The legal battle between Sears, Roebuck and Co. and Montgomery Ward & Co. over employee recruitment escalated Wednesday, with Sears charging that Wards lied to get a temporary restraining order last week.
In a filing with the U.S. Bankruptcy Court in Delaware, Sears said Wards deliberately made false statements in arguing for an order prohibiting Sears from calling or contacting any Wards employees.
Sears asked the court to dismiss the restraining order permanently and award it monetary damages “including, but not limited to, award of attorneys fees and costs incurred in connection with this matter.”
Wards declined to comment on Sears’ countercharges, saying it would respond Thursday in bankruptcy court. Bankruptcy Judge Peter J. Walsh is scheduled to rule on the case Friday morning.
In an Aug. 11 filing with the court, Wards charged that Sears executives had engaged in “predatory” behavior designed to weaken Wards, which filed for Chapter 11 bankruptcy protection from its creditors July 7.
Wards said Sears’ actions constituted a conspiracy to harm the Chicago-based retailer and created “tortious interference” with its ability to conduct business. It asked the court for a permanent injunction preventing further recruitment efforts by Sears and actual and punitive damages.
The charges were based on an internal July 12 e-mail message from Mary Conway, vice president of Sears northeast region stores, that described an “action plan” to go after Wards’ executives. Wards also produced affidavits from six Wards employees who allegedly had been contacted by Sears’ vice president of human resources.
But in its dismissal motion, Sears said the employee who contacted Wards’ employees, Ken Goyens, is a lower-level executive recruiter just doing his normal job, not the vice president of human resources.
“The importance of this false statement to Montgomery Ward’s case was clear–without executive action, there could be no executive-level scheme,” Sears said in court filings.
Sears also said Wards’ allegation that there was a conspiracy to destroy it was “wildly exaggerated.” And it said Wards initially neglected to tell the court it had even asked for Sears’ help in finding jobs for employees at some of its Lechmere and Electric Avenue & More stores slated for closing.
In court testimony, Goyens admitted contacting more than 86 Wards’ store general managers as part of his recruiting efforts through the end of July but said he had “never seen or heard of that e-mail . . . until after I learned that this lawsuit had been filed.”
The recruiter also said he regularly calls more than 50 people at day at Sears’ competitors but that none of his efforts were undertaken “to harm Montgomery Ward.”
Five of the six Wards employees who filed affidavits never had an actual conversation with Goyens, and “there is no evidence Mr. Goyens did or said anything improper,” Sears said in court filings.
Under Delaware law, Wards must prove Sears acted improperly in trying to lure away its employees. But that appears to be a long shot, said Michael Karpeles, an attorney with Goldberg Kohn in Chicago who specializes in employment law.
“The language of the memo was unfortunate, but it doesn’t appear Sears’ conduct rises to the level of being so improper that they should be liable,” said Karpeles, who is following the case.
Competitors generally are free to go after others’ employees unless they are trying to steal trade secrets or break non-compete agreements, attorneys said.
But even if Sears prevails and the restraining order is lifted, it’s unlikely the court would award Sears the damages it seeks, Karpeles said. “Courts often will say your argument is baseless but it’s not so detached from the facts and law that it rises to the level of frivolous,” he said.
If Walsh did issue a permanent injunction to prevent Sears from recruiting Wards employees, he would be setting a precedent in bankruptcy cases, Karpeles said.
