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Reader's Digest sues former employees for unfair competition, control
By Caroline Salls
Pittsburgh, May 13 - Reader's Digest Association, Inc. and Haven Home Media, LLC filed a lawsuit Monday in an attempt to prevent a group of former employees from unfairly competing with the plaintiffs and improperly exercising control over bankruptcy estate property, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.
Reader's Digest and Haven Home said they are seeking damages already sustained in connection with the defendants' alleged wrongful conduct before and after the companies filed for bankruptcy.
In addition, the plaintiffs said four of the defendants have been diverting business away from Reader's Digest and Haven Home, "by improperly exercising dominion and control over valuable estate assets in willful violation of the automatic stay" imposed by the Bankruptcy Code.
"Specifically, defendants have been improperly using client relationships, goodwill and confidential and proprietary information that they either developed at plaintiffs' expense or sold to plaintiffs for valuable consideration," the lawsuit said.
The plaintiffs said Haven Home Media co-founder Daniel P. Meehan "has carried out this scheme in flagrant breach of a non-competition agreement he signed when he sold his business to plaintiffs and received millions of dollars in return."
Meanwhile, the plaintiffs said Haven Home co-founder Andrew Augustine and Jennifer Klimek-Gavin assisted Meehan and his competitive business PadSquad LLC in this scheme while still employed by the plaintiffs by secretly soliciting clients, vendors and strategic partners for Meehan and PadSquad and diverting corporate opportunities to them.
Reader's Digest, a subsidiary of RDA Holding Co., is a media and direct marketing company based in New York. The company filed for bankruptcy on Feb. 17 under Chapter 11 case number 13-22233.
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