SOMS Technologies, a Valhalla auto parts company that has filed for bankruptcy protection, is accusing a former employee and a customer of using its trade secrets to manufacture the parts.
SOMS Technologies LLC sued Roger Turpin of Albion, Illinois, and K&N Engineering Inc. of Riverside, California, Jan. 25 in bankruptcy court in White Plains. SOMS Technologies claims that K&N Engineering has used the confidential information to sell more than $5 million in automotive oil and air filters.
SOMS designs and sells products to automakers such as General Motors and Mazda, according to court filings, and to auto parts retailers. Its signature product is the microGreen oil filter. It employs four people.
SOMS filed for Chapter 11 bankruptcy protection in September, declaring $536,000 in liabilities and less than $500,000 in assets that could be readily monetized. Its cash flow was weakening quickly, according to an affidavit by Miles Flamenbaum, vice president of corporate development.
The company had spent $600,000 in cash during the first nine months last year, leaving only $119,000.
“At the current rate of its cash burn,” Flamenbaum said, SOMS “may run out of cash to properly operate its businesses within a few months.”
K&N accounted for $7.9 million in revenue in the previous two years and was the largest customer of its private label business. The loss of K&N, he said, was a “a very substantial blow.
SOMS claims in the adversarial bankruptcy case that Turpin, its former national accounts manager, and K&N conspired to manufacture the filters and bypass SOMS in the marketplace.
Turpin left SOMS in October 2016 and went to work for K&N in January 2017. He had managed relationships with KoAir Industrial Co. Ltd. in South Korea and Interfil S.A. de C.V (now T&N De Mexico), the companies that made the filters that SOMS sold to K&N. KoAir and Interfil are also named as defendants in the lawsuit.
SOMS said that its supply agreements prohibited KoAir and Interfil from making the filters for anyone else. But the manufacturers, according to the lawsuit, now make the filters directly for K&N, using SOMS technology.
SOMS accuses the defendants of conspiracy to appropriate confidential information and Turpin of violating his fiduciary duties.
SOMS sued K&N two years ago in Westchester Supreme Court, making essentially the same allegations. K&N never formally answered the charges. It argued that the case should not be heard in a New York court because none of the alleged actions happened in New York.
Turpin, who worked out of an Illinois office, also said that none of his interactions took place in New York.
In an affidavit supporting K&N’s position, Turpin said, “I did not commit any wrongdoing in connection with any SOMS-related activity, while I was employed there or thereafter.”
SOMS withdrew the state court lawsuit in September, after it filed for bankruptcy protection.