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FURASH & COMPANY, INC. v. MCCLAVE

January 4, 2001

FURASH & COMPANY, INC., PLAINTIFF,
v.
KATHLEEN C. MCCLAVE, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Oberdorfer, District Judge.

  MEMORANDUM

I.

The following facts are undisputed.

A. McClave's Employment at Furash

McClave began working at Furash in 1983 and continued there until 1993, when she left for a position at the Wharton School, University of Pennsylvania. While at the Wharton School, McClave continued working part-time at Furash. In July 1996, she returned to Furash full time as the Vice Chairman and Co-Chief Operating Officer, jointly operating the company with Rolland Johannsen, Furash's Chairman and Chief Operating Officer. Plaintiff's Consolidated Opposition to Defendants' Motion for Summary Judgment, pp. 3-4 ("Pl.Opp'n").

In December 1997, Furash's owner, Headway Capital Industries, sold Furash to InterBank Communications Inc., part of a group of closely related companies owned or operated by Simon Hershon and Ehud Laska, known as the Interbank Companies ("Interbank"). In February 1998, after a three month transition period, Johannsen left Furash, and McClave became President and Chief Executive Officer. Pl. Opp'n at 4. She served as President and Chief Executive Officer from January 1, 1998 until December 31, 1998 pursuant to a contract with Interbank. She continued working at Furash for a brief time in January 1999 after her contract expired. McClave's contract with Interbank did not include a covenant not to compete. Contract Between McClave and Interbank, Def.'s Statement of Material Facts, Ex. A.

Sometime during the 1997-1999 period, Furash began experiencing financial difficulties, and Hershon and Laska directed McClave to attempt to find a company to purchase or merge with Furash. McClave spoke with a number of companies, including Towers, Speer and Associates, "Lee-Mack", "AMS", "Total Research", "Dove", and "Treasury Strategies", but was unable to consummate a sale or merger. McClave Dep., Pl. Opp'n, Ex. 1, p. 102-103. Plaintiff claims that, while meeting with these companies, McClave acted on her own behalf by seeking employment for herself outside of Furash, rather than seeking a partner or buyer, as Furash's owners had directed.

B. McClave's Employment Discussions with Towers

In 1998, Towers decided to expand its financial consulting "Tillinghast" subsidiary, by which McClave is now employed. McNees Dep., Pl. Opp'n., Ex. 5, pp. 35-36. As a result of this decision, in May or June 1998, Don McNees, director of Towers' banking, investment management, and securities practice, requested that an executive recruiter contact McClave regarding the possibility of employment at Towers. Id. at 31-32. McClave responded through the recruiter that she was not interested in being hired at that time, but that she wanted to meet with Towers concerning a transaction with Furash. Id. When McClave and McNees met in June 1998, McClave informed McNees of Furash's interest in pursuing some type of acquisition or partnership with Towers, and McNees suggested that instead of a corporate transaction, McClave could leave Furash and join Towers. Later, in July 1998, McNees informed McClave of Towers' final rejection of a deal with Furash. Id. at 34-35.

In September 1998, McClave and McNees again began discussing employment opportunities. In connection with his recruiting efforts, McNees gave McClave a set of guidelines entitled "INSTRUCTIONS TO GIVE A CANDIDATE FOR HIRE FROM A COMPETITOR." The instructions listed the following:

Clients

• Should not tell clients he is leaving employer until he has told employer.

• Should not ask clients to follow him.

• Should cooperate with employer's efforts/instructions regarding transitioning their clients to new employees to competitor.
• Should not tell or suggest to clients that they request their files or anything.

Information

• Should not take anything with him — originals or copies/software

no client information

no copies of work he has done

no competitor information — regarding company, ...

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