Case of the Day: NEP Canada v. MEC OP Transaction I

The case of the day is NEP Canada ULC v. MEC OP Transaction I ULC (Ohio Comm. Pl. 2022). With a name like this, you know a lot of money is at stake. MEC sold shares in one of its subsidiaries to NEP for $175 million. As part of the deal, NEP continued to employ one of the subsidiary’s key employees, Gayden Carr. NEP then fired Carr, and it sued MEC for failing to disclose several regulatory issues prior to the sale. At the same time, Carr sued NEP on a claim relating to his firing. The two cases were pending in the Alberta Court of Queen’s Bench. The cases were consolidated in part. One issue from the misrepresentation case, and the wrongful termination case, were tried together first. The judge in that trial concluded that Carr and others on the “deal team” had not known of a key report or had only known of the report’s existence, and that Carr had been wrongfully terminated. The judgment was affirmed on appeal. Then the remaining issues in the misrepresentation case were tried. In that case, the judge found that Carr and the others knew of the regulatory problems or acted with reckless indifference, and that MEC was liable for damages. The judge found that the first trial did not have issue preclusive effect and rejected the view that the two courts were inconsistent.MEC appealed, and the appeal is still pending. NEP did not insist on an appeal bond.

Because MEC had a large bank account in Franklin County, Ohio, NEP sought recognition and enforcement of the judgment in the Court of Common Pleas there. MEC objected to recognition on the grounds that the two judgments were inconsistent. Inconsistency with another final and conclusive judgment is indeed a basis for nonrecognition under the UFCMJRA, and in Ohio’s enactment of the statute, it is a mandatory basis. Nevertheless, the judge concluded that because the Canadian court had determined there was no inconsistency, the court “may not simply ignore such a ruling.” On the other hand, the Canadian case was still on appeal and included the issue of the inconsistency, and so the court stayed the case, provided MEC posted a bond in the amount of its Ohio bank account balance.

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