); JX 4034 at ’145 (noting that as part of settlement in Blues
MDL, Anthem was “[p]ushing for elimination or an increase in the cap”); Zielinski Tr. 153
(explaining that the parties expected the 2/3 Rule “would change as part of settlement of
the MDL action”); see also JX 172 at ’615 (Anthem talking points informing Cordani that
Anthem was planning to attempt to change the 2/3 Rule through a mediated settlement of
the Blues MDL).

277
licensure implications of the Merger, which identified both positive and negative

implications of the Merger for the Blues Association. See JX 267.

After the Merger was announced, some Blues Association members expressed

support, but others opposed the Merger vigorously.396 Internally, the Blues Association

examined the deal closely.397 The Blues Association sent an early warning shot across

Anthem’s bow by asserting that aspects of a website that Anthem had created to support

the Merger violated branding restrictions in the Blues Rules. See JX 557.

In February 2016, the Blues Board formed a Special Task Force to respond to the

competitive threat that NewCo could pose.398 The Special Task Force considered a number

of changes to the Blues Rules that could affect NewCo’s ability to operate as a member of

the Blues Association, including,

 Reducing the amount of time that NewCo would have to achieve compliance with
the Blues Rules. See JX 1197.

 Changing the definition of a “National Competitor” and “Major Competitor” to limit
NewCo’s ability to use the Cigna brand. Id.

 Increasing the termination fee that NewCo would have to pay to relinquish its Blues
license. Id.

396
See JX 264; JX 508; Zielinski Tr. 301–302, 307–08; Swedish Tr. 1267–68; see
also Serota Tr. 2831.
397
See JX 534; JX 535; JX 536; JX 573.
398
PTO ¶ 164; JX 1197.

278
Anthem opposed the formation of the Special Task Force and objected to its work.399

Anthem did not tell Cigna about the Special Task Force. PTO ¶ 164.

In March 2016, the Special Task Force made recommendations that would have

impaired NewCo’s ability to operate as a member of the Blues Association. The Special

Task Force proposals included a rule that would prevent Anthem from providing its

discounts to Cigna customers.400

Swedish was a member of the Special Task Force. Anthem personnel provided

Swedish with analyses and talking points to argue against each of the proposals, and

Swedish consistently declined to vote in favor of them.401 Zielinski worked against them

as well. He had a series of meetings with representatives of the Blues Association in an

effort to convince them to change or eliminate the 2/3 Rule as part of the settlement of the

Blues MDL. See JX 1581 at ’070. He even lined up White & Case to be ready for litigation,

explaining, “We will push back internally . . . . However, if we are unsuccessful, I will not

rule out the possibility of suing the [the Blues Association] over the changes to the Rules

which will have adverse consequences to Anthem.”402

The Special Task Force backed off from its initial recommendations. Rather than

reducing the timeline for compliance, the Special Task Force proposed giving a member

399
See JX 1197; Serota Tr. 2866–70, 2879.
400
See JX 1197; JX 1718; Zielinski Tr. 312–16.
401
See JX 1483; JX 1498; JX 1596; JX 1636; see also JX 674; Zielinski Tr. 16364,
52223.
402
JX 1507; see JX 1547.

279
an additional sixty days to propose a compliance plan. The Special Task Force, however,

did recommend increasing the fee that a member plan would have to pay to voluntarily

relinquish its Blues license. See JX 1690. By June 2016, in response to Anthem’s

opposition, the Special Task Force halted its work.403

Four days of mediation in the Blues MDL were scheduled for June 2016. JX 1849

at ’002. After the mediation, Zielinski reported that the Blues Association members had

“finally come to the realization that the settlement of the Blues antitrust litigation will result

in a significant reduction, if not total elimination of the [2/3 Rule] rule.”404 Shortly

thereafter, the Brands Committee of the Blues Association began working on rules that

could be adopted to replace the 2/3 Rule.405 The Blues Board subsequently formed a new

special committee to evaluate possible alternatives. See JX 2508. As late as September

2016, the Blues Association was considering changes to the Blues Rules that could

adversely affect the Merger. See Zielinski Tr. 323–24.

403
See JX 1849 at ’002; JX 2014.
404
JX 2464 at ’781. As noted previously, Anthem invoked the mediation privilege
to block discovery into the mediation sessions that took place in the Blues MDL.
Consequently, the court precluded Anthem “from submitting evidence of its efforts in
connection with the joint defense or mediation of the Antitrust MDL, if any, to change the
Association’s National Best Efforts Rule.” Dkt. 544 ¶ 5. The court permitted Anthem to
introduce a document that it had produced, but precluded Anthem from going beyond the
text of the document. See id. ¶ 4; Trial Tr. 159–61, 166. The admissible evidence
nevertheless demonstrates that Anthem pursued a settlement of the Blues MDL as the
optimal strategy for changing the 2/3 Rule.
405
See JX 2464; JX 2479.

