“Corporate Greed Defeated: $9 Million Business Fraud Verdict in Favor of Gwilliam, Ivary, Chiosso, Cavalli, & Brewer” describes one of the largest verdicts in our firm’s history: $9,263,345 awarded to our plaintiff Peter Allen, owner of Allmed Systems, Inc. in Pleasanton, California. In order to provide a more complete account of this verdict, we will take a closer look at the details of this case. Considering the current worldwide climate of protests against corporate greed, corporate misconduct, and corporate misrepresentation, this verdict is very timely and illustrates what many disenfranchised people around the world are protesting against.
Attorneys and Experts:
Plaintiff attorneys: J. Gary Gwilliam and Jayme L. Burns of Gwilliam, Ivary, Chiosso, Cavalli, & Brewer of Oakland, California and Richard E. Korb, Korb Law Offices of Berkeley, California. Defendant attorneys: Breck Harrison and Aldean Kainz, Jackson Walker, LLP of Austin, Texas and Bob Phelps, Glynn & Finley, LLP, Walnut Creek, California. Experts: Dr. Sal Lombardo, Urologist, New Jersey and David Nolte, economist from Los Angeles, California.
Case Facts: Allmed Systems, Inc. dba LISA LASER USA and LISA LASER OHG v. Healthtronics, Inc.
Plaintiff Peter Allen of Allmed Systems, a small corporation and distributor of medical products, sued Healthtronics, Inc. a multi-national corporation. The defendant corporation had an exclusive distribution arrangement to market the plaintiff’s surgical laser. The plaintiff contended that rather than using it’s best efforts to market the laser to the entire medical community, the defendant corporation (Healthtronics, Inc.) tried to maximize their own profits by entering into partnerships directly with urologists and others in the medical community. The jury found that the defendant, Healthtronics, Inc., breached the contract with plaintiff Peter Allen owner of Allmed Systems and made intentional and negligent misrepresentations to the plaintiff.
Allmed Systems Contentions: Breach of Contract
Mr. Allen contended that the defendant, Healthtronics, Inc., breached the contract by:
- Did not utilize their “best efforts”
- Did not use “good faith efforts”
- Refusing to sell the laser throughout the entire United States (there were no fly zones where they did not sell)
- Did not provide the plaintiff with rolling forecasts for sale and distribution of the laser
- Defendant lied about their intent to sell the product to urologists outside the partnerships they represented (approximately one-third of the urologists in the United States)
- Healthtronics, Inc. never intended to distribute the laser to anyone other than their own partners
2008 Allmed System’s Cure Provision
In September and November of 2008, Allmed Systems executed a cure provision signaling they would withdraw from the contract under their terms because of Healthtronic’s breach. Correspondence between the attorneys, in late September and November of 2008, disputed the anticipatory breach. During this time frame a new development occurred.
Healthtronics Sues Peter Allen and Allmed Systems in Texas
While negotiations were pending on the cure provision, Healthtronics, Inc. sued Peter Allen and Allmed Systems in Texas. The plaintiff contended this was in violation of the provisions of the contract which stipulated that any litigation on the contract needed to be in Alameda County Superior Court in the State of California.
Texas Litigation
The case was litigated in Texas for a year and a half before the Texas Supreme Court finally ordered the case back to the Alameda County Superior Court in California. The defendants then removed the case to federal court. Subsequently, the plaintiffs were able to remand the case back to Alameda County Superior Court.
Facts of the Texas Lawsuit
The plaintiffs contended that the jury should know of the facts of the Texas lawsuit because of the contention for punitive damages. Unfortunately, the court excluded that evidence from the jury. The plaintiffs contend that the evidence can still be important to illustrate their bad faith under their contention for pre-judgement interest.
Tort of Interference With a Business Relationship
Plaintiffs also contended that the defendants are liable for the tort of interference with a business relationship. The Court entered a directed verdict on that cause of action against the plaintiffs- it did not go to the jury.
However, there was evidence that the defendants have threatened other doctors with litigation if they purchased lasers from Mr. Allen and Allmed Systems after the lawsuit was filed. Furthermore, the defendants contended by their website and otherwise that they had exclusive right to sell the lasers even after the litigation had begun.
Healthtronics, Inc. Disputes Plaintiff Contentions
Healthtronics, Inc. strongly disputed the plaintiffs’ contentions that they (Allmed) had in fact spent a great deal of money developing the product and were using their best efforts to sell it. The defendant denied any misrepresentations and contended Allmed breached the contract by promoting a new advanced laser product in violation of the exclusive distribution contract.
Verdict Results
- Breach of Contract $7,647,345.00
- Intentional Misrepresentation $9,263,350.00
- Result: Total Plaintiffs’ Jury Verdict $9,263,345.00
Defense verdict on Defendant’s cross-complaint - Punitive: Defense verdict for punitive damages
- Settlement Discussions: Defense indication of $750,000. Plaintiffs’ final demand $4 million
- Injury Damages: Result $9,263,345 jury verdict
The plaintiffs have the right to attorney’s fees under the contract and contend they have a right to pre-judgment interest for the last three years. Plaintiffs estimate the final judgment will be in excess of $10 million
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