Big Suits: Breed Technologies v. AlliedSignal

It took seven years and multiple changes of venue, but in March a Florida jury cleared AlliedSignal (now a part of Honeywell International Inc.) of all charges in a fraud case in which plaintiffs were seeking $375 million in damages.

In 1997, auto safety company Breed Technologies purchased an ailing seat-belt manufacturing unit from AlliedSignal. Two years later Breed filed suit, claiming that Allied had misrepresented the potential of the unit and saddled Breed with a dud, and charging Allied with fraud, misrepresentation, and fraudulent transfer.  One month later Breed announced it was entering Chapter 11 bankruptcy proceedings.

After years of delays due to repeated disputes about forum, the addition and removal of several charges, and the simultaneous processing of Breed’s bankruptcy, on March 23 a state jury in Barstow, Florida sided with AlliedSignal.

At trial AlliedSignal’s lawyers argued that Breed’s management team had been informed of the difficulty the unit was having in strengthening its market share as it slowly lost out to bigger players in the seat belt industry.

Central to AlliedSignal’s defense were financial reports from AlliedSignal and its accountants, which described the unit’s finances around the time of the sale, and matching records from Breed’s files that were also produced at trial.  Among the evidence was a letter from Breed’s COO to the CEO of AlliedSignal stating “There are problems…but I am the greater optimist and believe they can be fixed.”

Since emerging from bankruptcy in 2001, Breed Technologies has relocated to Sterling Heights, Michigan, and has changed its name to Key Safety Systems, Inc.

The company has filed a motion for a new trial, claiming that AlliedSignal’s lawyers repeatedly introduced inadmissible evidence.

FOR PLAINTIFF BREED TECHNOLOGIES (LAKELAND, FLORIDA)

JONES DAY: Donald Ayer, Edward Bilich, Gregory Shumaker, Geoffery Stewart, of counsel Paul Riechert, and associates Louis Gabel, Tyler Hudson, Shannon Kasley, Sean Malone, Charles Morse, Jennifer Swize, and David Torborg.  (All are in Washington, D.C., except Stewart and Morse, who are in New York.)  Stewart brought the matter to Jones Day when he moved from Hale and Dorr in 2000.

FROST TAMAYO SESSUMS & ARANDA: John Frost II.  (He is in Barstow, Florida.)  Frost served as local counsel.

FOR DEFENDANT ALLIEDSIGNAL (MORRISTOWN, NEW JERSEY)

IN-HOUSE: At Honeywell International Inc.: senior vice-president and general counsel Peter Kreindler.  At Honeywell Specialty Materials: general counsel Katherine Adams and assistant general counsel-litigation Charles Graf.

KIRKLAND & ELLIS: Eugene Assaf, Zhonette Brown, Daniel Donovan, Steven McCormick, Matthew Papez, Craig Primis, and associates Padraic Fennelly, Alicia Johnson, Jake Phillips, Christopher Posteraro, Christian Schultz, and Michael Williams. (All are in Washington, D.C., except for McCormick, who is in Chicago.)  Kirkland took the case after successfully representing AlliedSignal against Goodrich Corporation in a 1999 litigation.

HILL, WARD & HENDERSON: Benjamin Hill III. (He is in Tampa.)  Hill served as local counsel. 

REPRINTED WITH PERMISSION FROM THE JUNE 2006 EDITION OF THE AMERICAN LAWYER © 2005 ALM PROPERTIES, INC. ALL RIGHTS RESERVED. FURTHER DUPLICATION WITHOUT PERMISSION IS PROHIBITED