“Competition in this market is keen”
Don Day | May 15, 2007Today’s Idaho Statesman simply scratched the surface of a long and complicated lawsuit laid forth by Citadel Broadcasting. Idaho Radio News has obtained a copy of the lawsuit, and response to it by Peak Broadcasting.
Citadel spins a rich narrative, that alleges Peak CEO Todd Lawley set forth a grand plan to defraud Citadel, and raid many top employees. It’s a fascinating look inside the two radio companies, and their business dealings.
In setting up the story, Citadel notes that “competition in this market is keen,” referring to the Boise metro area radio industry.
Citadel notes that Lawley was the third highest ranking executive in the company, inferior only to the company’s CEO Farid Suleman and COO Judith Ellis. The company says Lawley had access to “virtually all of Citadel Broadcasting’s confidential, proprietary and trade secret data.”
In July of 2006, four months before he left the company, Citadel alleges Lawley tried to recruit company regional president Kevin LeGrett, but that LeGrett declined the offer.
Citadel says that it too made a bid for CBS Radio’s cluster of stations in Fresno, CA. The company says Lawley took part in discussions relating to the negotiations between Citadel and CBSR. The suit further alleges Lawley sought out Suleman and “probed (him) for information relating to Citadel Broadcasting’s bid for the Fresno cluster, including but not limited to the ‘book’ provided by CBS to Citadel Broadcasting in connection with the sale of the Fresno cluster.”
The book is the bundle of documents provided by a seller to interested parties.
Lawley left Citadel on November 13, 2006 – and a week later – joined his newly formed company “Peak Broadcasting.” Idaho Radio News has confirmed that Peak Broadcasting LLC was formally incorporated in the State of Delaware on November 9, 2006 – the announcement by CBSR of its Fresno sale to Peak came on November 16, 2006. Joe Mauk of Fresno, CA purchased the domain name “peakbroadcasting.com” on November 8, 2006. Mauk is listed as chief engineer for the Fresno Cluster of stations now owned by Peak Broadcasting.
That timeline again:
November 8, 2006 – Mauk purchases PeakBroadcasting.com
November 9, 2006 – Lawley and his agents incorporate Peak Broadcasting LLC
November 13, 2006 – Lawley resigns from Citadel
November 16, 2006 – Peak announces deal to buy CBSR’s Fresno properties
Fast forward to March of this year: Citadel says Lawley made a presentation to potential investors in Peak Broadcasting. Citadel says Lawley openly showed the group “proprietary, confidential and and trade secret information,” that came from his time at Citadel. The suit alleges Lawley did not try to hide the fact that the data came from Citadel.
The suits says Kevin Godwin notified the company that he would resign effective immediately on March 16, 2007. That notification was made to COO Ellis, who had plans to leave the country for vacation the next day. The suit says Ellis asked Godwin to stay on for an extra “week or so” to help the transition. Citadel says Godwin e-mailed Ellis the next day and noted that his resignation was effective immediately.
The suit says Godwin tried to delete data on his company-issued laptop. The suit says he “attempted to do so,” leaving some ambiguity over the efficacy of that attempt (simply deleting files on a Windows system doesn’t make them go away – it just deletes the “pointer” to the file. Disk recovery software would allow the data to be retrieved in many cases.)
Citadel said that it became concerned that Peak would try to “raid Citadel Broadcasting’s employees.” The company scrambled to lock down Owens and Sutton. It offered Owens a 29% pay bump, and Sutton a 36% increase. Citadel says Owens and Sutton said they were a “package deal.” Citadel says it reached a deal – but on Sunday March 18, the company told Ellis that they were resigning.
I first heard of the departures at 4:05pm that day, with several e-mails echoing the initial tip throughout the evening. I sat on the information pending official confirmation.
There has been lots of confusion concerning Rick Stewart/Sutherlin. The suit says Stewart was hired by Citadel on February 26h, just five days before this site broke news of the Peak Broadcasting purchase of Clear Channel’s Boise stations. Citadel says Stewart was set to start work as KQFC program director on March 19th, but instead began work on March 12th. In that time, he purchased a jingle package for KQFC, and looked at proprietary information regarding KQFC, according to the suit. The suit also says he flew to Fresno during that time to meet in secret with CEO Lawley.
