Two years after buying Bryan Custom Plastics, Plastech Engineered Products Inc. is embroiled in a string of acrimonious lawsuits with ex-Bryan officials.
In one case, a federal jury already has ordered Plastech to pay $4.4 million. The company is appealing that judgment, and in the meantime has lawsuits pending against the former officials and their new company.
The suits threaten the golden parachute severance packages that two executives received when they left Bryan, according to a source close to Plastech.
One of the executives, Timothy Kline, declined comment on the lawsuits.
``We do business by being a low-cost, good-quality company, not by bashing the competition,'' Kline said in a telephone interview.
The problems date back to May 1997, when Dearborn, Mich.-based Plastech purchased Bryan and its parent company, United Screw & Bolt Corp. of Bryan, Ohio, for $128 million in cash. Bryan, which was Plastics News Processor of the Year in 1996, had recorded $129 million in 1996 sales.
The deal was considered a blockbuster for Plastech, a minority-owned injection molder headed by Vietnamese immigrant Julie Brown. Plastech's sales nearly doubled to about $300 million after the purchase.
Kline formerly was vice president and general manager at Bryan. He and sales and marketing director Gene Schubert left Plastech in late 1997 and joined a newly formed injection molder, Clarion Technologies Inc. of Schaumburg, Ill.
In early 1998, Clarion acquired Triangle Plastics Inc., a molding operation in Montpelier, Ohio. Kline and Schubert help run that operation, now called Clarion Plastics Technologies. Like Plastech, the company molds plastic parts for heavy trucks and consumer appliances.
According to one source close to Plastech, officials there were outraged and felt that the former employees were competing for similar customers and using confidential Plastech information.
``They were livid,'' said the source.
The lawsuits that followed involve Plastech, Clarion and the ex-Bryan officials. At least two suits could damage severely the future financial health of both Plastech and Clarion.
One suit already has pierced Plastech's armor. In April, a jury in a civil trial in U.S. District Court in Detroit awarded a manufacturer's representative firm $4.4 million from Plastech. The jury found that Plastech breached a contract that Howting-Robinson Associates had with Bryan through 2002.
Royal Oak, Mich.-based Howting-Robinson did 90 percent of its business with Bryan. After Plastech bought Bryan, Howting-Robinson suddenly found itself without work, said Norman Lippitt, a Birmingham, Mich.-based lawyer for Howting-Robinson.
Plastech has filed a countersuit against Kline and others in U.S. District Court in Toledo, Ohio. That suit calls the Howting-Robinson contract fraudulent, claiming that ex-Bryan officials conspired to create a phony, nonbinding commission agreement, Lippitt said.
Lauren Rousseau, an in-house lawyer for Plastech, said the company plans to appeal the Detroit jury verdict.
``[The award] was premature, based on the facts presented,'' Rousseau said July 1. ``We were never allowed to present our case on liability.''
Plastech lawyers have asked that the Ohio case be moved to Michigan, where it can be married to the other lawsuit.
Meanwhile, with pre- and post-judgment interest piling up at a rate of 12 percent per annum, the jury award has ballooned to more than $5 million, Lippitt said.
Another case filed by Plastech is aimed directly at Clarion. Plastech claims, in documents filed in Common Pleas Court in Bryan, that Clarion officials stole trade secrets and used them to gain a competitive edge with Plastech customers.
``We will prove that Clarion misappropriated various trade secrets and other matters of confidentiality,'' said Rodger Young, a Southfield, Mich.-based lawyer for Plastech.
The court file claims that at least 10 former Bryan employees joined Clarion from Plastech. Although the suit does not name Kline and Schubert by name, it alleges that former Bryan executives recruited the employees to gain knowledge of trade secrets and Plastech customers.
In addition, the suit says that Plastech's exclusive sales representative, Ralph Rose, also joined Clarion. Rose had signed a nondisclosure agreement with Plastech, the suit says. Other top Bryan officials had refused to sign the agreement.
Rose's firm, Rose Industries Inc. of Versailles, Ky., is a party to the suit with Clarion. Rose did not return a call seeking comment.
Rose was given access to confidential Plastech information that would have been extremely costly for Clarion to duplicate on its own, the suit alleges. The suit says Rose and Clarion misused those trade secrets, most involving design, engineering and product-development issues.
The secrets cost Plastech a $20 million contract with Trane Corp. of La Crosse, Wis., the suit alleges. The contract, to mold air-conditioning parts for Trane's Pinnacle Project, was given to Clarion, the suit said.
Trane previously had assured Plastech that it would win the contract, the suit claimed.
In another contract with heavy-truck maker Freightliner Corp. of Portland, Ore., the suit says, Plastech kept the business but was forced to make price adjustments to preserve its relationship. Freightliner informed Plastech that Rose ``sought to solicit business away from Plastech,'' the suit alleges.Plastech is asking that Clarion be prohibited from either soliciting or working on projects with Plastech's customers and from recruiting current Plastech employees.
Plastech also is asking for compensatory monetary damages of at least $25,000 for each of five counts in the lawsuit.
In the past year, the two sides have attempted to negotiate a settlement, said a source familiar with the discussions. But negotiations broke down in late June, and Plastech decided to take the case to a jury, the source said.
Plastech is much larger than Clarion. The Dearborn firm recorded an estimated $235 million in injection molding sales last year, placing 19th on Plastics News' rankings of injection molders.
Including a deal announced last week, Clarion has five plants in Michigan and Ohio with 400,000 square feet of manufacturing space. Clarion also operates a technology center in Jenison, Mich.
In the most recent deal, Clarion agreed to buy Wamar Products Inc. and Wamar Tool & Machine Inc., both of Caledonia, Mich. Clarion plans to pay for them with an undisclosed amount of cash and Clarion stock when the deal closes in August.
Wamar and the toolmaking affiliate have annual sales of about $19 million.