A federal appeals court sent PerkinElmer Inc. back before a lower court in a lawsuit filed against it by a failed acquisition, Sonoran Scanners Inc., and its co-founder. Sonoran and Joseph Donahue sued the Waltham, Mass.-based diagnostics maker in 2006, alleging that PerkinElmer broke the terms of its $3.5 million acquisition of the Tucson, Ariz.-based computer-to-plate printing firm.
The U.S. District Court for Massachusetts had upheld all four of PerkinElmer’s summary judgment claims, but the case was appealed to the U.S. Court of Appeals for the First Circuit. That court affirmed three of PerkinElmer’s four claims but ruled against its claim that it couldn’t have breached the terms of its agreement to develop the business under Massachusetts law.
That means the Massachusetts district court will get the case again, to decide whether PerkinElmer failed to meet its obligation to promote and develop the Sonoran business.
Donahue founded Sonoran in 1997 to develop and market high-speed computer-to-plate technology for the newspaper and graphic arts industries, according to court documents. In 2000, realizing that he was under-capitalized despite sinking $3.5 million of his own money into the venture, Donahue went looking for suitors to acquire the company.
PerkinElmer agreed to acquire Sonoran for $3.5 million — the bulk of which went to satisfy creditors — in May 2001, keeping Donahue on as site leader and GM of its CTP business. Under the terms of the deal, if the segment met certain sales and gross margin targets, both Sonoran and Donahue would earn up to $2 million over five years.
But by 2004 it was clear that the business was foundering, having sold only a single unit since the acquisition. PerkinElmer put it on the market, selling in Spet. 2004 to MacDermid Inc., shuttering it and laying off all staff — including Donahue.
He and Sonoran then sued, claiming that “PerkinElmer had an implied obligation to exert reasonable efforts to develop and promote Sonoran’s technology, and that it breached its obligation,” according to court documents.