PITTSBURGH 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.
Husqvarna Consumer 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 Carolina.
Carolinas Recycling 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.
Husqvarna, which 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.
Charlotte, N.C.-based 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.
Fort Wayne-based 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."