MeritDirect is trying to stop founding partner Chad Slater from starting his own list brokerage company, Integrated Direct Marketing.
Responding to an application for a temporary injunction filed Feb. 21 by MeritDirect, the Superior Court in Stamford, CT, yesterday issued an order to show cause to defendants Chad Slater, Integrated Direct Marketing LLC and Direct Media Inc.
The action was triggered by Slater's announcement last week that he had opened Integrated Direct Marketing and that another former employer of his, Direct Media, would provide back-office support. In addition, Direct Media announced last week that Integrated Direct was a partner in its new database consortium.
MeritDirect alleged that Slater, Integrated Direct and Direct Media were in violation of MeritDirect's operating agreement, which Slater signed as a partner in the firm.
“For two years he cannot in any way, shape or form compete for the clients of MeritDirect, he cannot recruit the associates of MeritDirect, he cannot use in any way our proprietary intellectual property,” said Ralph Drybrough, CEO of MeritDirect, White Plains, NY.
According to MeritDirect attorney Stephen J. Curley, the injunction has four aspects relating to the operating agreement.
“This involves Chad's alleged violations of his covenants not to compete against MeritDirect, his covenant not to solicit employees of MeritDirect for another business in direct competition with it and his agreement not to solicit clients of MeritDirect and, finally, an injunction against his use of trade secrets that he learned while associated with MeritDirect,” he said.
Though Slater was out of town on business and had not yet seen the documents, he said he was confident he would prevail.
“I have not violated any agreements with my former partners,” he said. “They have violated agreements with me, and I'm confident that my position will be vindicated and look forward to my position being vindicated in court.”
As to why Direct Media was named in the complaint, Curley said that “Direct Media is in concert with Chad Slater, and by virtue of that we believe we have the right to get an injunction against it. Chad is barred from operating either directly or indirectly with [Direct Media] during the two-year time period immediately after his termination.”
At press time, Direct Media had not been reached for comment.
Further, the complaint alleges that Slater knowingly divulged proprietary MeritDirect information while he still was employed at the firm, though no details were provided. The document also said Slater was dismissed Oct. 7 upon discovery of that breach.
On Oct. 24, Slater commenced a civil action contending that MeritDirect breached its contract by wrongfully dismissing him, not paying wages due, defaming his character and other allegations. He filed the civil action despite that MeritDirect's operating agreement stipulates that disputes be settled in arbitration.
The court sealed the records of the case in December, and no further information could be obtained.
The court has scheduled a hearing March 17 at which Slater, Integrated Direct and Direct Media can try to block the temporary injunction, Drybrough said.
“The court has asked them to show cause as to why they should not have the injunction placed against them for interfering with our relationships,” he said.
