Case Background
Sanmina Corporation filed a lawsuit against Dialight PLC on December 20, 2019. The case is in the U.S. District Court for the Southern District of New York. Sanmina is based in California. Dialight was a public company incorporated in England and Wales. The two companies signed a manufacturing agreement on March 8, 2016. That contract required disputes to be handled in New York under New York law.
Cause
On September 27, 2018, Dialight terminated the agreement without cause. At the time, Dialight owed Sanmina nearly $10 million. This included unpaid invoices and costs for excess and obsolete materials. Sanmina claims Dialight refused to pay for completed goods and materials already purchased. The company alleged that this refusal breached the contract and disrupted business operations.
Injury
Sanmina said it suffered financial losses. It applied $5 million from a reserve account but claims $9.8 million remains unpaid. Sanmina argued that Dialight’s failure to pay forced the company into costly litigation. It also stated the unpaid amounts affected its cash flow and business continuity.
Damages
Sanmina seeks $5.3 million in unpaid invoices and $4.6 million for excess materials. It also requested 1% monthly interest on both amounts. In addition, Sanmina wanted compensation for attorney fees and legal costs. The company demanded a jury trial and asked the court for any additional relief it finds appropriate.
Key Arguments and Proceedings
Plaintiff: Sanmina Corporation
Counsel for Plaintiff(s): Mike Lieb | Zoe M. Vallier | Joseph Andrew Gershman
Defendant(s): Dialight PLC
Counsel for Defendant(s): Amanda Asaro | Daniel J. Herling | Michael P. Molstad | Scott Adam Rader
Claims
Breach of Contract – Unpaid Accounts Receivable
Sanmina Corporation alleged that Dialight PLC breached their Manufacturing Services Agreement (MSA) by failing to pay for finished goods that were delivered and accepted. The complaint stated that Dialight owed $5,329,881.32 in unpaid invoices, which were due within 30 days of issuance. Each overdue invoice accrued interest at a rate of 1% per month. Sanmina argued that Dialight’s failure to pay constituted a clear breach of contract.
Breach of Contract – Excess and Obsolete (E&O) Materials
Sanmina further claimed that Dialight was liable for $4,558,070.97 in excess and obsolete materials costs under the MSA. The Plaintiff contended that Dialight anticipatorily repudiated its obligation to cover these E&O liabilities after terminating the agreement without cause. Sanmina applied a $5 million reserve to partially offset these costs and sought recovery of the remaining balance, plus interest and fees.
Legal Fees and Costs
Sanmina sought recovery of all reasonable legal fees and court costs incurred in pursuing the owed amounts, as provided for under the MSA.
Defense
Dialight PLC denied breaching its contract with Sanmina Corporation. It admitted terminating the Manufacturing Services Agreement (MSA) but disputed Sanmina’s claims of outstanding payments. Dialight argued it had no obligation to pay the $5.3 million in unpaid invoices or the $4.5 million in excess and obsolete (E&O) material costs.
The company further rejected the 1% monthly interest Sanmina demanded on overdue balances. Dialight also disputed the claim that Sanmina was entitled to recover legal fees and costs under the MSA.
In its affirmative defenses, Dialight asserted that Sanmina failed to state a valid claim. It accused Sanmina of unclean hands and willful misconduct. It also suggested the MSA could be invalid due to fraud. Other defenses included failure to mitigate damages and acceptance of an accord and satisfaction. Dialight demanded a jury trial to resolve all factual disputes.
Jury Verdict
On April 1, 2024, the court entered judgment in favor of Sanmina Corporation. The jury found Dialight PLC liable for breach of contract. The court awarded Sanmina $21,980,444.70 in total damages.
This amount reflects unpaid invoices and unconsumed materials under the terminated manufacturing agreement. The judgment also incorporates a post-verdict stipulation between both parties.
The court ordered post-judgment interest to accrue at the legal rate starting April 1, 2024. The ruling applies to all matters consolidated for trial.
Court Documents:
Court Documents are available for purchase upon request at [email protected]
