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Fargo-based engineering firm alleges trade theft

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Park Rapids Enterprise
(218) 732-8757 customer support
Fargo-based engineering firm alleges trade theft
Park Rapids Minnesota PO Box 111 56470

On the morning of Nov. 2, 2010, a senior Ulteig Engineers executive delivered a bombshell to the company: 19 resignation letters, including his own, worded identically and effective immediately.

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The outgoing group, a quarter of the Fargo-based company's civil engineering division, left to form Apex Engineering Group, a company that had been incorporated days earlier in North Dakota. Shortly thereafter, the new firm began bidding on and winning contracts that mirrored projects they'd worked on at Ulteig.

Now, in a lawsuit filed Thursday in Cass County District Court, Ulteig alleges that the departed employees built the splinter company by making off with Ulteig property and hatching a months-long conspiracy on company time.

Calls and e-mails seeking comment from Apex principals - all of whom are named as defendants - were not returned Thursday. A man who answered the phone at the home of Scott Olson, one Apex principal, said Olson was not available and the company was choosing not to comment at this time.

Along with the 19 former employees who resigned last fall, the lawsuit also names as defendants:

* A former employee who resigned three days later.

* Two unnamed companies and one unnamed individual, labeled "unidentified co-conspirators."

* A former employee who had been terminated in 2009 and who is now a principal at Apex.

Ulteig did not detail whom it believes led the group, but said it expects that information to come out during the discovery period of the case. It says no specific event seems to have precipitated the mass defection.

The lawsuit seeks unspecified monetary damages, an order dissolving Apex, and the return of materials allegedly taken improperly from Ulteig, including drawings and designs, customer lists, vendor information, pricing information and bid and proposal packages. The complaint alleges Ulteig sought the return of those materials but was told in December that Apex possessed no information or property belonging to Ulteig.

According to the lawsuit, the defendants copied that information electronically - and deleted files to cover their tracks - in the months before their mass resignation, which Ulteig alleges was planned as early as last March. Ulteig says the defendants worked to acquire proprietary company information up until the night before they resigned.

The lawsuit also says the defendants neglected their duties for Ulteig in the months leading up to their departure, instead working "to access, duplicate, transmit and take Ulteig's information and property, and coordinate their unlawful conduct."

It accuses the defendants who held the highest positions at Ulteig - five officers, one of whom was a member of the board of directors - of breaching their fiduciary duties to the company's shareholders. Ulteig is an employee-owned company.

Ulteig did not detail the bid opportunities it be­lieves were improperly poached by Apex, but the lawsuit identifies a number of specific projects for which the defendants are alleged to have taken information, including Fargo's wastewater treatment plant, and sewage and water flow projects in Jamestown and Minot.

Ulteig employs about 320 employees over nine offices. All of the former employees named as defendants worked in Fargo or Bismarck. Apex now has offices in both cities.

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