280
 Ultimately, the Blues Association did not make any changes to the Blues Rules

during the life of the Merger. They did not make the Blues Rules more onerous. Nor did

they modify or eliminate the 2/3 Rule.

b. The Applicable Efforts Covenant

As with Anthem’s claims against Cigna, a threshold question exists as to whether

Anthem’s interactions with the Blues Association should be evaluated under the

Reasonable Best Efforts Covenant or the Regulatory Efforts Covenant. The proper

framework is the Reasonable Best Efforts Covenant, under which Anthem had a general

obligation to expend efforts to satisfy the conditions to closing and consummate the

Merger. The Regulatory Efforts Covenant, by contrast, obligated the parties to take action

to address legal impediments that a Governmental Entity like the DOJ might raise. The

Blues Rules were an impediment in the general sense that they constrained how NewCo

would operate, and the DOJ or a court therefore would take the Blues Rules into account

when assessing whether the Merger would have procompetitive or anticompetitive effects,

but the Blues Rules themselves were not a legal impediment in the sense contemplated by

the Regulatory Efforts Covenant.406

406
See MA § 5.3(b). The Blues Rules could have implicated the Regulatory Efforts
Covenant if the DOJ had conditioned its approval on changes to them or if the DOJ had
identified them as a concern for the parties to address. See id. Neither the DOJ nor any
other Governmental Entity ever made a request of that sort. Nor did the DOJ assert that the
2/3 Rule was itself anticompetitive. See Zielinski Tr. 167–68; Paul Tr. 667–68; Rosen Tr.
801, 816–17, 870–71, 892–93; Jones Tr. 2967–68. Zielinski testified at trial that he
personally did not view the 2/3 Rule as anticompetitive. Zielinski Tr. 285. Cigna
successfully impeached this testimony. See id. at 285–99; JX 611; JX 674.

281
 In light of this distinction, the proper contractual framework for analyzing Anthem’s

actions regarding the Blues Rules is the Reasonable Best Efforts Covenant. Cigna’s claim

that Anthem breached the Regulatory Efforts Covenant by failing take additional actions

to address the Blues Rules therefore fails because that is not the operative provision of the

contract that governs Anthem’s conduct. The balance of the analysis assumes that the

Regulatory Efforts Covenant applies.

c. Whether Anthem’s Conduct Breached The Regulatory Efforts
Covenant

Cigna failed to prove that Anthem breached the Regulatory Efforts Covenant by not

taking more vigorous action to change the 2/3 Rule. Anthem selected a viable strategy

seeking to change the 2/3 Rule as part of a settlement in the Blues MDL. Anthem pursued

this strategy in a logical way. Anthem resisted efforts by the Blues Association to adopt

rules that would harm the Merger, and Anthem appropriately chose not to take more

aggressive actions that could have antagonized the Blues Association. Anthem thus

fulfilled its obligations under the Regulatory Efforts Covenant.

As discussed in the preceding section, both sides entered into the Merger Agreement

expecting that the Blues Rules would not be changed and that NewCo would have to

comply with the 2/3 Rule. As the DOJ’s investigation unfolded, Anthem came to

understand that the DOJ’s views about the implications of the 2/3 Rule would be critical to

the parties’ discussion with the DOJ and getting approval. After Schlegel’s deposition in

November 2015, Zielinski described the 2/3 Rule as his biggest worry inside the DOJ.

282
Anthem understood that if the 2/3 Rule were eliminated or modified, then it would

eliminate one of the DOJ’s areas of concern. See Part II.F.2, supra.

The question was how best to accomplish that goal. Under the Regulatory

Cooperation Covenant, Anthem had the right to determine the parties’ strategy for

obtaining regulatory approval. Once it picked a strategy, Anthem was obligated to take any

and all actions that were necessary and appropriate to carry out that strategy. Anthem was

not contractually obligated to achieve regulatory approval.

The record establishes that Anthem sought to change the 2/3 Rule through a

settlement of the Blues MDL.407 Anthem explained to Cigna that it would pursue this and

discussed the likely timeline for achieving a settlement.408 Cigna understood this strategy

and agreed with it. Zielinski Tr. 163.

Cigna’s contemporaneous conduct demonstrates that it agreed with Anthem’s

strategy. As part of its opposition to the Merger, Cigna sent Anthem more than twenty-five

letters alleging breaches of the Merger Agreement.409 Cigna never asserted that Anthem

had an obligation to change the 2/3 Rule or was breaching the Regulatory Efforts Covenant

by following its selected course of action.410

407
See JX 2464; Zielinski Tr. 157–60.
408
See JX 94 at ’927; JX 339 at ’325; JX 4034 at ’146; Zielinski Tr. 141, 162–63;
Jones Tr. 2582, 2587–88.
409
See Part II.H.4, supra; Jones Tr. 2963.
410
See Zielinski Tr. 171–72; Cordani Tr. 2146; Jones Tr. 2965–67; Rule Tr. 3155–
56.

283
 Anthem had every reason to pursue the optimal strategy for addressing the 2/3 Rule.

Anthem opposed the existence of the rule, which limited its ability to grow its non-Blues

business. Eliminating or changing the 2/3 Rule also would make the Merger more accretive

to NewCo because Anthem would not need to divest Cigna business to achieve compliance.

See Zielinski Tr. 531.

Anthem’s strategy was sound. The members of the Blues Association were not

going to “voluntarily agree to change the [2/3 Rule] and get nothing in return for it.”

Zielinski Tr. 158. As demonstrated by their response to the Merger, the Blues Association

was not interested in helping NewCo create value by competing with its members. If

anything, the Blues Association wanted to impose greater restrictions on NewCo.411 Unless

linked to a settlement of the Blues MDL, any effort by Anthem to convince its fellow

members to change the 2/3 Rule would have been “dead on arrival.” Zielinski Tr. 553.

The same is true for other possible proposals that Anthem could have made. As

Cigna points out, Anthem could have lobbied the Blues Board to exempt the Merger from

the 2/3 Rule or to give NewCo a longer timeline for complying with the 2/3 Rule. No one

asked the Blues Board to eliminate or modify the 2/3 Rule or exempt the Merger from its

coverage.412 It nevertheless seems likely that such an effort could have backfired and

caused the Blues Association to become more suspicious of Anthem and more focused on

411
See JX 2704; Zielinski Tr. 308–11; Serota Dep. 334–36.
412
See JX 2911 at 8; Serota Tr. 2852–54; Zielinski Tr. 332–38.

