The 1st Circuit Court last week denied German medical laser maker Biolitec‘s (ETR:BIB) challenge to a Massachusetts federal court ruling which found for AngioDynamics (NSDQ:ANGO) and set possible contempt sanctions against Biolitec.
The ruling is the most recent in a long-running spat between the 2 companies.
Biolitec reportedly violated a preliminary injunction and appealed the resulting civil contempt order entered by the district court, according to court documents.
The company argued in its challenge that the district court which ruled against them lacked the authority to set a cap for the sanctions against it, saying the “underlying preliminary injunction expired by its own terms and so the district court can no longer coerce compliance with it.”
The 1st Circuit Court denied the appeal, saying it did so due to the fact that Biolitec “failed to raise this argument at any time prior to the present appeal.”
Judge Michael Ponsor of the U.S. District Court for Massachusetts slapped Biolitec with a $75 million contempt ruling in 2014 after finding that it deliberately effected a so-called “downstream merger” to move its incorporation to Austria to escape jurisdiction in U.S. courts. Ponsor’s harshly-worded ruling trebled the $23.2 million awarded to AngioDynamics by a New York court in 2012, adding $3.6 million in interest and another $1.9 million in legal costs, according to court documents.
Ponsor also issued an arrest warrant for ex-Biolitec CEO Wolfgang Neuberger and imposed an injunction on sales of some of Biolitec’s vascular offerings. Ponsor also levied a hefty fine schedule against Biolitec to compel it to undo the merger, beginning with $1 million in May 2013, escalating to $2 million the next month, $4 million in July 2013, $8 million in August and $8 million a month thereafter.
Biolitec appealed Ponsor’s rulings to the U.S. Court of Appeals for the 1st Circuit. In June the appeals court affirmed the lower court judge and scorched Biolitec in dismissing the appeals, but ruled against the indefinite escalation of the penalties, which reached $160 million. Ponsor reduced the penalties to $75 million on remand from the 1st Circuit, according to court documents.
In a certiorari petition filed July 1 with the Supreme Court, Biolitec argued that the 1st Circuit decision adds to the confusion on the difference between criminal and civil contempt. The high court in November declined to grant the petition without comment. That means the 1st Circuit’s decision stands, putting Biolitec on the hook for the $75 million penalty tab.