Cambridge Technology sues founder
The computer services company files a lawsuit against its former CEO and founder James Sims, alleging he violated a noncompetition agreement.
In a complaint filed in Middlesex County District Court in Massachusetts, Cambridge Tech claims that Sims broke a severance agreement by starting a new company that directly competes with the professional services firm. That agreement prohibited him from engaging in "competition with the company" at any time during his employment with the firm and for a period of 12 months following termination of his employment, said Cambridge Tech.
The founder of the Cambridge, Mass.-based firm left it last July to work on more "entrepreneurial endeavors." Last month, Sims took the helm at a new business e-commerce consulting start-up, Gen3 Partners.
"These claims are completely without any merit whatsoever," said Sims. "Gen3 Partners does not compete with Cambridge. This is simply untrue. I am not bound by any nonsolicitation agreement."
Sims started Gen3 with partner Michael Treacy, former head of Boston-based consulting firm Treacy & Co. Gen3 said its consulting work is aimed at helping clients develop business-to-business marketplaces that link them to their suppliers and partners over the Internet.
The suit, which seeks unspecified damages, also alleges that Sims used his "intimate knowledge of, and relationships with, Cambridge Technology's employees" to lure senior managers and high-level engineers from the firm to join Gen3, including ex-chief financial officer Arthur Toscanini, who left Cambridge Tech last November.
Cambridge Tech said it is also directly suing Toscanini, claiming that he has been assisting Sims and Gen3 in the solicitation and hiring of the company's senior managers, including ex-employees who served as Cambridge Tech's chief technology officer and director of human resources. Toscanini now serves as chief financial officer at Gen3.
Sims said that ex-Cambridge employees that have joined his company did so "freely."
"We're going to defend this," added Sims, who said he has not been contacted by Cambridge. "Myself and Gen3 Partners have not misappropriated any trade secrets. That is all untrue and false."
About the same time Cambridge Tech appointed Jack Messman to the chief executive post, the company said it formed a contract with Sims that let him remain employed as a special adviser to the company for a one-year period, ending July 18, 2000. As a special adviser, Sims was collecting monthly severance payments totaling $600,000 annually, along with additional stock options.
In the lawsuit filing, Cambridge Tech said that Sims, as a special adviser to the company, continued to owe it a "duty of loyalty" and alleged that he was instead heavily recruiting and developing a direct competitor of Cambridge Tech. The company said it terminated Sims' employment as special adviser as of yesterday.
In the suit, Cambridge Tech is asking that both Sims and Toscanini return compensation paid to them under their severance agreements along with stock options that Sims may have vested since July 19, 1999.
At the time
of Sims' departure, Cambridge Tech was undergoing tough times, struggling to rebuild
lost momentum as demand decreased for traditional enterprise resource
planning services and increased for interactive Web-based offerings, such as Web design, strategy, development and branding.
Feeling the pressure from Internet-savvy consulting firms, older, established computer services and consulting firms, including Cambridge Tech and rivals Electronic Data Systems and IBM Global Services, have been busy revamping their strategies. Services companies are among those feeling pressure to move their businesses online.
"These types of lawsuits occur all the time," said Tom Rodenhauser, an industry analyst who heads ConsultingInfo.com. "Nowadays, people are jumping ship, creating the next big thing and the company that's been wronged tends to get very irate (about it)...Very rarely will you see these (cases) have a real effect on the new business. You can't stop a person from making a living."
Rodenhauser added that employee raiding is a common occurrence among consulting firms because an employee's loyalty typically remains with a mentor or superior rather than the firm itself.
"The most common occurrence (with consulting firms) is when a guy leaves, he takes a whole division with him to a new firm," said Rodenhauser. "That's raiding and very difficult to prove. But, the notion of creating (a new company) while you're being paid by another firm, that's just tawdry."