• Clint Engel

RH sues Crate and Barrel and CEO

Alleges the competitor took trade secrets to speed launch of a food and beverage business

SAN FRANCISCO — Restoration Hardware has sued Crate and Barrel, claiming the competitor, its CEO and another leader — both former RH employees — for misappropriated trade secrets and breached contracts to gain a leg up in a new business.

The suit was filed Monday in California’s Superior Court here against the Northbrook, Ill.-based Top 100 company; its CEO Douglas Diemoz, former RH chief development officer; and Kimberly Ahlheim, former director of food and beverage for RH, who it believes is now a senior manager in Crate’s food and beverage operations.

“Lacking its own formula for growth, Crate set upon a business strategy of recruiting away key senior leaders from RH to help revitalize the flagging Crate business,” RH said in the complaint.

Crate allegedly hired Diemoz in July 2015, after unsuccessfully trying to hire away other senior RH executives, the fast-growing luxury home furnishings retailer said. According to court documents obtained by Furniture Today, Diemoz continued Crate's campaign of trying to recruit away Ahlheim and other RH talent, even though he was under a one-year obligation not to solicit RH employees.

Ahlheim continued to work for RH “for months while concealing her shift in loyalties” and sent trade secrets and other confidential information to her personal email address. When Ahlheim left the retailer in May, “she copied and took with her to Crate a massive amount of RH confidential information spanning almost the entirety of RH’s business operations,” RH contended.

In the suit, Corte Madera, Calif.-based RH outlined the risks and unprecedented investment that went into the opening of its RH Gallery at Chicago, its first showroom with an innovative and acclaimed food and beverage business. It said Crate and its CEO took notice of the success and “decided to move quickly in order to implement a similar kind of program at Crate stores.”

The retailer hired Diemoz "to more broadly implement" RH's growth strategy at Crate stores, and, “rather than developing its own know-how and data necessary to create such a program for expansion … Crate and Diemoz set about to leverage the know-how of RH by targeting Ahlheim for hiring,” the suit contended.

As she was leaving RH, Ahlheim told the company she didn't know what she would be doing next, the company said, but RH contends she knew she was going to Crate at least three months before telling the retailer she was leaving.

RH said it has information and believes "Ahlheim was already working with Crate and designing its food and beverage program before she even left RH."

The 85-store RH is suing all three for misappropriation of trade secrets, Diemoz and Ahlheim for breach of contract and Ahlheim for “breach of duty of loyalty.” It seeks unspecified damages and, among other things, asked the court to prohibit Crate from opening a food and beverage service in its stores for 12 months.

Diemoz has not yet responded to calls and an email for comment.

Clint EngelClint Engel | Senior Retail Editor, Furniture Today

Please feel free to email or call me with all of your retail news and tips, including expansion news, successful merchandising and marketing strategies and anything else you would like to see covered by Furniture/Today.  Contact me directly at cengel@furnituretoday.com or 336-605-1129.

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