Reader's Digest's Books Are Fun division has filed a lawsuit charging that several former BAF employees breached their fiduciary duty and engaged in unfair competition when they established Reader's Choice Books, a display marketing company that competes with BAF.
In the suit, filed in the Iowa District Court for Jefferson County, BAF alleges that Stephen Rosebrough, former head of book buying for BAF, along with regional managers Steven Craddock, Mark Rader and Virgil Streck, used confidential information to develop RCB's business plan and to recruit sales and marketing reps. BAF is seeking punitive damages as well as an injunction prohibiting the defendants from using trade secrets and other proprietary information to run RCB.
The lawsuit accuses Rosebrough, who resigned from BAF last November and established RCB in December, of using his access to BAF's confidential testing methods to determine how books will sell in establishing RCB's selection process. The complaint also charges that Rosebrough "deviated" from his usual business conduct during his last year at BAF, buying large quantities of untested books, while buying insufficient stocks of popular titles. This was part of Rosebrough's plan, the lawsuit alleges, to sow dissatisfaction with BAF customers and sales reps so that he could "lure" them to RCB.
Craddock, Rader and Streck are charged with soliciting BAF employees and reps to work at RCB while they were still employed by BAF. The complaint also charges that the three men used "threats and promises" to induce BAF employees and reps to leave BAF for RCB.
The lawsuit charges that the actions of the defendants caused BAF to lose sales and profits and damaged its reputation.
RCB did not return a call for comment by press time.
