Lippert Components accused of stealing trade secrets
Published 1:00 pm Saturday, April 25, 2020
- Lippert Components in Elkhart, Ind., is accused of poaching two employees who then delivered to their new bosses stolen trade secrets about a system that allows consumers to control RV functions from a smartphone.
SOUTH BEND, Ind. — A tale of lies, fraud and betrayal is unfolding in a lawsuit against Lippert Components Inc., the giant RV industry supplier that employs thousands in Indiana.
Elkhart-based ASA Electronics has accused LCI of poaching two employees who then delivered to their new bosses stolen trade secrets about a system ASA developed that allows consumers to control RV functions from a smartphone.
The lawsuit alleges Lippert CEO Jason Lippert, angry that ASA’s product was outperforming his company’s version, personally hired away the employees to help stifle the competition from the smaller company.
Lippert Components has a presence in Umatilla County, with an RV chassis plant in Pendleton.
ASA first filed a complaint in Elkhart Circuit Court in early 2018, alleging violations of Indiana’s Uniform Trade Secrets Act and the former employees’ noncompete and nondisclosure agreements. A judge has already granted ASA a preliminary injunction that forbids a key former employee from continuing to work on similar products at LCI while the lawsuit plays out.
But in its latest salvo of court filings earlier this month, ASA added an allegation of fraud by LCI and the former employees and demanded a jury levy monetary damages against Jason Lippert as a punishment for misconduct.
“Jason Lippert and LCI acted maliciously, fraudulently, oppressively, or with gross negligence,” the latest version of the complaint says, adding that “an award of punitive damages is important to deter Lippert and LCI from treating smaller competitors the way they have treated ASA.”
In a statement, LCI called ASA’s version of events revisionist history, saying the allegations “have no basis in law and fact and LCI is confident that it will ultimately prevail.”
ASA has framed the lawsuit as a sort of David-and-Goliath story in which Lippert is trying to bully a smaller company out of the marketplace. ASA, which makes stereos and other electronics for RVs, boats and heavy trucks, has about 150 employees. The publicly traded LCI employs more than 10,000 and is valued at about $2.5 billion.
LCI has more than 20 facilities in Elkhart and St. Joseph counties, including a 530,000-square-foot warehouse on West Sample Street in South Bend.
The dispute centers on “iN-Command,” a product developed by ASA that controls RV functions from a single touch screen in the vehicle. Some systems, including HVAC, can be controlled from a smartphone.
Lippert makes a similar control system. But ASA says its product is better because all the RV systems are wired into a single module. That makes it simpler to install and service than the LCI version, which has separate modules for the different RV systems. ASA has invested more than $3 million developing the product, the lawsuit says.
According to ASA’s complaint, the latest version of iN-Command drew strong reviews at the RV industry’s annual trade show in late 2017.
Jason Lippert was “visibly upset” at the reception to ASA’s product, the lawsuit alleges, and began to realize his company had made a “grievous mistake” with its modular control system.
According to court documents, Lippert had spent $36 million in 2014 to acquire the electronics division in charge of the control system, but LCI’s place in that part of the market was “on the ropes” by early 2018.
That, according to ASA, is when Rick Carver, an ASA salesman, allegedly approached Jason Lippert with a plan. Over breakfast, Carver suggested Lippert could hire away Vince Smith, the “mastermind” behind iN-Command, and Carver could get customers to avoid committing to ASA’s system until Lippert could catch up.
Jason Lippert contacted Smith about a job offer in February 2018. He flew Smith to Michigan to tour the LCI facility developing the company’s control system, “OneControl,” the lawsuit alleges.
ASA says it has evidence that, after the job offer was a “done deal” but before Smith left ASA, he downloaded the entire product file for the first generation of iN-Command and backed up the files on a personal hard drive.
Once Smith resigned from ASA in March 2018, he began working on OneControl at Lippert, despite signing a non-compete agreement. Smith and LCI both assured ASA he would abide by the agreement and not work on competing products.
In a text message, Jason Lippert urged Smith to tell an RV company how “fired up” he was to be working on OneControl, according to court documents. The former ASA salesman, Carver, who no longer works at Lippert, also took confidential information and used it to help lure clients away from ASA, the lawsuit alleges.
Joshua Hague, who is listed in court records as the lead attorney for Smith and Carver, did not return a call seeking comment Tuesday.
In its own filings, Lippert has dismissed ASA’s allegations as a “tall tale” that spins a conspiracy out of nothing, and portrayed its hiring of Smith as unimportant.
“OneControl is too far along for Smith to be the game changer ASA suggests he is,” Lippert said in one document.
As for the project files Smith moved to his personal hard drive, Lippert’s court filings suggest he mistakenly believed the files belonged to him and not ASA because they were made up of his ideas.
In its press statement, LCI said the company is “an innovative leader in control systems” and that its product was fully developed years before Smith came to work for the company.
“Since the outset of his employment in 2018, LCI has not allowed Mr. Smith to participate, in any substantive way, in the ongoing development and refinement of OneControl,” the statement said. “Mr. Smith has not shared any of ASA’s trade secrets or confidential information in his work for LCI, and LCI has always admonished him not to do so.”
With its new fraud allegation and request for punitive damages, ASA is renewing its demand for a jury trial. Last month, a mediator reported the two sides were unable to reach a settlement.
Tom Irions, owner and CEO of ASA, said he originally expected a trial in summer 2021, but that will likely be pushed back because of the coronavirus pandemic.
Irions said Tuesday it would be difficult to estimate the money at stake. But he said ASA and Lippert were the only two companies in the RV smart controls market, which is likely to become more valuable as more of the vehicles run on the systems.
“We’re going to make it a trial about the behavior,” Irions said. “Is this acceptable behavior in business, where you can take off with key personnel and blatantly use trade secrets, that we had non-disclosure and non-compete agreements, and assurances from Lippert those would be followed?”