MTH lawsuit against Lionel...

[Deputy]

"It ain't over till it's over"

[3railguy]

VINDICATION IS SWEET

[Kooljock1]

Brian, Your cogent and passionate posts may have been heard. It seems that Lionel may be turning the corner on this. We must hold them to more however: BETTER transformers in starter sets, MORE action in starter sets, NEWER prototypes in starter sets. Combine this with their already gangbuster marketing program, and there will be hope for the future! Jon

[brianel027]

Lee, although you are correct in the fact that the lawyers and the court will get paid, remember that the number one cost factor to the hobbiest today - be they high or low end modelers - is new product development and tooling.

I know I say this a lot, but it is the truth. I'm not advocating or wishing the hobby would take a step backwards to 25 years ago. But consider that the products involved in these lawsuits are high-end products which are enormiously expensive to produce. MTH stated this in their original claim, and also that the profit margins on these items are MINIMAL. I know many of you who like these items don't like hearing this and counterback "well why do they make them then?"

That is a good question and I think much of it is prestige over the perceived notion of being the industry leader. It's not so much the development of these high end items, but the foolish over-repitition of idential models and the glut of more models than the market can absorb that is the main mistake.

This is my gut impression, but from hearing Mike Wolf speak and from reading his words, I've always had the impression he was determined at any cost to hurt Lionel and put them out of business. Again, that's just my gut feeling.

I do believe his is very passionate about the hobby and believes in his own company and his products maybe more so than any other respective CEO believes in their's. But I think his over indulgence on the high end is going to come back to hurt his company. But that applies to all the companies.

The lawyers fees, lawsuits and court battles are just a symptom of what is very wrong about this hobby. there simply isn't a large enough market out there to successfully support all the glut of expensive high end products and have them be profitable to the companies making them. In a smiplistic way of thinking, it's almost as if the companies knew they couldn't make money on high end steam engines, so decided to get it out of the hide of the other company.

I laugh about all this. The non-command lower end trains that I so much enjoy have NOTHING to do with these foolish lawsuits. But Lee, you are right in that I am still paying a welfare payment for high end products every time I buy a low end non-command product. And now add the lawyer's costs to that.

That's why I buy a lot of used stuff.... I want to pay just for the one train car that I plan to buy.

I don't want to pay for the development of unreliable, incompatible command systems I can't stand, high end products I will never run and lawyers who will never invite me out for a friendly lunch at a nice posh roadside joint.

[Buckeye Riveter]

Buckeye Riveter:  It helps to have a representative that has some background in the industry.   

Mickey, I bet Professor Stein has his money safely in the bank that he received  from MTH.

[mickey4479]

Buckeye Riveter:  It helps to have a representative that has some background in the industry.   

[phillyreading]

May be a big win for Lionel but don't forget the lawyer's fees, no matter who gets a favorable outcome the lawyers always get paid and the court!  Seems to me the lawyers are the winners overall.

Also new post about this subject by O gauge overload.

Lee F.

[mickey4479]

This is a big win for Lionel. MTH will be seriously talking settlement right now. The court found that the testimony of MTH's expert was unreliable & based on unproven theories.   ... The court found that the maximum that could have been awarded there was around $855k.

 

These two points are significant.  In order to retry successfully, MTH will have to develop new expert testimony (very expensive) and even then, it might not meet the evidentary test.  Then, even if they make a case, the law limits the method to calculate, in part, the damages to be assessed against Lionel.  Another good point previously made is that the other defendants may not be solvent.  Because the verdict cannot be joint and several, MTH cannot collect damages from Lionel that should have been individually assessed against the other defendants.    

[Buckeye Riveter]

.......................The limitation on the methodology of calculating damages and in particular the fact that Lionel cannot be held liable jointly and severally for the misdeeds of the other defendants is huge.  .............................. 

There will be no charge for this Comment. 

Mickey,  I always thought Lionel was taken down the wrong tracks  by their original counsel and that is why they saw the light at the end of the tunnel and put on board new attorneys that knew how to run the train.

[ben10ben]

"

Obviously, we are gratified and feel vindicated by their decision.  At this time, though, I want to take some time to fully understand the impact of their decision and I will have comments shortly.

 

Jerry Calabrese

President and CEO

Lionel Electric Trains"

[beefmalone]

This is a big win for Lionel. MTH will be seriously talking settlement right now. The court found that the testimony of MTH's expert was unreliable & based on unproven theories. They also found that the amount of damages awarded by the jury was "contrary to all reason."

The $26m for past & future lost profits was originally awarded with joint & several liability. That means that any one of the various defendants could be liable for the whole amount. The court ruled that J&S shouldn't have been used in this case. As part of the new trial the jury will now have to decide how much of that $26m (assuming they even find that much in damages the 2nd time around) is Lionel's and how much should have to be paid by the other defendants from Korea (who I'm sure are basically broke).
The $13m award for unjust enrichment by Lionel is completely thrown out. The court found that the maximum that could have been awarded there was around $855k.

[nblum]

Unbelievable.  Here's my prediction of the comments by the two parties:

 

Lionel:  "We are pleased the appellate court agreed that the original trial was not a fair assessment of the issues in the case.  We reaffirm our goal of producing the whizziest and greatest trains as we have for 100 years plus."

