On Friday, U.S. Magistrate Judge Kenneth G. Gale issued an order in a Wichita, Kansas Federal Court compelling Combat Brands, LLC, a firm organized and controlled by Independent U.S. Senate candidate Greg Orman, “to file a memorandum to show cause as to why sanctions should not be awarded,” because the firm “wholly failed to provide the Court with any–let alone substantial–justification for their inaction in regard to discovery at issue” in a lawsuit filed against it by Everlast World’s Boxing Headquarters Corporation.
The Court gave Orman’s firm seven days–until this coming Friday, September 12, 2014–to file the “show cause” memorandum.
Judge Gale also ordered Orman’s firm to produce the discovery documents it had “unreasonably” withheld within thirty days.
Everlast World’s Boxing Headquarters Corporation sued Orman’s company, Combat Brands, LLC, and Ringside, Inc., an Olathe, Kansas supplier of boxing products in a New York Federal Court in 2012, claiming that Orman and his associated companies owe Everlast approximately $30 million. In 2013, the venue for the case was moved from New York to Kansas.
Orman founded Combat Brands, LLC in June 2012. Ringside, Inc. filed for bankruptcy in October 2012. The bankruptcy case is still pending.
In 2009, Ringside, Inc. signed a contract with Everlast promising to pay the company $1.6 million a year in royalties until 2018, and to purchase at least $28 million in products, the lawsuit alleges. After Ringside, Inc. filed for bankruptcy in October 2012, according to the lawsuit, its assets, including inventory provided by Everlast and accounts receivables associated with the sale of Everlast supplied products, were transferred to Combat Brands, LLC, but no payments were made to Everlast in association with those asset transfers.
In hard-hitting language, Judge Gale wrote, “the Court finds that Defendant’s position in regard to these discovery disputes was not only unreasonable, but in blatant disregard of the rules and spirit of discovery. As discussed above, Defendants flouted the conferral process, often intentionally misleading Plaintiff as to their intentions regarding the discovery at issue.”
But Judge Gale wrote that “Defendants nonsensically argued it was impossible for them to respond to document requests–seeking items in their possession, custody, or control–until they received discovery responses from Plaintiff.”
Mr. Carter did not return Breitbart News’ call for comment on the story.
Neither of the plaintiff’s attorneys, Kansas-based Scott Ast or New York City-based Jed Schachter, returned Breitbart News’ calls for comments.
News of the possibility that a Federal Court may impose tough sanctions on Orman’s company strikes a blow against his campaign’s carefully constructed narrative that he is a business “good guy,” only interested in preserving jobs for Kansans. A careful reading of Judge Gale’s ruling, in fact, paints a very different picture of Orman’s business practices.
“Defendants position,” wrote the Court, “that it cannot respond to Plaintiff’s documents requests until it receives all of the documents Plaintiff has been required to produce is nonsensical and disingenuous.”
“The Court sees this as another blatant attempt by Defendant to flaunt the federal rules and stonewall the discovery process,” the judge’s order continued. The defendant complained about the plaintiff’s “gamesmanship,” but “would have been better served to direct that effort at actually responding to the issues in Plaintiff’s motion, or better yet, towards providing adequate discovery responses.”
Rather than someone who plays by the rules, the court order portrays Orman as someone who consciously manipulates the rules for his own personal financial benefit.
It also brings to public attention questions concerning the role of private equity investment firms. For Democratic critics, a Republican private equity investor like Mitt Romney was characterized as a selfish “vulture capitalist.” It remains to be seen if Democratic and independent voters in Kansas will now give Orman a pass, or if they will start to look at him in the same negative light as they did Mitt Romney in 2012.