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 continued.
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 contract.
"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 told AMM.
Chris Prentice, New York, contributed to this story.