Lawsuit results in company folding
MOUNT VERNON — An anonymous inside source confirmed Friday that PACS Switchgear LLC has dismissed its staff Feb. 10 and the company is shutting down altogether as a result of losing a lawsuit.
PACS is a manufacturer and supply company of electrical power distribution switchgear, large circuit breakers and related products. The company was founded in 1972 in Mount Vernon and later expanded to Bethpage, New York, collectively as PACS Industries.
Despite the sale, the company operated under the same leadership and largely the same personnel. Since then, the company has operated out of the two locations in Bethpage and Mansfield.
According to the company’s letter to the Ohio Department of Job and Family Services, the decision to close was due to “unforeseeable events and the company being unsuccessful in finding other forms of funding.”
The most recent lawsuit against PACS was filed in December 2017 by EthosEnergy, an industrial equipment service provider formerly known as Wood Group Gas Turbine Services, based in Houston, Texas.
According to the anonymous source, PACS lost the lawsuit. No official statement or press release has been issued as of press time, and PACS CEO Neil Minihane was unavailable for comment.
According to court documents filed at the US District Court for the Northern District of Ohio, in 2011 EthosEnergy contracted PACS Industries to design and manufacture 12 circuit breakers for $2.2 million,
The circuit breakers were designed for installment at a power plant in Ashkelon, Israel. The final products were made and shipped to the Ashkelon plant in 2012.
In 2015, one of the breakers malfunctioned due to overheating. EthosEnergy contacted PACS, now PACS Switchgear, to conduct inspection and maintenance on all 12 circuit breakers. The inspection found that all circuit breakers were operating at “dangerously high temperatures and could possibly fail at any time,” according to court records.
PACS recommended the Ashkelon plant to implement certain maintenance practices. However, the practices failed to resolve the overheating issue.
EthosEnergy determined that the circuit breakers contained a design flaw that led to the overheating. EthosEnergy requested PACS to replace or repair the circuit breakers per their warranty agreement.
PACS refused because it was now a new entity, PACS Switchgear, and had no obligation to honor the warranty agreement between EthosEnergy and PACS Industries.
EthosEnergy sued PACS for over $900,000 and demanded a minimum of $75,000 remedy in addition to interest, court costs and other relief, according to court records.
The case continued to be active in the following years, including several court orders and conferences in 2019.
