NEWS10 May 2010

OTX sues Luck for breach of contract and unfair business practices

Legal North America

US— OTX has filed a counterclaim against former executive Kristin Luck. She is accused of breach of contract and unfair business practices.

Luck’s former business, Forefront Consulting Group, and her current employer, Decipher, are named as third-party defendants in the action.

OTX is suing Luck (pictured) individually to recover the $152,000 it paid her as part of a settlement and release agreement relating to the termination of her employment contract in December 2005.

The online research agency claims Luck breached the terms of the agreement by starting a competitive business, Forefront, through which she then allegedly solicited OTX staff and clients.

In its claim for unfair business practices against Luck, Forefront and Decipher (which bought the Forefront business in June 2007 ), OTX repeats its allegations that staff and clients were unlawfully poached, but also accuses the defendants of misappropriating and using OTX’s proprietary information and trade secrets.

OTX is seeking restraining orders demanding the return of the proprietary information and trade secrets, the cessation of unfair business practices and an order forcing Luck to keep to the terms of various agreements between her and OTX. The company is also seeking unspecified damages and attorneys fees.

The counterclaim was filed in response to Luck’s own claims for money allegedly owed to her by OTX, both in connection with OTX’s recent sale to Ipsos for $71m and for $82,000 in unpaid settlement.

Luck said her stake in an employee incentive scheme entitles her to a share of the OTX purchase price, but OTX claims it has paid her “all amounts currently due”: that is $11,300 in connection with Ipsos’s $60m upfront payment, with the prospect of an additional $5,700 should Ipsos make a scheduled deferred payment of $11m in two years’ time.

As for the unpaid settlement, court filings include a letter dated 25 August 2006 sent from OTX to Luck explaining that the company would not pay all that was due under the settlement agreement because of Luck’s alleged breach of terms – though at that time OTX did not seek to recoup payments already made.

Luck worked for OTX for more than five years from June 2000. She was latterly executive vice president of operations and corporate strategy.

Her counsel Joseph Kar said: “It appears that defendants OTX are using the litigation as a platform to smear Mrs. Luck’s good name. My brief analysis of the counter claim reveals many improper or false allegations, which will be addressed in her formal response in court.

“It is interesting, however, to note that OTX has elected to bring these claims against Mrs. Luck and her new current employer, admitting that they were known to them in 2006. Waiting to file these types of claims, for such a long period of time, smacks of retributive litigation which we hope the court will recognise and properly dispose of.”