CPI sues ASG, accusing it of ‘raiding’ CPI’s sales reps

ASG denies wrongdoing
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Wednesday, October 2, 2013

CHARLOTTE, N.C.—CPI Security Systems, based here, has filed a lawsuit against the Alarm Security Group (ASG), accusing ASG of “raiding” sales reps from CPI by means of deceptive practices.

Now, CPI contends in the lawsuit, former CPI employees working for ASG “are misappropriating CPI’s confidential/proprietary information and trade secrets … and ASG is directly benefiting from this misappropriation.”

The lawsuit was filed last week in the General Court of Justice, Superior Court Division, Wake County, N.C.

Bob Ryan, ASG senior VP of sales and marketing told Security Systems News in an email communication: “We have not seen the complaint so we can’t comment except to say [that] we don’t believe we’ve engaged in any wrongdoing.”

ASG is based in Beltsville, Md. but is a “direct competitor” of CPI because it has offices in North Carolina in Raleigh, Wilmington and Charlotte, the lawsuit says.

CPI says in the lawsuit that it hired four sales reps earlier this year to work in CPI’s Raleigh office. One was hired in February and the other three in April, CPI says.

The reps, called security consultants by CPI, all signed employment and non-competition agreements that, among other things, barred them from using or disclosing CPI’s confidential information or trade secrets and from working for a CPI competitor for a year after leaving CPI.

But in June, all four sales reps resigned from CPI. The four said they would pursue different business ventures, but all are now working for ASG in its Raleigh office, “in virtually the same role for ASG as they held at CPI,” CPI alleges in the lawsuit. The four sales reps also are named as defendants in the lawsuit.

Also, the lawsuit claims, ASG “directly solicited other CPI employees as well” this year. It says an ASG sales manager emailed at least seven other CPI top sales reps between May 9 and June 5.

ASG offered many a $1,000 bonus to sign up with ASG and also gave them “a false representation of North Carolina law” to persuade them to break their contracts with CPI, that company says in the lawsuit. It alleges that ASG told the employees that because North Carolina is “right to work” state, the non-compete contracts the employees signed “only means you can’t solicit current customers.”

The lawsuit calls ASG’s actions “unfair and deceptive trade practices” and said they “had the effect of raiding CPI.”

The lawsuit further states that “ASG is engaging in a calculated effort to target and hire away CPI security consultants and managers, and in so doing inducing them to breach their contractual obligations to CPI.”

It says the employees “have and will inevitably disclose CPI’s confidential, proprietary information to ASG.” That constitutes a violation of the North Carolina Trade Secrets Protection Act, according to the lawsuit.

CPI seeks an unspecified amount in damages and wants a judge to bar its former employees and ASG from any use of CPI’s confidential business information.

Heidi Cowley, CPI’s VP of marketing and corporate communications, told SSN that the lawsuit was self explanatory so the company didn’t want to comment further.

She added, “Efforts were made to try to do it [resolve the problem] in a different manner to no avail, so we decided to move forward [and file the lawsuit].”

The lawsuit claims CPI President and CEO Ken Gill previously contacted ASG CEO Joe Nuccio, exchanging emails and having conversations about CPI’s concerns, but “ASG continues to employ the former employees and continues to attempt to raid CPI.”