A Boston federal judge issued a civil-contempt arrest warrant for a German executive who moved a company’s incorporation home from Germany to Austria, allegedly to elude a $23.2 million civil judgment.
U.S. District Judge Michael Ponsor on April 11 in AngioDynamics Inc. v. Biolitec A.G. ordered the warrant for Biolitec chief executive Wolfgang Neuberger for violating Boston federal judge Rya Zobel’s August 2012 preliminary injunction against the company’s merger with its Austrian subsidiary. He also referred the case to the Boston U.S. attorney’s office for criminal contempt prosecution.
The plaintiff claimed the merger would prevent it from collecting on Northern District of New York Senior Judge Lawrence Kahn’s November 2012 partial final judgment against Biolitec in a business dispute. Pretrial interest boosted the total from the original $16.5 million.
Ponsor described the merger — which he said transpired despite Biolitec and the other defendants’ assurances to the contrary — "the most flagrantly offensive violation of a court order that this court has personally encountered."
Ponsor’s so-called coercive sanctions were to remain in place until the defendants restore the German Biolitec company to its status quo ante. Until that happens, Ponsor levied fines that would increase over time from $1 million as of May 10 to $2 million on June 1, $4 million on July 1 and $8 million on August 1. After that date, the company would owe an additional $8 million on the first of each month.
Biolitec lawyer Edward Griffith of the New York-based The Griffith Firm insisted the company had legitimate business reasons for moving to Austria related to taxes, workforce costs and proximity to Eastern European markets.
"We believe the company has substantially complied with the preliminary injunction and scrupulously complied with its stated purpose to maintain assets in Germany," Griffith said. Although U.S. judgments cannot be enforced in Austria, Biolitec is "going to do it’s best to comply," he added.
The contract dispute between the two medical device makers involved claims that Biolitec improperly dodged AngioDynamics’ legal costs in patent infringement lawsuits that arose from AngioDynamics’ role as a Biolitec supplier and distributor.
Biolitec’s New York lawyer Paul Feigenbaum of Mazzotta, Siegel & Vagianelis in Albany, N.Y. said the defendants were pursuing an appeal of that judgment "vigorously to say the least." He added: "The court below rewrote the actual agreement between the parties."
Michael Callan of Doherty, Wallace, Pillsbury & Murphy in Springfield, Mass. also represents Biolitec.
AngioDynamics’ lawyers at Syracuse, N.Y.-headquartered Bond, Schoeneck & King did not respond to requests for comment.
Sheri Qualters can be contacted at email@example.com.