Everyone Is Suing Logan Paul

Summary

Logan Paul's energy drink company, Prime, faces lawsuits from the U.S. Olympic Committee for trademark infringement and its manufacturer, Refresco, for breach of contract amid declining sales. The USOPC alleges Prime's unauthorized use of Olympic trademarks in marketing, while Refresco claims Prime failed to meet minimum order commitments, leading to significant financial losses. The video also touches on potential legal defenses and the broader implications for celebrity-backed businesses.

Takeaways

• 🚫 Logan Paul and his energy drink company, Prime, are facing lawsuits that threaten the brand's future.
• ⚖️ The U.S. Olympic Committee (USOPC) is suing Prime for trademark infringement due to the unauthorized use of Olympic-related terminology and trademarks in marketing.
• 📈 Prime's manufacturer, Refresco, is suing for breach of contract as sales have dramatically declined, leading to non-fulfillment of agreed minimum orders.
• 💡 The video discusses the importance of proper legal protection and trademark law, emphasizing the potential consequences of not adhering to legal standards in business.
• 🏅 The USOPC's lawsuit highlights the misuse of Olympic trademarks, such as OLYMPIC, OLYMPIAN, TEAM USA, and GOING FOR GOLD, by Prime in their marketing materials.
• 📊 The decline in sales for Prime's products has had a domino effect, leading to legal actions and financial strain on the company.
• 🤝 The video touches on the complexities of business relationships and contracts, especially when sales do not meet projections, leading to disputes and potential breaches.
• 💼 The script also mentions other legal issues faced by Logan Paul, including a defamation lawsuit and controversies that have affected his business ventures.
• 🌐 International regulations play a role in Prime's challenges, with some countries banning Prime Energy due to excessive caffeine content.
• 📱 The video concludes with a promotional segment for Saily, an eSIM service app, highlighting the importance of reliable internet connectivity during international travel.

Q & A

Why is Logan Paul being sued by multiple parties?

Logan Paul is being sued by the U.S. Olympic Committee for trademark infringement and by the manufacturer of his Prime energy drink for breach of contract due to dramatically declining sales.

What are the specific trademarks that Logan Paul's Prime energy drink company is accused of infringing?

The trademarks accused of being infringed include OLYMPIC, OLYMPIAN, TEAM USA, and GOING FOR GOLD.

How did Logan Paul's Prime energy drink company allegedly misuse the Olympic trademarks?

Prime used Olympic-related terminology and trademarks in marketing and promotions, particularly on a Prime Hydration flavor featuring Kevin Durant, which mentioned Durant as a 3X Olympic Gold Medalist.

What legal protection does the U.S. Olympic Committee have regarding the use of Olympic trademarks?

The U.S. Olympic Committee has exclusive rights to the name, seals, emblems, badges, and related words and phrases associated with the Olympics, including OLYMPIC, OLYMPIAN, TEAM USA, and GOING FOR GOLD, as granted by the Trademark Act of 1946 and 36 U.S. Code 220506.

What is the significance of the Lanham Act in the lawsuit against Prime energy drink company?

The Lanham Act is significant as it provides the legal framework for trademark infringement claims, which the U.S. Olympic Committee is using to argue that Prime's use of Olympic trademarks is likely to cause confusion, mistake, or deception about the source of its products.

What are the damages and relief sought by the U.S. Olympic Committee in the lawsuit against Logan Paul's company?

The U.S. Olympic Committee is seeking all profits associated with the sale of Prime, damages for harm imposed on its sponsorship agreements, and protection of its trademark rights.

Why did Refresco, the manufacturer, sue Logan Paul's Prime energy drink company?

Refresco sued Prime for breach of contract, alleging that Prime did not fulfill its obligations to purchase a minimum volume of products after Refresco had invested in a dedicated production line for Prime's unique bottle design.

What is the 'take-it-or-pay-it' arrangement mentioned in the lawsuit between Refresco and Prime?

