Dan O'Brien, The Business Journal
Lordstown 64ef5f5a40169

Lordstown Settles Karma Lawsuit, Proceeds With Foxconn Case

Aug. 30, 2023
Foxconn tried to get its lawsuit thrown out, but the motion was dismissed by a judge.

Bankrupt electric vehicle company Lordstown Motors Corp. has settled its lawsuit with Karma Automotive for $40 million, according to a regulatory filing. Lordstown, which filed for Chapter 11 Bankruptcy earlier this summer, had been ordered by a judge to resolve the case before it could proceed with its restructuring.

The lawsuit with originated after Karma claimed Ohio-based Lordstown misappropriated “trade secrets and intellectual property, conspiracy, breach of the parties’ non-disclosure agreement, interference with Karma’s employment contracts, RICO conspiracy, and violation of computer fraud statutes,” according to the filing with the U.S. Securities and Exchange Commission.

Included in the $40 million payout is a $5 million royalty fee allowing Lordstown to use the technology Karma alleged it stole. A trial had been scheduled for Sept. 12, but a settlement was reached on Aug. 15 and approved by the bankruptcy court on Aug. 28.

But Lordstown isn’t done with the legal side of things quite yet. It is currently suing contract manufacturing giant Foxconn for allegedly breaking the companies’ 2022 agreement that called for Foxconn to invest $170 million in the company to help develop and design a new EV program as well as general corporate purchases. However, Foxconn backed out of the deal and only invested $52.7 million, a move Lordstown executives say led directly to them needing to file for bankruptcy protection.

Foxconn filed a motion to dismiss the case or convert it to a Chapter 7 liquidation on July 20, saying that Lordstown had filed its bankruptcy papers in bad faith. This motion was dismissed on Aug. 28 by Judge Mary Walrath. 

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