Medical Co. Sues Over Breached Sales Contract, Copied Product

On October 23, Snap Medical Industries LLC and its president, Nancy Stamps, sued Focus Health Group, along with owner Fred McBee and employee Beth Cross. The lawsuit was brought in the United States District Court for the Southern District of Ohio, Eastern division.

The complaint said Snap was created for the express purpose of creating and selling FDA-registered epinephrine convenience kits at an affordable price. Snap entered into a nonexclusive sales distribution agreement with Focus Health Group; the plaintiffs said this agreement still permitted the direct sale and marketing by Snap of the convenience kits. The complaint alleged that McBee, on behalf of Focus, submitted a request to permit a licensing agreement which was proposed to create a direct competitor for the Snap product, purportedly in order to create bidding wars for the product. According to the complaint, “McBee demonstrated how the licensed product could be used by Focus to ‘play a pricing game’ with its major wholesalers and government contracts. Although Ms. Stamps indicated that Snap may have some level of general interest in a licensing agreement, it had no interest in playing a ‘pricing game,’ and was instead more interested in continuing with the promotion and sale of Snap’s produc ts under the then-current Agreement.” The denial of the request marked the beginning of a downturn in the business relationship, the complaint said.

Behvaior alleged in the complaint includes several breakdowns in the relationship, including failure to pay additional commission work performed by Stamps on behalf of Focus, failures of Focus to promote or market the Snap product, inventory mismanagement by Focus of Snap inventory, failure to return excess inventory upon termination of the agreement, and finally, the creation of a copy-cat product based off of the branding and marketing materials originally created for Snap by Focus.

The complaint alleged nine causes of action, including tortious interference, unfair competition, deceptive trade practices, unjust enrichment, conversion, and breach of contract. Stamps and Snap are represented by Johnathan Corwin of Arnold & Clifford, LLP