Open in full screen mode
Recall that on September 21, Tergeo, unable to secure new investments, placed itself at shelter from its creditors. A request which was extended by a month. (archives)
Marie Eve Lacas (View profile)Marie Eve Lacas
Another tile falls on Tergeo, formerly Alliance Magnésium, and casts a shadow over its already fragile future in its quest for new investors.
Radio-Canada has learned that the company, which has placed itself under the protection of the Bankruptcy and Insolvency Act, is facing justice in the United States for possible contempt of court. It allegedly failed in its obligations to preserve evidence relevant to a dispute in which it is accused of having benefited from the commercial secrets of an American competitor.
The plaintiff, AMACOR, is a company specializing in magnesium recycling which serves several major customers in alloy parts and ingots, including the multinationals GM, Chrysler and Ford. She filed her official complaint against one of her ex-employees and senior leaders of Alliance/Tergeo in August 2020.
In two decisions rendered in September, after four days of hearings, Federal District Court Judge Mark J. DinsmoreSouthern Indiana, recommends moving forward with the Court's Complaint for Destruction of Materials Under Order of Protection. He also suggests referring the case to Criminal Court for charges of contempt of court. The civil procedure suggests that the costs incurred by AMACOR in connection with its complaint be reimbursed by the respondents; but rejects other requests for compensation which are not within its jurisdiction.
An expert in American law, and lawyer member of the Quebec and New York bars, David Sébastien Gervais explains the decision of this magistrate: he is convinced that there is one of the parties who has failed in its obligation to preserve the evidence. There is evidence that apparently has been destroyed and that can lead to being held in contempt of court, which in itself is a pretty serious determination.
Open in full mode screen
Tergeo faces justice in the United States for possible contempt of court.
For AMACOR, there is no doubt that sharing information sensitive, which it cannot fully trace, allowed the Val-des-Sources company to break into the magnesium recycling market.
The founding shareholder and former President and Chief Technology Officer of Alliance Magnésium, Joël Fournier, the former Chairman of the Board of Directors and CEO, Michel Gagnon, as well as the former Vice-President of Sales and Marketing at AMACOR, Alain Déry, find themselves at the heart of this legal saga. Alliance/Tergeo, as an entity, is also being sued.
Open in full screen mode
Michel Gagnon and Joël Fournier, in 2020, during a virtual groundbreaking for Alliance Magnésium.
In the court documents of which Radio-Canada obtained a copy, which arise from the hearings last July, the possible plot of events is extensively detailed. What was the purpose of these four days of court? Me David Sébastien Gervais explains it: the magistrate has all the powers to hold a hearing, to force the parties to testify, to force the production of evidence, etc. This is indeed a serious step, it is simply a mechanism that allows the justice system to function more efficiently.
According to these documents, the two former senior managers of Alliance/Tergeo would have used the services of Alain Déry, as a consultant, while he was still working for AMACOR. After an initial warning and a commitment made in court to cease this collaboration, they still continued their discussions.
Upon learning of this, AMACOR quickly contacted the three men to demand that they secure all the equipment and content exchanged. The American court notes that several pieces of evidence appear to have been destroyed. Alain Déry allegedly made hard drives, USB keys, email exchanges containing sensitive information, and the cell phone used in the exchanges disappear.
In the same documents, we can read from the pen of Judge Dinsmore, that the statements of Alain Déry, who denies having worked in secret for Alliance Magnésium, are demonstrably false. In the evidence presented, the judge cites a chain of emails proving Déry's work to supply Alliance/Tergeo with magnesium.
D' other details of their exchanges are related. There would have been use of code names, such as Monsieur X. or Alain X., anonymous email addresses, in addition to an unlisted cell phone to facilitate communications.
After their commitment to stop interacting with Alain Déry, Michel Gagnon and Joël Fournier of Alliance/Tergeo allegedly used a Chinese intermediary to continue dealing with Déry. They then allegedly involved an acquaintance of Mr. Gagnon working in this company so that his salary was paid there, i.e. $18,000 per month.
We also cite the steps taken to identify the devices used by Déry to share information. Of the seven identified, he only handed over three. He cannot explain what happened to the two external drives and the two missing USB sticks. A Motorola phone was also lost and replaced by Déry, and never submitted despite the parties' disclosure obligation in the lawsuit. For Judge Dinsmore, the existence and content were deliberately abstracted.
One of the shareholders at Alliance/Tergeo, Claude Delage, testified in court during the hearing. He explained to the judge that in the wake of this story, Michel Gagnon was suspended from his duties before resigning, and that Joël Fournier was dismissed after an investigation. Decisions which would have been taken after receiving a letter from AMACOR accusing them of having violated their commitment.
AMACOR claims that all these maneuvers allowed Alliance/Tergeo to secure an investment of $16.7 million from the Japanese giant Marubeni Canada. The Val-des-Sources company was at that time carrying out a $100 million financing round to build its test factory. Remember that during the same period, the government of Quebec became a partner in the project, investing $30.9 million in loans and share capital.
In a press release published on September 11, in response to the recommendations in the Federal Court, the CEO and owner of AMACOR, Jan Guy, said he was grateful for the findings established by Judge Dinsmore, before concluding that “AMACOR will continue to seek damages against
Déry, Tergeo (…). » .
No new court date has been set at this time. Me David Sébastien Gervais explains that this is a rigorous process: after three years, there has still been no trial on the substantive issues. We also see when we have access to the file that there were more than 750 notations in the file over a period of three years. That in federal law is also indicative of a case that is serious, which is a case that raises complicated questions of law and fact.
Open in full screen mode
Me David Sébastien Gervais, lawyer member of the Quebec and New York bars.
Contacted to react to this action taken by AMACOR, the current managers of Tergeo did not want to grant an interview to Radio-Canada since the case is before the courts. The company, however, says it acted diligently and quickly in the circumstances, and disputes the judge's recommendations.
The former chairman of the board of directors and CEO of Alliance/Tergeo, Michel Gagnon, sent this written statement to Radio-Canada through a communications firm: It is clear that this initiative The contempt of court seeks to discredit Alliance Magnesium, its directors and officers. This civil litigation file is related to the hiring of an employee and no judgment has been rendered to date. (…) These allegations are nothing more than attempts at deterrence on the part of an American competitor, set in the context of protectionist policies that can also be observed in many sectors of our economy. Quebec SMEs must stand up to maneuvers like these and should never give in to such dissuasive attempts by American giants.
Reached by telephone by Radio-Canada, Joël Fournier refused our interview request. However, he indicates that the management of Tergeo has nothing to reproach itself for. This is a labor relations dispute played up by AMACOR to harm a competitor. He is appealing Judge Dinsmore's recommendations.
Ex-AMACOR employee, Alain Déry, contacted by telephone, declined our interview request since the case is not over . His lawyer expressed his objections within the allotted time frame.
Recall that on September 21, Tergeo, unable to secure new investments, is sheltered from its creditors. A request which was extended for one month in October.
Marie Eve Lacas (View profile)Marie Eve LacasFollow