OmniSource Corp. is facing a lawsuit from an industrial scrap
metal generator that alleges it was underpaid or not paid at
all for some material over several years.
Outdoor Products NA Inc. filed the $8-million
breach-of-contract suit against the subsidiary of Fort Wayne,
Ind.-based Steel Dynamics Inc. in U.S. District Court in South
Group LLC (CRG) agreed in 2007 to buy scrap from two Husqvarna
facilities based on AMMs Chicago price for No. 1
busheling with no deductions, according to court documents.
CRG, owned 50 percent by OmniSource, merged with Atlantic Scrap
& Processing LLC later that year to form Recycle South LLC,
and in June 2008 OmniSource acquired all the equity interest in
Recycle South, Husqvarna said, and OmniSource subsequently
started to pay a price that was markedly lower than the
agreed-upon Chicago price.
generates scrap from lawn equipment manufacturing, said it was
unaware that it had not been fully paid since 2008 and rejected
OmniSources attempt to renegotiate the terms of the
contract in 2010.
Husqvarna said it learned of the loss when it analyzed its
books after local law enforcement arrested a former OmniSource
employee who was accused of helping to steal and sell scrap
valued at more than $886,455 (
amm.com, April 5, 2012). Husqvarana said it
believes it has been underpaid by more than $8 million.
OmniSource said it was compelled to deviate from its standard
practice of not commenting on pending litigation because the
company had done nothing wrong.
"Throughout its long
corporate history, OmniSource has always placed its integrity
at the top of the list and has prided itself in providing great
service, best pricing and total transparency in servicing its
customers. And we want to emphasize that OmniSource most
assuredly did so throughout its relationship with Husqvarna,"
the recycling company said. "We firmly believe that once the
facts have been developed, it will become quite evident that
Husqvarnas allegations are both false and absurd."