Court dismisses battle between Husky and Athena; Schad seeks a successor

Toronto — Now that he has endured a fierce legal battle with his former company, Robert Schad is turning his attention to succession.

Schad and the company he established several years ago, Athena Automation Ltd., can breathe a little easier after a court on April 22 dismissed legal actions against them by Husky Injection Molding Systems Ltd. Husky had alleged that Schad and Athena misused confidential information in their designs for Athena's injection molding presses. Athena employees had access to new Husky technology at injection molder Niigon Technologies Ltd. in northern Ontario, but the judge found Athena did not make material use of the knowledge.

“We are thrilled that Husky's claims have been defeated,” Schad said in an email to Plastics News. “That is what is most important.”

Husky appeals

For its part, Husky is appealing the ruling, which came in a 127-page opinion from Justice Frank Newbould on the Ontario Superior Court of Justice, Commercial List in Toronto.

“The legal proceedings that had been initiated against Robert Schad, Athena and others were a last resort to an extremely challenging situation,” Husky CEO John Galt said in an email to Plastics News.

“This decision was initiated only after an extended period of discussion and mediation, lasting well over a year, in which the parties were unable to resolve the dispute in a mutually agreeable way. While we are disappointed with the judge's interpretation of the history of events, our concerns in initiating the lawsuit were justified by the court's findings relating to the misuse of Husky's confidential information.”

Schad requested email correspondence rather than a phone interview because his hearing is not good. At trial, questions for Schad were posted on a video monitor for him to read before answering.

Now Schad, who is 87, is looking to pass the reins of Athena to a different executive, and his timeline is strict.

“We are looking to bring on a CEO within two years, either by promoting from within or hiring an external candidate,” Schad said.

Athena is growing into its new manufacturing plant in Woodbridge, Ontario, a 150,000-square-foot facility next to its original building. Completion of the new $45 million operation should occur about the end of June and machinery production will pick up pace now that the legal distractions have mainly dissipated.

“With the lawsuit out of the way, we are looking forward to hiring more people and ramping up shipments,” Schad said. “It will be the end of the year before we have achieved a proper production flow through the new facility.”

New products under development include a 450-ton injection press to extend the firm's machine tonnage options. Cube and rotary-table technologies are being developed for multi-material molding. As well, Athena will debut this year a closure-molding package to complement its PET container molding machine offerings. Schad said Athena decided early on to focus on injection molding machines to make them completely modular. A customer chooses the mold maker who can present its technological options for the customer's application.

Fighting Husky was expensive in terms of money and time but what bothered Schad most were implications that he stole information from Husky, a company he founded in 1953 and sold to private equity investors in 2007.

“The most difficult part for me was the stress the lawsuit came with and the questioning of my integrity,” Schad said.

Countersuit also dismissed

Galt noted that the court also dismissed a countersuit in which Schad and the other defendants alleged Husky was disseminating false and misleading statements about Schad and Athena to the plastics industry and beyond.

“We are pleased that the court dismissed the counterclaim against Husky. Customers choose to work with Husky because they believe in our commitment to providing novel technologies that will enable them to be more competitive, and it is our responsibility to protect the integrity of this relationship,” Galt said.

“Our intention in bringing these claims to court was to protect Husky's confidential and proprietary information and to ensure that any rewards and customer value that result from our inventions stay within the Husky team.”

Schad is a member of the Plastics Hall of Fame with a reputation for philanthropy, particularly for environmental causes. The court noted Schad's standing in the industry. The judge's ruling stated: “Mr. Schad has had a lifelong reputation for hard work and uncompromising integrity and honesty.”

Although the court found Schad and Athena not liable for Husky's claim for damages, the judge commented that if the ruling went the other way, Husky would be entitled only to nominal damages of a dollar. Husky had requested damages of more than C$24.3 million (US$18.7 million).

Athena claimed Husky's suit cost it C$5 million (US$3.85 million) in lost profit from 2013 to 2015. It had sought damages of up to $50 million, which the court dismissed.

Husky launched an appeal of the ruling on May 20.

“We are confident that the appeal will not succeed,” Schad said. He plans to issue a statement on the April ruling the week of May 30.

Plans at Husky

While Schad said Athena will move ahead now that the lawsuits have been dismissed, Husky's Galt also talked about future plans.

“We are particularly excited about our multi-layer barrier technology, which offers tremendous opportunity to explore PET as a packaging material for products needing enhanced barrier properties traditionally packaged in materials, such as glass, carton and aluminum,” Galt said.

“Plastics packaging growth has been primarily driven by conversion and increasing consumption. Barrier solutions offer the industry an opportunity to open up new markets that can spawn a next generation of conversions and demand growth.”

He added that Husky is working on several initiatives in melt delivery technology.

“We are also very excited by advancements in melt delivery technology and what this can do to improve quality, productivity and design freedom in a range of applications that are off limits to current technologies. Systems and mold technologies of the future will need to revolutionize the way a product is produced,” Galt said.