Biolitec Exec Still Ducking Depositions, Sanctions Bid Says
Share us on: By Michael Lipkin
Law360, San Diego (April 08, 2015, 6:14 PM ET) -- AngioDynamics Inc. on Wednesday urged a Massachusetts federal judge to sanction a group of Biolitec AG affiliates for its CEO’s repeated refusal to show up for depositions, arguing the companies should be forced to pay a $75 million judgment entered against Biolitec last year.
U.S. District Judge Michael A. Ponsor ordered specialty laser firm Biolitec to pay the $75 million last March, after ruling that Biolitec President Wolfgang Neuberger’s avoidance of mandatory depositions required the court to enter a default judgment against the defendants. AngioDynamics had claimed that Biolitec failed to shield it from patent infringement claims related to varicose vein treatments after they struck a distribution deal.
The suit had originally claimed subsidiary Biolitec Inc. was responsible, but with final judgment outstanding, the company filed for bankruptcy. That prompted accusations that Biolitec and Neuberger had wrongfully diverted assets from Biolitec Inc. to avoid payment and the appointment of a series of subsidiaries as trustees.
AngioDynamics now claims that the trustees are trying to duck responsibility by denying they have any Biolitec Inc. assets and have stonewalled AngioDynamics’ attempts at discovery and to depose Neuberger, who is facing an arrest warrant after he went ahead with a merger between Biolitec and an Austrian subsidiary in violation of a court order.
Neuberger allegedly claimed he should not be subject to the deposition because he resigned as an executive for the trustees several months before the deposition request.
“The trustees did not dispute that, as the court found, Neuberger resigned the positions solely to avoid being deposed, and they did not dispute that Neuberger retains control over them. Neuberger’s refusal to appear for his deposition thus subjects the trustees to the sanctions,” AngioDynamics wrote.
In September 2012, the court ordered Biolitec Inc. to hand over $16.5 million, plus prejudgment interest, to AngioDynamics for failing to protect the company from lawsuits involving a laser treatment. But in January 2013, with the $23 million final judgment unpaid, Biolitec Inc. filed for bankruptcy. The judgment was tripled under Massachusetts law to reach the eventual $75 million against Biolitec Inc.’s German parent.
Biolitec suffered the default judgment after the Austrian merger, which was forbidden by the court because American judgments are not enforceable in Austria. Despite a pending appeal of the injunction, Biolitec completed the merger anyway, prompting Judge Ponsor to authorize coercive fines against Biolitec and the arrest warrant against Neuberger.
The First Circuit largely upheld the rulings last month, noting that the fines had reached $160 million, and called the defendants guilty of “outrageous misconduct.”
AngioDynamics’ latest filing alleges that Biolitec Holdings US Inc., Biolitec Medical Devices Inc. and others should pay the $75 million judgment after they rejected requests for financial statements, tax returns or balance sheets on assets they owned and instead sent several pages claiming there were no debts between them and the defendants.
Neuberger also failed to appear for a deposition after losing a bid for a protective order, claiming he would not appear anywhere in the U.S. due to the outstanding warrant, according to the motion. AngioDynamics said it didn’t agree with Neuberger’s request to be deposed in Europe or to appear via videolink.
An attorney for Biolitec said Neuberger's proposed conditions meant he had never refused to testify.
"The person with the most knowledge of the U.S. companies’ assets, their president and CFO, has offered to testify," Edward Griffith of the Griffith Firm said in an email. "Under these uncontested circumstances, there is no justification for imposing any sanctions on the U.S. companies, let alone the ultimate sanction of a default judgment."
AngioDynamics' attorney did not immediately respond Wednesday to a request for comment.
AngioDynamics claimed that Neuberger has a pattern of moving around assets to avoid judgment and that the court has already rejected his argument that he is no longer an executive for the trustees. The court ruled that the timing of his purported resignation came amid impending depositions and showed a lack of good faith, according to the motion.
The company further said Neuberger still maintained effective control because the appointment of a replacement will only last until the next shareholder meeting, which Neuberger can allegedly call at his discretion.
AngioDynamics became a distributor in 2002 for Biolitec Inc., which allegedly provided assurances that the laser ablation devices would not violate any intellectual property protections.
Within a few years, however, AngioDynamics had been targeted with a pair of infringement lawsuits, and according to a complaint AngioDynamics filed in 2008, Biolitec Inc. did not live up to its promise to defend and indemnify the company against such legal action.
AngioDynamics is represented by William E. Reynolds of Bond Schoeneck & King PLLC.
Biolitec AG is represented by Edward Griffith of the Griffith Firm and Michael K. Callan of Doherty Wallace Pillsbury & Murphy PC.
The case is AngioDynamics Inc. v. Biolitec AG et al., case number 3:09-cv-30181, in the U.S. District Court for the District of Massachusetts. |
