CDW Sues Former VP

Mar 13, 2003 10:30 PM  By

(Direct Newsline) A competitive battle in the computer market has ended up in court.

CDW Computer Centers has sued former vice president of marketing Joseph K. Kremer, charging that he bolted to Dell Computer Corp. in December armed with trade secrets. Alleging that “Dell is seeking to expand its SMP [small and midsize professional] sales at CDW’s expense,” CDW wants Kremer enjoined from taking on responsibilities that will lead to the disclosure of those secrets.

Chicago-based CDW also demands the return of more than $746,000 in stock option proceeds that Kremer allegedly received before he left.

CDW has called for expedited discovery in the case, which recently was moved at Kremer’s request from a local court in Chicago to the U.S. District Court for the Northern District of Illinois. Kremer now lives in Austin, TX.

Calls to Kremer and his attorney had not been returned at deadline. CDW executives would not comment on the case.

The complaint charges that Kremer resigned last Dec. 18, “immediately after attending a meeting of CDW’s executive committee,” and that he announced his plans to focus on the so-called SMP market at Dell.

CDW believes that Kremer’s task will be “to oversee the development and implementation of marketing and sales plans” for the segment, with an emphasis on the corporate and public sectors. The SMP product line accounts for 75% of CDW’s business, and the corporate and public sectors providing 97% of its sales, the complaint continues. The SMP market constitutes 10% of Dell’s sales, the papers state.

The complaint argues that Kramer had inside knowledge of CDW’s vendor relationships, marketing plans, and pricing and customer segmentation strategies. CDW has asked for an order enjoining Kremer from working in any of these areas for a reasonable period of time to prevent “the inevitable disclosure” of the secrets. The firm claims that Kremer signed a confidentiality agreement.

Citing the rules of its stock incentive plan, the firm also wants Kremer to return the stock option monies, which were above his “base salary and sizable bonus.” Kremer was awarded options on 190,557 shares of stock at various prices, and exercised options on 26,837 shares between May 2001 and November 2002, the complaint adds.