Dialight plc (LON:DIA) has provided an update to the Sanmina litigation.
As reported previously, Dialight plc has been involved in ongoing litigation with its former manufacturing partner, Sanmina Corporation in relation to the termination of a manufacturing services agreement. Both parties issued formal legal proceedings in December 2019 and Sanmina lodged a motion for summary judgment to dismiss certain elements of Dialight’s claims and counter-claims.
The Court’s ruling on Sanmina’s dismissal motion (with pleadings first filed on 2 May 2022) was released to the parties under seal on Tuesday 14 March 2023 (the “First Judgment“). The notification of this ruling is available at https://ecf.nysd.uscourts.gov and is also available on request from Dialight (email: [email protected]). In the First Judgment, the court denied Sanmina’s motion to dismiss Dialight’s fraudulent inducement claim and denied its motion for summary judgment on Sanmina’s accounts receivable claim.
Sanmina subsequently filed a motion of reconsideration seeking the reversal of the judge’s denial of summary adjudication of Sanmina’s $5.3m accounts receivable claim. The Court’s ruling on Sanmina’s motion for reconsideration was released to the parties under seal on 28 November 2023 (the “Second Judgment“).
In the notification of the Second Judgment, the court: (a) stated that it was granting the motion for reconsideration solely to the extent that the Court’s prior opinion could be construed as finding that certain evidence established as a matter of law that Dialight timely rejected invoices comprising Sanmina’s accounts receivable claim; (b) stated that otherwise Sanmina’s motion for reconsideration was denied; and, (c) affirmed its prior opinion denying Sanmina’s motion for summary judgment on its accounts receivable claim.
The fraudulent inducement claim, together with various claims and counter-claims relating to excess and obsolete inventory, accounts receivable and accounts payable, are now expected to proceed to trial (pending any further motions, appeal processes and/or mediation), and Dialight intends to continue to rigorously pursue its claims.
If Dialight’s claims are successful at trial, the range of outcomes could include the payment by Sanmina to Dialight of between $0 and c. $220m (excluding legal costs and judicial interest). If Sanmina’s claim is successful at trial the range of outcomes could include the payment by Dialight to Sanmina of between $0m and $8.3m (excluding legal costs and judicial interest).
Fariyal Khanbabi, Dialight Plc’s CEO, commented:
“I am pleased that yet again the court has denied Sanmina’s effort to obtain summary judgment and we now look forward to seeing it proceed to a satisfactory conclusion.”
