Travers Collins, the Buffalo, New York-based PR and marketing firm, is taking its former IR unit to court after five employees quit to set up their own shop.
Last month Travers lost its IR practice when Lynn Casteel and Jeff Schoenborn, the two people who ran it, abruptly quit. They took three other employees with them and started their own firm, called Casteel Schoenborn.
On Monday, October 17, Travers Collins filed a suit at the New York Supreme Court alleging breach of fiduciary duty, breach of duty of loyalty, conversion of private property, misappropriation and unjust enrichment.
All five of the former employees – Casteel and Schoenborn, plus Julianne Senulis, Brittany Frey and Katherine Croft – are named as defendants under one or more of the allegations.
Bill Collins, co-founder and principal of Travers Collins, says in an email: ‘We have no further comment and prefer to let the facts speak for themselves.’
In the court filing, Travers Collins accuses the former employees of ‘acts of disloyalty and theft’ and alleges that Casteel and Schoenborn planned the departure in advance and set the groundwork, including diverting new customers from their old employers and soliciting existing customers to change firms.
According to the filing, as well as records from the New York State Department of State seen by Inside Investor Relations, Casteel filed for the incorporation of C&S Ventures WNY on June 15, 2011, more than three months before the five employees abruptly quit.
Inside Investor Relations contacted Casteel and Schoenborn for comment but did not receive a response. Schoenborn has been quoted in the Buffalo News as calling the suit ‘baseless accusations’.
Last month, Casteel told Inside Investor Relations that he and Schoenborn were careful not to solicit any clients before leaving. He added: ‘Most of our clients knew we were planning to set up our own shop before we left. We don’t think we crossed any legal boundaries by allowing our clients to know we planned to leave.’
According to Casteel, he and Schoenborn left after past discussions with Bob Travers and Collins about ‘different things we wanted to change in the agency, like the compensation structure and a number of things about how the agency ran.’ He claims the discussions led nowhere.
Collins told Inside Investor Relations last month that Casteel and Schoenborn had never approached him or Travers about a different business model or a greater share of the profits.
According to the court filing, Travers Collins had a special profit-sharing arrangement with the IR group, which received a 30 per cent cut, with distribution among the staff members determined by Casteel.
The suit seeks unnamed compensatory and punitive damages as well as attorneys’ fees, costs and expenses. Travers Collins also seeks the defendants to ‘disgorge all profits earned from their unlawful taking and use’ of Travers Collins’ property, including proprietary information.
[Article by Erik Sherman, Inside Investor Relations]