erry Calabrese comments on Court of Appeals Decision in the matter of MTH and Lionel!

Discussion in 'G / O / S Scale Model Trains' started by ozzy, Jan 23, 2007.

  1. ozzy

    ozzy Active Member

    [FONT=Arial, Helvetica, sans-serif]Jerry Calabrese comments on Court of Appeals Decision in the matter of MTH and Lionel!
    [FONT=Arial, Helvetica, sans-serif]At a time like this, I could say any number of things. Obviously, we feel relieved and happy. Even more important, we’re grateful that the US Sixth Circuit Court of Appeals clearly saw the real issues of law and evidence and supported our position that a significant injustice had been done by the earlier decision in favor of MTH. Rather than try to add my own poor remarks on matters of law, I prefer to let the wording of the court’s decision, handed down this morning, speak for itself.

    From a personal standpoint, even though the past two years of living under the cloud of this lawsuit has been difficult, it has also been pretty uplifting. The steady and inspirational support of our fans and dealers has been a constant reminder of the love and respect that is invested in Lionel. As the people in charge of this great company, it’s also served as a constant reminder that our first and foremost responsibility is to live up to the Lionel brand and what it means to generations of Americans. Please be assured that we will.

    Finally, thank all of you for your good wishes throughout this very difficult time.

  2. ozzy

    ozzy Active Member

    [FONT=Arial, Helvetica, sans-serif]Year End Message From Jerry Calabrese
    [FONT=Arial, Helvetica, sans-serif]Dear Friends of Lionel:
    As 2006 winds down, I can’t help thinking about and being grateful for what has been a very special year. For the second straight season, Lionel has reached record levels of sales and product deliveries. More important, for the first time in anyone’s modern memory, Lionel train displays were seen and experienced by hundreds of thousands of people in places like Macy’s Santaland and Grand Central Terminal; and our train sets are for sale in a wide range of mainstream department and specialty stores.
    In addition to our big push on new ready to run starter sets, we’ve also worked hard to create affordable engines and rolling stock, and there will be more, including an expanded K-Line catalog, this coming year. At the other end of the spectrum, I believe that our new TMCC Legacy operating system, due out in early 2007, will demonstrate just how serious we are about our commitment to all ends of our fan base and market.
    Best of all, after so many years of having our collective and communal landscape dominated by a tempest of legal issues, those dark storm clouds are finally breaking on a new and better day for Lionel and the model train hobby. On behalf of everyone at Lionel, I’d like to thank all of you who have supported us and given Lionel a chance to be part of your lives. Best wishes for a healthy and happy New Year.
    Jerry Calabrese
  3. Cannonball

    Cannonball More Trains Than Brains

    Wow... Now that the lawsuit thing is over, maybe they'll deal with those quality control issues?
  4. ozzy

    ozzy Active Member

    so i take it lionel won,, but how much? and they going to take over MTH like they did k-line?
  5. Dave Farquhar

    Dave Farquhar Member

    No, there was more danger of MTH taking over Lionel. The question always was what Lionel owed MTH, not the other way around. The short version of the story is that an employee of one of MTH's Korean subcontractors moonlighted for one of Lionel's Korean subcontractors, so some MTH designs ended up in the hands of the Lionel subcontractor and, possibly, Lionel itself. So when Lionel released a locomotive based on that information, it came out way sooner than anyone expected and was far more detailed than anyone expected. MTH got one, took it apart, and sued. They were awarded $40 million, which was more than MTH asked for in the lawsuit. Lionel filed for bankruptcy, appealed, and fired a number of employees, including CEO Bill Bracy (who was replaced by Jerry Calabrese).

    What's happened since then is that Lionel won its appeal, so now the question is whether Lionel and MTH go into mediation, where they decide on a more appropriate settlement (Lionel will probably end up paying MTH something, just not $40 million) or whether it goes back to trial again. MTH has been making noise about a new trial, but the truth is it's probably a negotiating tactic and neither company really can afford a new trial. Lionel's total revenue (not profits) for the last couple of years has been somewhere along the lines of $60 million, so $40M would amount to nearly a decade's profits. MTH is a smaller company, so its revenue and profits will be somewhat less.

    Both companies have thin profit margins and the lawyers get paid no matter what, so it's in the best interests of both companies to settle.

    And that was longer than I intended for this to be, but hopefully it's somewhat clear.
  6. ozzy

    ozzy Active Member

    i had thought they was sueing each other.
  7. Dave Farquhar

    Dave Farquhar Member

    I'm pretty sure Lionel has sued MTH in the past, and there may be a separate pending case right now where Lionel is suing MTH, but the dollar amount there is much lower. Right now Lionel's main objective is to get out of bankruptcy, and MTH is trying to recover its losses (there's little doubt that Lionel owes MTH something, but $40 million is essentially the corporate death penalty, which probably is excessive).

    The two companies certainly do have a troubled past.
  8. ozzy

    ozzy Active Member

    i seen a thing on tv i think abc news, about trains and X-mas, it said lionel was the biggest company out there, even if you count all scales . it said that lionel made record sales the last 2 years i think....

    a clip of it is on the lionel site,, i will have to go watch it to make sure my facts are right.
  9. ozzy

    ozzy Active Member

    ok, it said lionel was market leader and sales jumped 40% in the last 2 years

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