Wisconsin Attorneys Secure Not Guilty Verdict in Federal Conspiracy Case

Wisconsin Law Journal – Defense attorneys for James Lenz, who was facing up to 10 years in prison for federal conspiracy charges, were able to secure a not guilty verdict last month, following a two-week jury trial.

The case was filed in U.S. District Court for the Western District of Wisconsin, and Attorney Joseph A. Bugni with Federal Defender Services of Wisconsin Inc., was appointed to the represent Lenz. Bugni then partnered with Rob Rosenberg, president at RCS Legal, a courtroom consultant and technology company.

Bugni said at first it was daunting as he faced a team of federal prosecutors in Wisconsin who had flown from Washington, D.C. Typically Bugni said he recognizes opposing counsel, which can make a difference.

“It’s the devil you know versus the devil you don’t,” Bugni said, during an interview with the Wisconsin Law Journal on Tuesday.

According to Rosenberg and Bugni, several others assisted with the Lenz’s defense, including Bugni’s paralegal, Shavon Caygill, and Rosenberg’s trial consultant, Melissa Van Beck.

Rosenberg and Bugni both credited Caygill and Van Beck, as being instrumental in trial’s positive outcome, they said.

“Melissa had a time intensive, integral role. When she sits in a courtroom, she’s in a pressure cooker at all times, constantly on. It’s like the feeling of 10,000 people staring at you and having to perform. She does it flawlessly and played an integral role to the successful outcome of the trial,” Rosenberg said.

When Van Beck was asked how she played a role in the successful outcome of the trial, she said, delivery.

“We developed tools to help Joe deliver information to the jury in an easy to digest concise manner,” Van Beck said.

Rosenberg also praised the work of Bugni.

“Over the years I’ve had the opportunity to work with some really great lawyers, some of the best in the country. When we got to work with Joe, the first thing I noticed was zeal, passion and enthusiasm. Joe was heavily invested in the outcome of this case,” Rosenberg noted.

Bugni also praised the work of the entire legal team at RCS Legal.

“My trial consultants were really great. I was very fortunate to learn from them,” Bugni said, noting that he was pleasantly surprised to work with Rob and Melissa, gaining invaluable resources.

“In the Federal Defender’s Office, we aren’t used to those types of resources (offered by RCS Legal),” Bugni said.

“You don’t get that technology and the ability to talk through issues with individuals so immersed in the case. Rob and Melissa have a mastery of craft and made everything easier,” Bugni said.

According to a copy of the indictment obtained by the Wisconsin Law Journal, Lenz was the environmental manager at Didion Milling Inc. (DMI) from approximately June 2011 to April 2016. During that time, he began part-time work as an environmental consultant for DMI. His duties as the environmental manager included monitoring DMI’ s compliance with pollution control permit requirements and interacting with third-party environmental auditors and government regulators.

The indictment also noted DMI sold millions of dollars of milled corn ingredients annually to various food and beverage manufacturing companies. DMI milled the ingredients at the Cambria facility and shipped them via interstate carrier to its customers. As a condition of DMI’s certification, a third-party food safety auditor performed an on-site audit at DMI’ s mill each year to determine compliance with certification requirements.

According to court documents obtained by the Wisconsin Law Journal, Lenz, along with other co-defendants, knowingly and intentionally conspired to falsify documents in violation of 18 U.S.C. § 371 and 18 U.S.C. § 1001(a)(3).

During Bugni’s opening statement he maintained Lenz’s innocence, while arguing “bad” facts were taken out of context about his client.

Bugni told the story of his client as being a family man, who has been married to the same woman for more than four-decades, and has two children and two grandchildren.

Bugni reminded the jury that while Lenz was responsible for tracking hundreds of pages of data simultaneously, he had no authority over other employees and repeatedly reminded the staff to comply with applicable federal law, often via written email correspondence. Bugni then explained to the jury how Lenz increased efficiency from a stack of papers to electronic data tracking, successfully modernizing an outdated system — effectively revolutionizing how the company did business.

“There is only a conspiracy if you want there to be,” Bugni said during opening statements to the jury. In a slide presented to the jury labeled “Worst Designed Conspiracy … Ever…” Bugni argued his client literally had nothing to gain by engaging in the conduct alleged by federal prosecutors. Assuming his client had done so, Lenz would not have received any financial gain. There would have not been a pay raise, stock incentives, a job promotion, or any bonus.

“If there was a conspiracy, Jim Lenz had no idea,” Bugni said.

During closing arguments, Bugni said he proved his client’s innocence while demonstrating how context matters and how the government was forcing a conspiracy theory that simply did not exist.

Rosenberg praised Bugni’s closing argument.

