Dialight Sues Former Manufacturing Partner Sanmina Corporation

Dialight is currently engaged in litigation in the United States (Southern District of New York) against its former manufacturing partner, Sanmina Corporation (“Sanmina”) [SANM:US]. This litigation relates to a Manufacturing Services Agreement (“MSA”) with Sanmina, which Dialight terminated in September 2018, effective January 2019. Both parties initiated formal legal proceedings against the other in December 2019. Dialight seeks damages of up to $220 million, plus interest and attorneys’ fees. By contrast, Sanmina seeks damages of $8.6 million, plus interest and attorneys’ fees.

Dialight brought its action to seek redress for the fraudulent and wilful misconduct, gross negligence, and contractual breaches of Sanmina.

Specifically, Dialight’s lawsuit now seeks redress for fraudulent inducement and contractual breaches of the MSA, signed in March 2016, in which Dialight outsourced the production of LED fixtures to Sanmina.

Dialight alleges that it entered into this agreement on the basis of Sanmina’s material misstatements about its capabilities and expertise at the time, including with respect to its supposed expertise in high-mix/low-volume manufacturing; that Dialight relied upon Sanmina’s statements as its basis for entering into the agreement; and that Sanmina knew that these statements were false at the time they were made.

Dialight intends to demonstrate at trial that Sanmina misrepresented its then-existing capabilities and expertise, including its stated expertise in complex high-mix/low-volume manufacturing, resulting in significant harm and damages to Dialight, which can be measured by severe erosion of its market capitalization value. Dialight also intends to demonstrate that Sanmina breached the MSA by, among other ways, an ongoing failure to meet agreed production targets and consistent issues around product quality.

Dialight intends to rigorously pursue its claims at trial, which if successful, could lead to the payment by Sanmina to Dialight of up to $220 million, excluding legal costs.

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