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Cronimet files suit vs. Keywell Metals

Keywords: Tags  scrap processor, lawsuit, noncompete agreement, Edward J. Newman, John D. Joyce, Keywell, Keywell Metals, Prophet Equity Cronimet

NEW YORK — Cronimet Corp. and two former employees of bankrupt specialty steel scrap processor Keywell LLC are suing Keywell Metals LLC—the new company formed in the wake of the company’s bankruptcy—to halt enforcement of noncompete agreements that prevent the two men from working for Cronimet.

Edward J. Newman and John D. Joyce are being prohibited by Keywell Metals from working for Cronimet through noncompete agreements that they signed in 1997, according to the lawsuit filed May 14 in U.S. District Court in Illinois.

While Keywell Metals allegedly "threatened to seek legal action ... if Cronimet did not rescind the offers of employment," the plaintiffs "dispute whether (Keywell Metals) acquired the old Keywell noncompetes" as part of the asset purchase agreement that saw the company obtain the now-bankrupt Keywell’s former assets (, Dec. 12).

Newman worked for Keywell from 1979 through December 2013, serving as the company’s executive vice president of titanium and HTA commercial at the time of his departure, according to the lawsuit. Joyce worked at the company from 1995 through December 2013 and was vice president of purchasing at the time he left Keywell.

The two men signed noncompete agreements with the company in 1997 that prohibited them from working for rival processors such as Aliquippa, Pa.-based Cronimet, McKeesport, Pa.-based ELG Metals Inc., Fort Wayne, Ind.-based OmniSource Corp. and other companies for 24 months after the termination of their employment, according to court documents.

The two men left the company in the wake of bankruptcy proceedings that saw Texas investment firm Prophet Equity LP acquire Keywell’s assets, which now operate under the name Keywell Metals (, Dec. 16).

Newman and Joyce jointly informed Keywell Metals on May 5 "that they had been offered employment with Cronimet and that they intended to accept such offers," the lawsuit said. Keywell Metals responded May 9 "that it objected to their acceptance of employment with Cronimet" and "expected Newman and Joyce to abide" by the noncompete agreements they held with the bankrupt Keywell.

Cronimet joined Newman and Joyce in filing the lawsuit, which claims that Keywell Metals "does not have standing to enforce the old Keywell noncompetes ... so as to preclude Newman and Joyce from working for Cronimet" and asks that Cronimet "may employ Newman and Joyce ... without regard" to the agreements.

Before filing for Chapter 11 bankruptcy protection in September, Keywell said that it had agreed to sell a "substantial portion" of its assets to Cronimet (, Sept. 23). That deal was foiled in December, however, when Prophet Equity trumped Cronimet’s bid in bankruptcy court proceedings (, Dec. 11).

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