Timeline:
February 26 – Owens hires Stewart as KQFC PD
March 3 – Word of Peak’s CC purchase released
March 12 – Stewart starts work
March 15 – Godwin resigns Citadel post
March 18 – Sutton and Owens resign
March 19 – Stewart fails to show up for duty at Citadel
On March 22nd, Lawely held an all staff meeting with the employees of Clear Channel Boise. Peak did not take control of the stations until April 1. Sources tell me that Lawley did not mention Godwin, Sutton or Owens by name.
Sources also tell me that Lawley brought up competitor Citadel during the meeting, specifically saying that Citadel would have to write a ‘very very large check’ if it wanted to hold on to the rights to Boise State University athletics, which are held by KBOI-AM.
Citadel alleges the following against Peak Broadcasting, Todd Lawley, Mike Owens, Mike Sutton, Rick Sutherlin and Kevin Godwin:
- Civil Conspiracy – Computer Crime
- Violation of Idaho Trade Secrets Act
- Unfair Competition
- Imposition of a Constructive Trust Upon Illegal Proceeds and Profits
- Trespass to Chattells/Conversion
- Breach of Fiduciary Duty – Loyalty (against Lawley, Owens, Sutton, Sutherlin and Godwin only)
- Breach of Fiduciary Duty – Confidentially (against Lawley, Owens, Sutton, Sutherlin and Godwin only)
- Violation of Computer Fraud and Abuse Act (against Godwin and Owens)
COMING: Summary of Peak’s response to the suit.
You don’t think Citadel is a little embarrased that they didn’t have contracts, and non competes with thier so called top executives, who by thier own admission were so valuble…..It’s not hard for any company to protect themselves against something like this happening….that includes executives, ceo’s and top air talent….the problem for most companies is they don’t want to loose the freedom to fire someone whenever they want for what ever they want……Citadel learned an important lesson, that companies always seem to have to learn the hard way….If you have a valuable employee, you have to pay them well and give them a contract that not only protects the company, but also the employee. You don’t think CC would have killed to not have lost Tracy and Margo 5 or 6 years ago……..
You’d have to be an ex- CC employee to understand this but reading the break down of the events is therapy to an ex-CC employee. Finally everyone will see what it’s like in that building. No other radio cluster in the could have been that backwards (although i hear from a friend that CC-Reno was just as “twighlight zone”)
I slime drips down from the top. It’s so funny how Godwin’s (as i mentioned on another post) final words to me were “if you leave you’ll always have a black mark on your resume for the way you left here” LOL LOL LOL. I just get a kick out of reading the way he left. He was being a slime ball because here he is doing the same thing (and i love it) but all i want is a written apology Kevin. Thats all! Nothing more than “I’m sorry Karma for being a slime ball, I now see how backwards CC is and you were right Karma” Signed Kevin Godwin
so i take it there’s just about every position available now at CC (sarcasm). I’m a hard working, creative person seeking a job for 22,000 bucks a year that wants to work for someone with zero radio experience and that will cause me to lose my will to live and get out of radio all together. i’ve heard CC is a perfect fit for me. Call me!
WOW! Those lawyers are going to REALLY clean up on this one!!!!!
Who’s representing who here? Inquiring minds in the legal community want to know.
Citadel is rep’ed by Perkins Coie, Peak grabbed some counsel from out of state that I didn’t recognize. I’ll look it up and post it when I get home.
I would have assumed that big Corporate boys would have their own in-house ambulance chasers, on retainer or working on their tab full-time. Is this the case or in siutations like this do you hire outside specialists…
Any of Those in the legal bureaus please empower us with your vast wisdom of such things….
So if the “competition in this market is keen,” is now a good time for me to come home and be on the air?
Chris, Yes. Its a wonderful time.
To ensure that you are on the air, the only thing that is required is to secure yourself ownership of a radio station license. The cost of admission to this party is very high, but that is the cost of job security these days.
Oh, and better retain the services of a good legal firm- you know, just in case….
There are firms that specialize in large scale, heavy litigation. That’s all they do. An inhouse counsel, even if these guys had one, would be more focused on day-to-day mundane legal tasks. This is one of those “best left to the professionals” type of deals.
That out of the way, this is going to cost both parties a PILE of money. This isn’t going to be something that gets resolved in hurry. A chance of settlement will probably only come after thousands of hours of discovery and trial prep work.
I think it’s entertaining that Citadel has retained Perkins Coie. Somebody from the Bannock bomb shelter is going to be spending plenty of time meeting with the lawyers. May as well pick the office that’s nicer than any Parade home I’ve been in.