The 'take-it-or-pay-it' arrangement stipulates that if Prime did not purchase at least 90% of the agreed annual volume commitment, they would be obligated to pay Refresco a fixed shortfall amount for each case below the commitment.

How much in damages is Refresco seeking from Prime energy drink company?

Refresco is seeking $67 million in damages from Prime, claiming that this amount represents the losses they sustained due to Prime's breach of contract.

What is the connection between the lawsuits against Logan Paul's Prime energy drink company and the company's sales performance?

The lawsuits are connected to Prime's sales performance because the declining sales led to a breach of contract with the manufacturer and potentially contributed to the misuse of Olympic trademarks as the company may have been desperate to boost sales.

Outlines

00:00

🚫 Legal Troubles for Logan Paul's Energy Drink Brand

Logan Paul faces lawsuits that threaten his Prime energy drink company. The U.S. Olympic Committee is suing for trademark infringement, alleging that Prime used Olympic trademarks without authorization in marketing. Additionally, the drink's manufacturer claims that Paul breached their contract due to declining sales. The video discusses the potential implications of these legal issues on the brand and highlights the importance of proper legal compliance in business ventures.

05:01

🏅 USOPC's Lawsuit Against Prime for Olympic Trademark Infringement

The U.S. Olympic and Paralympic Committee (USOPC) has filed a lawsuit against Prime for unlawful use of Olympic trademarks in marketing. The USOPC claims that Prime deliberately used Olympic-related terminology and trademarks to capitalize on the committee's intellectual property. The lawsuit cites specific examples of trademark infringement, including the use of terms like 'OLYMPIC' and 'TEAM USA' on product labels and in promotions. The video explains the legal basis for the USOPC's claims, including the unique legal protections granted to the committee under U.S. law.

10:03

📝 Nominative Fair Use as a Potential Defense for Prime

The video discusses the concept of nominative fair use, which could potentially be used as a defense by Prime in the trademark infringement lawsuit. Nominative fair use allows for the use of a trademark to describe the trademark owner's goods or services without suggesting endorsement. The video provides examples of how this doctrine has been applied in previous cases, such as the New Kids On The Block case, and how it might be relevant to Prime's use of Olympic champion Kevin Durant's name and image in association with the brand.

15:03

📉 Prime's Financial Woes and Contractual Disputes

Prime is facing financial challenges and contractual disputes that further complicate its legal situation. The company's sales have dramatically declined, leading to a breach of contract lawsuit from Refresco, a beverage manufacturer. Refresco claims that Prime agreed to minimum orders but later backed out, causing significant financial losses. Additionally, Agrovana, an importer, alleges that Prime failed to pay for over $70 million worth of ingredients and used deceptive practices to avoid payment. The video outlines the details of these financial disputes and their impact on Prime's business.

Keywords

💡Logan Paul

Logan Paul is a social media influencer and entrepreneur who is a central figure in the video's discussion. He is known for his controversial actions on YouTube and his ventures into business, such as the Prime energy drink company. The video explores the legal challenges he faces, including lawsuits from the U.S. Olympic Committee and the manufacturer of his energy drink, due to declining sales and alleged trademark infringement.

💡Prime Energy Drink

Prime Energy Drink is a product launched by Logan Paul and KSI in 2022. It is an energy drink that initially saw high demand but later faced declining sales, leading to legal issues. The video discusses how the product's marketing and sales strategies have led to lawsuits and financial troubles for Paul's company.

💡Trademark Infringement

Trademark infringement is a legal concept discussed in the video where one party uses a trademark or branding that belongs to another party without permission. The U.S. Olympic Committee is suing Logan Paul for trademark infringement, alleging that his Prime Hydration product used Olympic-related terminology and trademarks in its marketing without authorization.

