By: Press Release | CIPS Marketing Group, Inc.
CIPS Marketing Group, Inc. has secured another victory in the ongoing lawsuit against former vice presidents Kennedy Higdon and Peter Friedrich and their start-up company, Global Ad Distribution (“Global”). CIPS recently exposed spoliation of data and documents by Higdon and Friedrich, which the presiding judge found to constitute concealment and destruction prohibited by California law. On June 28, 2013, the Court awarded CIPS significant monetary sanctions, to be paid by Higdon and Friedrich pending jury agreement with the Court’s conclusion. This significant ruling further confirms a pattern of egregious conduct by the defendants.
At the onset of this litigation last fall, CIPS obtained a preliminary injunction prohibiting Higdon, Friedrich and Global from acquiring, disclosing or using any CIPS’ confidential customer information, financial data and distributor information. In the early stages of the lawsuit, the Court concluded that they had, “obviously breached their fiduciary duties, and took CIPS’ confidential information to their new business.” According to the Court, Defendants’ evidence to the contrary was “simply not credible” and they had “acted surreptitiously while stealing CIPS’ information for their new business.” As a result, the Court granted a motion to compel production of information in the possession of Friedrich, Higdon, and Global then, ordered the defendants pay monetary sanctions to CIPS as a result of their violations of discovery rules and abuses of the discovery process in the litigation.
In its latest ruling, the Court concluded that Higdon’s and Friedrich’s “efforts (as framed by the court at the earlier injunction stage) to conceal or destroy evidence was ongoing after the earlier court order was made.” We are confident that the matter will be decided in our favor at the conclusion of the upcoming trial.
CIPS’ lawsuit seeks to prevent the Defendants from engaging in any improper solicitation of CIPS clients, and to recover damages for what the lawsuit alleges is a pattern of conduct that began when Friedrich and Higdon were employed at CIPS, and continued following their departure. CIPS sincerely hopes to avoid involving its clients in this matter, and will only do so if it feels it has no choice. CIPS believes the lawsuit is necessary to preserve its confidential information and reputation in the industry, as well as to preserve the overall integrity of the alternate distribution industry. “We are grateful that our business continues to grow and CIPS is experiencing an incredible response from the industries we serve. To that end we cannot let the behavior of Higdon, Friedrich, and Global go unchecked. CIPS will stay the course with this lawsuit for our customers and employees, and to ensure the integrity of the industry is preserved,” said Manuel Collazo, CIPS’ Vice President of Sales and Marketing. CIPS will continue to keep its clients and the industry updated of any material rulings or decisions by the Court.
LA Times Exec
The backlash against CIPS for this behavior is good to see. I recently left the LA Times and was somewhat close to CIPS and its board members (fellow LA Times execs). There should be no mistake that the board members are behind this nonsense as much as, if not more than, the CIPS management team itself, specifically Bill Nagel. If Global is smart, they will target the individual board members in whatever counter action they take, since they all believe they are at a safe army's length from consequence. It was the board's decision to "litigate Global out of business" before they even sought legal counsel and started to develop and frame a negative narrative against Frederick and Higdon. Their objective was to ruin them before they even got off the ground.
Former
8/1/2013
Former CIPS customer
This is disappointing. Our industry needs companies like CIPs and Global to offer an alternative to mail delivery while providing world class service. Spending time on frivolous lawsuits takes time away from them being able to do that. I also find it disturbing when CIPs claims that they “hope to avoid involving clients in this matter”. I was deposed for over 4 hours by their attorneys, then again I am a former client. Before contracting with Global, we were experiencing several issues with our TMC and Sunday Select distribution. Advertisers were threatening to pull out because they were getting excessive complaints that people were not receiving the products, we would see homes with several weeks of old issues in the driveways and/or in the street, etc. They also did not fulfill their commitment on proper staffing and we were finding bundles of papers on street corners, in dumpsters, in fields, etc. These were some of the reasons I approached Global. After signing with Global we found the largest dumping of undelivered product I have seen in my 20+ years I the business. Papers and bundles were dumped over an area the size of a football field and were dated during the time our prior vendor was contracted. Since contracting with Global we have not received a single complaint from an advertiser, communication is almost daily with thorough follow-up on their part, they have come to us with great solutions on working with HOAs and we are not seeing the mess we saw with the previous vendor. They have even helped me with a few maps of our area that had nothing to do with their distribution or in their contract. I have found Ken, Pete and their team willing to go above and beyond to satisfy our requests and keep our customers happy.
For Real?
7/25/2013
ErniePaperBoy
As someone who knows Higdon & Friedrich extremely well, as well having a short experience with the new executive team at CIPS, this lawsuit is pure BS, and appears only to be a campaign of slander by people whose feelings are hurt by their departure......and their rapid and deserved success. I'd recommend Global Ad Distribution to anyone. We moved our business to them after the service dramatically fell off after they left CIPS. Service is the only reason we moved the business, and Global delivers.
Agree With These Comments 100%
7/24/2013
Stephen Jacobs
Such an irresponsible smear campaign by CIPS and the LA Times (owners of CIPS). Perhaps E&P is just as irresponsible for running this smear. Neither of you are doing any favors for the industry. Time move on, CIPS.
Irresponsible
7/23/2013
Michael
I believe Dan Schaub's scathing response to you represents the views of most of us in the industry when he wrote... Manuel - Please remove me from your e-mail grouping for all future correspondence on this matter. It appears you are not following your own commitments / statements. Below you stated: "CIPS sincerely hopes to avoid involving its clients in this matter, and will only do so if it feels it has no choice." Why would you send this massive e-mail if this was your true position. Next you state : "CIPS believes the lawsuit is necessary to preserve its confidential information and reputation in the industry, as well as to preserve the overall integrity of the alternate distribution industry." This may not be working for you and I'm not sure I understand this at all. From my vantage point it's clear that you are spending at least some of your time harming an industry that has normally worked well together. Colleagues - Here at McClatchy we have relationships with a good number companies (to include CIPS and Global) that are in the business of helping us deliver products and services. I would be more than happy to share our learning's with any company whom is preparing for new programs, innovations and ways to grow our respective business. Sharing things that grow our business is a healthy thing to do..... Kind Regards, Dan S. Dan Schaub Corporate Director of Audience Development The McClatchy Company I www.mcclatchy.com O/916-321-1693 I M/916-203-0634 I E/ dschaub@mcclatchy.com
Disgusting
7/23/2013
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