“Joe gave one the top-five closing arguments I’ve ever seen. You don’t get to say that often and really mean it. Joe had extraordinary knowledge of the case and command of the courtroom. He took facts, told the true story, and molded that into a successful outcome for his client,” Rosenberg said.

In this particular case, the government failed to prove Lenz acted knowingly and willfully, beyond a reasonable doubt. Lenz was found not guilty.

Bugni attributes the success of the case to RCS’ legal strategy and the use of the next generation of technology.

“Rob and Melissa have a unique ability to present things in a clean and persuasive way that cuts out what won’t resonate with the jury,” Bugni said.

“This a whole different level of playing field. My only wish is that I would have experienced it earlier in my career,” he added.

Rosenberg said the secret to his success has been observing what works and what doesn’t work from many other trials.

“I’ve never walked away from a trial where I did not learn something from the opposing side,” Rosenberg noted.

Rosenberg says he helps attorneys by “getting lawyers to get out of their own way. That’s also the key to success,” he added.

Rosenberg also noted he and Van Beck were so pleased with Bugni’s courtroom performance, his firm presented Bugni with a portrait on November 7.

Originally published by Wisconsin Law Journal on November 7, 2023.

By: Steve Schuster, Sschuster@Wislawjournal.Com 

RCS Case News: Jury Acquits Former Didion Milling Environmental Manager

MADISON, Wis. (WMTV) – A federal jury in Madison convicted current and former Didion Milling Inc. officials of workplace safety, environmental, fraud and obstruction of justice charges after the explosion in 2017 that killed five workers and seriously hurt a number of others, this according to the US Office of Public Affairs.

Among those convicted was Didion Milling Vice President of Operations Derrick Clark. Clark was convicted Friday, October 13, of conspiring to falsify documents, making false Clean Air Act compliance certifications and obstructing the investigation done by the Occupational Safety and Health Administration (OSHA) following the explosion.

Shawn Mesner, former Didion Milling Food Safety Superintendent, was convicted of participating in a fraud conspiracy against Didion’s customers and conspiring to obstruct and mislead OSHA for his role in falsifying cleaning records used to track when cleaning to remove combustible corn dust at the mill was done.

“The convictions of Didion Milling senior managers sends a clear message that EPA and our law enforcement partners will investigate and prosecute companies that put profits above the health and safety of their workers,” said Assistant Administrator David M. Uhlmann of the Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance.

The jury also acquitted former Didion Milling environmental manager James Lenz of charges related to falsifying environmental records and conspiring to make false statements and obstruct agency proceedings.

Didion Milling Inc. previously pleaded guilty to federal charges of falsifying the cleaning logs and agreed to pay a criminal fine of $1 million and restitution of $10.25 million to families of the five victims in the explosion.

The company also has agreed to a five-year “organizational probation” and must allow federal inspectors to visit the mill without advance notice up to twice a year. And back in August, Didion agreed to pay the Wisconsin Department of Justice $940,000 to settle a lawsuit alleging multiple regulatory violations at the Cambria plant.

“The tragic loss of life in this case shows the terrible consequences that can result when companies fail to implement required health, safety and environmental measures,” Uhlmann added.

Sentencing hearings for each of the defendants will be scheduled at a later date.

NBC15 News has reached out to Didion for a response to the verdict and will update this story with more information.

Originally published by NBC15 (WMTV Madison) on October 17, 2023.

RCS Case News: $106M Verdict Against Chinese Furniture Maker

A federal jury on Friday awarded more than $100 million in damages to a Germantown company that accused a Chinese furniture maker of stealing its intellectual property — the design of a multi-functional lighted cupholder.

The jury found Man Wah Holdings LTD. had infringed on Raffel Systems LLC’s patent and intentionally misappropriated its “trade dress” for the cupholder, and had even put stickers with Raffel’s patent number on the faked components.

The jury awarded about $9.3 million in actual damages for the false marking, patent and trade dress infringements. It added added $97.5 million in punitive damages for the malicious appropriation of Raffel’s trade dress, the overall look and feel of the cupholder.

The 12-person jury returned the verdicts Friday afternoon, after about six hours of deliberations at the end of a two-week trial. Officials from neither Raffel or Man Wah had any immediate comment on the verdicts.

About two dozen employees from Raffel Systems LLC in Germantown — most of its staff — packed into a small courtroom gallery at Milwaukee’s Federal Courthouse Thursday, all wearing company shirts.

They came to hear closing arguments in Raffel’s case against Man Wah Holdings LTD, a giant Chinese furniture manufacturer Raffel accused of unlawfully copying its lighted cupholder controllers used in theater-style seats made by Man Wah and several other companies.

John Scheller, a lawyer with Michael Best & Friedrich in Madison, called Man Wah’s strategy, “deliberate, planned and destructive copying,” of Raffel’s intellectual property.

