Technology manufacturer 3M has filed a lawsuit against TAC2 Global LLC, a Clearwater company that offered to sell N95 masks made by 3M to the Florida Division of Emergency Management.
The lawsuit is one of five complaints 3M (NYSE: MMM) filed this week against vendors in in Florida, Wisconsin and Indiana. Those vendors targeted government officials with fraudulent offers to sell N95 respirators at inflated prices while falsely affiliating themselves with 3M, the company said in a news release.
Derek McAfee, president of TAC2 Global, told the St. Pete Catalyst Friday morning that he was unaware of the lawsuit, which was filed April 30 in U.S. District Court in the Middle District of Florida in Tampa.
“To the best of our knowledge, everything we did was above board,” McAfee said, adding he did not try to misrepresent anything in correspondence with state officials.
NOTE: After publication, TAC2 Global sent the Catalyst a statement, categorically denying the allegations by 3M. See the complete statement below.
The 3M lawsuits come amid rising concerns about fraud, as healthcare providers and others try to secure personal protective equipment needed to care for Covid-19 patients. The U.S. Department of Justice recently issued a warning about scams as part of a coronavirus response.
3M, a Minneapolis-based manufacturer, makes N95 respirators, which are among the personal protective equipment most in demand by medical professionals working with Covid-19 patients.
In its lawsuit against TAC2 Global, 3M said the company wrongly used 3M trademarks to perpetrate a price gouging scheme. TAC2 Global falsely claimed to have a relationship with “the 3M manufacturer,” said it “very recently contracted to become a distributor” of 3M respirators, and said that the masks that it procured would “be inspected and certified by 3M agents,” according to the lawsuit.
“Defendant is not an authorized distributor of any of 3M’s products and ‘3M agents’ do not work with or for Defendant, and Defendant has no contract with 3M,” the lawsuit said.
As part of the complaint 3M filed with the court, there is a copy of an April 14 email and letter signed by McAfee to Florida emergency management officials, offering to supply and deliver 3M NIOSH 1860 N95 masks and hand sanitizer. The quote said the company could supply 5 million to 10 million masks for $5.50 each. 3M sells the masks for $1.27 each, according to a fraud alert included as an exhibit with the lawsuit.
TAC2 Global also said it could supply hand sanitizer, ranging from two-ounce bottles for $2.80 each to 16.8-ounce bottles for $7.84 each.
McAfee told the Catalyst that TAC2 Global has been working with a partner company, Medical Titan Group in Texas, to try to procure 3M masks, but that was “still in the works,” he said.
“We have not acquired any 3M products and certainly had no attempt to misrepresent things,” McAfee said.
Here’s the complete statement TAC2 Global issued:
“We were made aware this morning that we are among several companies being sued by 3M, and we categorically deny the allegations being made by 3M in the Complaint against TAC2. TAC2 contracted to purchase 3M N95 masks supplied through a Global distributor.
“Our team has been very cognizant and cautious with our pricing and given the level of justified scrutiny in the current environment we have quoted the product to all customers at the same fixed price. Additionally, we have offered terms under escrow payment, ensuring that our customers have time to confirm authenticity of the product at no financial risk.
“TAC2 has been open and transparent about our pricing and contractual arrangement with all customers. We have quoted the product as we would under normal times with a gross margin of ~10%, leaving an estimated net margin of approximately 5-6% when accounting for the cost of financing, transport, and other direct costs. We have contracts and escrow documentation to fully substantial our cost and pricing.
“Given the extremely long lead times to get this product domestically, we sought an overseas supply for agencies interested that ensures quality while prioritizing time of delivery. It is the only supply of 3M branded product that we have been able to find that can be procured and delivered quickly and ethically.”
In its lawsuit, 3M cited Florida Division of Corporation records showing TAC2 Global was located in St. Petersburg, but in his email to Florida emergency management officials, McAfee said TAC2 Global is a veteran-owned small business based in Clearwater.
3M has filed a total of 10 lawsuits in April in its effort to combat fraud. 3M has deployed its internal litigation team, and in Florida the company is represented by a team from the law firm McDermott Will & Emery LLP.