MeritDirect Asks Court to Restrain Slater and DMI

The bitter divorce between Chad Slater and White Plains, NY-based business-to-business list firm MeritDirect took a new turn on Feb. 21 when MeritDirect took its former vice president to court. MeritDirect hopes the action will put a damper on Slater’s new firm, Integrated Marketing (IDM), and on its affiliation with Direct Media Inc.

The complaint alleges that Slater, who was terminated by MeritDirect last October, violated a noncompete agreement with the firm by starting IDM earlier this month. It also charges that he contacted MeritDirect’s employees and clients in violation of his contract.

MeritDirect asked for an order to show cause, which was issued yesterday, according to the firm’s attorney Stephen J. Curley. A hearing on MeritDirect’s request for a temporary restraining order against all three defendants is scheduled for March 17.

Slater had not seen the complaint at deadline, but he denied violating any agreements with “my former partner. They’ve violated agreements with me, and I look forward to prevailing in court on the issues.”

In a separate action, Slater is pursuing an arbitration case against MeritDirect–which recently moved from Stamford, CT, to White Plains, NY–claiming that he was wrongly terminated by the firm last October.

The charges and counter charges have roiled the normally placid world of business-to-business lists.

The complaint accuses Slater of breaking noncompete and non-solicitation covenants. and it also charges him and the other defendants with civil conspiracy, interference with business and client relationships, and violations of Connecticut’s Uniform Trade Act and Unfair Trade Practices Act.

Also named in the action on file with the Stamford, CT Superior Court are Direct Media and IDM. Direct Media chairman/CEO Dave Florence says news reports in Direct Newsline were the first he had heard of the situation. “We haven’t gotten a scrap of paper, phone call, or e-mail,” Florence says. “So we have no idea what they’re talking about—we certainly haven’t done anything wrong in providing him our back-office accounting services.”

MeritDirect decided to take the action after reading online trade press reports about Slater’s new business, Curley said.

The startup “flies right in the face of covenants he agreed to at the founding of,” Curley said. According to Curley, the covenants are in place until October 2004.

A Direct Newsline story on Feb. 22 reported that Direct Media had formed a consortium with American List Counsel, Paradysz Matera and IDM to market Direct Media’s cooperative B-to-B database.

Curley says that the legal action was filed too early to include allegations about the consortium, but that they may be included later.

The complaint continues that two employees in Slater’s department at MeritDirect abruptly resigned prior to the first story. “We have reason to believe they’re going down the street to work for Chad,” Curley says.

The papers add that since “Slater’s termination for cause, he has been contacting clients, prospective clients and employees and other business contacts of MeritDirect to further the business endeavors of Slater and Direct Media.”

MeritDirect also charges that Slater had “unrestricted access to information,” including client data and the workings of the firm’s private prospecting and cooperative databases, and that these trade secrets will give him an advantage when developing co-op databases with Direct Media.

Slater and MeritDirect CEO Ralph Drybrough, worked for Direct Media, prior to the founding of MeritDirect in 2000.

Florence of Direct Media says that regardless of the legal situation, he has no intentions of backing out of his firm’s arrangement with IDM, which not only seeks to jointly develop co-op databases, but also for Direct Media to provide back-office accounting services. “It’s a free country, and you can sell your back-office services to anyone if you want,” he says. “We don’t know for sure if MeritDirect will sue us or what—I’m a little puzzled.”–Additional reporting by Paul Miller, Catalog Age

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