Appleton replies to Thilmany lawsuit

The company Appleton cited insufficient quality and volume of paper as reasons for its termination of a contract with Thilmany of Kaukauna.

In its answer to a lawsuit filed Nov. 2 by Thilmany, Appleton said it terminated the 2008 salescontract because of "Thilmany's prolonged and continuing failure to provide the volume or quality of thermal base stock Thilmany had promised."

Thilmany alleged it sustained more than $20 million in damages due to a breach of a contract by Appleton.

The companies have requested a jury trial. The case was reassigned to Outagamie County Branch 6 Judge Dee Dyer.

Appleton used base stock from Thilmany to make thermal paper, a product used for point-of-sale receipts and other applications.

In the counterclaim filed last week, Appleton alleges that the base stock had manufacturing defects such as thin spots and holes in the paper that was put through the coating process at its West Carrollton, Ohio, mill. In addition, there were cracks or tears in the edges of the paper that caused breaks and subsequently costly downtime on its coating equipment.

It further claims that from May through July 2009, Thilmany repeatedly failed to make timely deliveryof the base stock Appleton had ordered resulting in a shortfall of more than 2,800 tons.

Also alleged in the suit is that on a cumulative basis, the Thilmany base stock generated web breaks and downtime on Appleton's off-machine coater in West Carrollton at a rate three times the rate of the base stock produced internally at the Ohio mill.

Since May 2009, Appleton has shut down the West Carrollton coating operation between six and eight days each month because of the shortages of usable external base stock supply from Thilmany.

A copy of the original contract is sealed in the file.

Appleton said in an attempt to mitigate damage from Thilmany's alleged breach, Appleton obtained an offer from a competitor that was lower than Thilmany's in the contract.

Bill Van Den Brandt, Appleton's manager, corporate communications, declined comment on his firm's answer because the case is in active litigation.

Thilmany, through its Milwaukee legal counsel, issued the following statement: "Thilmany is a manufacturer of quality paper products. Thilmany had a very satisfactory history of providing paper to Appleton until Appleton found a lower priced competitor to buy from. Upon finding a lower-priced competitor, Appleton's complaints began. The alleged defects Appleton cites were not caused by Thilmany."