284
imposing additional restrictions on NewCo.413 As demonstrated by the work of the Special

Task Force, the Blues Association actively opposed the Merger.414 As late as September

2016, the Blues were considering “rules which [were] designed to restrict and eliminate

[Anthem’s] ability to compete against the Blues Plans with [its] non-Blue brands.”415

During post-trial argument, Cigna’s counsel acknowledged that “the Blues were going to

fight [the Merger] every step of the way. So there was no reason to think that the

adjustments that the Blues would have had to make to make [the Merger] work were ever

going to happen.” Dkt. 728 at 217. Although it is true that the members of the Blues Board

would have had to consider those proposals “in good faith,” Serota Tr. 2850–51, they

would have done so as fiduciaries of the Blues Association based on what was in the best

interests of the Association, not what was helpful to the Merger.

Cigna also maintains that Anthem could have exploited its commercial leverage as

the largest member of the Blues Association and threatened to leave if the Association did

not change the 2/3 Rule. Anthem’s territory consisted of the fourteen Anthem Blue States;

the next largest member had a territory consisting of only five states. See JX 846 at ’342.

It would have created a large hole in the Blues network if Anthem left. Serota Tr. 2832.

Anthem therefore had some commercial leverage, but the argument that Anthem should

413
See JX 793 at 75; Zielinski Tr. 146–47.
414
See JX 1197; JX 1456; JX 1476; JX 1624; JX 1718; Zielinski Tr. 147–48, 312–
16.
415
JX 2464; see Zielinski Tr. 322–24.

285
have used it against the Association is unpersuasive. Despite Anthem’s leverage, the

members of the Blues Association adopted the 2/3 Rule over Anthem’s opposition as a

condition to approving an acquisition by Anthem in 2005.416 Anthem also could not leave

the organization without losing its licenses, which would have breached its obligation

under the Merger Agreement to continue to operate in the ordinary course of business.417

In addition to preventing Anthem from using its Blues licenses to conduct business, leaving

the Blues Association would have obligated Anthem to pay an exit fee of approximately

$2.8 billion.418 Anthem’s threat might well have rung hollow.

Anthem theoretically could have refused to comply with the 2/3 Rule and either

sued the Blues Association or forced them to sue.419 Anthem and Cigna discussed that

potential path, which they appropriately dubbed the “nuclear option.”420 Doing so would

have jeopardized Anthem’s licenses, and the loss of its licenses would have had disastrous

effects on Anthem’s business.421 Under the Burdensome Condition Exception, Anthem was

416
See JX 9 at ’097–98; Zielinski Tr. 156.
417
MA § 4.2; Zielinski Tr. 274.
418
JX 793 at 75; see JX 1197 at ’002.
419
See JX 62; JX 94 at ’928; Zielinski Tr. 195–202.
420
Cordani Tr. 2143–44; Zielinski Tr. 173, 178. Cigna successfully impeached
Zielinski’s testimony on this point, demonstrating that during his deposition, he
implausibly denied using the term “nuclear option.” See id. 200–01.
421
Zielinski Tr. 178; see JX 105 at ’752.

286
not obligated to pursue that course of action. Cigna understandably never suggested that

Anthem pursue it.422 It was an avenue to consider, if at all, only after the Merger closed.

Anthem also could have tried a grassroots strategy to eliminate the 2/3 Rule or

reduce the threshold. Shortly before the Merger was announced, Anthem told Cigna that it

had reached out to approximately seventeen members of the Blues Association and

received fourteen responses that were supportive of a transaction. See JX 339 at ’325.

During the same period, Anthem told Cigna that they believed there was a “coalition of 20

plans that are in agreement” on “[r]emoval of [the 2/3 Rule].” JX 351 at ’079. The Merger

would have conferred some benefits on the Blues Association, such as “the potential of

adding millions of lives to the Blue system.” Serota Tr. 2830–31. Anthem could have

engaged in a vigorous lobbying effort to generate support for the Merger and either

eliminate the 2/3 Rule or lower the threshold. Although eliminating the rule required a

double-supermajority vote, amending the rule to reduce the percentage could have been

accomplished by a simple majority of the plans.423

422
See Zielinski Tr. 178; Cordani Dep. 245.
423
See Serota Tr. 2830; Zielinski Tr. 191–92. Swedish also could have been more
involved. During the relevant period, he chose not to attend a number of meetings of the
Blues Board where he potentially could have advocated for a change in the Blues Rules.
See CDX 5 (collecting evidence and testimony about Swedish’s absences from Association
meetings). At trial, Swedish’s testimony about his involvement with the Blues Board and
the Special Task Force did not suggest a meaningful effort to advocate in favor of the
Merger. See Swedish Tr. 1287–90.

287
 All of these ideas are ways to criticize Anthem’s strategy with the benefit of

hindsight. In real time, Anthem adopted a reasonable strategy and pursued it, consistent

with its obligations under the Regulatory Efforts Covenant.

2. Cigna’s Claim Regarding The $704 Million In Efficiencies

Cigna also argues that Anthem breached the Merger Agreement “by abandoning

$704 million of potential merger-specific efficiencies.” Dkt. 700 at 98. The record does not

support Cigna’s claim.

As discussed previously, in early May 2016, Cadwalader sent a lengthy email to

White & Case that was highly critical of Anthem’s draft white paper on medical cost

synergies and argued that Anthem should use data on Cigna’s risk-adjusted cost of care

(PMPM) to show that the Merger could achieve efficiencies by applying Cigna’s strategies

more broadly. Because Cigna had withdrawn from integration planning in February,

Anthem did not have the necessary data. White & Case asked for information to make the

argument that Cadwalader was suggesting, and Cadwalader responded with PowerPoint

presentations and marketing materials from 2012, 2013, and 2014. Using the high-level

materials, Anthem’s economists initially calculated an incremental $704 million in

efficiencies. Anthem’s lawyers, however, could not verify the total cost of care calculation,

which conflicted with the results of analyses based on claims data. In an effort to

understand the issue better, Anthem’s lawyers asked for more detailed support from Cigna,

but Cigna did not provide it. Anthem’s lawyers therefore dropped the language from the

white paper. See Part III.B.2, supra.

