A lawsuit filed last week claims a pair of top US Foods sales representatives in the Chicago area left for rival Performance Food Group late last year and used US Foods’ confidential information to steal customers, according to a lawsuit filed last week.
The lawsuit against the sales reps, Don Harris and Ira Fenton, as well as Performance Food Group, says the two took account information from the Chicago area and used it to undercut US Foods’ prices.
US Foods claims that PFG took away several clients with a sales value exceeding $1 million. A PFG spokesman said the company had no comment.
The dispute underscores the intense competition between distributors in the aftermath of the failed Sysco-US Foods deal. Sysco agreed to buy US Foods in December 2013, but it sat in limbo for more than a year before the federal government halted the merger, which the companies ultimately killed this summer.
As part of the deal, 11 US Foods facilities were to be sold to Performance Food Group, a deal that also died with the end of the merger.
US Foods was in a self-described state of limbo during that time, but now that the deal is over the companies have returned to what they’d done for decades before that: Compete aggressively for customers.
According to the lawsuit, Harris oversaw $40 million of business in the Chicago area during his time at US Foods. Fenton oversaw $8 million in sales in the Chicago area. Harris was Fenton’s supervisor, according to the lawsuit, which states that both signed confidentiality agreements.
In December 2014, Fenton left US Foods to take a position with PFG. Harris left for PFG days later. The suit claims both had been considering such a move for months.
US Foods performed a forensic analysis on Harris’ and Fenton’s laptops after they left, according to the lawsuit, and found that Harris downloaded trade secrets to four thumb drives shortly before his departure — but only returned two drives to the company. The information included sales audits, transaction and other account information, including items purchased by every customer in his district.
The lawsuit also alleges that Harris took transportation files and information called “Descending Dollar Reports,” which includes all purchases, from the top-purchased items to the least, for every customer in the district.
According to the complaint, Harris emailed confidential information to a personal account in November 2014.
The lawsuit says that Fenton also inserted a USB drive into his company laptop but never returned that drive, and that he opened several confidential US Foods files shortly before he left.
US Foods claims that Harris and Fenton then met with PFG managers to devise a strategy to use the information to take accounts. The two met with Josh Bernicchi, a PFG territory manager at the time, and said they would have him manage accounts amounting to $150,000 per week of business, including restaurants Harris and Fenton were responsible for at US Foods.
According to the complaint, Harris gave Bernicchi a document showing each customer account and their weekly purchases. And Fenton gave him order guides and pricing information. The restaurants were all customers of US Foods, the company claims. Bernicchi and Fenton then visited the accounts together.
In August of this year, however, Bernicchi left PFG to take a position with US Foods, which confirmed customer solicitations by Harris and Fenton and started an investigation.
US Foods in its lawsuit said that it had sent letters back in December to Harris, Fenton and PFG to ensure they didn’t use confidential information to take customers.
US Foods also says it sent multiple letters throughout the winter and spring to PFG asking the company to stop Harris and Fenton from using confidential information in solicitations with its customers — and that PFG denied anything improper was going on.
Contact Jonathan Maze at [email protected]
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