Breach of Oral Agreement Results in Punitive Damages

The closing argument featured a slide-show presentation. The closing slide was a depiction of the Taiwanese manufacturer’s chairman giving a speech at a wedding banquet. The wedding was that of the daughter of the U.S. distributor’s owner. The speech compared the 30-year relationship of the manufacturer with the distributor with the bride and groom, and how those present would look back on the wedding day with fondness. Instead, the jury looked back at the wedding day, for the manufacturer concealed that they decided to terminate the oral distribution agreement. The jury awarded $6.2 million in compensatory damages and $6 million in punitive damages.

In Mighty Enterprises v. She Hong Industrial, (U.S.D.C. for the C.D. Cal Nov. 23, 2016), the distributor Mighty Enterprises, Inc. brought suit against its Taiwanese manufacturer of heavy equipment, She Hong Industrial. The “largest machining center in Taiwan,” She Hong has 500 employees in Taiwan, and had more than 70 distributors in 60 countries, with 300 offices worldwide. Mighty in 2013 was the fifth largest distributor of She Hong equipment in the world. The relationship was an oral distribution contract, effectively a handshake across the Pacific Ocean. Mighty would purchase new equipment and parts from She Hong, and would service its customers in the United States. This was a 33-year relationship before it was terminated by She Hong.