MATTHEWS INTERNATIONAL CORP 10-Q

Item 1. Legal Proceedings The Company is subject to various legal proceedings and claims arising in the ordinary course of business. Management does not expect that the results of any of these ordinary course legal proceedings, as presently positioned, will have a material adverse effect on Matthews' financial condition, results of operations or cash flows. In addition to these ordinary course legal proceedings, the Company is involved in the following legal proceeding. On June 14, 2024, Tesla filed a complaint against the Company in the Northern District of California, Civil Action No. 5:24-cv-03615 (N.D. Cal.). The complaint alleges trade secret misappropriation under the Defend Trade Secrets Act (the “DTSA”) and California’s Uniform Trade Secrets Act (the “CUTSA”), breach of contract and unfair business practices. Tesla alleges that the Company improperly incorporated Tesla’s confidential trade secrets into patent filings relating to the Company’s dry battery electrode solutions and that the Company disclosed Tesla’s confidential trade secrets to other companies, including Tesla competitors. The complaint seeks: (i) a permanent injunction ceasing all sales, offers to sell, and/or demonstrations to others of machines embodying any of Tesla’s confidential and proprietary technology; (ii) transfer of ownership of all patent applications incorporating any of Tesla’s confidential and proprietary technology; (iii) damages, costs, expenses, and pre-judgment and post-judgment interest; (iv) disgorgement of any and all unjust enrichment; and (v) a finding that any misconduct has been knowing, willful, and malicious, and enhancing any damages award. Tesla served the complaint on June 24, 2024. On June 25, 2024, the Company filed a Motion to Compel Arbitration based on the provisions of the underlying contract governing the relationship between the Company and Tesla, which requires arbitration. The Company believes the claims stated in the complaint are without merit and intends to vigorously defend itself against the allegations. The Company currently does not expect this matter will have a material adverse effect on Matthews' financial condition, results of operations or cash flows. At present, sales relating to dry battery electrode solutions are not expected to exceed 7% of the Company's sales for fiscal 2024. For a discussion of the risks to the Company associated with this matter, see “Risk Factors - Intellectual property infringement assertions by third parties, including those of Tesla, could result in significant costs and adversely affect the Company's business, financial condition, operating results and reputation.”