Standard Register Sues Former Employees
Seeking Action Against Craig Stockmal And Lynn Smith
Top 40 distributor Standard Register (asi/333647) has filed a lawsuit against two longtime, former employees, alleging the pair used trade secrets and customer contacts to start a similar company, according to documents filed in federal bankruptcy court. Standard Register says the resulting loss of key customers could threaten its $307 million sale to Taylor Corp., the top bidder in its recent bankruptcy court auction and the parent company of Top 40 supplier Taylor Promotional Products and Top 40 distributor Amsterdam Printing (asi/121500).
Standard Register is seeking action against former sales employees Craig Stockmal and Lynn Smith, alleging breach of contract and misappropriation of trade secrets, among other counts, in the suit filed in U.S. Bankruptcy Court for the District of Delaware. According to the lawsuit, Standard Register argues there was a “deliberate scheme” by Stockmal and Smith to steal trade secrets, confidential and proprietary information and customer contacts obtained while employed at Standard Register to divert customers to their new firm, Focused Impressions. “Stockmal and Smith are now leading Focused Impressions, having secretly served as its founders, officers, executives and operatives while still employees at Standard Register, and using this misappropriated information to attempt to steal key Standard Register customers,” according to court documents.
Stockmal and Smith, however, contend that Focused Impressions is solely a software company, and does not compete with their former employer. Focused Impressions is working on a cloud-based product for third parties to aggregate marketing efforts. “In setting out to develop a new company, there would be no incentive to me in relying upon such outdated technology,” Stockmal said in a filing responding to Standard General’s suit.
On Wednesday, the Delaware court issued a two-week restraining order against Stockmal and Smith, scheduling a hearing for July 15. David Rich, an attorney representing the pair, said the interim order prevents Stockmal and Smith from contacting Standard Register customers during that time. Rich added, however, that “the court had ‘significant reservations’ about the plaintiff’s claims.”
Based in Dayton, OH, Standard Register reported to Counselor that its 2014 North American ad specialty sales were $118.8 million, a year-over-year increase of about 6%. The sale of Standard Register was necessary after it filed for Chapter 11 bankruptcy protection in March due to its financial state, which included debts of nearly $184 million to complete the acquisition of WorkflowOne, a former Top 40 distributor.