💡U.S. Olympic Committee (USOC)

The U.S. Olympic Committee is a prominent entity in the video that is suing Logan Paul for the unauthorized use of Olympic trademarks in marketing his Prime Hydration product. The USOC is responsible for protecting the Olympic brand and ensuring that its trademarks are not misused, which is a key point of contention in the lawsuit discussed.

💡Class Action Lawsuit

A class action lawsuit is a type of legal action where a large group of people collectively sue a defendant for similar harms. The video mentions a class action lawsuit filed against Prime Energy by consumers who accuse the company of mislabeling the amount of caffeine in its drinks, which is a significant issue as it relates to consumer protection and transparency.

💡Caffeine Content

Caffeine content is a critical aspect of the Prime Energy Drink discussed in the video. The script mentions that a 12-ounce bottle of Prime Energy contains about 200 milligrams of caffeine, which is a substantial amount compared to other beverages. This high caffeine content has led to regulatory issues in some countries and concerns about consumer health.

💡Breach of Contract

Breach of contract is a legal term referring to when one party fails to fulfill their obligations under a contract, causing harm to the other party. The video discusses a lawsuit filed by Refresco, the manufacturer of Prime Energy, against Logan Paul's company, alleging that Paul breached their contract by not meeting sales commitments and causing significant financial loss.

💡Sales Decline

Sales decline is a significant issue for Logan Paul's Prime Energy Drink, as highlighted in the video. Initially, the product experienced high demand, but a dramatic drop in sales led to financial troubles and lawsuits. The video explores how this decline affected the company's legal and financial standing, including disputes with the manufacturer and the U.S. Olympic Committee.

💡Legal Obligations

Legal obligations refer to the duties and responsibilities imposed by law that must be fulfilled. The video script mentions Logan Paul's serious approach to legal obligations, contrasting with the current situation where his company faces multiple lawsuits for alleged trademark infringement and breach of contract.

💡Nominative Fair Use

Nominative fair use is a legal doctrine that allows the use of a trademark to describe the trademark holder's product or service. The video discusses how this doctrine might apply to Logan Paul's use of Olympic trademarks in marketing, suggesting that if the use is merely to identify and not to imply endorsement, it might be considered fair use.

Highlights

Logan Paul faces lawsuits over his Prime energy drink company due to dramatically declining sales.

The U.S. Olympic Committee is suing for trademark infringement related to Prime's marketing.

Prime's manufacturer, Refresco, claims contract breach due to falling sales and seeks $67 million in damages.

Logan Paul's beverage line Prime launched with influencer KSI in 2022 and initially saw high demand.

Prime Energy's high caffeine content raised health concerns, prompting an FDA investigation.

Canadian and New Zealand regulators banned Prime Energy for exceeding caffeine limits.

A class-action lawsuit accused Prime of mislabeling caffeine amounts in their drinks.

The Eagle Team law firm offers representation for those dealing with car crashes, data breaches, and sexual harassment suits.

The USOPC's lawsuit against Prime involves the unauthorized use of Olympic trademarks in marketing.

Trademark law aims to prevent consumer confusion and protect brand identity.

The USOPC has exclusive rights to Olympic-related terms due to specific U.S. Code provisions.

Nominative fair use may provide a defense for companies using trademarked terms to describe products.

Agrovana claims Prime failed to pay for over $70 million worth of ingredients provided since 2020.

Prime's projected sales success did not materialize, leading to a breach of contract with suppliers.

Saily, an eSIM service app, is promoted for travelers needing reliable internet abroad.

The video concludes with a call to action for viewers to support the channel and engage with the content.

Transcripts

- Everyone is suing Logan Paul,

which is weird because he seemed like

he took legal obligations so seriously.

- I had to rely on my team.

I crumbled internally.

- But things aren't looking great for Logan Paul

or his Prime energy drink company.

Dramatically declining sales are only the tip of the iceberg

and have caused him to be sued

by not just the U.S. Olympic Committee,

but also the manufacturer of the drink.

