PTP sues AOL as causing its demise Plaintiff seeks $80 million, alleges various injurious acts

March 25, 1997|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

A Baltimore packaging company and major Empowerment Zone employer on the verge of extinction filed a federal lawsuit yesterday against America Online Inc. seeking $80 million, claiming that the computer services provider breached agreements and acted in bad faith.

PTP Industries Inc.'s lawsuit against AOL also charges the Virginia-based software maker with negligent misrepresentation and defamation for "engendering in the mind of the public that PTP had engaged in criminal activity," with statements that the company committed mail fraud.

"The consequence of AOL's wrongful actions has been the complete destruction of PTP," stated the 10-count lawsuit filed in U.S. District Court in Baltimore.

PTP acknowledged last week that it was eliminating 600 jobs and closing its doors, contending that AOL, its only client, forced the packaging company out of business for failing to pay $2.2 million in bills. PTP, which invested $6.2 million in equipment for its AOL work, also has shuttered facilities in Texas and Nebraska, court papers said.

AOL, one of the nation's largest online computer services firms with 8 million subscribers, said it intends to fight the lawsuit and will file a counterclaim against PTP "based on the deliberate falsification of documents submitted to us."

Last week, AOL alleged PTP committed fraud by claiming to mail more computer diskettes to potential customers than it actually had. Between July 1994 and November 1996, PTP manufactured packages for 170 million AOL software mailings, according to court documents. "It appears on the surface that PTP is trying to make AOL the scapegoat for its own failures," said Tricia Primrose, an AOL spokeswoman. "PTP deliberately concealed its failure to be a reliable supplier and is now attempting to deceive the media and the courts. We are going to fight this, and we intend to prevail."

AOL said it could not respond further because it had not yet seen the lawsuit.

Before the imbroglio with AOL, the Southwest Baltimore company had ranked as one of the biggest local success stories of the $100 million federal Empowerment Zone program to enhance blighted neighborhoods, hiring half its work force since moving to a former Montgomery Ward & Co. facility near Carroll Park in early 1995. In 1996, PTP had $38 million in sales, thanks to its work packaging and mailing AOL diskettes, said William Hartley, PTP's president.

"When you know all your eggs are in one basket, but you ask the goose that's laying them if they'll continue, and they say yes, then the question of where the eggs come from becomes irrelevant," said Benjamin Rosenberg, a Rosenberg, Proutt, Funk & Greenberg LLP attorney representing PTP.

The lawsuit represents the second legal action against AOL in connection to PTP's pending demise. Last week, PTP lender Provident Bank of Maryland sued AOL in federal court because it is entitled to recoup $3.45 million in loans owed by PTP.

AOL has 60 days to respond to PTP's lawsuit, and a trial could begin early next year, Rosenberg said.

Pub Date: 3/25/97

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