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Virgin Group wins $115 million in Brightline contract dispute

Virgin Group wins $115 million in Brightline contract dispute © Reuters.

In a recent legal battle, Virgin Group, led by Richard Branson, has secured a significant victory against Brightline. The conflict stemmed from Brightline’s decision to terminate a long-term licensing agreement amid the Covid-19 pandemic. The London High Court awarded Virgin $115 million in damages on Friday.

The lawsuit was initiated by Virgin Enterprises after Brightline dissolved their agreement, citing negative publicity surrounding the Virgin brand. This followed Branson’s revelation in 2020 that Virgin Atlantic required a UK government bailout due to the pandemic’s impact. However, Judge Mark Pelling found that Brightline failed to substantiate its defense, leading to the award in favor of Virgin.

The original contract, signed in 2018, had led to Brightline rebranding as Virgin Trains USA. However, they announced an intent to withdraw in April 2020 due to the suspension of their Miami and West Palm Beach service caused by the pandemic.

Brightline argued that Branson’s bailout request and allegations of tax evasion had damaged Virgin’s reputation. They presented internal Virgin emails and comments from an external public relations adviser as evidence. Despite this, Virgin Group CEO Josh Bayliss acknowledged Branson’s minimal tax payments while asserting a swift reputation recovery.

A spokesperson for Virgin Group emphasized the resilience of their brand and commitment to exceptional customer experience throughout the Covid-19 challenges. Besides the damages awarded, Virgin Group was also seeking an exit fee up to $200 million and unpaid royalties.

Despite the unfavorable ruling, Brightline announced plans to appeal. Alongside this, they face a future hearing for an additional $90 million as part of a lawsuit valued at $250 million.

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