Lawsuit Alleges C-Suite Purge at Starkey Hearing Tech was Retaliatory and Tied to Family Drama
October 9, 2015
By Alex Keown, BioSpace.com Breaking News Staff
EDEN PRAIRIE, Minn. – A September purge of C-Suite executives at Starkey Hearing Technologies (formerly Starkey Laboratories) was retaliatory after a family member of the chief executive officer was not promoted in 2014, a lawsuit filed earlier this month alleges.
Keith Guggenberger, Starkey’s former vice president of operations, alleges in his lawsuit seeking nearly $11 million in damages, that Starkey founder and Chief Executive Officer Bill Austin wrongfully terminated him and seven other executives after Austin’s stepson was not promoted by the company president.
Guggenberger alleges breach of contract, defamation of character and spying, according to a report in the Minneapolis Star Tribune. He further accuses Austin of “creating a hostile and vindictive work environment.”
In September Guggenberger, along with seven other Starkey executives, including company president Jerry Ruzicka, were terminated, but at the time little was known about the reasoning behind the dismissals. Austin told The Minneapolis/ St. Paul Business Journal that he was unable to comment due to “an ongoing investigation.”
The lawsuit alleges Austin “marginalized and ignored Ruzicka” after he did not promote Brandon Sawalich, the company’s marketing senior vice president, who is also Austin’s stepson, the Star Tribune reported. Sawalich was up for promotion in 2014, Qmed reported.
Furthermore, the lawsuit alleges Sawalich engaged in a form of internal espionage by intercepting emails of Ruzicka and Guggenberger. The lawsuit said Ruzicka planned to start his own hearing aid company in 2016 following the end of his contract with Starkey. Sawalich learned of this and sought to use it against Ruzicka, the Star Tribune said.
The C-Suite purge began Sept. 8 and targeted those who were close to Ruzicka, according to reports. In his lawsuit, Guggenberger said he was accused of planning to open a competing business with Ruzicka, something he denied in his filing, the Star Tribune said. Mark Briol, Guggenberger’s attorney, told the Star Tribune that Guggenberger had no intention of leaving Starkey and was fully intent on honoring his 13-year contract worth $375,000 annually. Guggenberger signed his most recent contract with Starkey in December 2014.
Other executives terminated include Scott Nelson, the company’s chief financial officer, Larry Miller, senior vice president for human resources; and executive assistants Julie Miller and Kim Mohlis, the Star Tribune said. Additionally, Jeff Longtain, the president of Starkey’s Oregon subsidiary Northland Hearing Centers, and Susan Good, the senior director of Starkey Medical Partner Network, were also terminated.
Austin acquired Starkey in 1970 and proceeded to build it to the fifth-largest hearing aid company in the world. The company, which employs approximately 3,600, has annual estimated revenue of $825 million, according to the Business Journal. Starkey manufactures and distributes several hearing aid brands, including the Audibel, NuEar, MicroTech, AudioSync and original Starkey brands.