288
 Anthem did not breach its contractual obligations by failing to include this

information, which its lawyers could not verify. The incident instead shows the dire

consequences of Cigna’s withdrawal from the integration planning process for the

efficiencies defense.

Cigna more generally argues that Anthem chose the wrong regulatory strategy,

claiming that Anthem attacked Cigna and presented an efficiencies defense grounded on

discounted prices rather than innovation. See Dkt. 700 at 98. That choice was reasonable.

Anthem sought to blunt the DOJ’s contention that Cigna was uniquely innovative, just as

the parties had anticipated when Cordani thought he had a path to become CEO of NewCo.

See Part III.B.2, supra.

Anthem sought at all times to complete the Merger. Anthem pursued the best

regulatory strategy that it believed was available, given Cigna’s withdrawal from

integration planning and its ever-increasing opposition to the Merger. As this decision has

noted, the Merger Agreement gave Anthem the right to “take the lead in . . . developing

strategy for responding to any investigation or other inquiry by any Governmental Entity

related to any of the Necessary Consents.” MA § 5.3(e). Although the regulatory strategy

that Anthem pursued ultimately did not succeed, Anthem did not breach its obligations

under the Regulatory Efforts Covenant by acting as it did.

3. The Effect-Of-Termination Provision

Assuming for the sake of argument that Anthem had breached its obligations under

the Merger Agreement, Anthem would not face any liability. The parties to a contract “can

by agreement vary the rules” established by the common law, “as long as the agreement is

289
not invalid for unconscionability or on other grounds.” Restatement (Second) of Contracts

§ 346 cmt. a (citation omitted). In the Merger Agreement, Cigna and Anthem agreed to

modify the circumstances under which they potentially could recover damages. Titled

“Effect of Termination,” Section 7.2 states,

In the event of the termination of this Agreement pursuant to Section 7.1, the
obligations of the parties under this Agreement shall terminate, except for
the obligations in the confidentiality provisions of Section 5.2, and all of the
provisions of this Section 7.2 and Section 7.3, and there shall be no liability
on the part of any party hereto; provided, however, that no party hereto shall
be relieved or released from any liabilities or damages arising out of (i) any
fraud by any party, (ii) the Willful Breach by any party of any representation
or warranty on the part of such party set forth in this Agreement or (iii) the
Willful Breach of any covenant or agreement set forth in this Agreement.

MA § 7.2 (the “Effect-Of-Termination Provision”). The Merger Agreement defines

“Willful Breach” as “a material breach of this Agreement that is the consequence of an act

or omission by a party with the actual knowledge that the taking of such act or failure to

take such action would be a material breach of this Agreement.”424

Under the Effect-Of-Termination Provision, it is not enough for Cigna to prove the

elements of a claim for breach of contract that satisfies the common law framework. The

parties agreed that once the Merger Agreement had been terminated, “there shall be no

liability on the part of any party hereto” except in three defined situations. Only one is

pertinent here: “the Willful Breach of any covenant or agreement set forth in this

424
MA § 8.13. Although not relevant to this case, a second part of the definition of
“Willful Breach” encompassed any failure by Anthem to pay the cash consideration on the
date of closing (or to have the funds available to do so). See id. (defining Willful Breach
as either a failure to act with actual knowledge that such action would be a material breach
“or as otherwise contemplated by the last sentence of Section 5.14(h)”).

290
Agreement.” MA § 7.2(iii). Cigna thus had to demonstrate that Anthem’s breach of the

Efforts Covenants was (i) a material breach and (ii) committed “with the actual knowledge

that the taking of such act or failure to take such action would be a material breach.” Id.

§ 8.13.

The operative element for present purposes is whether Anthem acted “with the

actual knowledge that the taking of such act or failure to take such action would be a

material breach.” At common law, a knowing and intentional breach occurs when a party

knowingly takes an action that results in a breach. Hexion Spec. Chems., Inc. v. Huntsman

Corp., 965 A.2d 715, 746 (Del. Ch. 2008). The knowledge requirement only modifies the

action; the party does not also have to know that its conduct constitutes a breach. Id. In the

definition of “Willful Breach,” the parties to the Merger Agreement contracted around this

common law rule by providing that liability would exist only if the breaching party acted

“with the actual knowledge that the taking of such act or failure to take such action would

be a material breach of this Agreement.” MA § 8.13. Actual knowledge is “direct and clear

knowledge, as distinguished from constructive knowledge.”425

Determining actual knowledge requires a contextual judgment based on the record

in a given case. An all-too-human trial judge lacks the ability to read a witness’s mind and

retrospectively determine the state of the witness’s knowledge. See Allen v. Encore Energy

P’rs, L.P., 72 A.3d 93, 106 (Del. 2013) (“[T]he members of the Court of Chancery cannot

425
Actual Knowledge, Black’s Law Dictionary (11th ed. 2019); accord Deutsche
Bank Nat’l Trust Co. v. Goldfeder, 86 A.3d 1118, at *2 (Del. 2014) (ORDER) (“Actual
knowledge is defined as ‘direct and clear knowledge.’”) (quoting Black’s Law Dictionary).

