Contracts: 3M Sues Porton Capital, Its Director, Alleging Blackmail over BacLite Trials

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Case Summary: 3M files suit in a New York state court alleging that private equity group Porton Capital and its director attempted to blackmail 3M to pay $30 million for Porton to withdraw its lawsuit claiming 3M breached a medical device research and commercialization agreement.
Key Takeaway: The 3M suit is the latest in a series of actions the two sides have taken in and out of court against each other concerning the dispute.
ST. PAUL, Minn.3M sued Porton Capital Technology Funds and its director June 20, claiming that the director sought $30 million from the company in exchange for withdrawing a lawsuit involving a medical device research and commercialization agreement (3M v. Boulter, N.Y. Sup. Ct., No. 651708, filed 6/20/11).
The lawsuit, filed in New York State Supreme Court, also alleges that an e-mail from Harvey Boulter, Porton director, threatened the knighthood recently awarded to 3M's chief executive officer, George W. Buckley, by the British queen.
A spokesman for Boies, Schiller & Flexner, attorneys for Boulter and the Porton Group, said they would file an answer to the lawsuit soon. Included in the answer, he said, would be a motion to dismiss the lawsuit.
In a news release, the Porton Group denounced the filing as a publicity stunt disguised as a lawsuit. It noted that the lawsuit was filed just days after a trial involving both 3M and Porton began in London.
Porton also has filed a citizens' petition with the U.S. Food and Drug Administration that alleges 3M exhibited negligence in its clinical trial of the medical device BacLite (5 LSLR 503, 5/20/11).
BacLite Effectiveness Questioned
According to 3M's complaint, it purchased BacLite from Acolyte, a combined company that included a British Ministry of Defence subsidiary and the Porton Group, in 2007. BacLite had been developed by Acolyte to diagnose whether patients in hospitals were infected with methicillin resistant staphylococcus aureus bacteria, a superbug resistant to conventional antibiotics.
3M contends that while Acolyte touted BacLite as both a cheap and reliable method of screening patients for the superbug, its own clinical trials showed the device to have little promise. The lawsuit alleges that after testing BacLite and seeing competitors develop other screening devices, 3M decided the device would not be commercially viable. It tried to end the BacLite business in 2008, the complaint says, but the Porton Group objected.
Porton sued 3M, claiming breach of contract. In that suit, Porton contends that 3M failed to actively market BacLite, failed to diligently seek regulatory approval for the device, and failed to devote resources to it.
In an effort to settle the lawsuit, 3M's attorneys were given permission to speak directly to Boulter. 3M's lawsuit claims that Boulter indicated that he had been authorized to speak on behalf of the claimants in the London trial, including the British Ministry of Defence.
E-mail at Heart of Lawsuit
A June 18 e-mail from Boulter to 3M's attorneys is the heart of 3M's lawsuit. In the e-mail, Boulter wrote that the lawsuit was about losing face. A settlement of $30 million, he wrote, would allow the Ministry of Defence to internally save face.
The e-mail also noted that a smaller verdict for Porton and the ministry could leave the government seething and could have future ramifications. It also noted that the British cabinet shortly could be discussing the knighthood for Buckley.
A follow-up e-mail asked for a response so that the ministry could be apprised of the situation before its workweek began.
3M's lawsuit claims that the e-mails constituted blackmail and tortious interference with its business relationships. It also alleges prima facie tort, civil conspiracy, and aiding and abetting.
The lawsuit seeks compensatory and punitive damages, as well as attorneys' fees and costs.
Travis Carter, spokesman for 3M, said the e-mails appear to indicate that 3M's business relationships could suffer if the company did not pay at least a $30 million settlement. They also appear to indicate that 3M's failure to pay could affect Buckley's knighthood.
He noted that the British Ministry of Defence has refuted Boulter's claims that he was authorized to speak on its behalf.
Porton's statement claims that the 3M lawsuit is aimed at diverting attention from the breach-of-contract lawsuit. It adds that 3M's publishing of Boulter's e-mails violated the rules of confidentiality regarding settlement negotiations. The publication, it says, mischaracterized the statements and made them the basis for the extortion claim.
3M is based in Maplewood, Minn.
Full text of the complaint is available at