In a bizarre turn of events, electric truck maker Nikola Motors is suing its scandal-ridden former CEO Trevor Milton, a reality TV personality, and a company it partially owns.
In the ever-evolving saga of Nikola Corporation, a new chapter unfolds as the electric and hydrogen fuel cell truck manufacturer navigates through a complex legal battle against EMBR, Dave Sparks (better known as Heavy D), Cole Cannon, and controversially, Nikola’s own founder, Trevor Milton. This dispute centers around the intellectual property of the once-hyped Badger pickup truck, revealing intricate layers of corporate strategy, alleged contractual breaches, and deep-seated personal vendettas.
The Rise and Fall of the Badger
Nikola’s ambition was encapsulated in the announcement of the Badger, a hydrogen-electric pickup truck, in 2020, capturing the imagination of investors and the public alike. However, the project’s momentum was short-lived, as founder Trevor Milton faced allegations of securities fraud, ultimately leading to his resignation and a subsequent conviction in 2022. The fallout from these events forced Nikola to abandon the Badger project, citing prohibitive costs.
The Controversial Deal with EMBR
In a strategic move, Nikola divested the Badger’s intellectual property to EMBR, a venture co-owned by television personality Dave Sparks and Cole Cannon. This agreement provided Nikola with a 30% stake in EMBR but also included a pivotal condition that expressly prohibited Trevor Milton’s involvement with the new owners or the project, a stipulation aimed at distancing the company from Milton’s legal controversies.
Unfolding Legal Drama
The partnership between Nikola and EMBR has since soured, with Nikola levelling serious accusations against EMBR and its co-owners. Central to Nikola’s allegations is the claim that EMBR breached the initial agreement by allowing Milton to participate in the project, despite explicit prohibitions. Additionally, Nikola contends that Dave Sparks, leveraging his relationship with Milton, sought to exert undue influence over Nikola’s operations through shareholder maneuvers involving M&M Residual. The lawsuit encompasses allegations of contract breaches, securities law violations, trademark infringement, and conspiracy.
Underlying Motivations and Nikola’s Path Forward
Nikola interprets these actions as part of a broader scheme by Milton to escape a $165 million judgment and potentially maneuver himself back into a position of influence within the company. This legal entanglement comes at a time when Nikola’s financial stability and future prospects are under scrutiny, despite the company’s milestone of commencing production of its Tre FCEV truck in September 2023.
Nikola Corporation Takes Legal Action to Protect Future and Safeguard Reputation
Nikola recently filed its response with the SEC and its shareholders
Nikola Corporation vehemently protects our company and reputation. In the summer of 2023, an agreement was executed between Nikola and EMBR, a company majority owned by Dave Sparks (aka “Heavy D”) and attorney Cole Cannon. Nikola agreed to sell the Badger and powersports related assets, which included certain intellectual property and some physical prototypes.
Subsequently, Mr. Sparks and Mr. Cannon, along with Trevor Milton, Nikola’s disgraced founder and a convicted felon, launched a comprehensive campaign to take over the company’s board of directors, using EMBR as a vehicle for garnering attention. This occurred after Mr. Sparks and Mr. Cannon agreed, as part of the EMBR arrangement, that Mr. Milton would not be involved in any way, directly or indirectly, with the Badger or powersports assets. The agreement specifically states that Mr. Milton was to have zero involvement with EMBR or the assets it had purchased as the company felt strongly that he had caused enough reputational, financial, and operational damage to Nikola. The agreement also prohibits EMBR from using Nikola’s name and trademarks, other than those that were made part of the deal.
It is clear via social media and SEC filings that these provisions of the agreement were not adhered to, and as a result legal action is being taken against EMBR, Mr. Cannon and Mr. Sparks, as well as Mr. Milton. The Nikola team will aggressively pursue its rights and continue our mission to decarbonize the trucking industry.
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