291
peer into the hearts and souls of directors.” (internal quotation marks omitted)). A judge

must draw on a combination of direct evidence, indirect evidence, and circumstantial

evidence. See Voigt v. Metcalf, 2020 WL 614999, at *25 (Del. Ch. Feb. 10, 2020); cf. State

v. Anderson, 74 A. 1097, 1099 (Del. 1910) (recognizing that intent “may be found by direct

evidence, such as the admissions or declarations of the accused, or by indirect evidence;

that is by the rational inferences to be drawn from what the accused is proven to have done

or said, and from all the facts and circumstances involved in the transaction”).

Under the common law, a material breach is a breach of contract that is significant

enough to excuse the other party from performance. BioLife Sols., Inc. v. Endocare, Inc.,

838 A.2d 268, 278 (Del. Ch. 2003) (“A party is excused from performance under a contract

if the other party is in material breach thereof.”). At common law, “[a] breach is material

if it goes to the root or essence of the agreement between the parties, or touches the

fundamental purpose of the contract and defeats the object of the parties in entering into

the contract.” Mrs. Fields Brand, Inc. v. Interbake Foods LLC, 2017 WL 2729860, at *28

(Del. Ch. June 26, 2017) (internal quotation marks omitted), clarified on denial of rearg.

2017 WL 3863893 (Del. Ch. July 27, 2017). Whether a breach is material “is determined

by weighing the consequences in the light of the actual custom of men in the performance

of contracts similar to the one that is involved in the specific case.”426

426
BioLife Sols., 838 A.2d at 278 (internal quotation marks omitted); accord 23
Williston on Contracts § 63:3, Westlaw (database updated May 2020); see Restatement
(Second) of Contracts § 241 (identifying five guiding factors to consider when determining
whether “a failure to render . . . performance is material”). By using the common law term
“material breach,” the Willful Breach definition establishes a different standard than a

292
 Cigna failed to prove that Anthem knowingly committed a material breach of the

Efforts Covenants. The record indicates that Anthem acted at all times with the belief that

it was complying with the Merger Agreement and using its utmost efforts to complete the

Merger. Anthem expended approximately $800 million attempting to consummate the

Merger. See Zielinski Tr. 180–81. So zealously did Anthem try to complete the Merger

that it took aggressive positions on privilege in the Antitrust Litigation (and which it

renewed into this litigation) that this court is unable to endorse. Anthem also argued that

NewCo could exercise the affiliate clauses in its provider agreements when the Anthem

ELT had already made a decision not to invoke those clauses broadly. Throughout the

process, Anthem made judgments about what strategy to pursue. Although those judgments

quite obviously failed to achieve Anthem’s goal, Anthem did not willfully breach its

obligations under the Efforts Covenants.

4. Judgment In Favor Of Anthem

Because Cigna failed to prove that Anthem breached its obligations under the

Regulatory Efforts Covenant and further failed to prove that Anthem committed a Willful

Breach, Cigna is not entitled to a damages remedy. Judgment will be entered in favor of

Anthem on Cigna’s claims for breach of the Efforts Covenants.

provision that requires compliance “in all material respects.” For a discussion of the latter
concept, see Akorn, 2018 WL 4719347, at *84–86.

293
F. Cigna’s Claim Against Anthem For Failing To Pay The Reverse Termination
Fee

In a separate claim for breach of contract, Cigna contends that Anthem breached its

obligation to pay the Reverse Termination Fee. Anthem maintains that it never became

obligated to pay the Reverse Termination Fee.

1. The Provisions Governing The Reverse Termination Fee

Section 7.3(e) of the Merger Agreement governs Anthem’s obligation to pay the

Reverse Termination Fee (the “RTF Provision”). It states,

In the event that this Agreement is terminated by either Anthem or Cigna

(i) pursuant to Section 7.1(g), but only if the applicable Legal
Restraint constitutes a Regulatory Restraint, or

(ii) pursuant to Section 7.1(b) and, in the case of this clause (ii), at the
time of such termination, all of the conditions set forth in Section 6.1 and
Section 6.2 have been satisfied (other than (x) Section 6.1(a) (but only if the
applicable Legal Restraint constitutes a Regulatory Restraint) or Section
6.1(b) and (y) conditions that by their nature are to be satisfied at the Closing,
but that are capable of being satisfied if the Closing were to occur on the date
of such termination),

then Anthem shall pay to Cigna a fee . . . in the amount of $1,850,000,000
(the “Reverse Termination Fee”);

provided, however, that no Reverse Termination Fee shall be payable
pursuant to this Section 7.3(e) in the event that

(A) the failure of the condition set forth in Section 6.1(a) (but only if
the applicable Legal Restraint constitutes a Regulatory Restraint) or
Section 6.1(b) to be satisfied is caused by Cigna’s Willful Breach of
Section 5.3 or

(B) Anthem has waived the condition set forth in Section 6.1(b) and
Cigna refuses to effect the Merger on the basis that the condition set
forth in clause (iii) or (iv) of Section 6.1(b) has not been satisfied.

MA § 7.3(e) (formatting added).

294
 References to the conditions in Section 6.1(a) and 6.1(b) permeate the RTF

Provision. Section 6.1(a) is the No Injunction Condition. Section 6.1(b) is the

Governmental Approval Condition.

As discussed previously, the No Injunction Condition makes it a condition to the

obligation to close that

[n]o Governmental Entity or federal or state court of competition jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, judgment, injunction or other order
(whether temporary, preliminary or permanent), in any case that is in effect
and that prevents or prohibits consummation of the Mergers (collectively, the
“Legal Restraints”).

MA § 6.1(a)(i). A subtype of Legal Restraint is a “Regulatory Restraint,” which is defined

as “any Legal Restraint relating to (i) the HSR Act or any other antitrust laws, (ii) any

Healthcare Laws or insurance laws or (iii) any [Blues] Licenses or [Blues] Rules.” MA

§ 8.13. In this case, it is undisputed that the permanent injunction issued by the District

Court was both a Legal Restraint and a Regulatory Restraint.

