Abattis files suit against competitor, former employees
Abattis Bioceuticals Corp. has filed suit for damages and injunctive relief against Affinor Growers Inc. and former employees of PhytaLab. Abattis alleges the defendants conspired to steal confidential PhytaLab information to set up a competing business.
ABATTIS BIOCEUTICALS Corp. has today, in U.S. Federal Court in Washington state, filed suit for damages and injunctive relief against prior employees of PhytaLab (Dr. Kaleb Lund and Lauren Hilty), a former business associate (James Baxter), a competitor (Affinor Growers Inc.), its director and former Abattis director (Nick Brusatore), and an employee of Herbal Analytics LLC (Erin Leary).
PhytaLab is owned 51 per cent by Abattis through its subsidiary, Abattis Bioceuticals International Inc. PhytaLab was the first laboratory to provide testing services in Washington state for medical cannabis under state law.
In early September, 2014, Dr. Lund and Ms. Hilty, part owners of PhytaLab and consultants to Abattis, provided PhytaLab with 30 days notice of their resignations as managers of PhytaLab. After providing notice, but prior to the effective date of their resignations, they joined with Mr. Baxter and Affinor Growers to incorporate a new Washing- ton state limited liability company, Herbal Analytics LLC, for the purpose of competing with PhytaLab in providing testing services in Washington state for medical cannabis.
Last week Abattis obtained information that indicates that certain of the defendants, in conspiracy with the other defendants, stole confidential and proprietary information belonging to PhytaLab for the purpose of using PhytaLab’s proprietary information to prepare an I-502 application with the State of Washington to recreate PhytaLab’s laboratory facilities and business model, and to take business from PhytaLab. Dr. Lund and Ms. Hilty’s actions are willful breaches of their fiduciary duties as managers of PhytaLab, detrimental to the value of their fellow shareholders’ investment in PhytaLab, and in direct contravention of their continuing consulting contracts with and obligations to Abattis.
In conjunction with the company’s partner, Dr. Michelle Sexton, an owner and the chief executive manager of PhytaLab, Abattis and PhytaLab have acted quickly to prepare a complaint for damages and injunctive relief, as well as an emergency motion for a temporary restraining order. The complaint and TRO were filed with the U.S. District Court for the Western District of Washington, and was served on the defendants earlier this morning. As an emergency motion, a hearing on the matter is anticipated to take place within two to three business days, with the TRO being put in place at that time. A full hearing for a preliminary injunction to run until the conclusion of legal proceedings is expected to occur some time within 30 to 45 days of the entry of the TRO.
Mike Withrow, chairman and chief executive officer of Abattis, commented: “Our shareholders have been financially attacked by individuals who owed an absolute duty of loyalty and goodwill to the company. We will use all legal avenues available to us to stop their anti-competitive activity, and recapture any and all losses suffered and any gains they made from their actions. Abattis welcomes spirited competition, but we will not stand idly by and allow nefarious schemes to derail the execution of our best-in-class business model.” He went on to say: “Affinor proudly proclaimed on Sept. 9 that ‘Herbal Analytics has the staff, instrumentation and procedures necessary to comply with the scope of tests that Washington State requires for I-502 quality control of cannabis and associated derivatives.’ Initially we wished them well in their endeavours, but were stunned to subsequently learn that for- mer owners of PhytaLab and consultants to Abattis had conspired with Mr. Brusatore, the chairman of Affinor and former director of Abattis, to steal valuable confidential and proprietary information from PhytaLab with the intent to harm Abattis. This scheme was devised and implemented while these individuals were under contract to Abattis, and shareholders and managers of PhytaLab. Upon review of the evidence, we were simply amazed by the brazenness of their conduct and the willful manner in which they disregarded their contractual obligations and promises. We have replaced the staff at PhytaLab with talented people who come with strong credentials and passion for science. I am pleased to have Katherine Maloney, MSc (pharmacy), and Kyle Shelton join our team.”
We seek Safe Harbor.
Erika Flores condensed this news release ([email protected]watch.com).
Guy P Dancosse, Terence Fealey, William James Fleming, Robert Hedley, Emanuel Montenegrino, Douglas J Sorocco, Michael Withrow
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