Cigar maker Swisher seeks $20 million sanction in antitrust row

A worker sorts cigars at the H. Upmann factory in Havana
REUTERS/Desmond Boylan
  • Swisher's lawyers at Gibson Dunn accuse rival of "sham suit"
  • Plaintiff Trendsettah sued Swisher in California federal court

(Reuters) - Cigar manufacturer Swisher International Inc has asked a federal judge in California to force a rival company to pay nearly $20 million in legal fees as a sanction for pursuing what it called a "bad faith" antitrust lawsuit for nearly a decade.

Swisher's legal team at law firms Gibson, Dunn & Crutcher and Akerman argued in a filing on Tuesday in Santa Ana federal court that Trendsettah USA Inc's case "was built on a foundation of criminal misconduct, fraud, and misrepresentation."

The claim marked the latest flashpoint in a nearly decade-long antitrust and contract claims fight between the two companies, with both leveling allegations against each other about deception and distrust.

Swisher's lawyers, including Gibson Dunn partner Theodore Boutrous, contend that Trendsettah long concealed a "tax-evasion conspiracy — while simultaneously attempting to recover millions of dollars of purported lost profits."

"Because [Trendsettah] never should have filed this sham lawsuit, [it] should be required to pay Swisher's fees and costs as a sanction for its bad-faith abuse of the judicial process," Boutrous said in a statement on Wednesday.

At the center of the feud, Swisher had entered a deal with Trendsettah to produce a short and narrow product called a cigarillo, but the business relationship soured.

Trendsettah in 2014 sued Swisher in Los Angeles, claiming breach of contract and antitrust violations and demanding damages for alleged loss of profits.

A $44 million antitrust win for Trendsettah was vacated on appeal, but a $10 million judgment on contract claims remains in place.

Swisher's court filing seeks all of the fees and costs the company has incurred. Gibson Dunn did not reveal its rates in the filing. Veteran partners at the firm have billed at more than $1,500 an hour.

A lawyer for Trendsettah, Mark Poe of San Francisco's Gaw|Poe said "Swisher's motion is chock full of false statements of fact and misrepresentations of the record."

Poe pointed to a statement from a U.S. appeals court judge in 2018 during an earlier stage of the case who said he found a filing from Swisher to be "incomplete and misleading," observations that a lawyer for the company denied.

"A leopard can't change its spots, so they are doing the same thing again," Poe said. "We are confident, however, that the district court won't be misled."

A representative from Jacksonville, Florida-based Swisher did not immediately respond to a message seeking comment on Wednesday.

U.S. District Judge James Selna is scheduled to take up the dispute at a hearing in March.

The case is Trendsettah USA Inc v Swisher International Inc, U.S. District Court for the Central District of California, No. 8:14-cv-01664.

For Trendsettah: Mark Poe and Randolph Gaw of Gaw|Poe

For Swisher: Theodore Boutrous and Daniel Swanson of Gibson, Dunn & Crutcher; and Michael Marsh of Akerman

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