CVSL Pursues Dismissal of Lawsuit by Former Longaberger Chief
October 21, 2015 Leave a comment
Photo: Longaberger’s Newark, Ohio, headquarters building, modeled on the Longaberger Medium Market Basket.
A dispute between ousted Longaberger Co. CEO Tami Longaberger and her former employer has made its way to the Common Pleas Court of Franklin County, Ohio, where the company has filed a motion to dismiss Longaberger’s lawsuit for $1 million in alleged unpaid loans.
The lawsuit, filed on Aug. 12, also names as defendants CVSL Inc., controlling partner of Longaberger Co., and Agel Enterprises, a subsidiary of CVSL. Longaberger, daughter of company Founder Dave Longaberger, claims she made three separate loans to CVSL in 2014 as the company faced a “severe cash crisis.” According to the former executive, the notes have come due without any payments of principal or interest.
In a motion filed Oct. 12, CVSL alleges that all of Longaberger’s claims are subject to binding arbitration, per a provision in the employment agreement between Longaberger and CVSL. The two parties signed the agreement in March 2013, following CVSL’s acquisition of Longaberger Co. Claiming the entire dispute falls under the scope of arbitration, CVSL has urged the court to dismiss the case with prejudice.
Longaberger filed her own arbitration demand at the time she filed the lawsuit. In its motion, CVSL states that it has responded to Longaberger’s demand with multiple counterclaims of its own, related to Longaberger’s actions while employed by the company, “including breach of fiduciary duty, fraud, negligence, conversion, misappropriation of company funds, civil theft, breach of contract, and misappropriation of trade secrets.”
According to CVSL, the alleged misconduct came to light following Longaberger’s decision to resign from her role at the basket-maker and her seat on CVSL’s board of directors. In resignation letters dated April 28 and May 29, Longaberger claimed CVSL had cut her base pay by $600,000, placed executives over her at the company, and caused Longaberger to fail to pay sales taxes in several states, prompting authorities to assess her personally.
CVSL terminated Longaberger before her employment period ended, a decision it defended in a June 1 letter to Longaberger. The company states that an internal investigation revealed “substantial misconduct that has damaged the Longaberger Company and CVSL.” The letter claims that Longaberger was unwilling to work closely with the company’s sales field, engaged in an inappropriate personal relationship with a subordinate executive, and frequently absented herself from Longaberger’s corporate office.