by Matthew Russell Lee, Patreon Book Substack
SDNY COURTHOUSE, Aug 17 – Private equity firm Cambridge Capital thought it had a deal to acquire 51% of fulfillment company Ruby Has in 2020, with warehouses in Bayshore in New York, in Las Vegas and elsewhere.
It fell through, as Ruby Has talked with Summit Partners then tried to raise the price. Cambridge sued.
On August 7, 2023, the civil jury trial started before U.S. District Court ofr the Southern District of New York Judge Lewis J. Liman. Inner City Press was there, the only media in the courtroom.
Cambridge partner Dave Stubbs was on the witness stand, describing his volunteer work in Connecticut prisons and his interactions with Ruby Has.
When he said he'd not good at PointPoint, a juror smiled. Email after email went in without objection.
Just before trial on August 4 Judge Liman endorsed that plaintiff's damages at trial shall be limited to the claimed $405,000 in deal expenses. There were six lawyers at the defense table.
On August 8, Cambridge Capital's Benjamin Gordon was on the stand, the fingers of his hands touching as he looked at the jury while being cross-examined. He disagreed that the deal had not really been agreed, saying that with the Muellers, Phillip and Rafael Zakinov, their word was their bond. But the emails told another story....
On August 9, Rafi was on the stand, being cross examined about his messages with Esther Kestenbaum and Eli Mermenstein. He was asked, So you didn't tell Cambridge Capital about your other talks. He replied, You ask that as if there's something wrong with that.
On August 11 the trial plodded on, with Cambridge Capital's Matt Smalley on the stand. He estimated the firm spent 1000 hours on the Ruby Has failed deal. He said while it is not illegal for a closely held firm to veer so much from GAAP, it took time to get the numbers in the format Cambridge needed, and to understand the Mermensteins' role.
At day's end the Ruby Has legal team stood in front of the courthouse on Worth Street. Where would this end?
On August 14 a lawyer Ruby Has had hired during the failed deal, Alexander Kaplun, was on the stand. He said, as he had in a January 20, 2023 declaration with a large three letter signature, that he had never heard of Cambridge Capital.
He also said that despite Googling Ben Gordon he did not learn of the SEC case against him. He forewent his $800 an hour fee for six hours of trial prep; he flew back from Italy for it. Was he afraid of malpractice? Loudly he said, No. Judge Liman inquired into the different between broker and a "fundless sponsor." The former, by analogy he was told, presides over a marriage. And a fundless sponsor gets involved?
And then the verdict: no one owes anyone any money, on claims or counter-claims. Question 1: did they have a duty to negotiate in good faith? NO, unanimous. And no misrepresentations by Gordon or Smalley. So that's it.
The case is Cambridge Capital LLC v. Ruby Has LLC, 20-cv-11118 (Liman)
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