TechAmerica files $5 million lawsuit against ITI, three former execs

Monday - 11/11/2013, 3:40am EST

The rivalry between TechAmerica and the IT Industry Council just turned ugly.

TechAmerica filed a lawsuit in the Superior Court of Washington late Friday against ITI and three of the four senior executives who resigned from the association last week, claiming breach of contract and seeking $5 million in damages.

"To put it simply, there is a right way and a wrong way to leave a job. We don't begrudge anyone for wanting a change, but perpetrating illegal acts on your way out is not the way to do it," said Dennis Stolkey, chairman of the TechAmerica Board of Directors, in a statement. "These three individuals and ITI have attempted to damage TechAmerica's service to its members through unlawful means. That is not acceptable."

TechAmerica submitted a four-count lawsuit against Trey Hodgkins, Pam Walker and Carol Henton and ITI, claiming the three former employees breached their contracts and gave ITI proprietary information that will harm TechAmerica's business advantage.

TechAmerica didn't include Erica McCann, the fourth TechAmerica executive to leave and join ITI last week, in the lawsuit.

"ITI is a membership organization that is focused first on returning value on the investment of its member companies," said Dean Garfield, ITI president and CEO. "With that in mind, ITI will fully defend itself in this lawsuit and will not allow this suit to be a distraction from our work and responsibility to our membership. Our goal is to meet and exceed our members' needs—nothing more, nothing less."

TechAmerica is asking the court to:

  • Issue a temporary restraining order and preliminary injunction prohibiting the defendants from using any of the associations trade secrets or information;
  • Award TechAmerica compensatory damages of $5 million;
  • Award TechAmerica punitive damages as decided during the trial;
  • Have the defendants pay for attorney fees and court fees as well as provide other relief as determined by the court.

In court documents obtained by Federal News Radio, TechAmerica claims Hodgkins, Walker and Henton violated the employee handbook's confidentiality and proprietary information policies. Among those policies are rules against disclosing information without TechAmerica's approval and a prohibition against trying to get member companies to reduce or stop doing business with the association.

TechAmerica said Hodgkins, Walker and Henton violated the handbook provisions by recruiting at least 12 companies to commit to paying $50,000 in advance to become an initial member of ITI's new public sector organization, the IT Alliance for Public Sector (ITAS).

TechAmerica claims that ITI would only hire Hodgkins, Walker, Henton and McCann if they could gain the commitment of at least 12 companies to pay to become part of ITAS.

The lawsuit alleges, after the four employees quit, Henton downloaded proprietary information to her association-provided laptop's hard drive, including the TechAmerica membership list, the annual dues paid and renewal dates.

"The information contained in the TechAmerica spreadsheet derives actual and potential economic value from not being generally known to, and not being readily accessible by anyone outside of TechAmerica, including ITI, who can obtain economic value from its disclosure and use," the court documents stated.

TechAmerica claims Henton sent emails using the contacts in the spreadsheet to member companies from her ITI email address for two days after she quit her previous position.

TechAmerica alleges Henton did so at the direction of Hodgkins, who she copied along with Walker on many of the emails.

Court documents say Henton added a column to the TechAmerica spreadsheet detailing if member companies were interested in joining ITAS.

TechAmerica states in the court documents that Henton wrote in an email on Nov. 7 that IT was "talking to" another TechAmerica employee and that she "hope[d] they can bring him into ITI too," because doing so "would seal the fate of TA."

TechAmerica also alleges that Walker used her knowledge of the Health IT Advisory Group to recruit members from TechAmerica and create a similar organization at ITI, under the direction of Hodgkins.

"As a member-led organization, we are not going to sit idly by and have our organization diminished because of the illegal acts of a few," Stolkey said. "Our members have put their intellectual and monetary resources into building TechAmerica over many years. We owe them a duty to defend their investments and interests from the unlawful actions of a few disgruntled individuals."

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