WEST PALM BEACH -- Dyadic International has settled its legal malpractice dispute with Greenberg Traurig after a Florida judge struck down Dyadic’s claim to more than $700 million in damages.
After jurors heard seven weeks of witness testimony and were scheduled to hear closing statements, Judge Richard Oftedal granted Greenberg’s motion on the damages claim. That precipitated a confidential deal that Dyadic described as “mid-seven-figure settlement.”
Dyadic sued the legal services company over advice Greenberg gave the biotech firm a decade ago. In light of anonymous whistle-blower emails alleging fraud other financial wrongdoing at Dyadic’s Hong Kong subsidiary, Greenberg advised Dyadic to voluntarily halt trading on the American Stock Exchange, put its CEO on a temporary leave and issue a statement that its past financial statements were no longer reliable.
That caused the company to go into a financial tailspin, and Dyadic in turn was unable to sign lucrative contracts using its proprietary technology to produce biofuels and pharmaceuticals, Dyadic attorneys said.
“The judge reversed course and prevented us from presenting our lost-opportunities damages model for the jury,” Dyadic attorney Steven Katzman told the Florida Record. That’s what precipitated the settlement announced on Thursday, he said.
Oftedal also threw out a motion by Greenberg that argued third parties were at fault for what happened to Dyadic, Katzman said.
“It’s a shame that the company cannot recover the full measure of its losses,” he said.
Had Oftedal not struck down the Dyadic claim, the stakes in the legal malpractice trial could have been one of the largest on record.
Katzman said he felt confident in the outcome for Dyadic during the course of testimony presented at the trial. “Having interviewed the jurors, the company feels very much vindicated,” he said.
Greenberg Traurig’s director of media relations, Lourdes Brezo-Martinez, expressed relief the case is over. “We are pleased to put this litigation behind us, rather than continue with the cost and distraction it posed,” Brezo-Martinez said in an email to the Florida Record.
The international law firm, which is based in Boca Raton, has been threatened by meritless claims in the case for a decade, she said.
“Rather than the hundreds of millions claimed, we settled the suit for a very modest and insured, but confidential amount,” Brezo-Martinez said. “This occurred after the court granted our motion for a directed verdict striking Dyadic’s large damages claim. … We refused to bend to baseless and public threats, and deem our firm vindicated.”
Dyadic said the settlement amount, which excludes legal fees and related expenses, must be paid within 45 days. The settlement brings to a close the company’s efforts to recoup damages in the wake of the April 2007 whistle-blower allegations, which involved employees who worked at the Dyadic’s Asian subsidiary, Puridet.
“This settlement is the fourth and final in a series with various service providers and ends longstanding litigation,” said Michael Tarnok, the chairman of Dyadic’s board of directors, in a prepared statement. “The company looks forward to focusing on advancing the C1 technology in the biopharmaceutical field, which we believe has the potential to speed development, reduce cost and improve access to biologic medicines and vaccines around the world.”
A settlement between Dyadic and Jenkens & Gilchrist, a defunct Dallas law firm, netted the biotech firm $525,000 in 2012. The Miami law firm of Moscowitz & Moscowitz, which Dyadic hired to investigate what occurred at Puridet, settled a legal action that gave the biotech firm a “low-seven-figure settlement” in 2015, Dyadic said in a statement.
Dyadic also received a “low-seven-figure settlement” payment last year from the Miami law firm of Bilzin Sumberg as a result of Dyadic’s liability litigation.
The latest trial included dueling expert witnesses and heated testimony from Dyadic CEO Mark Emalfarb and the company’s former chief financial officer, Wayne Moor.
The trial testimony wound down with Moor and expert defense witness Richard Rampell both arguing that Greenberg’s legal advice to Dyadic in 2007 was not to blame for the company’s plummeting financial fortunes. The Puridet fraud could not be quantified because of a lack of proper accounting procedures, a situation that meant Dyadic could not restart its trading on the AMEX, Rappell testified this week.
During the trial, which began in January, defense attorney Stuart Singer said Greenberg’s advice to Dyadic in 2007 was proper under the circumstances and that the company had brought on its own downfall by internecine conflicts and failing to deal with the Puridet problems early on.
Katzman portrayed Dyadic as an up-and-coming “little engine that could” in the burgeoning biotech economy – only to be derailed by bad legal advice from lawyers who panicked over a couple of anonymous emails from a subsidiary that meant nothing to either investors or Dyadic’s financial future.