The Herald, Sharon, Pa.

Business

April 10, 2012

PM Kalco Inc. sues ex-owners, employees of metals maker

WHEATLAND — A Wheatland metals company has sued its former owners and several ex-employees alleging they have illegally started a competing business.

The former owners have denied the allegations while the ex-employees have asked that the suit be dismissed for lack of specificity.

PM Kalco Inc. and PM Kalco Real Estate, both of 40 Council Ave., Wheatland, on March 15 sued Leonard F. and Karen L. Darby of Delaware Township, former owners of Kalco Metals Inc.; Kalco Metals; the daughters of the Darbys, Laura Darby, of Girard, Ohio; Tammy Swartz of Clark; and Diane Davis of Hermitage; Diane Davis’ husband, Kevin Davis; former plant manager Brian Davis of Sharpsville; and the new company, Davis Alloys Manufacturing LLC, 144 Hickory St., Sharon.

PM Kalco and PM Kalco Real Estate said they entered into an asset purchase agreement with Leonard and Karen Darby on Oct. 8, 2010, to buy all or substantially all of Kalco Metal’s assets, including the building at 40 Council, the Kalco Metals name, good will and intellectual property, for $4,072,585.

Kalco Metals made specialty metals and alloys.

The Darbys’ children, Kevin Davis and Brian Davis were retained after the sale, but were eventually fired for insubordinate and intolerable conduct, the suit says.

Brian Davis told the president of PM Kalco and PM Kalco Real Estate that he intended to compete with him, the suit says.

The former employees have since gotten control of 144 Hickory and acquired “the very same type of equipment” as that used by PM Kalco and PM Kalco Real Estate, the suit says.

While the former employees “did not have sufficient knowledge or experience to operate a specialty metal and alloy manufacturing plant,” Leonard and Karen Darby provided them with confidential proprietary information, trade secrets, financing and consulting to engage in a competing business, the suit says.

PM Kalco and PM Kalco Real Estate are alleging breach of contract against Leonard and Karen Darby and Kalco Metals, and misappropriation of trade secrets and unfair competition against all of the defendants.

In their answer to the suit, Leonard and Karen Darby deny that they are violating terms of the asset purchase agreement, or are conspiring with anybody to compete against PM Kalco or PM Kalco Real Estate.

Mr. and Mrs. Darby said the suit was commenced to harass the defendants, and that PM Kalco and PM Kalco Real Estate violated the asset purchase agreement by disclosing the sale price.

The former employees said there is a difference between trade secrets and employee know-how. They said they were not subject to any restrictions on their know-how, and the suit does not specify what trade secrets they allegedly harbor.

The making of alloys is common in the metals industry, and the plaintiffs did not spell out what method of making alloys it possesses that is not readily used in the industry, or any other trade secrets allegedly held by the former employees, the former employees said.

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