MONTVALE, N.J. — The revolving door at A&P's executive suites has become hazardous.
The retailer — which, while attempting to restructure in Chapter 11 bankruptcy, is already being sued by two former chief executive officers and by the former employer of its current CEO — last week sought a restraining order that would prevent another top executive from defecting to rival Stop & Shop.
Frank Vitale, who was vice president of operations for A&P when he resigned Feb. 14, took on a similar role at Stop & Shop beginning Feb. 21 — and literally took a boxful of trade secrets with him, A&P alleged.
Vitale was forbidden to work for a competitor for 18 months following his resignation as a condition of having participated in a long-term incentive program for select A&P employees, A&P said in a complaint filed in U.S. District Court in Brooklyn, N.Y., last week. A&P is seeking an order to prevent Vitale from working for Stop & Shop or any other competitor, and to prevent Stop & Stop from having any contact with Vitale.
Arguments were expected to be heard late last week, according to an attorney for A&P. Stop & Shop, a Quincy, Mass.-based division of Ahold, had not acknowledged that it hired Vitale, nor filed a response to the lawsuit by late last week. A spokeswoman for the chain did not return a call for comment.
According to the suit, Vitale walked away from A&P with physical copies of what the retailer termed its “most sensitive information,” including a list of stores on its closure watch list, sales information and details of A&P's competitive and restructuring strategies.
Vitale had been an employee of Pathmark for more than 40 years and became a regional vice president of operations for A&P when it acquired Pathmark in 2007. Vitale was the second-highest-ranking operations executive at the company, with responsibility for A&P's stores on Long Island, N.Y. — the same job he was hired to do for Stop & Shop, A&P's suit said. Vitale was among the “Tier 2” employees eligible for a bonus under a short-term incentive plan approved by bankruptcy court last month.
A&P's suit said Vitale was currently participating in a four-month training program at Stop & Shop.
Vitale's departure violated restrictive covenants and confidentiality provisions contained in two separate agreements, A&P said. “Vitale has intimate knowledge of A&P's proprietary information … such as marketing strategies, pricing strategies, sales [and] labor forecasts, the identities of stores on the closing list, stores that were high performers, knowledge of key store operators, and A&P's sales transfer program,” the retailer said. “[M]ost important, Vitale had intimate knowledge of A&P's restructuring plans, which included plans to alter the stores' footprint, possible store closings, marketing and general strategy to emerge from Chapter 11.”
A&P said lawyers for Stop & Shop produced a “banker's box” full of such documents during negotiations to settle to the dispute. A&P brought suit when Stop & Shop declined to settle, the retailer said.
A&P has been deep in personnel issues of late. It acknowledged when it filed for Chapter 11 protection in December that breach of contract lawsuits were pending from Eric Claus, the CEO who left the company in 2009, and Ron Marshall, who was hired to succeed Claus in 2010 only to be dismissed months later. The bankruptcy filing in December triggered an automatic stay for lawsuits against A&P.
In the meantime, A&P is being sued by retailer OfficeMax, the former employer of A&P CEO Sam Martin and several of his colleagues who followed him there. The OfficeMax suit, filed in an Illinois state court, alleges that Martin improperly solicited Carter Knox and Paul Hertz to leave their employment with OfficeMax and join A&P after Martin was hired to succeed Marshall.
In court papers, A&P described OfficeMax's claims as “baseless.” Attorneys for OfficeMax were not available.