NUKOTE & CLOVER PREPARE FOR $100M. BATTLE !
NUKOTE & CLOVER PREPARE FOR $100M. BATTLE !
2010-04-11 at 6:06:40 pm #23479
NUKOTE & CLOVER PREPARE FOR
$100M. BATTLE !
Nukote has filed a
$100 million lawsuit against rival cartridge manufacturer Clover
TechnologiesFeelings are obviously running high in the dispute between
aftermarket cartridge competitors Nukote and Clover after Nukote filed a
lawsuit against Clover at the end of February in Texas seeking $100
million in damages.Nukote’s filing comes as part of a dispute after
Office Depot ended its 20-year supply relationship with Nukote last May,
leading the vendor to file for Chapter 11 bankruptcy protection a month
later (it came out of Chapter 11 in December).In a separate lawsuit
filed in September 2009 against Office Depot, Nukote is seeking $217
million in damages for what it calls “intentional and malicious acts” by
Office Depot that breached a binding contract between the two companies
and forced Nukote to file for Chapter 11.In that lawsuit, Nukote refers
to Depot “secretly negotiating” with Nukote’s main competitor
(Clover).Now Nukote has filed a second lawsuit, this time against Clover
itself for its alleged role in attempting to put Nukote out of business
by, among other things, getting Office Depot to switch suppliers.The
lawsuit seeks damages on seven counts, including: civil conspiracy;
tortious interference with contracts; unfair competition by
misappropriation; and employee raiding.
In brief, here are
Nukote’s allegations against Clover:
1. Clover had a co-ordinated
plan dating back several years to monopolise the supply of aftermarket
cartridges and collection of empties in the US in order to “drive Nukote
out of business”.
2. Clover induced Office Depot and other
companies to breach their agreements with Nukote.
misappropriated Nukote’s trade secrets by the “targeting and raiding of
key employees with secrets”.To their credit, both parties were willing
to respond to OPI’s questions, though they are limited in what they are
able to say because of the legal nature of the dispute.
side, though, was mincing its words.
In an initial press release
issued a few days after the filing of the lawsuit, Clover accused
Nukote of “abusing the court system in a transparent and desperate
effort to raise capital for a business that is on the verge of
collapse”, adding that Clover has been receiving “daily letters,
e-mails, and phone calls from Nukote customers looking to secure a new
supplier and Nukote employees desperately seeking job opportunities”.
so, retorted Nukote spokesman, Russell Mack.
“I think that
Clover’s rantings in the press release that they put out are perfectly
consistent with their behaviour that led to the lawsuit against them in
the first place,” he told OPI in an email.”Nukote is alive and well
[and] is conducting business normally – we’re manufacturing and shipping
products, and we’re selling and serving our customers,” he continued.”I
think everyone knows that a healthy Nukote is good for this industry.
We’ve got the newest factory in the industry, in Monterrey, Mexico, with
plenty of expansion capacity. We’ve restructured our finances and
reorganised our team. We feel great about the future of our
company.”With regards to the allegations themselves, Jim Cerkleski, CEO
of Clover Holdings, maintained that all Nukote’s claims “have no
connection to actual facts”, adding that their “sweeping allegations
have literally no grounding in fact” and that it seemed “Nukote is
proceeding with the notion that evidence is optional”.
to some of the specific allegations, Cerkleski denied that his company
had tried to muscle in on Nukote’s contract with Office Depot, telling
OPI that is was the plaintiff which first contacted Clover about
supplying them after Depot experienced supply issues with Nukote.”Office
Depot conducted an open and fair selection process to satisfy their
product needs,” he stated.Cerkleski also denied that Clover
“relentlessly pursued” Nukote seeking a merger or buyout, though he
admits that the issue had been discussed.”We have never had meaningful
discussions that ever became serious”, he affirmed. “However, we
certainly talked about the benefits of coming together. I have only met
Mr Rochon [Nukote's Chairman] a handful of times in my life, of which
one was at Office Depot when I told him we had decided to leave the line
review in February  after the first day.”
Holdings CEO also said that only a handful of former Nukote employees
are currently employed at Clover out of a total workforce of 3,700 and
that they contacted Clover, not the other way round as alleged in
Nukote’s complaint.Whatever happens, it is clear that Nukote has got its
work cut out on the legal front, with two major lawsuits that could
well drag on.
The lawsuit with Office Depot, originally filed in a
Tennessee bankruptcy court, is now in Federal District Court in
Florida, Depot’s home state. A fact that “should make no difference”,
according to Russell Mack.”Our case stands on its merits, regardless of
the jurisdiction,” he stated.”We’re going to get justice for those who
Clover has damaged,” he warned. “It will be a long case, but we’ll
pursue it all the way to the end, no matter how long it takes.”With
Clover stating that it is “prepared to root out the source of any attack
on our company and aggressively defend the integrity of our brand,” it
looks like being a hard fought battle.