Virgin Enterprises, Britain, has launched legal proceedings against U.S. private passenger rail operator Brightline to recoup $ 251.3 million it says it is owed after Brightline pulled out of a 20-year deal to use the Virgin brand.
Brightline rebranded as Virgin Trains USA as part of a 20-year licensing agreement signed in November 2018, which also saw the operator rename its main station as Virgin MiamiCentral. The partnership was short-lived, with Brightline serving notice of its intention to withdraw from the agreement in April 2020, shortly after it halted its Miami and West Palm Beach service in March due to COVID-19 pandemic.
The lawsuit says Brightline told Virgin it would be terminating the agreement as the “Virgin brand had ceased to constitute a brand of international high repute, largely because of matters related to the pandemic.”
Virgin has accused Brightline of using the pandemic as an out, calling the claims about the brand’s reputation “cynical and spurious” and “completely false.” The suit claims that Brightline’s continuing use of Virgin imagery on Twitter around the time that it wanted to withdraw from the agreement proved that Brightline’s reputation wasn’t harmed by the use of the Virgin branding.
According to its claim, Virgin told Brightline that its attempts to cut ties in this way would amount to a “material breach and repudiation” of their agreement. Virgin then served its own notice of termination in August, reports Law 360, which broke the story.
The amount being sought by Virgin includes what it would have collected if the agreement had continued through to 2023, the earliest the deal could have been cancelled with a termination fee, which is included in the damages Virgin is seeking.
As part of the legal case, Virgin has asked a British court to determine whether the pandemic undermined its standing as “a brand of international high repute.”
News of the legal battle, which was filed on February 10 but only made public on March 4, broke on the same day as Brightline announced that Mike Reininger would take up the role of CEO of Brightline Holdings.