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General Iron Owner Harassed Employees, Rejected $100M Offer For Land: Suit

By Ted Cox | June 30, 2017 3:04pm | Updated on July 3, 2017 8:08am
 The General Iron scrayard was roiled by a family lawsuit filed Friday.
The General Iron scrayard was roiled by a family lawsuit filed Friday.
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DNAinfo/Mina Bloom

DOWNTOWN — The controversial General Iron scrap yard off the Clybourn corridor was roiled by a family lawsuit filed Friday in Cook County Circuit Court.

Howard Labkon charged his brother, Adam, mother, Marilyn, and father, Mark, with "breach of fiduciary duty" at General Iron by harassing employees, falsifying records on hazardous waste and ignoring a $100 million offer to buy its property at 1909 N. Clifton Ave.

According to the complaint filed by attorney Fred Sperling on Friday, Adam Labkon "has harassed numerous employees and contractors and created a hostile work environment at General Iron through repeated inappropriate statements and physical contact with employees." It charged him with bias on age, sex and physical characteristics, as well as "wrestling with some employees at work and insisting on massaging others."

Other employees went along, it said, to "curry favor with him." The suit charged that "has exposed General Iron to liability, depressed employee morale and made it difficult for General Iron to retain quality employees."

The suit also charged that Adam Labkon oversaw contamination of unrecycleable waste known as "shredder fluff" by diluting it to pass tests on potentially hazard waste.

"Instead of properly sampling General Iron's shredder fluff, Adam has regularly submitted unrepresentative samples of shredder fluff for testing by mixing the fluff with soil in order to falsely report General Iron's fluff as non-hazardous waste," the suit said.

It accused that was done "to avoid paying higher fees to dispose of hazardous waste" and that Marilyn and Mark Labkon "acquiesced in Adam's conduct even though Adam's actions put General Iron at risk of significant penalties."

The suit also charged that the company received a $100 million offer for its property in May, but that the Labkons did not pursue it, even though Howard Labkon sought the first shareholder's meeting in five years to address the matter. The suit said a meeting eventually held in June was a sham in that they "refused to provide any useful information" on the sale.

The suit listed the sale price for the nearby Finkl Steel site at $140 million.

The suit charged that Howard Labkon sought information on all these matters in a formal letter and was rebuffed.

The suit seeks penalties worth 10 percent of the value of the defendants' shares, and that the court appoint an independent officer to handle the sale, along with other remedies.

"Howard Labkon filed the complaint to protect the company, its employees and the community," Sperling said.

The other Labkons did not immediately respond to requests for comment.

The family is no stranger to the courtroom. Crain's reported that in 2011 General Iron filed suit against Howard Labkon in DuPage County charging that he violated a non-compete clause by working with a competitor scrap company. Sperling said that suit had been dismissed.

General Iron has also been in frequent trouble with the city. It was briefly shut down last year when the Buildings Department found the yard "dangerous, hazardous and unsafe," according to the suit.

It has also been blamed for a series of trucks that have gotten stuck under the Kennedy Expressway at Armitage Avenue while on the way to the lot. Ald. Brian Hopkins (2nd) has suggested that "ultimately the solution needs to be that they have to relocate."