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Former Groupon sales reps countersue over tactics
Fri, Jan 27 19:05 PM EST
By Jonathan Stempel
(Reuters) - Former Groupon Inc sales representatives sued by that company after leaving for Google Inc have filed a countersuit, claiming their former employer is pursuing "sham" litigation to keep them from joining rivals.
Groupon, which runs the world's largest online coupon website, had accused Nikki Dorough, Brian Hanna and Michael Nolan of taking confidential trade secrets when they moved to the world's largest Internet search company. Google launched its own daily deals business early last year.
The workers maintained that Groupon, by filing its complaint on October 21, was trying to illegally stifle competition and bully workers, as it prepared to "cash in" through its upcoming, eagerly awaited initial public offering.
"In its stop-at-nothing strategy to take itself public and further enrich its founders, Groupon has crossed the line," the workers said. "The message is clear: don't leave Groupon and if you do, don't attempt to use any of the skills and experience you may have developed while working for us."
The workers said they are in their mid-20s and decided independently of each other to join Google in the fall. Their countersuit was filed on Wednesday in the Cook County Circuit Court in Illinois, where Groupon had originally sued.
Julie Mossler, a Groupon spokeswoman, said: "We believe these counterclaims have no merit and we remain confident of our case."
Groupon went public in the first week of November in an offering that valued the Chicago-based company at $12.8 billion.
It was the largest IPO for a U.S. Internet company since Google went public in 2004 and followed Groupon's having spurned in 2010 a roughly $6 billion takeover by that company.
According to Groupon, the workers violated a clause in their employment agreements that barred them from working for a direct competitor for two years after leaving.
The workers believe that clause is unenforceable and unnecessary as none had access to confidential, sensitive or proprietary information.
They also contended that Groupon is using them as a "prop," having served a subpoena to Google not simply for information to help its case, but also to "obtain intelligence on a burgeoning competitor" in an effort to preserve market share.
"These are young people who are industrious, entrepreneurial and trying to earn a living, and Groupon is trying to prevent them from doing that," Steven Molo, a lawyer for the workers, said in a telephone interview. "The law does not allow it."
Dorough, Hanna and Nolan seek compensatory damages for interference with their current work, plus punitive damages. They also want their non-compete clauses to be voided.
According to industry tracker Yipit, Google's daily deals business, Google Offers, had $3.5 million of gross billings in November, while Groupon had $154 million.
Sierra Lovelace, a Google Offers spokeswoman, declined to comment on the lawsuit, noting that Google is not named as a defendant. Google is based in Mountain View, California.
Groupon shares closed up 2.6 percent on Friday, rising 51 cents to $20.04 on the Nasdaq. The company went public at $20 per share.
The case is Groupon Inc v. Hanna et al, Cook County Circuit Court, No. 11CH36731.
(Reporting By Jonathan Stempel; editing by Gary Hill and Andre Grenon)