Generally speaking, the RTF Provision obligates Anthem to pay the Reverse

Termination Fee if either side terminates the Merger Agreement under one of two possible

sections. The first is Section 7.1(g), which states that the Merger Agreement may be

terminated

[b]y either Anthem or Cigna, if the condition set forth in Section 6.1(a) [the
No Injunction Condition] is not satisfied and the Legal Restraint giving rise
to such non-satisfaction has become final and non-appealable;

provided, however, that the right to terminate this Agreement pursuant to this
Section 7.1(g) shall not be available to any party that has failed to perform
fully its obligations under this Agreement in a manner that shall have

295
 proximately caused or resulted in the imposition of such Legal Restraint or
the failure of such Legal Restraint to be resisted, resolved, or lifted.

MA § 7.1(g) (formatting added). Section 7.1(g) thus grants both sides the right to terminate

the Merger Agreement if there is a Legal Restraint (such as a permanent injunction) that

blocks the Merger from closing and which becomes final and not subject to any further

appeal (the “Legal Restraint Termination Right”). Under the proviso, a party could not

exercise the Legal Restraint Termination Right if its own failure to perform its obligation

under the Merger Agreement “proximately caused or resulted in the imposition of” the

Legal Restraint that caused the No Injunction Condition to fail.

The second section that could trigger payment of the Reverse Termination Fee is

even more complex. Section 7.1(b) states that the Merger Agreement may be terminated

[b]y either Anthem or Cigna, if the Merger shall not have been consummated
on or before January 31, 2017 (the “Termination Date”);

provided, however, that the right to terminate this Agreement pursuant to this
Section 7.1(b) shall not be available to any party that has failed to perform
fully its obligations under this Agreement in a manner that shall have
proximately caused or resulted in the failure of the Merger to have been
consummated by the Termination Date;

provided, further, that if all of the conditions to Closing shall have been
satisfied or shall be then capable of being satisfied, other than the conditions
set forth in Section 6.1(a) [the No Injunction Condition] (but only if the
applicable Legal Restraint constitutes a Regulatory Restraint) and Section
6.1(b) [the Governmental Approval Condition], the Termination Date may
be extended by Anthem or Cigna, by written notice to the other party, to a
date not later than April 30, 2017.

MA § 7.1(b) (formatting added). Section 7.1(b) thus grants each side a right to terminate

the Merger Agreement if the Termination Date for the Merger Agreement has passed and

296
that side’s own conduct did not proximately cause the failure of the Merger to be

consummated before the Termination Date (the “Temporal Termination Right”).

Under the RTF Provision, however, for Anthem to become obligated to pay the

Reverse Termination Fee in the event that a party exercised the Temporal Termination

Right, it had to be true at the time of termination that

all of the conditions set forth in Section 6.1 and Section 6.2 have been
satisfied (other than

(x) Section 6.1(a) [the No Injunction Condition] (but only if
the applicable Legal Restraint constitutes a Regulatory Restraint) or
Section 6.1(b) [the Governmental Approval Condition] and

(y) conditions that by their nature are to be satisfied at the
Closing, but that are capable of being satisfied if the Closing were to
occur on the date of such termination).

To reiterate, Section 6.1 identifies conditions to both parties’ obligations to close. Section

6.2 identifies additional conditions to Anthem’s obligation to close. The latter set of

conditions includes Section 6.2(b), titled “Performance of Obligations of Cigna,” which

states,

Cigna shall have performed or complied in all material respects with all
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date. Anthem shall have received a
certificate of the chief executive officer and the chief financial officer of
Cigna to such effect.

MA § 6.2(b) (the “Cigna Compliance Condition”). Cigna’s obligations under the Cigna

Compliance Condition include its obligations under the Efforts Covenants.

Based on this portion of the RTF Provision standing alone, Anthem is obligated to

pay the Reverse Termination Fee in the event a party exercises the Temporal Termination

Right only if all of the conditions to closing in both Sections 6.1 and 6.2 have been satisfied

297
at the time of termination, including the Cigna Compliance Condition and except for (i) the

No Injunction Condition, (ii) the Governmental Approval Condition, and (iii) “conditions

that by their nature are to be satisfied at the Closing, but that are capable of being satisfied

if the Closing were to occur on the date of such termination).” Put differently, Anthem is

obligated to pay the Reverse Termination Fee regardless of whether or not the No

Injunction Condition or the Governmental Approval Condition are met, but Anthem is not

obligated to pay the Reverse Termination Fee if other conditions remain unsatisfied,

including the Cigna Compliance Condition.

Matters become even more complicated because the RTF Provision contains a

proviso, which states,

provided, however, that no Reverse Termination Fee shall be payable
pursuant to this Section 7.3(e) in the event that . . . the failure of the condition
set forth in Section 6.1(a) [the No Injunction Condition] (but only if the
applicable Legal Restraint constitutes a Regulatory Restraint) or Section
6.1(b) [the Governmental Approval Condition] to be satisfied is caused by
Cigna’s Willful Breach of Section 5.3.

MA § 7.3(e) (the “Willful Breach Exception”). Section 5.3 of the Merger Agreement

contained the Efforts Covenants.

The parties disagree about how to interpret the Willful Breach Exception. Anthem

maintains that the Willful Breach Exception applies only if Anthem is otherwise obligated

to pay the Reverse Termination Fee. If so, then under the Willful Breach Exception,

Anthem no longer is obligated to pay if either (i) the Governmental Approval Condition

failed or (ii) the No Injunction Condition failed because of a Regulatory Restraint and the

failure of either condition was “caused by Cigna’s Willful Breach of Section 5.3.”

