Top Plaintiffs' Verdict by Impact: Luoshe Printing & Dyeing Co. Ltd. et al. v. Standard Fiber Inc. et. al.

Zhize Huang just wanted his fair share.

In 1999, he invested $300,000 in a South San Francisco-based textile company, which the majority shareholder sold seven years later without telling him, Huang alleges.

Anshan Li, who owned a majority of bedding and textile distributor Standard Fiber Inc., allegedly sold the whole company for about $44 million in 2006 and did not tell Huang or pay him proceeds from the deal.

Huang, whose Chinese company manufactured products sold by Standard Fiber, sued for lost profits and breach of contract. The bench trial last year in front of San Mateo County Superior Court Judge Marie S. Weiner focused on whether Huang had an enforceable agreement. Luoshe Printing & Dyeing Co. Ltd. et al. v. Standard Fiber Inc. et al., 502381 (San Mateo Co. Super. Ct., filed Jan. 14, 2011).

Li, represented by a San Francisco-based team with Orrick, Herrington & Sutcliffe LLP, argued the $300,000 Huang provided was not an investment, but a loan that was repaid in 2005.

Weiner disagreed in October and tentatively awarded Huang $26 million, ruling that Li had breached his fiduciary duty by failing to disclose the sale of Standard Fiber.

The pair of San Francisco-based lawyers with Morgan, Lewis & Bockius LLP who represented Huang believe they succeeded by showing inconsistencies between defense testimony and internal records with Standard Fiber.

"[We] feel the decisive factor was the inability of the defense witnesses to testify in a way that was consistent with internal corporate records, with SEC and other government filings, and with common sense," Mortimer H. Hartwell and Howard Holderness said in an email.

Orrick, Herrington & Sutcliffe partner Robert P. Varian said the ruling is not final.

"This case is far from over," he said. "The tentative filing is the first step in a long process."

- SAUL SUGARMAN

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