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Appeals court upholds OSEMI lawsuit dismissal

The Minnesota Court of Appeals upheld the dismissal of a lawsuit against the Red Wing Port Authority by technology manufacturing company OSEMI Inc.

In the opinion issued Monday, the appeals court states that the district court was within its power to dismiss the case with prejudice — meaning it can’t be re-argued — due to lack of evidence.

First District Judge Kevin Mark dismissed the suit in 2013.

OSEMI leased property in Red Wing from the port in 2007. The parties later entered into a memorandum of understanding, but negotiations for a purchase agreement broke down in 2011, according to the appeals court opinion written by Judge Jill Halbrooks.

OSEMI eventually was ordered to vacate the property.

OSEMI filed a complaint in 2011 against the Port Authority with counts including failure to comply with the MOU, tortious interference with business relations and damage to business reputation.

The district court dismissed the case because OSEMI failed to comply with court deadlines and didn’t produce documentation of its alleged damages during discovery, the court said.

The dismissal was announced in January 2013 on the day a trial was set to begin.

OSEMI appealed the decision, saying the district court abused its discretion by dismissing its claims “without warning of the potential discovery sanctions following noncompliance” and also argued that a new trial is warranted because the district court required that it prove damages with “absolute certainty” instead of reasonable certainty. OSEMI said the case shouldn’t have been dismissed with prejudice.

“OSEMI received adequate notice of the need to disclose damages evidence by the close of discovery in order to preserve its claim for damages,” the appeals court opinion states, and said the company had extensions to deal with any roadblocks.

“Contrary to OSEMI’s implicit assertion, the failure to comply with discovery orders is a sufficient basis for dismissal with prejudice,” Halbrooks wrote.

Attorney Patrick Lee-O’Halloran, representing OSEMI, said Tuesday the company is disappointed with the decision.

“We would have preferred the court allow their claims to be heard on their merits instead of dismissing them procedurally,” he said.

He said OSEMI is weighing its options. It could ask the state Supreme Court to review the case.

“We’re obviously pleased that the decision held at the appellate court level,” Red Wing Port Authority Executive Director Randy Olson said, but acknowledged the Supreme Court possibility. “We can’t say that there’s total closure yet to this, but there does seem to be some indication here that we’ll be able to move on over the next several months.”

Danielle Killey

Danielle Killey covers local government for the South Washington County Bulletin. She has worked as a reporter for other Forum Communications newspapers since 2011. She graduated from the University of Minnesota-Twin Cities with a journalism degree.

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