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Boston Business Litigation News - March 13, 2017
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New Litigation
Customer Allegedly Tries to Muscle Supplier to Avoid Purchase Obligations
BUSINESS LITIGATION SESSION
Metal Seal Precision Ltd., a supplier of precision metal components, is suing its customer, Sensata Technologies, Inc. alleging breach of contract. According to the complaint, Metal Seal and Sensata first entered into a contract in 2011. Initially, and as subsequently amended, the contract required Sensata to source all of it requirements for certain metal parts (the specifics of which were modified over time) from Metal Seal. However, the contract was then amended in 2015 to, inter alia, require Sensata to purchase specified minimum quantities of identified parts from Metal Seal each year and to pay Metal Seal the former higher prices in the event it did not purchase the minimum quantities. After failing to meet its minimum purchase obligations in 2015, which was waived by Metal Seal in amendment, in 2016, Sensata's purchases fell short of the $11.2 million minimum requirement by about $7 million. Given that Metal Seal's annual revenues are about $25 million, the $7 million shortfall represented a substantial portion of Metal Seal's business. Sensata has since allegedly tried to leverage its power as Metal Seal's largest customer to revoke the contract and avoid any future purchase obligations to Metal Seal.
Suit Filed Over Alleged Misrepresentation of Assets in Asset Purchase: Double-Entry Accounting Led to Double-Booking of Accounts Receivable
BUSINESS LITIGATION SESSION
Keypoint Intelligence LLC is suing Questex LLC over alleged misrepresentations that Questex made in connection with an Asset Purchase Agreement that Keypoint's predecessor entered into with Questex. Under the agreement, Keypoint's predecessor was to purchase certain assets of Questex for $13 million dollars. During the due diligence process, Keypoint's predecessor discovered that certain accounts receivable items, primarily relating to Japanese operations, were double-booked, and pointed the problem out to Questex, who later represented that the accounts had been corrected. Recently, however, Keypoint discovered that was not, in fact the case, and that there were a number of items that remained double-booked; as a result, accounts receivable was overstated by about $263,000. Additionally, Keypoint discovered that Questex had underrepresented the bonus amounts owed to various employees and contractors by about $47,000. Keypoint now seeks indemnification from Questex.
Class Action Filed to Enjoin Merger of American DG Energy and Tecogen, Clean Energy Cousins
BUSINESS LITIGATION SESSION
A putative class action has been filed on behalf of the shareholders of American DG Energy Inc. ("ADGE"), seeking to enjoin the acquisition of ADGE by Tecogen Inc. The complaint alleges that the stock merger is unfair to ADGE's shareholders as it undervalues ADGE (and improperly assumes that ADGE could not continue as a stand-alone entity). Plaintiffs further allege that brothers John and George Hatsopolous of Thermo Electron fame together own over 40% of ADGE and Tecogen and effectively control both companies, which share a number of directors and officers, including co-CEOs, and occupy the same office building in which ADGE rents space from Tecogen. Plaintiffs allege that the board of ADGE failed to adopt any special measures to protect the public shareholders of ADGE in the merger process, such as conducting a competitive auction, notwithstanding the de facto control of ADGE by Tecogen. In addition, the registration statement issued by ADGE's board allegedly omits material information, including information about the financial analysis done on ADGE and the negotiation process surrounding the merger.
Suit Filed for Expungement of FINRA Record
BUSINESS LITIGATION SESSION
Heidi Hanson, a registered representative of a broker/dealer, has filed an action under FINRA Rule 2080 seeking expungement of certain information contained in FINRA's Central Registration Depository system. The Web CRD, as it is known,
is
the central licensing and registration system for the U.S. securities industry and its regulators and contains the qualification, employment and disclosure histories of active registered individuals.
According to the complaint, one of Hanson's former clients filed a baseless complaint against her in 2010, but despite the claim being found false and denied, the complaint is still reported on her FINRA U-5 form. She now seeks to have that information expunged.
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News
Judge Cypher Confirmed to SJC Bench
The Governor's Council unanimously voted to confirm Judge Elspeth Cypher, who is currently an Appeals Court Justice, to the SJC. Judge Cypher will replace Justice Margot Botsford, who reaches mandatory retirement age this month. Hat tip:
Mass Lawyers Weekly (subscription required).
First Circuit Reminds Attorneys to Include Addendum in Appellant Brief
The First Circuit has
apparently received a number of appellant briefs that fail to comply with the Federal Rules of Appellate Procedure, as they fail to include an addendum with the document setting forth the reasoning behind the decision that is being appealed. Also don't forget that the Appellate Rules were
recently revised shortening the maximum length of an opening brief from 14,000 words to 13,000 words (Fed. R. App. P. 32).
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Blog, Blog, Blog . . .
3/13/17 - Case of the Day: In re Rivada Networks
3/10/17 - Blog of the Day: Asia in U.S. Courts
IP Update
(
Sunstein Kann Murphy & Timbers LLP
)
3/13/17 - A State University's Patents May be Immune From PTAB Review
3/13/17 - The PARIS BEACH CLUB Trademark. Get it?
TTABlog
(
Wolf Greenfield & Sacks
)
3/13/17 - TTAB Dismisses CHRISTIAN LACROIX Fraud Claim: No Intent to Deceive
3/10/17 - CITY OF HEROES for Clothing Confusable with Same Mark for Video Games, Says TTAB
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