Digital Angel Wins Case Brought by Former CEO

A jury voted in favor of Digital Angel, which will not be required to pay damages to a former CEO who accused the company of breaching an employment contract.

More than a year after a former CEO of Digital Angel Corporation sued the company over an alleged breach of his employment contract, Digital Angel announced Wednesday that the jury in the case voted unanimously in the company's favor.

Michael Krawitz was appointed CEO in 2006, at which time he entered an employment contract with South St. Paul-based Digital Angel. He filed a lawsuit in June 2009 in U.S. District Court in Florida-Digital Angel was previously headquartered in Delray Beach-accusing the company and several of its board directors of breaching the contract. He also accused the company of making misleading statements about its financial condition.

Digital Angel responded with a motion to dismiss all claims except the breach of contract allegation-a motion that was granted by the court in December 2009. Krawitz amended his complaint in January, dismissing all other claims, and the recent jury verdict pertains to the amended lawsuit.

According to the suit, Digital Angel breached the employment agreement in multiple ways beginning in 2008. The company was accused of being repeatedly late in providing portions of Krawitz's compensation. Digital Angel also allegedly announced a reverse stock split during a prohibited period, “which decimated the value of Mr. Krawitz's severance compensation and interrupted his attempts to liquidate his position in the company.”

Krawitz claimed in his complaint that he suffered damages of an estimated $1.2 million. Per the jury's verdict, Digital Angel will not be required to pay any damages to Krawitz.

“We are pleased to be able to put this baseless lawsuit behind us,” Digital Angel's current CEO, Joseph J. Grillo, said in a statement. “This case, along with other legacy issues inherited from prior management, has been an enormous drain on current management's time and resources, and we are gratified that the jury found the lawsuit's claims to be without merit by granting the company an unqualified victory in the matter. This will be one less distraction for us as we continue to focus on improving the operational and financial performance of the company.”

Digital Angel produces technologies for animal identification and emergency identification. It is among Minnesota's largest public companies based on its 2009 revenue, which totaled $49.5 million.