Capstone Nutrition has sued Denver-based MusclePharm Corp. for more than $65 million in damages it claims resulted from a breach of contract.
Capstone, in a complaint filed in federal court in Denver this week, said the sport nutrition retailer didn’t pay for $22.5 million in product it accepted.
“Capstone had to repeatedly chase MusclePharm to get it to pay even the smallest amounts of money,” the Ogden, Utah-based company said in its filing, adding it worked for almost a year to resolve the problem before pursuing litigation.
Capstone, which spent $10 million on a plant in Tennessee so it could supply MusclePharm, is seeking another $40 million for a failure by the company to meet minimum volume requirements.
Eventually, MusclePharm stopped accepting certain shipments, forcing Capstone to sell the products on its own at a discount, the company claims.
“Capstone’s claims are without merit. In fact, it is Capstone who breached the parties’ agreement by failing for many months to deliver the products that MusclePharm had ordered,” said Marc Kasowitz, an attorney with Kasowitz, Benson, Torres & Friedman who is representing MusclePharm.
Kasowitz also said Capstone’s conduct damaged MusclePharm and its customers and that MusclePharm will seek to recover those damages.
The lawsuit adds to the woes faced by MusclePharm, which is undergoing a restructuring started last summer. Last September, executives settled civil allegations from the U.S. Securities and Exchange Commission that they had failed to
The figure included $244,000 paid to CEO Brad Pyatt for autos, clothing, meals, golf club memberships, and personal tax and legal services, an SEC investigation found.
Pyatt, a former NFL wide receiver who founded MusclePharm in 2008, . As part of his departure, Pyatt received $5.3 million in severance payments, which contributed to a $6.6 million first quarter loss at the company.
Pyatt received just shy of $800,000 in compensation last year, $7.1 million in 2014, and $4.5 million in 2013, according to the company’s .
This post was updated at 5:24 p.m. May 23, 2016: Comments from MusclePharm’s attorney were added.
Aldo Svaldi: 303-954-1410, asvaldi@denverpost.com or @aldosvaldi
