Judge tosses Mates lawsuit

N.A. Vaccine ex-president filed after being fired

June 24, 1999|By Mark Guidera | Mark Guidera,SUN STAFF

A federal judge has dismissed a lawsuit filed by the former president of North American Vaccine Inc. against the Columbia company for firing her last year.

Dr. Sharon Mates sued her former employer and two of its largest shareholders in U.S. District Court in Greenbelt in November, contending that she had been improperly fired because she opposed terms of a loan the two shareholders planned so the financially strapped company could stay afloat. Mates also contended in her suit that the two shareholders wanted her removed so they could sell the company without her opposition, and then defamed her when they announced that she had been dismissed.

Daniel J. Abdun-Nabi, North American Vaccine's senior vice president for legal affairs and general counsel, said the 27-page ruling by U.S. District Judge Alexander Williams Jr. dismissing the suit "confirms the company's earlier statement that we believed this lawsuit was without merit."

Daniel Loeb, a Washington attorney representing Mates, said his client is "obviously disappointed" with the judge's ruling.

"We think the judge was mistaken in this decision. We think there are errors," said Loeb. He declined to be specific.

He said he and other lawyers working on the case planned further review of the ruling, and may file an appeal or a request that the judge reconsider the dismissal. In his ruling, Williams said Mates had failed to meet certain legal tests for her claim that she was wrongfully fired and he said he could find no evidence that she had been defamed by a company news release announcing that she would be replaced.

In the suit, Mates sought unspecified punitive damages. She had also asked the court to bar the company from completing a $25 million private-placement financing agreement. But the company closed on that loan soon after the suit was filed.

Mates charged that North American's two vice chairmen, Phillip Frost and Francesco Bellini, "arranged a scheme" to increase the stakes of Frost and Canadian drug developer BioChem Pharma in North American "at the expense of the company and its minority shareholders."

Bellini is chief executive officer of BioChem Pharma Inc., based in Canada and North American's largest shareholder with a 35 percent stake. Frost, who is chairman and chief executive officer of Ivax Corp. of Miami, owns 17 percent of North American's stock and 39 percent of BioChem's stock. He is also vice chairman of North American Vaccine.

According to the suit, the two agreed to lend North American $25 million in the form of a convertible debenture. At the time, according to the company's second-quarter financial report, money-losing North American had about $18 million in cash on hand -- enough to support operations for less than a year.

In return, Frost and BioChem received the right to convert the five-year note into company stock at $8.35 a share, the suit states. The conversion terms were not advantageous to the company or shareholders, the suit argued, because the closing price of the stock on the day the agreement was being considered by the board was $11.25.

North American shares closed yesterday at $4.4375.

Pub Date: 6/24/99

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