NEW YORK A Texas federal court jury has awarded MM Steel LP $52 million in its lawsuit against a group of large steel mills and service centers for allegedly conspiring to drive the Texas steel distributor out of business.
After weeks of litigation, a jury in the U.S. District Court in Texas found that distributors Reliance Steel & Aluminum Co. and subsidiary Chapel Steel Corp., American Alloy Steel Inc. and its president, Arthur J. Moore, as well as steelmakers JSW Steel (USA) Inc. and Nucor Corp., violated federal and state antitrust laws by conspiring to boycott MM Steel.
An attorney representing Houston-based MM Steel praised the verdict, which allows MM Steel "to compete on an even playing field."
"We are gratified by the verdict. It is the decision of a careful, conservative jury that listened to weeks of powerful evidence of a conspiracy among the defendants to destroy MM Steel and stifle competition," Paul Yetter, an attorney at Houston-based Yetter Coleman LLP, said in a statement.
In the original 28-page complaint filed in April 2012, MM Steel said that it started doing business on Sept. 1, 2011, but stopped operations on Sept. 15, when Chapel Steel obtained a temporary restraining order against MM Steel owners Mike Hume and Matt Schultz, who previously worked at Houston-based American Alloy and Los Angeles-based Reliance Steel, as well as Reliance subsidiary Chapel Steel, for violating earlier non-compete covenants (amm.com, April 23, 2012).
Both Hume and Schultz left the companies to start MM Steel in Sept. 2011.
However, MM Steel claimed that shortly after the expiration of the injunction, which prohibited MM and its employees from soliciting customers until March 15, 2012, the alleged parties tried to drive the service center out of business.
Some defendants disagreed with the verdict.
"We are deeply disappointed with the outcome of this trial and we continue to believe that Reliance and Chapel acted appropriately and within their legal rights," Reliance chairman and chief executive officer David Hannah said in a statement.
The service center added that it intends to "pursue all available remedies, including taking the matter up on appeal."
In an e-mailed statement, legal counsel for Charlotte, N.C.-based Nucor said the company did not violate the law.
"We are disappointed with the verdict. Nucor denies violating any antitrust laws," Robert J. Katerberg, a partner with Arnold & Porter LLP, Washington, said in the statement. "We believe Nucor acted entirely within its legal rights. We will fight these allegations through the appeal process and we expect that Nucor will be vindicated."
Steve Lazur, director of human resources for Baytown, Texas-based JSW Steel, told AMM that "JSW Steel (USA) Inc. respectfully disagrees with the verdict and is currently exploring all appropriate options."
American Alloy Steel did not respond to requests for comment.
Editor's note: This story was updated March 27, 2014. Due to a reporting error, the story initially included SSAB Enterprises LLC, doing business as SSAB Americas, in the list of defendants that a Texas court jury ruled against concerning alleged violation of federal and state antitrust laws. Both entities were dismissed with prejudice in early February, according to documents filed with the court.