EM Tyre Conspiracy Verdict Awards $26 million, Defendants Likely to Fight On
On Friday 15 July 2010 Florida-based mining tyre design company Tire Engineering and Distribution L.L.C. gained a $26 million verdict against Shandong LingLong Rubber Co. Ltd. and Al Dobowi Tyre Co. L.L.C. for allegedly conspiring with a former employee (Sam Vance) to steal proprietary designs for underground mining tyres. The default verdict was issued when Vance failed to appear before the court. The news is the latest in a line of related claims and follows an Appeal Court decision to overturn an earlier $59 million award verdict earlier this year. In the latest case T&A understands that despite the jury verdict being given, the case has not yet reached the judgement stage, where the amount and even the ruling as a whole can be modified by a judge. Furthermore, due to the complex nature of the case, the defendants are expected to appeal if they are finally found against.
What is turning out to be a protracted courtroom saga began in 2005 when Tire Engineering (which trades as Alpha Mining Systems) filed suit in 2005 against its former sales and marketing manager Sam Vance. The suit claimed Vance, who had at this point worked for the firm for around 20 years in total spread across two stints in his career, provided trade secrets to at least two manufacturers in China and another firm in the United Arab Emirates that is said to have included “design blueprints, customer lists and pricing information.”
According to an interview with the complainant (Tire Engineering CEO Jordan Fishman) published in Gulf Coast Business Review on 18 July 2008, Fishman was tipped off when he received a phonecall from a manager working for Guizhou Tire Co, a China-based tyremaker that was Alpha Mining System’s Chinese manufacturing partner at the time, on 18 May 2005. The manager reportedly told Fishman that representatives from an Australian mining company, apparently one of Alpha Mining System’s biggest customers, were touring the plant in China and discussing new orders. This is said to have “jolted” Fishman into investigating Vance, who up till this point had been a trusted employee and head of the firm’s international sales unit.
In the same article Vance’s attorney, Scott Petersen, said Vance’s actions were only taken after his boss (Fishman) told him he couldn’t pay him for services rendered. “Vance’s actions were simply an attempt to fill outstanding orders for a joint venture Alpha Mining Systems was working on with a Chinese company,” Petersen said, adding: “[Vance] denies misappropriating any trade secret information from Alpha or acting inappropriately in any manner…Vance believes that when the full story is told, he will be completely exonerated of any charges of wrongdoing.”
Shandong LingLong and Al Dobowi, who found themselves on the wrong side of $26 million jury verdict on 15 July 2010, were only named in a later Virginia Court complaint filed on 30 October 2009. This alleged that Shandong LingLong entered “the conspiracy” at Al Dobowi’s invitation and that the firm planned to manufacture tyres based on Fishman’s designs and Al Dobowi intended to distribute them. This initial case resulted in a local judge awarding Tire Engineering $19.7 million in compensatory damages before later adding $39.3 million in exemplary damages, making it one of the largest trade secret judgments in Florida.
However, the $59 million award was overturned by the 2nd District Court of Appeal on 30 April 2010 when Vance was found to be a resident of Virginia at the time in question and said he conducted all his Tire Engineering business either there or in China. As a result the court found he was not subject to the Sarasota court’s jurisdiction. At the time Sarasota attorney Jennifer B. Compton was given leave to modify Tire Engineering’s complaint and said she intended to “quickly refile” the lawsuit using a different argument to show why Vance was subject to local jurisdiction.
Al Dobowi expected to fight court verdict on points of law
On 15 July 2010 the jury before the US District Court for the Eastern District of Virginia ruled in favour of Tire Engineering and levied damages of $26 million against Al Dobowi, Shandong LingLong and their subsidiaries, as well as another firm, TyreX International Ltd., and its subsidiary. However when you consider the drawn-out nature of this case to date, and the fact that previous rulings have apparently been so readily overturned, it may be premature to predict that this is the end of the matter. No doubt those close to the case would point out the fact that Fishman initially filed suit against his firm’s manufacturing partner – the same company that reportedly tipped him off, Guizhou Tire Company, before subsequently settling out of court. Fishman then sued Vance, before Linglong and Al Dobowi.
Whenever this case is concluded, jurisdiction is likely to play a key role in determining the outcome. As has already been reported, Vance’s appeal was able to demonstrate that as a resident of Virginia who did business in China, the Florida court had no jurisdiction over him and therefore no authority to impose the first $59 million damages. As both LingLong and Al-Dobowi are based and incorporated outside the US this is more than likely to play a key role in any future proceedings. If this argument regarding jurisdiction is accepted by the trial or appellate court, any judgment rendered will be void and without effect.