KANSAS CITY, Kan. – Independent U.S. Senate candidate Greg Orman is embroiled in a federal lawsuit in Kansas with an international boxing equipment manufacturer in a dispute over $30 million worth of payments for royalties and merchandise sales the firm claims it will be owed through 2018.
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Orman, seeking to unseat three-term Republican Kansas Sen. Pat Roberts in the Nov. 4 election, is one of five defendants in a lawsuit filed by Everlast World's Boxing Headquarters Corp. The lawsuit alleges Orman and the others are responsible for payments owed to Everlast by now-bankrupt Ringside Inc., of Lenexa, because their new firms are an "alter-ego" of the defunct one.
Orman campaign spokesman Sam Edelen said Monday that the lawsuit is "without merit." Orman and his fellow defendants asked the court Friday to allow them to file counterclaims alleging a secret agreement between Everlast and another businessman previously involved with Ringside.
The lawsuit is scheduled to go to trial in October 2015. Everlast accuses the defendants of breaching contracts and infringing upon and diluting its trademark — allegations the defendants dispute in court filings. Everlast seeks to prevent them from selling the company's products.
Everlast filed the litigation in July 2012 in New York. The case was transferred to Kansas in April 2013 and expanded to include Orman and a Kansas City-area company in which he is involved, Combat Brands.
"They named Greg just because he's a deep pocket," said Eric Carter, an Olathe attorney and former state legislator representing Orman and the other defendants.
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Scott Ast, a Kansas City, Missouri, attorney representing Everlast, declined to comment.
Orman, 45, also the co-founder of a private equity firm, touts his business experience in his race against the 78-year-old Roberts, who looked vulnerable after a tough GOP primary with a tea party challenger. Orman's campaign in June called Combat Brands one of his "many successful companies," and Carter said it has 50 employees.
The race suddenly appeared competitive last week, when the Democratic nominee ended his campaign, possibly giving Orman a better chance against Roberts in a normally safe Republican state. The GOP, fighting to regain a Senate majority, always has counted on Roberts winning re-election.
Everlast claims it had agreements through 2018 with Ringside, which sold boxing and mixed martial arts gear, requiring royalties and the purchase of a minimum amount of Everlast products. The lawsuit says Ringside owes Everlast nearly $1.7 million in royalties for 2012 through 2018, and $28.4 million for merchandise Ringside promised to sell on its website but didn't.
Everlast contends it terminated its licensing and website agreements with Ringside in June 2012 after it failed to make a royalty payment.
The lawsuit said that the same day it informed Ringside's president it could no longer sell Everlast products, Combat Brands was formed with the same president and Orman as majority owner.
Two days later, Ringside's former owner formed another new company, RAL. RAL and Combat Brands then purchased Ringside's assets, including hundreds of thousands of dollars in Everlast products that the two new companies continued to sell, the lawsuit said.
Carter said the new companies purchased the assets through a bank after bankruptcy.
Ringside declared bankruptcy in October 2012 and received an automatic stay preventing it from being sued. The lawsuit said the new companies are owned and managed by Ringside's principals, making them responsible for Ringside's payments to Everlast.
Carter said Orman is "the hero in the story" for investing $4 million in Combat Brands.
"For 50 employees, the only thing standing between them and the unemployment line is Greg Orman," he said.
Associated Press writer John Hanna contributed to this report from Topeka, Kansas.