As many YouTubers have found out,

your fans can propel you to huge success

on the streaming service,

but selling products away from YouTube

is about much more than a hungry fan base.

And if you don't cross your legal T's

and dot your legal I's,

you could be in a lot of hot water,

and that's where Logan Paul finds himself today,

thanks to two lawsuits

that may sink his popular beverage brand.

The U.S. Olympic Committee

is suing Paul for trademark infringement

and Prime's manufacturer said

that Paul breached their contract

when sales of the drinks started to tank.

So today, we'll be breaking down those two lawsuits.

Now, Logan Paul has a knack for making quick money,

scamming people, and getting punched in the face.

In our last video about Paul

covered his bonus defamation lawsuit against Coffeezilla.

Now, fighting this lawsuit is costly,

and you can check out Coffeezilla's video

and how you can help.

But the current dust up is about Paul's beverage line Prime,

which launched with influencer KSI back in 2022.

- We made a better-for-you drink that tastes better.

- Yeah, Prime currently has two offerings.

Prime Hydration, which doesn't have caffeine,

and Prime Energy, which does.

A 12-ounce bottle of Prime Energy

has about 200 milligrams of caffeine,

which is the equivalent of about six cans of Coke.

The demand for both products was initially through the roof.

People lined up at dawn to get the new flavors,

bottles were sold out on eBay for thousands of dollars,

and people literally fought each other

to get their hands on the Orange Mango flavor.

And of course, both Logan Paul and KSI

have been involved in various controversies over the years

from problematic content on YouTube

to highly publicized personal feuds.

These controversies

have spilled over into their business ventures,

including lawsuits and inquiries by several U.S. states

and many more European countries.

Basically, wherever Prime's beverages have appeared,

they've also been the target of the law.

For example, Canadian and New Zealand regulators

banned Prime Energy

because it exceeds their regulatory limits for caffeine.

But in the U.S. there is no legal limit

for the amount of caffeine

the companies can put into their energy drinks.

And thank goodness for that, America.

But we discussed high caffeine levels

in the video that we did on Panera Bread's Charged Lemonade.

And when the same concerns were raised about Prime,

Senator Chuck Schumer asked the FDA

to investigate Prime Energy.

And in April, consumers filed a class action lawsuit,

accusing Prime of mislabeling the amount of caffeine

in each drink.

Though Prime says this energy drink has a warning label,

that it is not recommended for children under 18

and that it contains comparable level of caffeine

to other competitors.

Now, obviously, if you're getting sued

by the notoriously litigious U.S. Olympic Committee,

you want a good lawyer.

But if you want a great lawyer,

my law firm, the Eagle Team, can help.

If you've gotten in a car or a trucking crash,

suffered a data breach,

especially if you got a letter

saying that your Social Security number

might have been hacked,

or are dealing with a sexual harassment suit,

we can represent you or help find you the right attorney

because it's so important to talk to a lawyer right away

so you can maximize your recovery

and find out what your options are.

So, just click on the link of the description

or call the phone number that's on screen

for a free consultation with my team

'cause you don't just need a legal team,

you need a legal team, so you can click below.

But Paul and KSI are now facing two additional lawsuits

that show how sloppy Prime is at business.

And a complaint on July 29th

in Federal District Court of Colorado,

the U.S. Olympic and Paralympic Committee, or USOPC,

sued Prime for the unlawful use of Olympic trademarks.

The complaint alleges that Prime, quote,

"In a deliberate and willful attempt to trade

on the USOPC intellectual property,

used Olympic-related terminology and trademarks

in marketing its products on internet advertising

and in promotions for a Prime Hydration flavor

featuring Kevin Durant."

The infringed trademarks

include OLYMPIC, OLYMPIAN, TEAM USA, and GOING FOR GOLD.

Now, I first heard about this lawsuit from LegalBytes

who made a video explaining why Prime was in legal trouble.

