Severstal Columbus, a steel plant in the Lowndes County industrial park, is in the middle of litigation with its former metal brokerage company.
Severstal, then known as SeverCorr, entered an agreement with Jefferson Iron and Metal Brokerage Inc. in 2006 for the company to “locate and secure” “no less than 30,000 gross tons of scrap metal per month” for Severstal, according to court documents. Severstal, in turn, would pay Jefferson”s procurement costs, as well as $2 per gross ton of scrap metal.
In April, Severstal officials met with Jefferson officials to inform them their services were no longer needed, as of April 1, since Severstal had developed its own system to work directly with vendors.
“Severstal ultimately paid Jefferson”s April invoice in full, but no longer wishes to pay for services not needed and not required under the contract,” the Severstal complaint reads.
Still, Jefferson “contends that it is due (more than) $12 million in damages” if Severstal deals directly with vendors and doesn”t pay Jefferson the $2-per-gross-ton fee.
Severstal filed suit in Lowndes County Circuit Court on June 2, asking the court to clarify that Severstal does not owe Jefferson and does not have to use the company as its exclusive supplier.
On June 13, Jefferson filed a counterclaim, saying their contract with Severstal is valid through September 2012. Additionally, in an email, “Severstal admits that it used Jefferson Iron”s confidential and proprietary business information to establish direct relationships with Jefferson Iron”s network of scrap vendors” and “would no longer pay to Jefferson the contracted brokerage fee for scrap delivered to the mill,” the countersuit reads.
The company alleges Severstal “acted in bad faith” in seeking Jefferson Iron”s confidential business information. Rather than making sure they were getting the best prices, as Severstal officials said, Severstal was trying to establish its own network with Jefferson”s scrap vendors, the suit claims.
Jefferson wants the court to declare Severstal in breach of contract and also alleges company leaders fraudulently obtained confidential information.
The company also asks for an injunction, keeping Severstal from “directly contacting scrap vendors of which Severstal acquired knowledge though its misappropriation of Jefferson Iron”s confidential and proprietary business information” and “an award of damages in an amount which will fully and fairly compensate Jefferson Iron for actual damages … pre-judgment interest, post-judgment interest, attorney”s fees and costs, and punitive damages.”
Severstal has until Aug. 29 to respond to the counterclaim.
Severstal is represented by Adam Stone of Watkins, Ludlam, Winter and Stennis in Jackson.
Jefferson, a Birmingham, Ala.-based company, is represented by Jackson attorney Clarence Webster III of Bradley, Arant, Bolt, Cummings, also in Jackson.