Precision Dynamics Founder Files Suit

The co-founder of Precision Dynamics Corp. has filed a lawsuit against two top managers and three members of the board of directors claiming they put up roadblocks for him to participate in running the company. The 25-page complaint alleges a power grab against Precision Chairman Walter Mosher by President and Chief Executive Officer Gary E. Hutchinson, Chief Financial Officer Mark Segal and board members Jonathan G. Lasch, Robert B. Kraemer, and Robert F. Foster for control of the privately held San Fernando company. The suit filed in Los Angeles Superior Court seeks to oust Lasch and Foster from the board, find that Segal failed to carry out his duties as inspector of the election of board members, and find that Kraemer and Hutchinson, majority shareholders in the company, failed to hold a shareholders meeting in compliance with state code and breached their fiduciary duty by taking steps to keep Mosher, 72, from electing a board member of his choosing at an August shareholders meeting. The suit accuses the defendants of attempting to get around safeguards for Mosher, a minority shareholder, to keep intact the company he created. “Mosher has been informed that the other directors are now considering selling new shares to private investors, thereby diluting Mosher’s ownership interest and voting power potentially to (32 percent) or less based upon the amount of money to be raised,” the lawsuit states. Selling additional shares of Precision stock is no longer being considered as far as its known but was still indicative of the actions taken against Mosher, said his attorney Howard Gould. Going to court shows the frustration by Mosher concerning his inability to participate in the running of the company, Gould said. “It’s obvious that he feels he is not getting the voice in the company he should have,” Gould said. Attempts to reach Lasch, Hutchinson, Segal and Foster were not successful. The case is scheduled to be in court on Oct. 16. Mosher, a graduate of Glendale Community College and UCLA, founded Precision Dynamics in 1956 with three investors. The company is one of the largest manufacturers in the San Fernando Valley and a leader in designing, manufacturing and distributing identification band systems primarily for the medical and hospitality industries. Precision Dynamics employs 500 people in both San Fernando and Mexico facilities. Mosher and Kraemer have known each other for a “very long time” but have not always been business partners for that time period, Gould said. Hutchinson joined the company in 2002 and was elected that year by Mosher and Kraemer to the board. Lasch is chairman of the board, president and chief executive officer of ORFID Corp., a company formed by Precision Dynamics and Convergent Ventures to develop radio frequency identification technology. Lasch is also a managing partner with Convergent Ventures. Mosher, Hutchinson and Kraemer serve on advisory boards of ORFID Corp. Foster is an adjunct professor at the UCLA Anderson School of Management where he also serves as director of the Global Access Program. He is a member of the Tech Coast Angels and the Pasadena Angels, both angel investing organizations, according to his biography at the Anderson School website. Key to the lawsuit is an agreement between Mosher and Kraemer allowing them to elect themselves and three independent non-employees to the board. The agreement was amended following Hutchinson becoming company president and chief executive. Although the agreement states that “initially” Lasch and Foster were to be board directors, Mosher understood that he was not required to keep voting them onto the board, the lawsuit said. Also, in April 2005 Lasch and Foster told Mosher they would step down if he requested, the suit continued. Mosher argues in the suit that as head of ORFID Corp., Lasch is no longer an impartial outsider on the Precision board “and is ineligible to serve in such capacity and should be removed as a director.” The lawsuit also focuses on the Aug. 14 shareholder’s meeting at which Mosher cast votes to have Lee K. Alpert on the board. Mosher cast no votes for Lasch to retain his board seat, the lawsuit said. The suit argues that Segal acted improperly by not counting the votes Mosher cast for Alpert. “Defendants improperly prevented Mosher from voting his shares as he chose, caused the votes to be counted improperly, and willfully and intentionally interfered with the proper results of the election,” the suit said.