This lawsuit came out

when there was a lot going on in the world

and I was focused on other things,

but should really check out the video.

She does a good job of explaining U.S. trademark law,

including why an official Team USA merchandise licensee

has significant value to brands.

As you probably know,

a trademark can be any word, phrase, symbol, design,

or a combination of these things

that identifies goods or services.

The purpose of U.S. trademark law is to allow consumers

to easily identify producers of goods and services

and avoid confusion.

And because of that, a trademark can last indefinitely,

so long as the user is using it in commerce,

unlike copyright or patent law, which eventually expires.

Now, with respect to the Olympic Games,

for decades, brands have known

that when consumers see a product with the words Team USA

or the image of a popular athlete,

they are more willing to buy it.

And so if a company wants in on the U.S. Olympic glory,

it has to become a licensee of the USOPC,

and the USOPC gets to decide who can use those trademarks

and where they appear.

So, for example,

if you see a Wheaties box featuring Katie Ledecky

or Simone Biles with the words Go for the Gold,

that's because Wheaties paid for a license.

And lots of companies work with the USOPC,

such as Coca-Cola, Polo, Eli Lilly, Cisco,

Warner Brothers, Delta, Fanatics, and Visa.

And of course, Prime is not on that list

because it never negotiated a license.

However, the label on the bottle

of Prime's Kevin Durant-themed hydration drink

features Durant's name

emblazoned above a curiously patriotic-looking Prime logo.

The bottle also talks up Durant

as the 3X Olympic Gold Medalist and counting.

The text says, "When KD steps on the court,

he's going for gold."

And the complete features,

lots of ads that Prime Hydration placed on social media

and on its official website,

as well as advertisements on various social media platforms

and physical printouts for stores selling the drink.

For example, quote,

"Prime Hydration provided ad copy to stores

selling the infringing project

that prominently used the Olympic marks

using the word Olympic six times in ad copy,

including two uses of Kevin Durant Olympic Prime Drink,

Celebrate Greatness

with the Kevin Durant Olympic Prime Drink,

Olympic Achievements, Kevin Durant Olympic Legacy,

and other uses."

Now, I found this to be fascinating

because not only does the USOPC

have the rights to the trademark by right of trademark law,

but they actually got it written into law.

A 36 U.S. Code 220506 grants the U.S. Olympic Committee

exclusive rights to the name, seals, emblems, badges,

all of that associated with the Olympics,

including the name the United States Olympic

and Paralympic Committee

and the symbol of the International Olympic Committee,

as well as related words and phrases

including Olympics, Olympiad, and Paralympic.

And the law says that the Olympic Committee

can bring a civil lawsuit

under the Trademark Act of 1946

against a person who, without the committee's consent,

uses the Olympics-related symbols, emblems,

and words mentioned earlier for the purpose of trade

to induce the sale of any goods or services

or to promote any theatrical exhibition,

athletic performance, or competition.

Now, the law does include some exceptions from civil suit,

mostly to do with place names

and regions with variants of Olympic

and the names such as Olympia, Washington.

But unfortunately for Prime,

they aren't one of the exceptions.

And the second claim for relief

is a regular trademark infringement claim

under the Lanham Act.

The complainant alleges that Prime's use

of the Olympic trademarks

is likely to cause confusion, mistake, or deception

about the source of its products,

thus infringing on the USOPC's trademark rights.

And in the U.S. court's evaluated claim

for trademark infringement primarily by analyzing

whether there is a likelihood of confusion

between the plaintiffs and defendant's marks.

And most courts use some combination

of the factors set forth

in the case of Polaroid versus Polarad Electrics.

These include the strength of these senior user's mark,

the similarity of the two marks,

the similarity of products or services,

the junior user's intent in adopting the mark,

and the sophistication of the buyers.

And of course, will also consider evidence

of actual confusion by consumers.

And another issue

is whether there's similarity of the goods.

