Ex-Gilbarco CEO halts recruiting former staff
The Business Journal by Mick Normington, The Business Journal Serving the Greater Triad AreaDate: Monday, April 25, 2005, 12:00am EDT - Last Modified: Thursday, April 21, 2005, 9:42am EDT
Scott Clawson was CEO of Gilbarco until he left in June 2003. Sixteen months later, he became CEO of Ryko Manufacturing Co. in Grimes, Iowa. So far this year, six executives and managers have left Gilbarco to go work for the Iowa company.
Gilbarco filed a lawsuit in Guilford County Superior Court in March charging Ryko, along with former executives Clawson and Jeffrey Alascio, with misappropriating trade secrets. Along with the poaching, Gilbarco claims Alascio's computer records show that while working in Greensboro, Alascio e-mailed his client list to his home 10 days before quitting Gilbarco to join Ryko.
While not admitting guilt, Ryko, Clawson and Alascio reached a consent agreement earlier this month with Gilbarco to not use any information that once belonged to the Greensboro company and to cease recruiting until the case can go to court.
"This isn't over," Bill Raisch, counsel for Ryko, said last week. "They're preventing their people from taking better jobs."
The case is unique in that Gilbarco and Ryko are not competitors, but both serve similar clients. Gilbarco makes fuel equipment for service stations while Ryko makes car-wash equipment.
The dispute between the two companies came to light when Christopher Kastner, vice president of operations for Gilbarco, announced that Clawson tried to lure him to Ryko.
According to court documents, Kastner testified that Clawson contacted him about a job. Kastner and his wife flew to Iowa to interview with Ryko. There, Clawson also explained his plans to grow Ryko through a series of acquisitions. But would need a "star team" of executives to support the growth, including an "operations star" like Kastner.
Clawson initially offered Kastner an annual salary of $140,000 to $160,000. Then Clawson raised the salary more so that Kastner could have made one-third more at Ryko than Gilbarco. But Kastner testified he turned Clawson down, a decision that ultimately led to the lawsuit.
Nevertheless, Gilbarco claims Clawson tried recruiting other executives, including Alascio, who was eastern U.S. sales manager for the Greensboro company. Alascio left Gilbarco in February for Ryko.
Ryko attorney Raisch said his company is not giving in since both North Carolina and Iowa are "right to work" states that allow workers to chose their employer. Raisch also questions the argument of trade secrets because the two companies are not competitors.
And Raisch disputes Gilbarco's claims that Clawson did not wait through the 12-month non-compete period as was part of his Gilbarco contract. Clawson resigned from the Greensboro company in June 2003, but Gilbarco wants the 12-month period to start on October 2004 when he joined Ryko.
Gilbarco doesn't have the strongest argument but can make a case, said Jim Fox, a trade secrets attorney with Bell Davis & Pitt PA in Winston-Salem.
"Executives hiring from their old companies is pretty common," Fox said. "Whether you get sued over it depends on if you do it a little or a lot."
Companies tend to claim customer information as trade secrets but a case like this will require a judge or jury to interpret the finer points if Ryko, Clawson and Alascio went too far, Fox said.
Gilbarco is the top maker of fuel and electronic equipment for service stations with more than $600 million in annual sales and more than 1,000 employees at its headquarters in Greensboro. It is one of the largest subsidiaries of Danaher Corp., a Washington, D.C.-based $7 billion industrial conglomerate.
Ryko is the top maker of automatic car wash equipment for service stations; it has more than 500 employees and more than $100 million in annual revenue.
Executives for Gilbarco and Clawson did not return calls to comment on this lawsuit. Raisch said Ryko is asking for a jury trial as soon as possible.
Reach Mick Normington at (336) 370-2917 or firstname.lastname@example.org.