Upper Deck Suing…Upper Deck

Upper Deck International has filed suit against the U.S. subsidiary known to most North American collectors, seeking damages after it says CEO Richard McWilliam’s actions cost them millions and caused more than ten dozen overseas employees to lose their jobs.

The case stems from the Yu Gi Oh! trading card saga that played out in court three years ago.  The issue, however, wasn’t over according to UDI. In fact, the Netherlands-based company claims its nightmare was only beginning.

Upper Deck International claims American CEO Richard McWilliam was less than truthful in his negotiations with Konami Digital Entertainment, which owns the Yu Gi Oh! brand, causing massive losses in revenue and trust with business partners, resulting in massive layoffs overseas.

In 2006, Upper Deck International signed a contract to be the exclusive distributor of the game in Europe and South Africa while the Carlsbad, Calif.,-based subsidiary would handle the same duties in the United States,  Canada, Central America and South America.

In 2008, Konami claimed Upper Deck orchestrated a scheme to produce replicas of some of the game’s most valuable and popular cards and insert them into packs in hopes of increasing sales.  Lawsuits followed with Konami terminating its deal in the United States as part of the settlement.

According to court papers obtained by Sports Collectors Daily, UDI states that Upper Deck wasn’t able to come up with the $1 million in settlement costs it agreed to pay Konami and hasn’t paid the money, which it claims was due in April of 2010.

The lawsuit also states that McWilliam only confessed to the counterfeit efforts after UDI had spend “millions” of dollars in legal fees to to move forward with its European contract and place more orders. UDI claims it loaned the money to its American group believing it would resolve matters in Europe.  Instead, the suit claims McWilliam told Konami that UDI wasn’t interested in a European settlement, thus freeing the Konami to go after it for damages.  That’s just what KDE did, suing Upper Deck International for $64 million from lost sales, legal fees and what it says is a damaged reputation in overseas markets.

Since the lawsuit was filed, UDI claims it has been forced to lay off more than 100 employees, leaving it with a skeleton staff of 22, and close its offices in the United Kingdom, France, Spain, Italy and Australia.  “Were it not for Defendants’ unlawful counterfeiting scheme of Yu Gi Oh! trading cards, Plaintiff’s economic relationship with KDE would have continued forward for at least the duration of the Yu Gi Oh! Europe contract and likely beyond,” reads the suit, which was filed late last week.

UDI is asking for punitive damages for breach of contact, intentional interference with contractual relations, intentional and negligent interference with prospective economic advantage, breach of fiduciary duty and aiding and abetting breach of fiduciary duty.

Upper Deck also faces a lawsuit filed by Virginia-based Blowout Cards over its new distribution policy for trading card products after Upper Deck had filed papers seeking a judge’s approval.

Court documents:  Upper Deck International vs Upper Deck


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