SpeakerCraft Co-Founder Seeks $1 Million in Damages in Suit Against Nortek

Former SpeakerCraft President Jeremy Burkhardt is seeking damages and a declaratory ruling that his non-compete agreement against SpeakerCraft Inc., SpeakerCraft LLC, Linear Corp. and parent company Nortek has “expired,” according to a complaint Burkhardt filed in California Superior Court in Santa Ana. In the complaint, which was filed Nov. 9, but surfaced only recently, Burkhardt claims his former employer and its affiliates “are using a nine-year-old non-competition agreement that expired in 2008 to block him from earning a living in an industry to which he devoted substantially his entire adult life, to restrain him from working with others, and to dissuade others from working with and employing him.”

Burkhardt is seeking monetary damages and asking the court to declare that the non-compete agreement is “expired, invalid and unenforceable,” said court documents. In the lawsuit, Burkhardt said as CEO and co-founder of SpeakerCraft, he acquired an ownership position in the company before 2003, when Nortek subsidiary Linear Corp. bought SpeakerCraft in a stock purchase agreement that included non-competition and non-solicitation clauses. Burkhardt said his employment with SpeakerCraft continued until December 2009 when SpeakerCraft “stopped doing business as a result of the bankruptcy of Nortek and its subsidiaries."

Nortek then formed SpeakerCraft LLC, which bought the assets of SpeakerCraft Inc. from the bankruptcy estate, according to the suit. Burkhardt was employed by SpeakerCraft LLC as president and “has never been employed by Linear Corp, Linear LLC or Nortek, Inc.,” according to the suit.

Burkhardt claims the Nortek bankruptcy cost him $1 million that he invested in Nortek when it acquired SpeakerCraft in 2003, his complaint says. He was “repeatedly promised” by Nortek’s chairman at the time that he would be repaid the $1 million in the form of bonuses, it says. After Nortek Chairman Richard Bready retired in June 2011, the company “repudiated its agreement” with Burkhardt, and SpeakerCraft notified Burkhardt the company would not renew his contract, his complaint says. SpeakerCraft also “substantially reduced” Burkhardt’s compensation and bonus opportunities, “while taking the position that Mr. Burkhardt could not work anywhere else in the industry” due to the non-compete agreement, the suit alleges. As a result, it says, Burkhardt has refrained from pursuing job opportunities and suffered “financial loss for each day that he remains unemployed, in an amount to be proven at trial."

The non-compete is “overbroad, invalid and unenforceable,” Burkhardt alleges, because “it purports to apply not merely” to SpeakerCraft but also to Linear “and its unspecified subsidiaries.” He maintains in the suit that “the mere existence of a non-competition agreement is enough to persuade many employers not to hire qualified applicants” because of the fear of a resulting lawsuit. He claims further that the defendants “engaged in unlawful conduct designed to interfere with and disrupt” Burkhardt’s existing and prospective economic interests “including using the threat of litigation” to enforce the non-compete agreement in an attempt to prevent Burkhardt from obtaining employment. Burkhardt is also seeking unspecified punitive damages, claiming “emotional stress and anguish” and accuses the defendants of “intentional, malicious and oppressive” acts.

Requests for comments from lawyers for Burkhardt and Nortek weren’t answered by our deadline Friday.