Court case

[MartyE]

I gotta agree with Neil, this does sound a bit strange to not even listen to the arguments...but then again I'm no judge so I don't know what legal stuff may be involved. It does seem odd though.

[nblum]

This sounds very much like a judge whose mind was made up very early on in the case. Allowing testimony about criminal trials in Korea to color the jury's decision and then not even being willing to listen to post-verdict oral arguments from the defendant 's attorneys, etc. Sounds like potential grounds for reversal on appeal, at least to this layman :). Sustaining damage awards far beyond any rational assessment of what transpired in the marketplace also is an indication of the legal system gone off the rails.

[garyseven]

Macomb Daily News

Judge lets $41 million verdict stand against Lionel Trains

Without successful appeal, Chesterfield toymaker may be looking at bankruptcy

PUBLISHED: October 21, 2004

By Chad Halcom
Macomb Daily Staff Writer

The world's foremost maker of model trains must live with a potentially devastating $40.8 million verdict in a civil lawsuit by a rival trainmaker or find grounds to appeal it, a federal judge in Detroit ruled from the bench this week.

Chesterfield Township-based Lionel Trains LLC planned at a hearing this week to argue for a judgment that would essentially vacate a jury's June 7 verdict against the company in a lawsuit by Maryland-based Mike's Train House, also known as MTH Electric Trains.

But at the hearing, U.S. District Judge John Corbett O'Meara ruled from the bench before even hearing oral arguments that he would not consider Lionel's request -- leaving the company with little choice but to appeal the verdict at a higher court or face possible bankruptcy.

"It's not a question of whether they're going to appeal. They're going to appeal," opines Mike Wolf, president and owner of MTH Electric Trains in Maryland. "If they don't, I believe they'd have to file for bankruptcy. And then you're basically asking the court to protect you from a judgment that you got because of your own theft of trade secrets."

Attorneys for MTH argued in court, and a jury agreed to the tune of $40,775,665, that Lionel had used stolen designs for die casts in 1998 to make several models of trains that MTH already had in production, including the Challenger, the Baby K-4 and the Hudson Junior. The Maryland trainmaker is also asking O'Meara to grant a permanent injunction against Lionel from further selling those train models with the stolen designs.

"We're pleased that the court decided to deny the defendants' post-trial motion regarding the verdict," said Robert LaRocca, a Pennsylvania attorney who was heading up MTH's efforts in court. "And we feel very confident in our arguments for (an injunction)."

O'Meara indicated he would issue a written ruling later on the injunction request. Attorneys and other officials representing Lionel either did not return phone calls or said they would not comment on the case until O'Meara issues his formal judgment in writing.

At issue are several different designs and die molds for models of trains that MTH was about to produce in 1998 when an employee of a Korean supplier making the train molds for MTH apparently sold the designs surreptitiously to another Korean supplier company working for Lionel.

Lionel then began producing and marketing several series of model trains that MTH has claimed were virtually their own, flooding the hobbyist market with those models and allegedly robbing MTH of any potential profits from them. Wolf's company then brought a lawsuit in 2000 against Lionel, Korea Brass Co. Ltd. and Yoo Chan Yang, an alleged intermediary between Korea Brass and Lionel management in Macomb County.

At the court hearing, attorney Patrick Hickey of Bloomfield Hills attempted to argue that Lionel should not be blocked from marketing the trains in question, and that the evidence in the case didn't prove that Lionel had actually used stolen designs or die casts.

"Each and every one of these trains could be and were developed by Lionel's own designs and work," he told O'Meara in court.

Also at the hearing, attorneys discussed the possibility of allowing Lionel to continue making and modeling the train models in question, but only if the company does some "reverse engineering" or taking the finished product and using it to come up with its own design specifications and production procedures. Hickey argued in court that this process would take between three months to one year, meaning production may continue unaffected and an injunction would have little effect.

Wolf said he believes an injunction is the only way to assure he can recover his losses from Lionel's behavior, down the road. O'Meara is expected to issue a ruling on the matter within a few weeks.

[Kooljock1]

The Macon Co. newspaper is reporting that the judge wouldn't even listen to the LIONEL LLC lawyers, and that the judgement stands. There's a thread over on OGR alluding to this, along with arguments regarding MTH getting their hands on LIONEL's cash before they can file bankruptcy.

This is all over my head, but I am saddened and angry at both sides in this.

Jon [:(]

[Anonymous]

let us keep in mind that for someone to drop a thousand bucks on an impulse to buy todays average locomotive they will need lots of money. one needs the income of a lawyer just to keep up with what is being produced.

i'll bet those lawyers involved received some really nice trainsets.

perhaps it's the lawyers who will perpetuate the hobby into the future.

[3railguy]

QUOTE: What a shame that all this money plus the lawyers for both sides has to be wasted this way.Just think what all that money could do it it were put to development of the hobby,

Roxin, well said. Who pays for it all? WE DO!!

[Anonymous]

Guess we'll hafta start a fund here to help pay off the lawyers and keep O Gauge alive....

Let's see, I can kick in 2 or 3 Dollars!

[Anonymous]

What a shame that all this money plus the lawyers for both sides has to be wasted this way.
Just think what all that money could do it it were put to development of the hobby, especially towards beginners sets for little kids to get in the hobby.
How much longer will us 3 railers be around to support the hobby?
Also how long will these dealers be around to supply parts to fix the stuff we have now.
You can still get parts for 40-50 or more year old flyer and lionel.
What are the chances for getting parts 50 years from now from any of the mfg's? dave.

[ChiefEagles]

3railguy, [:D][:D][:D][:D]

[Buckeye Riveter]

And I could conclude that it takes about 2 weeks to write any legal ruling pro or con for Lionel.

[3railguy]

QUOTE: In court in Michigan this afternoon (Tuesday) the judge in the case announced that he would be back in two weeks to give his final ruling on the jury's decision to award $41 million to MTH.

This concludes my belief that more evidence showed up proving Lionel was framed by the Korean maffia.

[ChiefEagles]

Thanks for the update.

[BigSteam224]

And so, in two weeks, our attention is divided as to which decision gets priority: MTH/Lionel, or Bush/Kerry. Passionate feelings on both sides on both issues.

[Anonymous]

Hi guys,

I know many of you are interested in the MTH/Lionel lawsuit.

In court in Michigan this afternoon (Tuesday) the judge in the case announced that he would be back in two weeks to give his final ruling on the jury's decision to award $41 million to MTH.

Neil Besougloff
editor, Classic Toy Trains