 

MTH:  "We are disappointed in the appellate court's decision and maintain that we are due justice for our losses. We reaffirm our goals of producing the greatest variety of trains ever seen and the galaxy's best control system."

 

Hope that clears up the implications of the decision for everyone :). 

[Jumijo]

I happen to be an Attorney.   (If you know of a good joke about Lawyers, bring it on, I enjoy them and perhaps can appreciate them even more by relating them to real life personalities I deal with.  )

Without a bias toward either MTH or Lionel, I read the holding of the Court.  It was clear, concise and well written IMO.  The legal issues were particularly interesting to me, in fact the controversy could be the basis for a question on a bar exam. 

As you mentioned, it appears that Lionel is in a better place now.  The limitation on the methodology of calculating damages and in particular the fact that Lionel cannot be held liable jointly and severally for the misdeeds of the other defendants is huge.  I suspect that the parties will resolve the matter and avoid future protracted litigation, but that is pure conjecture on my part. 

There will be no charge for this Comment. 

 

I agree that both parties will most likely hash this out without further litigation. Mike and Jerry are most likely sharing a booth in some deli right now.

 

And what do you call a million laywers at the bottom of the ocean? A good start. That's my lawyer joke. 

[willpick]

The OGR forum has requested that posters refrain from posting until statements can be obtained from both parties. The full text of the decision had been linked to, you can read it for yourself. I hope that both parties can continue on, especially since it seems that a retrial may be coming in the future--

[mickey4479]

I happen to be an Attorney.   (If you know of a good joke about Lawyers, bring it on, I enjoy them and perhaps can appreciate them even more by relating them to real life personalities I deal with.  )

Without a bias toward either MTH or Lionel, I read the holding of the Court.  It was clear, concise and well written IMO.  The legal issues were particularly interesting to me, in fact the controversy could be the basis for a question on a bar exam. 

As you mentioned, it appears that Lionel is in a better place now.  The limitation on the methodology of calculating damages and in particular the fact that Lionel cannot be held liable jointly and severally for the misdeeds of the other defendants is huge.  I suspect that the parties will resolve the matter and avoid future protracted litigation, but that is pure conjecture on my part. 

There will be no charge for this Comment. 

[Jumijo]

Why would the OGR thread be deleted?

Regards,

John O

because this is good news for Lionel. Anti-Lionel threads run there unchecked - pro-Lionel threads get deleted.

 

Agreed. But I also think they want to "break" the story by pretending to be the first. This is America, right. More like NK sometimes. Whatev.

Jim 

[jonadel]

You know what?  I just could care less, way too much time and money have already been spent stroking ego's and the worst part is all the hard feelings between friends that this has caused.

I use both companies product, not a problem.  I know, I'm probably missing the point.

 Merry Christmas!

Jon 

[Frank53]

Why would the OGR thread be deleted?

Regards,

John O

because this is good news for Lionel. Anti-Lionel threads run there unchecked - pro-Lionel threads get deleted.

[johnandjulie13]

Why would the OGR thread be deleted?

Regards,

John O

[Jumijo]

The thread on the OGR board has been deleted.

That sort of thing happens a lot over there.

Jim 

[phillyreading]

Regardless of who wins in court the price for O gauge trains will continue to climb to pay for the court costs of both parties involved.   I would like to see this case resolved so we can all get on with model trains.

Lee F.

[Frank53]

 

[nblum]

As close to total victory as Lionel could have hoped for. The initial verdict and award are totally voided. The case has been remanded for retrial,  thus proving what many have been saying, including Lionel, that the initial trial, jury decision and judge's decisions were almost certainly wildly off the mark:

 

From the decision :



"For the preceding reasons, we AFFIRM the district court’s order denying Lionel’s motion
for judgment as a matter of law; REVERSE the district court’s orders denying Lionel’s motion for
a new trial and granting MTH’s request for an injunction; and REMAND this case to the district
court for further proceedings consistent with this opinion."

[Jumijo]

From what I can see, Lionel still owes MTH $800 K and the case is being bounced back to distict court?

[brianel027]

Here's another link:

http://www.ogaugewatch.com/

I'm sure this will be updated throughout the day. If this is true that the whole thing has been THROWN OUT (???)  and that none of the evidence from this suit could be used in any other legal actions, this would be huge news for Lionel and good news too.

On the other hand, I think MTH was really depending on getting a good chunk of this award money, so we shall see what comes of it. I have heard that they've been tightening their belts for some time now. And there have been other rumors that MTH has borrowed heavily. It doesn't take a financial wizard to see they have spent a lot of money on new tooling... money they may not have, like K-Line.

It's still pretty early yet, so by later in the day, we will all know.

[johnandjulie13]

I am no lawyer, but it appears that Lionel won a major victory on their appeal.  It looks like MTH will have to retry the case.  Here is the link:

http://www.ca6.uscourts.gov/opinions.pdf/06a0457p-06.pdf

Regards,

John O

[johnandjulie13]

I saw on another board that the appellate court has ruled on the Lionel-MTH lawsuit.  We should know the results shortly...

Regards,

John O