This has to do with the MTH suit against Lionel for "stealing MTH trade secrets."
Following are 2 statements on this verdict; first the MTH statement, then the Lionel statement.
MTH Statement
6th Circuit Denies Lionel’s Request For Judgment In Its Favor, But Remands Case For New Trial
December 14, 2006 – The U.S. Court of Appeals for the Sixth Circuit today entered its decision in Lionel’s appeal of M.T.H.’s judgment against Lionel for willful misappropriation of M.T.H.’s trade secrets. The Sixth Circuit affirmed the trial court’s decision denying Lionel’s motion for judgment as a matter of law in favor of Lionel, but it reversed the trial court’s decision denying Lionel’s motion for a new trial and remanded the case for a retrial.
Significantly, the Sixth Circuit rejected Lionel’s argument that M.T.H. failed to specifically identify the trade secrets at issue, finding “the design drawings here are properly considered trade secrets even though they contain a mixture of secret information (e.g., dimensions, tolerances, and data-reference points) and non-secret information.” The Sixth Circuit also approved the trial court’s decision to admit forty-five exhibits that were English translations of documents generated during the South Korean investigation and judicial proceedings into the misappropriation of M.T.H.’s trade secrets.
“Obviously, we are very disappointed with the Court of Appeals’ decision to remand this case for a new trial, but the decision in no way vindicates Lionel for its actions” said M.T.H. founder and President Mike Wolf. “This has already been a long ordeal for everyone here at M.T.H., but the decision to remand the case for a new trial will not deter us from our relentless pursuit of justice. We have faith in the U.S. jury system. The jury got it right the first time, and we have no reason to believe it will not get it right a second time.”
Wolf added, “We are particularly disappointed the appeals court did not seem to consider the trial evidence concerning Lionel’s destruction of key documents, which led the trial judge to instruct the jury that it could infer from the failure of any party to produce a document that the document would be unfavorable to that party. We believe the jury verdict was influenced more by evidence of document destruction than by M.T.H.’s expert witness testimony.”
According to Wolf, the issue of document destruction will not go away during a retrial. He said the retrial could get “very interesting” because during Lionel’s bankruptcy case, Lionel sued its former chief engineer, Bob Grubba – one of Lionel’s star witnesses in the first trial – for working with a then current Lionel employee to obtain and use Lionel’s trade secrets for the benefit of another company, K-Line, for whom Grubba was working at the time. Lionel also accused Grubba of trying to cover his tracks by destroying key evidence of the scheme. MTH presented evidence of the same pattern of misappropriation and destruction of documents in its case against Lionel. “It is ironic that in the seven years since M.T.H. first filed its lawsuit against Lionel, M.T.H. has not received any compensation for its damages, while during that same period of time Lionel has taken control of and put out of business a 30-year old North Carolina competitor, without a trial, based on the very same claims of conduct by Lionel against Grubba and K-Line as M.T.H. claimed and proved against Lionel during a jury trial,” said Wolf.
Wolf did not rule out an out-of-court settlement of this long-running dispute, stating M.T.H. has always been willing to negotiate in good faith to resolve legal disputes, pointing to M.T.H.’s recent settlement of the lawsuit filed against it by Union Pacific, which benefited the entire model railroading industry. “Unfortunately, Lionel has refused thus far to acknowledge responsibility for any of its actions, leaving us no choice but to vigorously pursue our claim through the legal system. Maybe that mindset will change under Lionel’s current management.”
The Sixth Circuit’s decision does not have any impact on the trial court’s judgment entered against Lionel’s co-defendants Korea Brass Co., Ltd. and Yoo Chan Yang, collection of which M.T.H. is pursuing on several fronts.
Lionel Statement
From Jerry Calabrese, CEO of Lionel L. L. C.
At a time like this, I could say any number of things. Obviously, we feel relieved and happy. Even more important, we’re grateful that the US Sixth Circuit Court of Appeals clearly saw the real issues of law and evidence and supported our position that a significant injustice had been done by the earlier decision in favor of MTH. Rather than try to add my own poor remarks on matters of law, I prefer to let the wording of the court’s decision, handed down this morning, speak for itself.
From a personal standpoint, even though the past two years of living under the cloud of this lawsuit has been difficult, it has also been pretty uplifting. The steady and inspirational support of our fans and dealers has been a constant reminder of the love and respect that is invested in Lionel. As the people in charge of this great company, it’s also served as a constant reminder that our first and foremost responsibility is to live up to the Lionel brand and what it means to generations of Americans. Please be assured that we will.
Finally, thank all of you for your good wishes throughout this very difficult time.