Biolitec takes $75m AngioDynamics beef to the Supremes

German medical laser maker Biolitec (ETR:BIB) asked the U.S. Supreme Court this month to review an appeals court decision upholding a $75 million contempt penalty in its longtime legal dispute with  AngioDynamics (NSDQ:ANGO).

Judge Michael Ponsor of the U.S. District Court for Massachusetts slapped Biolitec with a $75 million ruling last year, after finding that it deliberately effected a so-called “downstream merger” to move its incorporation to Austria to escape jurisdiction in U.S. courts. Ponsor’s harshly-worded ruling trebled the $23.2 million awarded to AngioDynamics by a New York court in 2012, adding $3.6 million in interest and another $1.9 million in legal costs, according to court documents.

Ponsor also issued an arrest warrant for ex-Biolitec CEO Wolfgang Neuberger and imposed an injunction on sales of some of Biolitec’s vascular offerings. Ponsor also levied a hefty fine schedule against Biolitec to compel it to undo the merger, beginning with $1 million in May 2013, escalating to $2 million the next month, $4 million in July 2013, $8 million in August and $8 million a month thereafter.

Biolitec appealed Ponsor’s rulings to the U.S. Court of Appeals for the 1st Circuit. Last month the appeals court affirmed the lower court judge and scorched Biolitec in dismissing the appeals, but ruled against the indefinite escalation of the penalties, which reached $160 million. Ponsor reduced the penalties to $75 million on remand from the 1st Circuit, according to court documents.

In a certiorari petition filed July 1 with the Supreme Court, Biolitec argued that the 1st Circuit decision adds to the confusion on the difference between criminal and civil contempt.

Citing the Supremes’ 1994 decision in United Mine Workers v. Bagwell, Biolitec argued that criminal sanctions shouldn’t be imposed “without the procedural protections of the criminal law.”

“The current state of confusion regarding the distinction between coercive civil sanctions and punitive criminal sanctions allowed the district court to impose, and the court of appeals to affirm, serious punitive sanctions in a summary proceeding,” the company argued in the petition. “The opinions of the district court and court of appeals contravene the [Supreme] Court’s decisions regarding the distinction between civil and criminal contempt as well as decisions from the 2nd, 4th, and 7th Circuits. The court should resolve those important conflicts now in order to prevent other improper use of summary contempt power and to protect the constitutional rights of parties accused of serious contempts. Finally, the court should exercise its supervisory power to correct clear errors that raise serious international policy concerns.”

AngioDynamics in October 2012 won a $16.5 million award in a separate lawsuit when a judge ruled that Biolitec, which provided laser vein ablation technology to AngioDynamics, failed to defend and indemnify the medical device company in lawsuits filed against it by Biomed and Covidien (NYSE:COV) subsidiary VNUS Medical Technologies.

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