July 23, 2024   

Mistrial Declared in Dialight v. Sanmina Case

2024 mistrial dialight sanmina lawsuit case new york.jpg

Manufacturer and supplier suing one another. New trial set for multi-million dollar dispute in September.

 

A mistrial was declared in the 5-year legal conflict between Dialight PLC and Sanmina Corporation following the excusal of two jurors for medical and personal reasons.

Not yet reflected in unsealed court records, a brief press release from Dialight explained the circumstances leading to the mistrial in its litigation against Sanmina Corporation. Initially set for a 10-day trial starting Monday, July 15, 2024, the proceedings began with jury selection and the completion of opening statements. However, complications arose immediately following the initial day of the trial.

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On Tuesday, July 16, 2024, the court did not convene as two jurors were excused, one due to medical reasons and the other for personal reasons. The absence of these jurors disrupted the composition of the jury to the extent that proceeding with the trial was deemed untenable. Consequently, on Wednesday, July 17, 2024, the court declared a mistrial.

The trial has been rescheduled to start on September 9, 2024.

 

Backstory: Dialight vs. Sanmina and Sanmina vs. Dialight

Sanmina, a publicly traded San Jose, California company, provided various manufacturing services and products to Dialight under their Master Services Agreement (MSA). These services included producing goods based on Dialight's forecasts and specifications, managing a high mix, low volume production model, and delivering specific goods and materials essential to Dialight's operations. Sanmina also managed overhead, tooling, repair, and service charges, along with inventory management for excess and obsolete materials ordered based on Dialight's forecasts.

Dialight, a well-known name in hazardous and industrial lighting that generated approximately $188 million in 2023 revenue, is suing Sanmina for fraudulent inducement and breach of contract, alleging that Sanmina overcharged for labor and materials and engaged in willful misconduct. Conversely, Sanmina is suing Dialight, claiming it is owed over $13 million for goods delivered and materials ordered.

The lawsuit between Sanmina Corporation and Dialight involved several claims and defenses from both parties. 

 

Accusations and Defenses:

Sanmina Corporation's Claims:

  • Accounts Receivable Claim (A/R Claim): Sanmina claimed that Dialight owed them $5,292,950 for goods and materials delivered, which Dialight did not reject nor pay for. This claim included overhead, tooling, repair, and service charges.
  • Excess and Obsolete Materials Claim (E&O Claim): Sanmina sought $8,646,572 for materials ordered on behalf of Dialight, which Dialight refused to accept or pay for. Sanmina held $5,304,730 in a reserve account to partially offset this amount.

Sanmina's Defenses:

  • Contractual Limitation on Damages: Sanmina argued that the Master Supply Agreement (MSA) limited the amount of damages recoverable by Dialight.
  • Failure to Mitigate Damages: Sanmina claimed Dialight failed to mitigate damages by continuing to transfer additional product lines despite claiming the relationship was not working.
  • Excuse/Waiver: Sanmina's performance under the MSA was hindered by Dialight’s failures, including providing accurate forecasts and timely supplying materials.

 

Dialight PLC's Claims:

  • Fraudulent Inducement: Dialight alleged that Sanmina fraudulently induced them into signing the MSA by misrepresenting their capabilities and presenting false financial data.
  • Breach of Contract: Dialight claimed that Sanmina breached the MSA in a manner constituting willful misconduct and fraudulently overcharged for labor and materials.
  • Monetary reward: Dialight claims that this litigation “could lead to the payment by Sanmina to Dialight of up to $220 million, excluding legal costs.”

Dialight's Defenses:

  • Willful Misconduct: Dialight argued that Sanmina's willful misconduct caused the excess and obsolete inventory.
  • No Damages: Dialight contended that Sanmina did not sustain any damages due to Dialight's conduct.
  • Breach of the MSA: Dialight argued that Sanmina itself breached the MSA, excusing Dialight’s performance.

 

Pretrial Proceedings and Mistrial

As the trial was begining, a mistrial was declared immediately ending the trial. The pretrial order had detailed the trial counsel, the claims and defenses from both sides, the estimated duration of the trial, and a list of witnesses expected to testify. Both parties had prepared to present extensive evidence and testimony to support their respective claims and defenses.

Both Sanmina and Dialight, embroiled in this litigation since 2019, are preparing for the rescheduled trial, pledging to pursue their respective claims and defenses vigorously.

 

 

 




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