And here, the USOPC is right

that its mark is frequently used on similar goods.

Powerade is the official sports drink of Team USA

and Prime is its direct competitor.

The USOPC sent a cease and desist letter on July 10th,

but it alleges that Prime continued to ship products

and used the marks on social media.

The company continued to feature

both the bottle and copy on LinkedIn,

making it look like it deliberately wanted

to use the goodwill associated with Team USA

to promote its own products and brand.

There's a third claim for unfair competition

and false designation of origin

in violation of 15 U.S.C 1125,

and there's a fourth claim for trademark dilution.

Now, that's interesting because dilution occurs

when a third party uses a mark or a trade name

in commerce that is sufficiently similar to a famous mark,

such that it harms consumer perception of the famous mark.

The complaint says the quote,

"The USOPC has used the famous OLYMPIC trademark

in interstate commerce since at least as early as 1896,

which is prior to the use by defendant."

It notes the quote,

"The OLYMPIC marks have been used in commerce

by the USOPC for decades,

and billions of viewers around the globe

are expected to tune into the games this summer."

Prime Hydration's use will dilute the distinctive quality

of the famous OLYMPIC marks

under Section 43 of the Lanham Act and injure the USOPC.

And the courts have given the USOPC even stronger protection

for its trademarks

than it would have under a normal trademark claim

under the Lanham Act.

In San Francisco Arts & Athletics, Inc.

versus United States Olympic Committee,

the Supreme Court barred the San Francisco

Arts & Athletics Company from using the words Olympic

in its gay Olympic Games.

The court held that the committee

had the exclusive rights to the word Olympic

under the Amateur Sports Act of 1978

and could prohibit its use

without needing to prove trademark infringement

or consumer confusion,

which you would normally need to do

under a trademark action.

The court ruled that this exclusive right was constitutional

and did not violate the First Amendment

because the committee's use of the words

served a legitimate purpose,

and its protection did not unfairly restrict free speech.

And courts interpret 36 U.S.C. 380 broadly.

It gives the committee the sole power

to use the International Olympic Committee.

It gives the committee the sole power

to use the International Olympic logo

consisting of five interlocking rings.

For example, in USOC versus Intelicense Corp.,

the committee sued a marketing firm

for publishing pictograms using the Olympic rings mark.

Quote, "The pictograms at issue

are graphic designs of athletes

participating in various summer and winter Olympic sports

against a backdrop

that explicitly incorporates the Olympic symbol

consisting of five interlocking rings."

The International Olympic Committee

had given the firm permission to use the rings,

but the Second Circuit Court of Appeals said

that that was not enough.

Intelicense needed the USOPC's permission

to use the rings in the United States.

And some argue that the USOPC

takes its protection to the extreme.

For example, in 2005,

the Committee threatened to sue the ImprovOlympic Theater

if it did not change its name.

The ImprovOlympic Theater

helped launch the careers of Stephen Colbert, Seth Meyers,

and Bob Odenkirk, among others.

And the group had been using the name for 20 years,

but it changed its name to iO to avoid the lawsuit.

But Logan Paul might have some exceptions.

There is an exception to us Trademark Law,

known as nominative fair use that may help Prime.

Nominative fair use permits,

the use of another's mark

to refer to the trademark owner's goods and services

associated with that mark.

This is permissible as long as the use is necessary

to identify the product or service.

The use is limited to what is needed

to make the identification clear.

And the use suggests that the trademark owner endorses

or is affiliated with a user.

The nominative fair use doctrine was created in a case

that involved the New Kids On The Block

versus two newspapers that ran polls

gauging the band's popularity.

The court ruled that the use of the band's name

did not violate the trademark

because it was necessary to identify the band

and did not suggest sponsorship.

So hypothetically,

Coca-Cola could say it's better than Pepsi,

even though Pepsi is trademarked

because there's really no other way

to identify the product other than calling it Pepsi.

