General Iron sued by family part-owner alleging – Manufacturing News

on Jul1

30 June 2017 | 9:40 pm

The part-owner of scrap recycling center General Iron Industries is suing his family, alleging environmental violations, employee sexual harassment and the dismissal of a $100 million offer to buy the North Side land it sits on.

Howard Labkon filed the lawsuit today in Cook County Circuit Court against his mother Marilyn, brother Adam, father Mark and the business itself. General Iron is a third-generation family business in the fringe of Lincoln Park in the Clybourn Corridor Planned Manufacturing District that has watered the coffers of Mayor Rahm Emanuel and aldermen citywide. It processes rebar, pipes, used appliances and autos for metal. But the business has clashed with neighbors at a time when real estate developers are hungry to see the land where it sits converted to residential use.

The site of the scrapyard’s former next door neighbor, steel mill A. Finkl & Sons, was sold to real estate developer Sterling Bay which has plans to convert the acreage into a mixed-use development.

General Iron received an offer in May north of $100 million to buy its real estate, the lawsuit says. But the Labkon family did not engage any tax or real estate professionals to weigh a possible sale and so failed “to act reasonably to maximize shareholder value in connection with an offer to purchase General Iron’s most valuable asset: its real estate.”

Howard Labkon has asked the court to appoint “an independent person with expertise in industrial commercial real estate to consider, negotiate and have authority to approve offers to purchase General Iron’s real estate instead of Defendants.” He also wants the judge to order a penalty equal to 10 percent of his shares’ value.

David Chizewer, a partner at Goldberg Kohn who is representing the Labkon family and General Iron, said in an email that the claims had no merit, and his clients would vigorously defend the case in court. “It is disappointing and sad that this plaintiff would file a lawsuit hoping only to embarrass his family. It will not work.”

In the lawsuit, Howard Labkon accuses his brother Adam of flouting state laws and regulations regarding hazardous waste disposal. A shredder separates the iron in scrap metal from other materials; the leftover waste is called “fluff.” Adam Labkon mixed that “fluff” with soil and submitted it for hazardous waste testing, the lawsuit says, “to avoid paying higher fees to dispose of hazardous waste.”

Adam Labkon also “created a hostile work environment … through repeated inappropriate statements and physical contact,” the lawsuit says. He allegedly would comment on the attractiveness of young of physically fit men, ask about their sexual activities and share his own. The suit also says he wrestled with some employees and insisted on massaging others.

“Although employees have complained to Marilyn and Mark about Adam’s inappropriate behavior, no corrective actions have been taken,” the suit says.

The lawsuit is the latest conflict for General Iron, which has been hanging onto its property for 20 years as the neighborhood changed around it. In 1997, Marilyn Labkon told the Chicago Reader, “I love many of our new residential neighbors, but they have to recognize that we have a right to be here, too. We don’t want to leave.”

The planned manufacturing district zoning designation was originally created in to preserve manufacturing within city limits in the face of pressing gentrification. The site is in the 2nd Ward and its alderman, Brian Hopkins, 2nd, has said he wants to see the zoning designation scrapped and General Iron shuttered, as it was briefly in April 2016 for building and fire code violations. Hopkins called it a “game changer” when Finkl sold its 28-acre site to Sterling Bay for $140 million last year.

Fred Sperling, Howard Labkon’s attorney and a partner at Schiff Hardin, said his client “filed the complaint to protect his company, its employees and the community.” In addition to financial demands, the lawsuit asks the court to establish an anti-harassment program at the business and designate a third-party to test hazardous waste.

This is not the first public spat for the family. Six years ago General Iron accused Howard Labkon in a DuPage County lawsuit of working with a competing business, as well as absenteeism, poor performance and divisiveness. The reconciliation that later followed apparently has not lasted.



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