298
 As Anthem sees it, if Anthem is not otherwise obligated to pay the Reverse

Termination Fee, then the Willful Breach Exception has no application. For purposes of a

termination under the Temporal Termination Right, Anthem maintains that it is obligated

to pay the Reverse Termination Fee only if Cigna has satisfied the Cigna Compliance

Condition, including compliance with the Efforts Covenants in Section 5.3. If that

condition is not met, then the analysis never reaches the Willful Breach Exception.

Anthem accepts that under its reading, the Willful Breach Exception never will

apply for purposes of the Temporal Termination Right because before Anthem can become

obligated to pay the Reverse Termination Fee, Cigna must have complied with the Efforts

Covenants such that the Cigna Compliance Condition is satisfied. Anthem argues that this

interpretation does not turn the Willful Breach Exception into surplusage because the

Willful Breach Exception continues to apply to the Legal Restraint Termination Right.

Cigna responds that when the RTF Provision is read as a whole, the Willful Breach

Exception is a more specific provision that displaces the more general obligation to satisfy

the conditions set forth in Sections 6.1 and 6.2, including the Cigna Compliance Condition.

Cigna maintains that the evident purpose of the RTF Provision is to entitle Cigna to the

Reverse Termination Fee unless Cigna’s breach of the Efforts Covenants “caused” the

failure of the Government Approval Condition or the failure of the No Injunction Condition

due to a Legal Restraint.

This decision need not resolve this dispute because Cigna failed to prove that it

properly exercised the Temporal Termination Right.

299
 2. Cigna’s Attempt To Invoke The Temporal Termination Right

Cigna contends that Anthem was obligated to pay the Reverse Termination Fee

because Cigna validly exercised the Temporal Termination Right. Cigna relies on two

notices of termination: one delivered on February 14, 2017, and another on May 12, 2017.

JX 2872; JX 2928. Neither was effective.

The notice that Cigna delivered on February 14, 2017, was ineffective when sent

because Cigna could not exercise the Temporal Termination Right before the Termination

Date had passed. Under Section 7.1(b), either party had the right to extend the Termination

Date if all of the conditions to closing had been satisfied other than the absence of any

Regulatory Restraint. When Cigna delivered its notice on February 14, Anthem had

extended the Termination Date until April 30, 2017.

Cigna contends that Anthem could not have extended the Termination Date because

that right was not available “to any party that has failed to perform fully its obligations

under this Agreement in any manner that shall have proximately caused or resulted in the

failure of the Merger to have been consummated by the Termination Date.” MA § 7.1(b).

The plain language of this provision states that the right to terminate under Section 7.1(b)

is not available to such a party. The right to extend the Termination Date is not subject to

this condition. Regardless, Cigna failed to prove in this action that Anthem failed to

perform its obligations under the Merger Agreement, much less than any failure

“proximately caused” the failure of the Merger to be consummated.

Anthem validly extended the Termination Date. Accordingly, Cigna could not

exercise the Temporal Termination Right until after April 30, 2017.

300
 In response, Cigna argues that its February 14 notice may have been temporarily

ineffective, but that it became effective as of the first valid termination date, ostensibly the

instant that the TRO lifted. Cigna’s cases do not support this proposition; they address

contracts where a party had the power to terminate, but only after giving a certain amount

of notice.427 When Cigna issued the February 14 notice, Cigna did not have the power to

terminate the Merger Agreement. The February 14 notice therefore was ineffective.

The notice that Cigna delivered on May 12, 2017, also was ineffective. Between

February 14 and May 12, Anthem had obtained a TRO from this court preventing Cigna

from terminating the Merger Agreement. This court granted the TRO to preserve Anthem’s

ability to pursue an appeal from the District Court Opinion. Dkt. 8; see Dkt. 226 at 7. This

court also granted the TRO to preserve the court’s ability to issue a decree of specific

enforcement requiring Cigna to close. See Dkt. 74 at 38–40.

The TRO enjoined Cigna “from terminating” the Merger Agreement and it remained

in place “pending further order of this court.” Dkt. 8. While that TRO was in place, Cigna

could not terminate the Merger Agreement.

427
See Lyon v. Pollard, 87 U.S. 403, 406–07 (1874) (interpreting employment
contract which required thirty-days’ notice for termination, finding it “probable” that a
notice issued on July 11 was ineffective and that a second notice issued on September 19
became effective on October 19); All States Serv. Station v. Standard Oil Co. of N.J., 120
F.2d 714, 715 (D.C. Cir. 1941) (holding that notice sent under contract which required a
designated period for notice of termination, but which recited a shorter effective period,
became effective after the designated period ran); Shain v. Wash. Nat’l Ins. Co., 308 F.2d
611, 613–14 (8th Cir. 1962) (same); G.B. Kent & Sons, Ltd. v. Helena Rubinstein, Inc., 47
N.Y.2d 561, 563, 565–66 (N.Y. 1979) (same).

301
 After the entry of the TRO, Anthem moved for a preliminary injunction to prevent

Cigna from terminating the Merger Agreement pending a final ruling on the merits. By the

time of the hearing on Anthem’s motion, the DC Circuit Court had affirmed the District

Court’s decision. Anthem still wanted to keep the Merger Agreement in place so that it

could petition the Supreme Court of the United States to issue a writ of certiorari. Anthem

also was in discussions with the Trump administration.

On May 11, 2017, this court denied Anthem’s motion for a preliminary injunction.

But this court did not immediately vacate the TRO. Instead, this court stayed its ruling to

allow Anthem to decide whether to appeal. Dkt. 226 at 24–25.

