VeriFone (PAY) Slumps as Creative Mobile Technologies Files $250M Suit, Alleges Breach of Contract
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VeriFone Systems (NYSE: PAY) shares are seeing some pressure on the session Monday following a news release earlier in the session that a in-taxi media company is filing a massive lawsuit against the company. Shares are down 2.7 percent Monday.
Creative Mobile Technologies LLC said it was suing VeriFone for $250 million, alleging "wrongful, malicious, tortious and contractual breaches" of CMT's agreement with its exclusive in-taxi advertising partner, VMS, formerly Clear Channel Taxi Media, LLC (CCTM).
From the release: "The lawsuit alleges that VeriFone, including its Chief Executive Officer Douglas Bergeron, knew of the existence of the exclusive agreement between CMT and CCTM when VeriFone purchased CCTM in 2009 and that VeriFone specifically acknowledged its subsidiary's obligations under the agreement and said that those obligations would be honored. Despite these assurances, the lawsuit alleges that VeriFone, a competitor to CMT, employed a combination of bad faith dealing and other tactics that caused VMS to breach the agreement in numerous ways. Among other things, the lawsuit alleges that VMS withheld financial information from CMT, delayed payments to CMT for certain advertising, refused to pay CMT for other advertising, and violated the agreement's broad rights of first refusal by installing similar technology and placing advertisements in taxis outside of New York City without first offering those opportunities to CMT as required under the agreement. Such locations include Miami, Las Vegas, Atlanta, San Francisco, South Africa, and London.
The action was filed in the New York State Supreme Court in Manhattan by CMT's attorneys Skadden, Arps, Slate, Meagher & Flom LLP and co-counsel Rosenberg, Calica & Birney LLP. John L. Gardiner, partner at Skadden and co-head of the firm's International Litigation and Arbitration Group, is the lead attorney on the case."
Creative Mobile Technologies LLC said it was suing VeriFone for $250 million, alleging "wrongful, malicious, tortious and contractual breaches" of CMT's agreement with its exclusive in-taxi advertising partner, VMS, formerly Clear Channel Taxi Media, LLC (CCTM).
From the release: "The lawsuit alleges that VeriFone, including its Chief Executive Officer Douglas Bergeron, knew of the existence of the exclusive agreement between CMT and CCTM when VeriFone purchased CCTM in 2009 and that VeriFone specifically acknowledged its subsidiary's obligations under the agreement and said that those obligations would be honored. Despite these assurances, the lawsuit alleges that VeriFone, a competitor to CMT, employed a combination of bad faith dealing and other tactics that caused VMS to breach the agreement in numerous ways. Among other things, the lawsuit alleges that VMS withheld financial information from CMT, delayed payments to CMT for certain advertising, refused to pay CMT for other advertising, and violated the agreement's broad rights of first refusal by installing similar technology and placing advertisements in taxis outside of New York City without first offering those opportunities to CMT as required under the agreement. Such locations include Miami, Las Vegas, Atlanta, San Francisco, South Africa, and London.
The action was filed in the New York State Supreme Court in Manhattan by CMT's attorneys Skadden, Arps, Slate, Meagher & Flom LLP and co-counsel Rosenberg, Calica & Birney LLP. John L. Gardiner, partner at Skadden and co-head of the firm's International Litigation and Arbitration Group, is the lead attorney on the case."
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