Gunmaker fires back over Ruger lawsuit

A countersuit filed against Sturm, Ruger & Co., Inc. alleges that the company’s Newport facility supplied machine gun parts that put the lives of U.S. troops in Afghanistan at risk and had to be recalled.The countersuit was filed by U.S. Ordnance after Southport, Conn.-based Ruger filed a lawsuit against the Nevada firm in an attempt to settle a “very basic commercial dispute” over unpaid goods, in the words of Kevin Reid, vice president and general counsel of Ruger.But U.S. Ordnance attorney Michael A. Danforth said the dispute is really over parts that “just didn’t work as they are supposed to,” and that the whole matter has tainted its reputation with the U.S. military, its main customer.The product that Ruger supplied is so problematic, “that we would have to turn it into scrap metal,” he said.The whole controversy was buried in U.S. District Court in Concord for months, until it was unearthed last month by mainly manufactures small arms for personal use, but its Pine Ridge Castings facility in Newport also makes parts for other gun manufacturers, including U.S. Ordnance, which manufactures M2HB .50 caliber machine guns – those large machine guns that are mounted on tanks and personal carriers.According to U.S. Ordnance, Ruger’s bolt latches broke – one almost completely in half – during test firing in January 2009. Subsequent examination revealed that 16 of the 200 latches supplied by Ruger showed signs of cracking, the suit says.But 50 machine guns with that bolt had already been sent to Afghanistan – some already in the field of combat – and they had to be recalled “at great embarrassment to U.S. Ordnance,” the suit charges.The malfunctions had a “potential impact on soldiers’ lives” both in Afghanistan and in Iraq, USO says in the court filing.USO may never have brought the matter up in court save for a lawsuit filed in June by Ruger.In it, the company seeks more than $280,000 to pay for a variety of parts that were used in military equipment. (While this may not seem much for a company that reported $64 million in sales in the last quarter, it is a substantial amount of casting income, which totaled $768,000 in the period.)U.S. Ordnance countered Sept. 8 with 11 counts relating to defective parts, with each count asking for $75,000 or more in damages, but the suit did not ask for a specific amount.Ruger’s original suit fails to mention the bolt latches, though in its answer to U.S. Ordnance, it admits there were problems and even agreed to pay the cost of the problem, though both sides disagree on the amount involved.U.S. Ordnance alleges in its suit, and Ruger agrees, that Ruger did not subject them to testing involving X-ray and magnaflux particles that the Nevada company says was part of the specifications.Ruger reimbursed U.S. Ordnance on March 30, and the same day USO sent a list, outlining its expenses. Ruger issued a credit of $13,562.96, and – according to Ruger’s suit – U.S. Ordnance accepted it.Ruger says it thought the matter was settled.Not so, says U.S. Ordnance, which in its counterclaim says it wasn’t limiting damages to the actual cost of the allegedly defective items. It now wants to be reimbursed for the expenses of testing, the recall, the lost profits during the time it was unable to manufacture the guns, the difference between the agreed-upon contract price and subsequent market price to obtain them elsewhere, and “the damage to U.S. Ordnance’s reputation with its main customer, the United States Military.”That allegedly damaged reputation has caused the military to place it under a “higher degree of scrutiny” before its products were deemed acceptable, it claims.Bolt latches weren’t the only part in dispute. Indeed, they weren’t the main point of contention.Ruger’s Pine Tree Castings division also supplied U.S. Ordnance with tube liners made of a cobalt-chromium alloy known as Stellite to be used by U.S. Ordnance as gun barrels for the same machine guns.About the same time U.S. Ordnance was having trouble with the bolt latches, it discovered that the tube liners were more difficult to drill than usual.That’s because the Stellite was “mottled”- unevenly distributed so that some spots were harder than others, according to U.S. Ordnance, which says it sent the material to a third party to test the material, and it agreed.Ruger says it offered to soften the materials and thought the matter had been settled. But U.S. Ordnance claims the liners still didn’t meet requirements.Ruger says that U.S. Ordnance didn’t dispute the quality of the softened liners at the time and therefore owes some $248,000 for them, as well as money for other items that it maintains were not in dispute.But U.S. Ordnance claims it experienced problems with Ruger’s right rear cartridge stops, its back plate latch and the trigger, which Ruger denies.”If this was such a big deal,” said Reid of Ruger, “Why didn’t they raise it until they were sued? That speaks volumes. This is just a small commercial dispute over the money they owe us and nothing more.”Danforth said it was simply not worth it to start a lawsuit over the matter until Ruger’s suit forced the company into litigation.”We didn’t waive anything, but if you are paying a lawyer anyway, we are going to list all of their liabilities.”Danforth said they actually had to send someone overseas to fix the bolt latches. While the military didn’t insist that they be returned, “When we make something with defective parts, we have to act. Those soldiers are putting their lives on the line, and our machine guns have to function flawlessly, and they have to be made to specification.”If the matter is not settled, the whole messy litigation will be on display for all to see in U.S. federal district court in Concord.Despite U.S. Ordnance’s attempt to move the case to Nevada, on Oct. 14, U.S. District Court Judge Paul Barbadoro ruled any trial would take place in New Hampshire.Bob Sanders can be reached at