Medical Device Link.

Originally Published MX November/December 2003

BUSINESS NEWS

The plaintiff was reportedly as surprised as the defendant when an Orange County, CA, superior court jury awarded medical device maker Beckman Coulter Inc. (Fullerton, CA) $934 million in a case involving a contract dispute with contract electronics manufacturer Flextronics (Singapore).

The case dates back to 1997, when Beckman Coulter entered into an agreement with Dovatron, a unit of the Dii Group, to provide circuit boards for a Beckman blood analyzer. Flextronics acquired the Dii Group in 1999 and, according to Beckman, shortly thereafter Flextronics refused to provide the circuit boards unless it bought other electronic components from the company.

Beckman filed suit in early 2001, seeking $2.2 million in damages, which were cited as the costs incurred in having to retool one of its plants to manufacture the circuit boards in-house.

During the trial, held this past summer, Beckman executives acknowledged under cross-examination that Flextronics did not miss a shipment and that Beckman Coulter did not miss any orders for its blood analyzer.

The jury award consisted of $3 million in compensation and $931 million in punitive damages.

According to a Reuters report, jury forewoman Myrtle Dupret said that the panel did not consider the verdict to be excessive. "We felt that Flextronics did not care," she said. "The evidence presented to us was clear and convincing that Flextronics did wrong. It was pretty shocking and an eye-opener for a lot of the jurors."

In a company news release, Flextronics CEO Michael Marks referred to the award as the irrational act of a runaway jury. "We believe that the verdict is clearly unsupported by either the law or the facts, and that the award of punitive damages is excessive and unwarranted, since the jury found only $3 million in actual contract and tort damage to Beckman," said Marks.

Marks told a meeting of shareholders and analysts that the company would "vigorously appeal" the verdict. It is widely believed that the two parties will settle on a substantially smaller award. In a subsequent television interview with Reuters, Marks said, "We are quite convinced that we will prevail and this will be less than a $10 million total liability for us."

Copyright ©2003 MX