The American arm of a Chinese swimming pool equipment maker told a North Carolina federal judge it faces insolvency if forced to fork over a $16 million judgment bid for false advertising and unfair business practices, requesting a stay without bond while it appeals the verdict.

Blueworks Corp. argued in a motion Friday to stay the judgment that the damages are already too much for it to even post bond pending appeal, and it otherwise can't afford to pay the $16 million in full. According to Blueworks, that means "there is no question" it faces irreparable harm if the court doesn't allow a stay or permit it to post a smaller bond.

Pool Co. $16M Judgment Bid:  "Jackpot Justice" and Financial Strain

"Allowing execution on a 'jackpot justice' award of $16,000,000.00 will force defendants out of business (which of course is what Hayward desires)," Blueworks said. "Thus, defendants would be unable to appeal this decision due to the severe financial burden placed upon them."

Blueworks was hit in March with a $4.9 million verdict after a federal jury in Charlotte found it made false or misleading statements and otherwise violated the North Carolina Unfair and Deceptive Trade Practices Act in its online product listings for replacement parts.

U.S. District Judge Max O. Cogburn Jr. then automatically tripled that award under the state UDTPA to $14.7 million last week. He also tacked on $1.3 million in prejudgment interest, bringing the total judgment to $16 million.

Pool Co. $16M Judgment Bid : Case Background

The case was brought by North Carolina-based Hayward Industries Inc., which also makes and sells its own lines of swimming pool products and replacement parts.

At trial, Hayward told the jury that Blueworks blurred the line between the companies' products when it came to replacement salt cells for a saltwater pool chlorination system. Hayward said Blueworks was intentionally confusing customers by making it look as if Hayward recommends Blueworks' products as suitable substitutes, in part by using its trademarks on Amazon product listings.

While the jury found Blueworks and Ningbo liable for false advertising and violations of the state UDTPA, they were ultimately cleared of wrongdoing on Hayward's claims for trademark infringement.

Asset Freeze and Continued Legal Battles

In the intervening months, Hayward moved for an asset freeze to ensure the judgment was paid, expressing concerns that Blueworks would use its ties to China to hide assets and avoid payment. Judge Cogburn granted the freeze on April 11 and has extended the TRO several times since then, court filings show.

In addition to entering the $16 million judgment last week, Judge Cogburn also lifted a 30-day stay that had temporarily prevented Hayward from enforcing the judgment, citing a "significant risk that defendants' assets will dissipate" if Hayward is forced to wait to collect.

Blueworks' Defense and Appeal

Blueworks countered in Friday's motion that it has a strong likelihood of success on appeal, a factor that weighs in favor of pausing enforcement of the judgment. It also said Hayward won't be harmed by having to wait, noting it's a "multi-billion dollar company" that is otherwise "not in financial distress."

Additionally, Blueworks said its customers — which include North Carolina residents — have warranty and service claims that would be disrupted if Hayward is allowed to collect its judgment before the appeal concludes.

Hayward has not yet responded to the motion but separately filed a brief over the weekend seeking to modify the parties' protective order. It's specifically asking for permission to use documents and other protected information it obtained from Blueworks in the case — such as bank account statements — to enforce the judgment.

Counsel for Hayward does not comment on pending litigation, and counsel for Blueworks did not immediately respond to a request for comment Monday.

Hayward is represented by Erik Paul Belt, James H. Donoian, Anne E. Shannon and Alexander L. Ried of McCarter & English LLP and Russ Ferguson and Patrick G. Spaugh of Womble Bond Dickinson.

Blueworks is represented by Christina Davidson Trimmer and S. Alexander Long Jr. of Shumaker Loop & Kendrick LLP and Michelle C. Dunn of Platinum Intellectual Property LLP.