NEW YORK MM Steel LP has
filed a lawsuit against a number of large steel mills and
service centers alleging a group boycott that drove it out of
the distribution business.
In the 28-page complaint filed
in U.S. District Court in Texas, the Fulshear, Texas-based
distributor claims that the defendantsReliance Steel
& Aluminum Co., American Alloy Steel Inc. and president
Arthur J. Moore, JSW Steel USA Inc., Chapel Steel Corp., Nucor
Corp. and SSAB Enterprises LLC d/b/a SSAB
Americasviolated federal and state antitrust laws by
conspiring to boycott MM Steel.
"Essentially, the defendants
were tortiously interfering with MM Steel," said Mo Taherzadeh,
an attorney at Taherzadeh Law Firm and the lead counsel for the
case. "Theres a claim for business disparagement (and)
civil conspiracy under state law."
JSW and Nucor declined to
discuss the matter, while Chapel Steel, American Alloy, SSAB
and Reliance did not respond to requests for comment.
MM Steel owners Mike Hume and
Matt Schultz had previously worked at Houston-based American
Alloy and Los Angeles-based Reliance, as well as Reliance
subsidiary Chapel Steel, until the pair left to start MM Steel
in September 2011.
MM Steel started doing business
on Sept. 1 of that year but stopped operations on Sept. 15,
when Chapel obtained a temporary restraining order against Hume
and Schultz alleging that they had violated earlier non-compete
covenants, court documents show. The case was settled, however,
with an injunction prohibiting MM Steel and its employees from
soliciting Chapel customers until March 15, 2012, when the
injunction would be terminated.
MM Steel claims that shortly
after the parties agreed on the injunction, the alleged
campaign to drive the service center out of business
MM Steel also is suing Baytown,
Texas-based JSW Steel USA for alleged breach of contract due to
an incident in mid-October 2011, when it claims it tried to
purchase material from JSW under a one-year agreement dating
from August 2011 but JSW allegedly would no longer honor its
"As of the filing of this
complaint, MM Steel is effectively shut down because it cannot
buy steel from those mills with whom it had ongoing
relationships and which would allow it to compete in the
market," it claims in the court documents.
Taherzadeh said that the amount
of damages that MM Steel is suing for has not yet been
determined. Under federal rules, the defendants have a set time
to file answers or motions to dismiss. If the case proceeds,
the parties will have a scheduling conference to discuss the
next steps for a trial date and investigation time, sources
Chris Prentice, New York,
contributed to this story.