Upper Deck Sues Wife of Upper Deck International CEO

Upper Deck Sues Wife of Upper Deck International CEO

Upper Deck, Upper Deck, Upper Deck, at this point, I think you're trying to help me out. It's usually tough getting people interested in the legal ramifications of products, or to pay attention to what is going on in lawsuits. I mean, if I had to write about a breach of a fiduciary duty that the head of a European company owed to its shareholders, nobody would want to read that.

But you are really helping me out. First thing you do, you sue yourself. OK, maybe it's more of Upper Deck (Europe) v. Upper Deck (America). Regardless, it looks schizophrenic. Then you throw in counterclaims involving how someone stole a company from someone impaired by alcohol and prescription drug abuse, and, voilà, a fiduciary duty claim looks a whole lot sexier.

Then you have one of the parties taunt the other by saying, "If you want to sue me, you need to sue my parent corporation and CEO too." Basically, a “Nyah, nyah, you can't sue me unless you sue my mom, too."

That leads us to the latest developments, where Upper Deck (America) takes the European Upper Deck version's (UDI) taunt as a dare and files suit against UDI's parent (Blue Ocean Entertainment—its mom, if you will) and Nico Blauw (the CEO of UDI). Then you yet again raise the stakes and sue--wait for it--Nico Blauw's wife, Larissa.

Seriously. The amended complaint alleges that, “Nico and Larissa Blauw converted UDI company funds for their own personal use, at the expense of UDI's stakeholders."

Welcome to the Upper Deck family, Larissa. Lawsuits are apparently a right of passage.

I can't wait until you start suing children too. Maybe Grandma needs to be in on the action.

And if it was at all unclear from the last filings, the Upper Deck America makes it clear what Nico Blauw did wrong, “Also, Mr. Blauw, UDI's Chief Executive Officer (“CEO") and Director, repeatedly breached the fiduciary duties he owed to UDI and its shareholders and ran UDI into the ground through a pattern of both intentional and negligent mismanagement."

Legal translation – Well, don't really need one. I just wanted to repeat that Nico Blauw allegedly “ran into the ground."

Beyond the general humor of suing someone's wife, the rest of Upper Deck's updated counterclaims are enlightening on a number of issues.

  1. In its opening complaint, UDI alleged that UD California failed to pay back a $1 million dollar loan. The response? Apparently, on March 20, 2010, a non-party parent company within the Upper Deck family (yeah, that's all we need, ANOTHER Upper Deck company) loaned UDI over 7.2 million Euros. The $1 million “loan" from UDI to UD California was intended to be credited against that 7.2 Million Euro UDI loan.

Legal translation – That million dollars was never supposed to be paid back. It was actually UDI paying back a larger loan it had received from someone else in this complicated spider web of Upper Deck companies.

  1. The original UDI complaint also alleged that UD California settled the Konami litigation only for itself, leaving UDI in the lurch. The response? Blauw was allegedly “fully informed and consulted" on all the settlement discussions. Most interestingly, UD California “offered to specifically include a resolution of issues between Konami and UDI," but Blauw allegedly “refused to be a part of the settlement" because “he did not want to release or negotiate away a four million Euro advance previously made by Konami to UDI."

Legal translation – UD California did not leave UDI out in the cold. Instead, UDI and Blauw chose not to be a part of the settlement because they wanted to keep some Konami money.

  1. The amended counterclaims also go into more of the details on how Blauw allegedly mismanaged UDI in violation of his fiduciary duty. For example, Blauw allegedly mismanaged Upper Deck with allegedly horrible actions like having a “staggering ratio of managers to staff…the commercial department at UDI had 17 managers out of 23 total employees."  A staggering ratio of 17 to 23? The monster. Although, if you think about that, there were six poor guys who could have had 17 different bosses to answer to? That would suck.
  2. The complaint also recounts, again, how Blauw allegedly took advantage of McWilliam's prescription drug and alcohol problems to seize the company. For example, Blauw allegedly hid a multimillion dollar deal with Hasbro over “Flex Power Technology" from McWilliam. Apparently, if McWilliam had known about this deal, it would have caused McWilliam to charge Blauw a higher price.
  3. And finally, there's a claim of defamation against everyone.

Legal translation – They called me bad names.

Here's the relevant section:

UD counterclaim insert1 Image

Wait, the “defamatory" statements were made to Brain Grey? Isn't he the CEO of Leaf? Do you mean to tell me, that you're going to call the CEO of Leaf as a witness? Now that's going to be exciting!

No, wait, that's Brain Gray with an “a" not an “e." Come on Upper Deck, can't you at least spell your witness's name right?

So again, thank you Upper Deck. Each of your filings has been very insightful into the inner (non) workings of your company. And they've been entertaining too. I never thought I would anxiously await a filing in a breach of fiduciary duty case, but I am. Every filing surprises me a little more each time.

My take home from this filing: poor Larissa. I guess you should think twice before marrying into the Upper Deck family.

The information provided in Paul Lesko's “Law of Cards" column is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered in the sports industry. This information is not intended to create any legal relationship between Paul Lesko, the Simmons Browder Gianaris Angelides & Barnerd LLC or any attorney and the user. Neither the transmission nor receipt of these website materials will create an attorney-client relationship between the author and the readers.

The views expressed in the “Law of Cards" column are solely those of the author and are not affiliated with the Simmons Law Firm. You should not act or rely on any information in the “Law of Cards" column without seeking the advice of an attorney. The determination of whether you need legal services and your choice of a lawyer are very important matters that should not be based on websites or advertisements.

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Paul Lesko is a shareholder at Simmons Hanly Conroy and the chair of its Intellectual Property Department (http://www.simmonsfirm.com). Don’t hold the fact that Paul is a lawyer against him, he’s also a rabid baseball and college basketball fan, and an avid baseball card collector. Paul can be found on Twitter @Paul_Lesko and Google+.

User Comments

  1. Paul,

    Just wanted to say thanks for the continued coverage of this. It continues to be an endless source of entertainment (and gossip) for ex-employees of UDx.

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