SoClean distributor files $10 million suit for breach of contract

Monadnock Ledger-Transcript
Published: 7/17/2019 9:09:17 PM

A distributor for SoClean is suing the company for $10 million alleging a breach of contract.

SoClean, based in Peterborough, makes and sells continuous positive airway pressure, or CPAP machine cleaning devices. According to court documents filed in the United States District Court in Massachusetts, SoClean2 Pty Ltd, a distributor for the company, is suing based on the termination of a five-year distribution agreement with SoClean.

The damages of $10 million are the lost profits SoClean2 alleges it suffered as a result of the terminated contract.

SoClean has also filed a counter-suit against SoClean2, alleging the company made an illegal audio recording during a dinner meeting with SoClean, without SoClean’s knowledge or consent, allegedly to aid the planned breach of contract suit. 

SoClean alleges SoClean2 was understaffed and unable to keep the terms of the distribution agreement, according to filings by SoClean. 

SoClean denied that it had breached contract with SoClean2.

“The extent that [SoClean] had any obligations to [SoClean2], such obligations have been fully, completely and properly performed,” Joseph J. Laferrera, attorney for SoClean, wrote in a response to the complaint filed by SoClean2.

The original agreement, according to court documents, allowed SoClean2 the exclusive rights to distribute SoClean products in Australia, New Zealand, Singapore, Malaysia, Indonesia, the Philippines, Thailand, Japan, Hong Kong, Macau, South Korea and Taiwan.

The agreement between SoClean and SoClean2 was terminated in 2018, on the basis that SoClean2 had allegedly failed to make timely payments on certain invoices, a basis SoClean2 denies. 

SoClean2 had a previous distribution agreement with SoClean, which it renewed in April of 2017, according to court documents. SoClean2 alleges in 2018, it was informed SoClean no longer was interested in an Australia distributor, and wanted to start marketing and selling directly to consumers, and offered to continue paying a commission for products sold in Australia for the next year, but not anywhere else in SoClean2’s distribution territory. 

After attempts to negotiate a buy-out of SoClean2’s contract were unsuccessful, SoClean terminated the agreement, based on unpaid invoices, which SoClean2 alleges is a “pretext.”

SoClean is also currently involved with a separate federal claim of false adverting. A SoClean competitor, 3B Medical, alleges using the term “activated oxygen” to describe the ozone SoClean uses in its sterilizing process is misleading and potentially harmful, and its advertising practices potentially harmed 3B Medical’s business by encouraging people to buy SoClean’s devices over 3B Medicals.

SoClean denies this claim.

 

Ashley Saari can be reached at 924-7172 ext. 244 or asaari@ledgertranscript.com. She’s on Twitter@AshleySaariMLT. 




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