For example, in Playboy Enterprises versus Welles,

the Ninth Circuit ruled

that Terri Welles's use of the term Playboy

and Playmate on her website was nominated fair use

because it accurately described her former status

and did not imply Playboy's sponsorship or endorsement.

The court held that Welles

was allowed to mention the name Playboy

and use the related terms like Playmate of the Year,

or PMOY,

but she couldn't use Playboy's most distinctive mark,

the Playboy bunny.

So you can see how that might apply here.

First, we look at whether the trademark is necessary

to identify the product or service.

And in fact, this often comes up

when you're talking about the Super Bowl.

And for various reasons,

people have come up with some very creative ways

of describing the Super Bowl,

but for example,

the Pittsburgh Steelers have won six Super Bowls.

If you wanted to describe this level of success,

you could really get your point across

without saying the phrase Super Bowl,

even though that's trademarked.

It would be strange to say,

"The Steelers won six really big games."

The second factor is whether you're using

as much of the trademark as necessary.

So in that context, the phrase Super Bowl,

which is a trademark, is probably okay,

but your use of these Super Bowl logos,

that's probably a step too far.

So similarly, Prime is probably free to say

that Durant won three Gold Medals,

but the company probably can't use the Olympic rings.

And the third factor is that you can't create the impression

that you're affiliated or endorsed by the user.

And that's where the USOPC has gotten very aggressive,

and they will police any suggestion

that the company your person is formally affiliated

with the U.S. Olympic team,

because it's trying to protect the value

of the sponsorship that it sells.

But here, the Welles decision

might actually help Prime argue

that it had a right with Durant's permission

to describe him as an Olympic champion

and a Gold Medal winner.

If you take a look at the bottle,

it doesn't seem to use the font favored by the USOPC

and Durant isn't featured on the bottle

wearing his Team USA uniform,

and there's no other indications

that the Olympic Committee is partnering with Prime.

And so the USOPC is seeking all the profits

associated with the sale of Prime,

which, the Committee claims, is in the millions of dollars.

It also wants damages for harm imposed

on its sponsorship agreements with its licensees.

But Prime has yet to respond to the lawsuit,

possibly because it's busy fighting another major lawsuit,

which is about the lack of success of Prime.

It's really getting whipsawed here.

In November of 2023,

Bloomberg concluded that Prime was on track

to make over $1.2 billion in sales.

Prime and its branding company Congo

were bullish on the company's future.

With supply outstripping demand,

the company looked for a manufacturer

that could handle the large orders,

so they turned to Refresco,

a beverage manufacturer that produces products

for various brands and retailers.

And in 2022 and early 2023,

Refresco acted as the bottler for Prime,

but only on a spot basis,

meaning that they would only accept irregular orders

on demand.

However, this arrangement was costly

because it required Refresco to purchase from third parties,

unfilled bottles that had been fabricated

for Prime's unique design and trade dress,

including the shape and size,

because specialized molds and related equipment

are needed to fabricate those bottles.

And in early 2023,

Prime wanted to lower its production costs

by eliminating the deals with third-party bottle suppliers.

So Refresco allegedly informed Prime

that a production line in its Truesdale, Missouri factory

had become available.

And to produce its products,

Refresco would need to refit a dedicated line

with new equipment,

including some that would be custom made

to accommodate defendant's bottles.

According to Refresco, in the normal course of business,

customers pay for

or finance the cost of ordering all that equipment.

But Prime and Congo were not willing to reimburse Refresco

for the dedicated line.

Allegedly, since Refresco would be unable to use that line

for any other customer,

the company asked Prime to minimize its risk

by agreeing to minimum orders for three years.

Prime allegedly agreed to order a minimum

of 18.5 million cases, or 222 million bottles,

for a total of 55.5 million cases cumulatively

over the three years.

