Korean dry cleaners in Atlanta sue gas marketer

Cheesy pun first: A group of Korean dry cleaners claim to have been taken to the cleaners by their gas marketer.

But the local dry cleaners are serious. They filed a federal lawsuit against Florida-based Infinite Energy this week, saying the marketer exploited the short-term price spike that followed 2005’s Hurricane Katrina to lock them into long-term contracts at an inflated price. It says Infinite misled and scared its customers about the cause and likely duration of the post-storm surge in wholesale gas prices.

Infinite denied any wrongdoing and said it had helped its customers save money.

Korean cleaners make up more than half of the metro area’s estimated 1,400 cleaners. According to the lawsuit, the Korean Cleaners Association of Atlanta, a trade association that conducts business on behalf of participating Korean-owned dry cleaners, signed a three-year, fixed-price contract several weeks after Katrina hit the Gulf Coast.

As Katrina’s temporary effects on the gas market subsided, the lawsuit said, the cleaners began complaining that they were paying too much.

The suit calls Infinite’s behavior an “unlawful scheme to steal millions” from customers.

Filed by Byung Ho Cheoun, Shiraz Kurani and Hae Sook Chung, all of whom own and operate dry cleaning businesses, the lawsuit seeks damages of at least $5 million — a floor for getting class action designation.

Infinite hit back hard.

In a written statement from its law firm, Infinite denied “any improper or illegal conduct” and said it had no liability “to anyone on account of the various contentions asserted in the complaint.”

It also threatened to bring defamation claims related to the lawsuit and an accompanying press release, saying that both included statements that were “baseless,” made with “reckless disregard for the truth” and made “with malice.”

The events that led up to the dry cleaners’ lawsuit began in 2001, according to the suit, when Infinite first entered into a series of renewable, one-year master contracts with the KCAA.

The contracts provided a commission to the KCAA for every “constituent” that entered the program, the suit said. Infinite had also obtained signed letters from some, but not all, of KCAA’s members authorizing the association to contract for gas on their behalf, the lawsuit said.

The KCAA and Infinite signed their last one-year master contract in July 2005, the suit said.

Katrina hit the Gulf Coast several weeks later, on Aug. 29. It battered the infrastructure needed to pipe natural gas from the coast. Wholesale natural gas prices soared in response.

According to the lawsuit, “the reasons for the short-term spike were well understood in the natural gas industry and those experienced in the industry knew that the spike would not last for long.”

Reflecting that, wholesale natural gas futures contracts began declining within weeks of the storm, the suit said.

But Infinite, according to the lawsuit, sent mailings to customers, including dry cleaners, “representing to them that the supply of natural gas was running out and that prices would continue to spiral upward out of sight.”

In October, the KCAA agreed to a three-year fixed contract at $1.14 per therm for its members, a higher rate than the July contract, according to the suit.

“Despite its knowledge that this was a bad deal for its customers, Infinite switched over every KCAA dry cleaner to the new, inflated rate,” the lawsuit said.

It switched dry cleaners who never signed the requested KCAA authorization letters, as well as cleaners with no affiliation with KCAA, the suit said.

As the Katrina effect waned over the next few months, some cleaners tried to switch marketers but were threatened with thousands of dollars in penalties from Infinite, the suit said.

In its written response, the company said it had saved its customers thousands of dollars over the course of its relationship with KCAA.

The company said hundreds of KCAA members and other Atlanta dry cleaners have decided to stay with Infinite after the three-year contracts expire at the end of this month.

The company called that a “testament to the excellent service and pricing options provided to all of its customers.”