Law360 (June 1, 2021, 6:20 PM EDT) -- A cleaning supplies wholesaler that paid $2.5 million for hand sanitizer at the peak of the COVID-19 outbreak says in a new lawsuit its order was breached with late, inferior product, with bottles missing a specified pump-top and with a third of the order made in Mexico, not Colorado as promised.
Atlanta-based S.P. Richards Co. said Solv-All Alliance Group broke its contract with the shipment of 316,800, 16-ounce bottles of sanitizer when the product was delayed three times, then didn't meet the specifications of the order.
"Indeed, the product, which was supposed to have a gel-like consistency, was watery, and also lacked the promised pump-top lid," S.P. Richards said in a suit filed Friday in the Northern District of Georgia. "SPR noticed these non-conforming characteristics when the product did not sell, notwithstanding the high demand for hand sanitizer in the market."
S.P. Richards is seeking the reimbursement of nearly $2.5 million it paid for the order and punitive damages from Solv-All and its CEO, Scott Marincek, for alleged negligent misrepresentation, breach of implied and express warranty, fraud and breach of contract.
S.P. Richards said it first reached a deal for hand sanitizer with Solv-All and Marincek in April 2020 for a shipment of 8-ounce hand sanitizer produced by Mexican company Dibar Labs. Marincek told the company the sanitizer was approved by the U.S. Food and Drug Administration, and would be shipped by May 3, 2020, S.P. Richards said.
After asking for the FDA registration and product safety, S.P. Richards then bought $1.18 million of hand sanitizer and canceled its earlier shipment, according to the lawsuit.
The company paid $590,000 — roughly half the purchase price — at that time, according to the lawsuit.
Marincek and S.P. Richards confirmed on May 7, 2020, that the hand sanitizer would be made in Colorado, come with a "pump-top" and would be of a gel consistency, according to the lawsuit.
S.P. Richards then upped its order to a total of 316,800 bottles costing $2,360,160, the company said. The bottles were shipped May 20, 2020, and the remaining payment of $1,770,120 was sent to Solv-All, S.P. Richard said.
When the first shipment of sanitizer arrived at the Denver warehouse of S.P. Richards, it lacked the pump-top, according to the lawsuit.
"By email, Marincek confirmed that the product was supposed to have a pump-top, but that the ones he ordered did not fit the bottle, so he shipped the product anyways, without consulting SPR," according to the lawsuit.
In an exchange of letters and emails in early June, S.P. Richards demanded that Solv-All either mark down the price or take the product back, according to the lawsuit. Solv-All refused both options, S.P. Richards said.
The FDA issued a notice on June 19, 2020, advising people not to buy hand sanitizer from some Mexican manufacturers because the product contained dangerously high levels of methanol and, in some cases, were made completely of methanol.
Methanol has minimal antimicrobial properties and carries health risks, including blindness, S.P. Richards said. The FDA later issued a country-wide import ban on all hand sanitizers from Mexico.
S.P. Richards said it reviewed its inventory of sanitizer bought from Solv-All and found that 104,728 bottles - roughly a third at a cost of $780,223 – were produced in Mexico and found in random cases.
In February, S.P. Richards demanded Solv-All and Marincek indemnify the company in line with an agreement signed at the time they purchased the sanitizer, according to the lawsuit. Solv-All and Marincek didn't respond to the demand, S.P. Richards said.
"Here, Solv-All either negligently supplied products that failed to meet SPR's express contractual requirements or willfully misrepresented the type and nature of the product being provided," S.P. Richards said in a demand letter attached to the lawsuit.
Counsel for S.P. Richards did not immediately return a message seeking comment. Solv-All's corporate headquarters did not return an email seeking comment Tuesday.
S.P. Richards Inc. is represented by Scott N. Sherman and Abigail C. Castleberry of Nelson Mullins Riley & Scarborough LLP and Stephen M. Faraci, Sr. and David L. Amos of Whiteford Taylor & Preston LLP.
Counsel information for Solv-All and Marincek was not available Tuesday.
The case is S.P. Richards Co. v. Solv-All Alliance Group LLC, et al., case number 1:21-cv-02245, in the U.S. District Court for the Northern District of Georgia.
--Editing by Alex Hubbard.
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