A $40 million jury verdict against Alfred Teo Sr. and several units of film giant Sigma Stretch Film is up in the air after the judge in the case said that the chances of him sustaining the verdict "are probably slim to none."

Tom and Ellen Huff had filed a lawsuit against Teo and the Sigma units in 2018. The suit claimed that Teo — who founded Sigma in 1978 and served as the firm's CEO for many years — and other Sigma executives conspired to financially damage the Alliance Barrier Films LLC business, leading Tom Huff to sell his 50 percent stake to Sigma in 2017 for less than market price.

Pompano Beach, Fla.-based Sigma had acquired a 50 percent stake in Alliance of Washington, Ind., in 2016. The firm was owned by Huff, who launched the business in 2013. Huff also had owned United Films Group before selling that business to Huntsman Corp. in 1996.

After a two-week trial, the jury in Fort Lauderdale, Fla., deliberated for only four hours on May 27 before returning the $40 million judgment. The jury ruled that Teo and Sigma units Flexsol Holdings LLC, Great Eastern Acquisition Corp., Sigma Extruding Corp., Alpha Industries Management Inc. and ISO Poly Films Inc. — as well as Alliance — breached their fiduciary duty to the Huffs, committed fraud and coerced the Huffs into transferring their interest in Alliance to Teo.

"We're thankful that the jury delivered justice," said Robert Cheeley, the Alpharetta, Ga.-based attorney who represented the Huffs. "This was the first time someone stood up to Al Teo's bullying and punched him in the nose."

But shortly after the verdict was read, according to the court transcript, Circuit Court Judge Jack Tuter asked Sigma attorney Gene Stearns to submit a request for a directed verdict in Sigma's favor.

"You may want to be well served to go back to the negotiating table to see if you can work out a resolution," Tuter said. "But there are so many problems with the damages in this case, that there's just no way I can lawfully sustain this verdict.

"That doesn't mean the case won't have to be retried in a couple of years," he added. "It may be that I sustain the jury's findings on liability, but set aside the verdict on damages."

In a statement sent to Plastics News, Stearns described the Huffs' case as "long on prejudice and baseless argument and short on even a whisper of factual merit."

"The Huffs reached out to Alfred Teo when their film business was running on fumes, desperately needing Sigma's access to capital and raw materials," he added. "Alfred Teo saved them from bankruptcy and their thanks was a lawsuit built on hysterical fiction and prejudice."

Sigma officials in the statement also described the trial as "a superspreader event" that led to members of the defense team and court personnel being ill during the trial and later being diagnosed with COVID-19. They added that Sigma had a limited time to present their case because of the amount of time taken by the Huffs' team.

Cheeley said that the jury arrived at the $40 million award by taking half of the value of Alliance at the time the Huffs sold their half to Teo, based on the firm's EBITDA, and subtracting debt owed by the Huffs.

He added that if the judge reverses the $40 million jury verdict, the Huffs plan to appeal. Cheeley also said he plans to file a request with the court to seek punitive damages of $100 million.

"Al Teo treated the Huffs like red-headed stepchildren at a family reunion," Cheeley said. "He had total control and he used it to put his interests above those of the Huffs."

Sigma said in its statement to PN that the value of Alliance was $5 million at the time of their investment. The company added that the higher assessment claimed by the Huffs ignored negative net worth and other factors and was based on an assumption of 24/7 production from three extrusion lines at "fictional prices and margins." The lines had never achieved that volume or those margins, according to Sigma.

The case is the latest legal issue for Teo, who built Sigma into a massive business, partly through a series of acquisitions. He spent 11 months in jail in 2006-07 for securities fraud for insider trading in two companies.

Then in 2020, Teo was charged with three counts of tax evasion and six counts of making false personal and corporate tax returns from 2016-18. Investigators said that Teo avoided paying $61 million in taxes during that time. Those charges also could lead to a prison sentence. That case remains open.

In the 2018 lawsuit, the Huffs made several claims against Teo and other Sigma officials, including ISO Poly Films President David McKinney. One of those claims was that Teo intentionally withheld business from Alliance's Indiana plant, including orders from customers Belmark Inc. and Kendall Packaging Corp.

The Huffs also made several other claims, including:

• McKinney declined to allow Alliance to reduce its prices to gain business from customer TC Capri, a unit of TC Transcontinental.

• Sigma supplied resin to Alliance at a higher price than was necessary, which reduced the plant's profit margins.

• Teo made a payment of more than $900,000 on a new extrusion line without Huff's agreement, affecting Alliance's financial viability.

When Sigma acquired its stake in Alliance in 2016, Teo told PN that his firm "had been looking at Ohio or Indiana for a new plant for three years until this fell into our lap." The Alliance deal was Sigma's 11th in a seven-year period. No purchase price was disclosed.

In the lawsuit, the Huffs said they were seeking a partner or buyer in 2016 because of operating problems with a new extrusion line at the plant. They added that they turned down an offer from Indevco Plastics Inc. in favor of the deal with Teo.

Sigma operates 43 manufacturing sites making film, can liners and bags. The firm employs 5,000 and is North America's largest privately owned film extrusion group. In North America, Sigma ranks as the region's fourth-largest film and sheet extruder with annual sales of $2.5 billion, according to the most recent PN industry ranking.

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