Judge dismisses O'Leary, North Dakota Wonder Fund lawsuit after plaintiff misses deadlines
A Colorado lawsuit accusing businessman Kevin O'Leary and others of defrauding investors and misleading federal and North Dakota officials while investing the state's $45 million Wonder Fund in the livestock tech startup HerdDogg has been dismissed on a technical matter.
The lawsuit was brought by entrepreneur Melissa Brandao. It alleged that executives at HerdDogg -- the company she founded -- pushed her out, stole her patents and misrepresented the company’s financial standing to investors.
Allegations were also made that North Dakota Wonder Fund officials learned about HerdDogg's executives' actions after the state invested in the company, did not take corrective action and were complicit in misrepresenting HerdDogg to state officials and the federal government.
The North Dakota Wonder Fund is an investment program that uses federal money to provide early investment for small businesses in or impacting the state. The fund is managed by O’Leary Ventures, a venture capital investment company owned by O’Leary, widely known as “Mr. Wonderful” from the reality TV show “Shark Tank.”
Jeffrey Neiman, an attorney representing O’Leary and the Wonder Fund, told the Tribune that the dismissal was the result he expected.
“We said from the outset this case would be dismissed, and that is exactly what happened,” Neiman said.
The case was dismissed without the court deciding on the merits of the allegations.
Why was the case dismissed?
In the judgment, Colorado District Court Judge Gordon P. Gallagher dismissed the case “as a sanction for the plaintiff’s noncompliance.”
John Oleske, Brandao’s lawyer, failed to respond by court deadlines to multiple motions filed by defendants to dismiss the case and motions for sanctions against Brandao, according to the judgment.
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Oleske said during a Dec. 8 hearing that he intended to file responses to the defendants’ motions the same day as the hearing but never did, the judgment said.
The court said it was confused by Oleske’s failure to respond to the motions, noting that he did file a response to U.S. Magistrate Judge N. Reid Neureiter’s order staying discovery, or exchange of evidence -- even though that filing came after the deadline to respond to the defendants’ motions to dismiss and for sanctions.
Brandao and Oleske laid out claims that the defendants said were frivolous, lacked evidence and were filed to “harass, self-promote and exploit Kevin O’Leary’s notoriety,” according to one of the motions for sanctions. The court said it was difficult to determine the truth of the matter without responses from Brandao. Effectively, her failure to move forward with her own case left the defendants “hamstrung in their ability to show the falsity of the claims,” the court said.
The case was dismissed "with prejudice," meaning Brandao may not file the same lawsuit against the defendants in the future.
The court said Oleske has a history of missing filing deadlines, citing two prior cases in New York as examples. That pattern led the court to conclude that a lesser sanction would not move the case forward in a timely way, and to weigh in favor of dismissal, according to the judgment.
The court also said in a Jan. 14 order to show cause that the "flavor" of a Dec. 8 hearing left the court "concerned about the veracity and validity" of Brandao's claims. An order to show cause directs a party to justify why the court should not grant a motion or request. In this case, the motion was for dismissal.
Oleske filed a declaration Jan. 21 stating that his failure to respond stemmed from his inexperience managing a solo private law practice and his preoccupation with two other court cases -- one filed in New York and one in California.
The court said it was aware that the failure to respond was Oleske's fault but told Brandao that she is responsible for her choice of counsel and the consequences of that choice. The court indicated that Brandao could pursue action against Oleske for potential malpractice.
Oleske did not respond to a Tribune request for comment.
In a final footnote, the court said it gave "significant consideration" to dismissing all claims while still allowing the defendants' sanctions motions against Brandao to proceed, but ultimately decided to close the case.
Neiman, the attorney representing O’Leary and the Wonder Fund, said “Kevin O’Leary intends to hold accountable everyone responsible for initiating or publicizing this frivolous lawsuit, and he will pursue all appropriate remedies.”