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Battle between phone rivals spills into the courtroom

December 31, 2011

Things are getting ugly between Indianapolis-based Brightpoint Inc. and Brightstar Corp., its similarly named rival in the brutally competitive wireless-phone distribution business.

Brightpoint on Dec. 23 filed its second lawsuit in a week against Miami-based Brightstar over its hiring of a former Brightpoint executive who had access to the local company’s innermost workings and strategies.

In the latest case, Brightpoint alleges that Miljan Milan flagrantly violated the non-compete provision of his employment agreement when he recently accepted a senior post with Brightstar.

Brightpoint is seeking an injunction against the company and Milan. The suit filed in Marion Superior Court alleges breach of contract, breach of Indiana’s uniform trade secrets act, and tortious interference.

“Milan is in a position where the use of Brightpoint’s trade secrets will permit Milan and Brightstar to deploy an unfair competitive advantage in bidding for business against Brightpoint,” the suit alleges.

“For example, Milan can use his personal knowledge of Brightpoint’s pricing models and profit margins to ensure that Brightstar underbids Brightpoint for business.”

Brightpoint also has launched a legal assault against Brightstar over its Dec. 7 hiring of Mitch Black, a former Brightpoint senior vice president in charge of the company’s North American distribution division.

Black had worked at Brightpoint for a dozen years when he left in November 2010 to become president of sales and purchasing at PCS Wireless Inc., a New Jersey firm Brightpoint did not consider a direct competitor. But less than a year later, he began discussions about returning to Brightpoint and also said he had “a very compelling offer” from another company he did not identify, according to the suit.

The Brightpoint discussions were just a ruse to extract additional confidential information Black could use against the company when he joined Brightstar, according to the suit, which accuses him of fraud.

“During the course of these discussions and trading on trust, friendship and good will that he had built with Brightpoint over a 12-year period, Black cajoled additional trade secret and confidential information about Brightpoint’s business and strategic plans from unwitting Brightpoint executives,” the lawsuit alleges.

A Brightstar spokeswoman declined to comment on the litigation.

The two firms are global heavyweights in the wireless phone industry. Brightpoint has 3,900 employees and posted 2010 revenue of $3.6 billion, while Brightstar has 3,400 employees and had $4.6 billion in revenue. Both firms jockey for contracts to handle millions of phones for device manufacturers and operators of cellular networks.

The lawsuits show that Brightpoint had taken numerous pre-emptive steps to prevent executives from jumping to rivals. For instance, when Black left Brightpoint, he signed an agreement promising not to do anything to interfere with its business and not to provide its secrets to third parties.

In addition, Milan—who served as Brightpoint’s general manager for Latin America before joining Miami-based Incomex Inc. in April 2011—was still bound by a one-year noncompete agreement when he jumped to Brightstar late in the year, according to the lawsuit. He’d switched to Incomex because Brightpoint had formed a partnership with the firm to accelerate its Latin American expansion.

Brightpoint says it believes Milan’s role at Brightstar will be “extremely similar” and that he “will be in a position to work with, and solicit business from, many of the very same clients and suppliers he was paid to develop relationships with on behalf of Brightpoint.”

Steak n Shake on Broadway

David Letterman, a professed Steak n Shake fan, hasn’t had such easy access to steakburgers since he left Indiana for the big time.

Steak n Shake will open its first restaurant in New York state on Jan. 12. The location is in Manhattan on Broadway—right next to the Ed Sullivan Theater, where Letterman produces “Late Night with David Letterman.”

Sardar Biglari, whose Biglari Holdings Inc. owns the diner chain, said in a recent letter to shareholders that the restaurant will be the first Steak n Shake Signature in the country. It’s a counter-service-only format that Biglari believes will be enticing to franchisees because it requires less upfront investment.

Letterman frequently has mentioned his affinity for Steak n Shake over the years, as has another Midwestern celebrity: film critic Roger Ebert. Ebert recalled on his blog that during an early visit to Letterman’s show, he brought up Steak n Shake during a commercial break.

“In sight, it must be right,” Letterman responded.

“Our eyes locked in unspoken communion,” Ebert recalled.•

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