Berkshire Sued for Trying to Cripple Duracell Licensee Business

(Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc. was accused in a lawsuit of trying to cripple a New York-based company that sells Duracell-branded products after the billionaire investor acquired the battery maker in 2016.

ESI Cases & Accessories Inc. filed a breach-of-contract suit in state court in Manhattan on Thursday, seeking more than $20 million in damages. The company says Berkshire’s strong-arm tactics caused it to lose all its business with CVS Health Corp. -- a $5 million-a-year customer -- as well as others.

ESI has sold Duracell-branded products under a license since 2010, including Apple Inc.-compatible charging cables, and phone cases and headsets, and said it renegotiated its agreement with Duracell’s former parent, Procter & Gamble Co.’s Gillette subsidiary, in 2014.

Earlier this month, however, ESI said Chief Executive Officer Elliot Azoulay received a letter from a Duracell employee saying that the license agreement was being terminated.

“Azoulay realized that this unlawful and baseless purported termination was the final act in a year-long bad-faith campaign by Duracell’s new owner, Berkshire Hathaway,” ESI said in the complaint.

That campaign began in 2017 when Duracell said it was going to let ESI sell only three Duracell-branded products -- AC chargers, DC car chargers and UBS charging cables, as long as they were either black or white, according to the lawsuit. It had ordered ESI to sell most of its inventory at deep discounts.

Berkshire and Duracell didn’t immediately respond to requests for comment on the lawsuit.

ESI says it has tens of millions of dollars worth of outstanding customer orders that can only be fulfilled if the contract remains in place.

"This not only represents a tremendous amount of out-of-pocket expenses and capital, but incalculably more in lost business from major nationwide stores who will not carry plaintiff’s other products or otherwise do business with plaintiff because Duracell is so well-known and acts as a draw enabling plaintiff to sell its other products to retailers," ESI said in the lawsuit.

The case is ESI Cases and Accessories Inc. v. The Duracell Co., 655170/2018, New York State Supreme Court, New York County.

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