“No doubt, they wanted to get rid of us. Most small companies wouldn’t stand up to Man Wah, but they underestimated the strength of Raffel’s people.”

Man Wah denied it infringed any patent or trade dress associated with Raffel’s cupholders, and painted the Wisconsin company as merely trying to leverage a short-term error into a giant payoff from a big foreign firm.https://cm.jsonline.com/overlay/061722_JuneFlashSale_inline_desktop_anon

“This is their pot of gold,” said Michael Lindinger of Washington, D.C. “They’re seeking damages from Man Wah’s profits selling furniture.” 

Lindinger noted some Man Wah officials were also in attendance, all the way from China, “because this is important to them too.”

Simple idea, big business

According to its website, Mark Raffel owned a furniture store in Milwaukee in the 1980s when he began working on ways to embed motors and heaters to increase comfort. Now, the company does a global business providing controls and features for furniture, RVs, theaters and more.

The lawsuit says employee Ken Seidl got the idea for a lighted cupholder at the 2005 furniture show in North Carolina. It evolved to include controls for reclining, foot rests, head rests, massagers and other functions on theater-style seating and other so-called motion furniture. Raffel secured several patents.

It quickly became a popular component for dozens of manufacturers. Man Wah was a huge account, but Raffel insisted a change to the Chinese firm’s typical supplier agreement: it could not copy the cupholder.

Raffel employs about 30 people in engineering, design and administration at its Germantown headquarters, but makes most products at a Chinese subsidiary. 

In late 2017, Man Wah did contract with another Chinese firm to make the same units, for less than Raffel was charging. Not only were the cupholders “identical,” in design and appearance (though not in reliability), the fakes even had stickers on them with Raffel’s patent number.

By mid 2018, the fakes were failing, Raffel discovered the issue, and sued. 

Man Wah made changes to the holders it was having made, to make it clear they were not Raffel knockoffs. According to trial testimony, about 60,000 of the fakes were used in various Man Wah seating units sold under several brand names during 2018. 

Raffel’s lawyer said there are still some 14,000 of the fakes in circulation, meaning Raffel faces the possibility of brand damage for years to come.

Fakes hurt Raffel’s reputation

During closing argument, Scheller said Man Wah clearly knew of Raffel’s patents before it ordered the cheaper, counterfeit cupholders. Man Wah also kept buying some cupholders from Raffel, though in diminishing numbers. Scheller said that was a cover up, meant to keep Raffel thinking its own products were in all the furniture Man Wah kept selling.

The knockoffs quickly proved problematic. Major US retailers who purchased from Man Wah were reporting numerous failures, and thought Raffel’s products were defective, because Man Wah blamed Raffel.

“Our reputation is forever tarnished,” Scheller told the jury. 

The nearly two-week trial before U.S. Magistrate Judge Nancy Joseph included recorded and live testimony, some from China via Zoom, and battling experts trying to break down the arcane, technical aspects of patent and trademark law for jurors. 

Raffel sought in excess of $10 million and in damages for patent infringement, trade dress infringement, misappropriation and false marking. Scheller suggested the jury could award even more in punitive damages. 

“How do you deter someone like Man Wah?” Scheller asked, suggesting only a very large award would get the attention of a very large company. He did not specify a figure.

For Man Wah, Lindinger argued that Raffel never supported its claims of dominance in the seating control market, tied any specific research and development expenses specifically cupholder, or offered evidence as to the value of the company’s good will, which it now claims has been damaged.

Lindinger said Raffel’s total revenue from cupholder sales from 2016 through 2018 was $24.4 million, and yet was seeking anywhere from half to all that much in damages from Man Wah. 

Lindinger also pressed the defense that the cupholder didn’t really have a trade dress to protect because it was primarily functional, and that its appearance and design was a result of the functionality.  “Trade dress” refers to a kind of protection for products that wouldn’t qualify under patent or trademark law.. 

Man Wah argued no consumers were ever confused by the fake cupholders, because no one buys the furniture just because it has Raffel components. No one would know Raffel made the holders unless they disassembled the sofas, he said. 

Scheller argued he didn’t have to prove the potential for confusion, because there was so much actual confusion — among manufacturers, retailer, and consumers, and even Man Wah itself. He noted that after the fakes started failing, Man Wah workers sent out more fakes as replacements when they meant to send Raffel cupholders.

During pretrial litigation, Joseph had narrowed the claims and counterclaims of the case and found that Man Wah had infringed on one aspect of one Raffel patent. Lindinger argued that patent was invalid, because the claimed novel invention aspects were just obvious to anyone in that industry.

Lindinger noted though Raffel officials testified the cupholder is the company’s premier and seminal product, it wasn’t prominently featured in its catalogs, or mentioned during occasional stories about Raffel in a furniture industry magazine.