The next day, Anthem notified Cigna that it was terminating the Merger Agreement

under Section 7.1(i) of the Merger Agreement. JX 2929. That section granted Anthem a

right to terminate

if prior to the Closing Date there shall have been a breach of any . . . covenant
or agreement on the part of Cigna contained in this Agreement . . . which
breach . . . (A) would, individually or in the aggregate with all other such
breaches . . . , give rise to the failure of a condition set forth in Section 6.2(a)
or Section 6.2(b) [the Cigna Compliance Condition] and (B) is incapable of
being cured prior to the Closing Date by Cigna or is not cured within 30 days
of notice of such breach.

MA § 7.1(i) (the “Termination Right For A Cigna Breach”). Anthem proved in this

litigation that Cigna failed to comply with its obligations under the Efforts Covenants, and

the nature of those breaches meant that they could not be cured, so Anthem validly

exercised the Termination Right For A Cigna Breach.

302
 Anthem sent its notice of termination to Cigna so that it was received at 11:32 AM.

JX 2929. Anthem’s termination notice did not violate the TRO, because the TRO only

restrained Cigna, not Anthem.

Anthem informed the court that it would not appeal by letter dated 11:33 AM.

Dkt. 206. With the filing of that letter, the TRO lifted, and Cigna became entitled to

terminate the Merger Agreement. Shortly thereafter, Cigna sent its notice of termination

under the Temporal Termination Right. JX 2928.

Given the sequence of events, the termination notice that Cigna sent on May 12,

2017, was ineffective. By that point, Anthem already had terminated the Merger

Agreement by exercising the Termination Right For A Cigna Breach. There no longer was

a Merger Agreement in effect for Cigna to terminate.

In response, Cigna argues that under the Merger Agreement, notices in writing are

deemed given “on the date of delivery.” MA § 8.2. Cigna posits that this means that notices

which are delivered on the same day must be treated as having been delivered

simultaneously. The plain language of the provision does not say that. It rather appears

designed to establish a set of timing rules for the effectiveness of notices that would

eliminate uncertainty by displacing comparable common law doctrines such as the mailbox

rule. Cf. 29 Am. Jur. 2d Evidence § 266, Westlaw (database updated May 2020). Cigna has

not offered any authority to support interpreting a provision like Section 8.2 as creating a

rule that notices received on the same day are deemed to be delivered simultaneously. By

the time that Cigna’s notice arrived, Anthem already had terminated the Merger

Agreement.

303
 Because neither of Cigna’s termination notices were effective, Cigna did not validly

exercise the Temporal Termination Right. Cigna thus cannot base a claim to recover the

Reverse Termination Fee on a termination under the Temporal Termination Right.

3. Anthem’s Obligation To Pay The Fee Under The Termination Right
For A Cigna Breach

Anthem validly terminated the Merger Agreement under the Termination Right For

A Cigna Breach. By its plain terms, that termination right does not obligate Anthem to pay

the Reverse Termination Fee.

Cigna claims that this result is inequitable because Anthem exploited the TRO to

gain a timing advantage over Cigna. Cigna points out that because the decision to pursue

an appeal was Anthem’s to make, Anthem (rather than Cigna) had control over when the

TRO would end. Anthem could therefore deliver its notice of termination first.

Although Cigna perceives injustice in this result, the TRO was put in place because

Cigna previously breached its contractual obligations by attempting to terminate the

Merger Agreement on February 12 and moot Anthem’s appeal. That attempt at preemptive

termination failed to satisfy the Temporal Termination Right. It also violated the

Regulatory Efforts Covenant, which required Cigna to “vigorously pursu[e] all available

avenues of administrative and judicial appeal.” MA § 5.3(b)(iii). Having previously sought

to gain a timing advantage of its own in violation of the Merger Agreement, Cigna cannot

now complain about the effects of a TRO that its own conduct made necessary.

More broadly, Cigna contends that its right to the Reverse Termination Fee should

not be determined by a race to exercise a termination right. Parties can address this issue

304
by providing contractually that a Reverse Termination Fee would remain due even if the

Merger Agreement is terminated on other grounds. The Merger Agreement did not contain

such a provision. Moreover, the possibility of a race only arose because Anthem continued

to fulfill its obligation to seek to close the Merger, even after Cigna’s breaches of the

Efforts Covenants became obvious and gave rise to a termination right. Had Anthem not

been committed to the Merger, Anthem could have exercised the Termination Right For A

Cigna Breach long before Cigna’s ability to exercise the Temporal Termination Right

ripened. Under those circumstances, Cigna would not have been entitled to the Reverse

Termination Fee. There is no injustice to Cigna in recognizing Anthem’s prior exercise of

a termination right that it could have exercised months before.

4. Judgment In Favor Of Anthem

Cigna therefore is not entitled to the Reverse Termination Fee. By the time that

Cigna purported to terminate under the Temporal Termination Right, Anthem already had

terminated the Merger Agreement. When Cigna exercised its termination right, there was

no longer a Merger Agreement in place to provide for the payment of the Reverse

Termination Fee. Judgment will be entered in favor of Anthem on Cigna’s claim for

payment of the Reverse Termination Fee.

IV. CONCLUSION

In this corporate soap opera, the members of executive teams at Anthem and Cigna

played themselves. Their battle for power spanned multiple acts. Once the Cigna ELT

concluded that Anthem had the upper hand and would not make the concessions that Cigna

wanted, the Cigna ELT turned against the Merger. Anthem proved that Cigna breached its

305
obligations under the Efforts Covenants, but Cigna proved that it was more likely than not

that the Merger would have been enjoined anyway. Cigna failed to prove that Anthem

breached its obligations under the Efforts Covenants, and Cigna failed to prove that it is

entitled to the Reverse Termination Fee. Each party must bear the losses it suffered as a

result of their star-crossed venture.

306