Judge Joseph Kalin has dismissed PMC Inc.'s claims against the venture capital investor-directors of Paul Winkler Plastics Corp.
The Jan. 26 decision in Los Angeles Superior Court eliminated causes of action against Neil Kadisha, Benjamin Nazarian, Parviz Nazarian and their investment vehicle, Pioneer Private Equity Fund LLC.
The decision provided relief for the investment community, Kadisha said.
"Holding a private equity investor responsible for prior, alleged wrongdoings of a company to which that investor later provides growth capital would have a chilling effect on the entire venture capital industry," Kadisha said in a written statement.
"That would dramatically and adversely impact start-up and early-stage companies in many sectors of the American economy," Kadisha said. "Nobody would be in venture capital. Everyone could be sued."
In mid-1998, Paul Winkler and others left PMC Inc.'s majority-owned Winkler Forming unit in Santa Fe Springs, Calif., and started Paul Winkler Plastics in Buena Park, Calif. PMC sued the company organizers in June 1998. Both processors extrude and thermoform amorphous PET sheet.
Through newly formed PPEF, the investors provided Paul Winkler Plastics with $1.25 million in November 1998 and $1.6 million in June 1999.
PMC added the investor-directors to the litigation in March 1999. A judge dismissed them from the case in August 1999, but a California Court of Appeals reversed that dismissal in March 2000.
The venture capital investors and PPEF had faced a trial starting in late February, but Kalin's dismissal decision halted that possibility.
The investors also hold positions with machinery manufacturer Stadco Inc. of Los Angeles and related businesses including HPM Corp. of Mount Gilead, Ohio, an injection molding and extrusion equipment maker. Parvis Nazarian is the father of Benjamin Nazarian and father-in-law of Kadisha.
Meanwhile, PMC is appealing a Dec. 27 jury verdict that found fault against Paul Winkler, his sons Christopher and Colin Winkler and James Longstreth, but did not award any monetary damages to PMC or Winkler Forming.
PMC has objected to Kalin's instructions to the second jury. PMC indicated its appeal would seek damages of $20 million because of what it says was a lost opportunity to sell Winkler Forming.
PMC of Sun Valley, Calif., owns more than 100 businesses, including most of Winkler Forming. Philip E. Kamins is PMC's chairman and chief executive officer.