Vinson & Elkins LLP played a substantial role in winning a jury trial for client ITOCHU International Inc. and its subsidiary MedSurg Specialty Devices, Inc. in a case involving a $70 million claim for breach of a distribution contract and MedSurg’s counterclaim for unpaid sales commissions. On May 31, 2013, after a nine-day trial in the U.S. District Court for the Eastern District of Pennsylvania, ITOCHU and MedSurg won a full defense verdict on plaintiff’s breach of contract claim, and MedSurg won a full award of unpaid commissions.
“This is an important result and we are very pleased with the outcome Vinson & Elkins helped us achieve in this significant case,” said ITOCHU’s Senior Vice President and General Counsel, Eric J. Laptook. ITOCHU International Inc., headquartered in New York City, is the largest subsidiary of Tokyo-based ITOCHU Corporation, a leading trading and investment firm and Fortune 500 Global company, with revenues of nearly $49 billion in the fiscal year ended March 31, 2013.
The case grew out of contracts entered into on November 5, 2008, by ITOCHU, MedSurg, and plaintiff Devon Robotics LLC, that involved distribution of a chemotherapy-preparation robot called CytoCare. MedSurg was the exclusive distributor of the robot in North America, and ITOCHU provided $9 million in loans to Devon Robotics as working capital. Devon Robotics terminated the contract in April 2009, sued ITOCHU and MedSurg with respect to multiple business dealings among the parties, did not repay the loans, and also did not pay certain sales commissions that were due to MedSurg. ITOCHU separately sued for repayment of the loans, and MedSurg sued for payment of the overdue commissions. After dismissing two of Devon Robotics’ causes of action in December 2010, the court in August 2012 entered summary judgment in favor of ITOCHU on its $9 million claim, and in favor of ITOCHU on all of Devon Robotics’ remaining claims, except the one for breach of the distribution contract. Devon Robotics valued this claim at roughly $70 million in lost profits.
The case was tried to jury by V&E and co-counsel starting on May 20, 2013. Notably, on the eve of trial, the court partially granted a motion (prepared by V&E) to limit or preclude plaintiff’s expert damages testimony, cutting the plaintiff’s potential award down to $16 million. After a nine-day trial, it took the jury only four hours of deliberation to return a complete defense verdict for ITOCHU, and to award MedSurg the full amount sought on its counterclaim.
“We are extremely gratified by the jury’s verdict,” said Jason A. Levine, litigation partner and head of the V&E team. “Combined with the court’s separate summary judgment decision ordering the plaintiff to repay $9 million in loans from ITOCHU, plus interest and attorneys’ fees, our client’s position has been completely upheld.”
The V&E team was led by Jason, who has represented ITOCHU on these matters since their inception, and included Washington litigation associate Dennis Schmelzer and several summer associates.