And apparently,

there was also a take-it-or-pay-it arrangement, quote,

"If Defendants did not purchase

and take delivery of at least 90%

of the agreed annual volume commitment

for each of the three contract years,

Defendants would be obligated to pay Refresco

a fixed shortfall amount for each 12-bottle case,

below the volume commitment,

that Defendants did not purchase."

The parties called this contract the Truesdale agreement.

And since demand was so high at the time,

Prime told Refresco that they anticipated needing, quote,

"Spot contracts for production

from other Refresco facilities from time to time."

So the parties also worked

toward a master supply agreement, or MSA,

to facilitate future spot contracts

for Prime products in other Refresco facilities.

So the Truesdale agreement was signed on April 3rd, 2023,

and Refresco immediately ordered customized equipment

from third-party manufacturers in Europe.

The agreement contained a provisional deadline

for starting production on the dedicated line,

and the last line says that the provisional deadline

could be changed as agreed by the parties.

And Refresco alleges that on June 12th, 2023,

the parties changed the deadline for the dedicated line.

The changes were apparently discussed in a phone call

and then memorialized on a spreadsheet, which said, quote,

"The dedicated line in Truesdale

would be ready for startup in March/April, 2024."

The revised date was necessary

because the European manufacturer of the equipment

needed more time.

So in this exchange,

you can see how business relationships

can gradually break down.

Refresco says an email attachment contained a new date

for commencement of the dedicated line.

The Prime did not respond

with a clear message that it agreed to the new deadline.

Refresco continued to make plans for the dedicated line,

but Prime seemingly did not object.

And the agreement obligated the parties

to keep working on the MSA,

which was supposed to be done by October 1st, 2023.

But Prime didn't give feedback on the MSA

until the deadline passed.

And by the spring of 2024,

the dedicated line was just about ready for production.

But when Refresco told the defendants

that they needed to know Prime's orders for April and May,

the Prime defendants said

that they would have an estimate by the end of the day,

quote, "But they did not provide

the requested forecast that day, or ever."

And after three weeks of silence,

Prime's manager of external manufacturing

told Refresco that, quote,

"The decision was made to not move forward

with the incubation or flavor qualification at Truesdale."

That is a roundabout way of saying that the deal is dead.

Sorry, not sorry, about the new dedicated line.

Now, Refresco says that the reason Prime canceled the deal

is because it realized that a slowdown in sales

of their Prime Hydration products

likely was not just seasonal,

that those sales, which had slowed in early winter,

were not picking up as spring approached,

as Defendants had expected.

Prime claimed that the Truesdale agreement

expired on its own terms because the parties

couldn't come to terms on the master supply agreement.

That would be a fairly weak explanation

since the main reason for the business relationship

was to get a dedicated line that would allow for Refresco

to fill massive orders,

the more likely scenarios the Prime decided

not to perform on its obligations

because sales of Prime dramatically slowed down.

So Refresco sued for breach of contract,

promissory estoppel, and equitable estoppel.

Refresco argues that the Truesdale agreement

was binding on the parties as of April 3rd, 2023,

and it fully performed on its obligations

under the contract.

And Refresco says it sustained damages

in the amount of $67 million.

Now, the $67 million damages request is pretty interesting

because now yet a third company

claims that Prime can't pay its bills.

Agrovana is a Massachusetts-based importer,

which says it has provided over $70 million,

surprisingly close to the $67 million,

worth of ingredients to Prime since 2020.

Agrovana says it has a contract with Prime

for more than $32 million of product

for the first half of 2024,

but Prime stopped paying its bills

and eventually refused to accept deliveries.

But Prime contends that the products were defective.

In the complaint, Agrovana alleges that Prime failed to pay

for products and use, quote,

"Deceptive acts and practices to avoid paying for products

that it had ordered in binding purchase agreements."

And in a story you've probably heard before,

the company blames Prime's, quote,

"Inability to sell their product

at the rate they projected,"

for the alleged breach of contract.

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