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ATLANTA – Hooters of America is accusing a new competitor of stealing confidential business information to gain unfair competition in its most profitable locations.
The popular food chain that prides itself on scantily clad waitresses claims La Cima, a franchise owner of Twin Peaks, orchestrated a plan to poach Hooters executives. In a federal lawsuit filed last week, Hooters claims Joseph Hummel, its former vice president of operations, resigned to become partner and CEO of La Cima, planning to develop 35 Twin Peaks restaurants over the next decade. Hooters contends Hummel, before leaving, gained unauthorized access to its computer system, allowing him to acquire sensitive trade secrets and other proprietary information to share with competitor La Cima.
The complaint asserts that under the federal Computer and Abuse Act and the federal Electronic Communications Privacy Act, in addition to state laws, he cannot electronically steal confidential data.
Twin Peaks co-founder and CEO Randy DeWitt responded this week, emphasizing that Twin Peaks was not named in the litigation. “We think the lawsuit is frivolous and baseless. No one ever offered Twin Peaks any of Hooters trade secrets and it’s ludicrous we would ever want them anyway. To think we would benefit from using their trade secrets seems preposterous to me,” DeWitt said.
But Hummel is not the only high-profile executive to leave Hooters to join the new franchisee group. Its CEO, Coby Brooks, son of Hooters' former owner Robert Brooks, also left, as did its vice president, general counsel, controller, and VP of company stores. The claim alleges that Hummel and his former colleagues coordinated the timing of their departures to exploit their knowledge of Hooters' trade secrets and other confidential data for the benefit of La Cima. Because of their actions, Hooters claims it will be irreparably harmed.
Hummel, who had been with Hooters from December 2003 to July 2011, has acknowledged publicly that La Cima, under the leadership of former executives like himself, will pursue the Atlanta market aggressively. He recently stated, “We know the Atlanta market pretty well since we’ve been here awhile.” But the franchisor also points out that the metro Atlanta market has been a Hooters stronghold, featuring a number of its most successfully performing restaurants. The lawsuits claims that much of Hummel’s knowledge consists of “protected confidential information acquired during and by dint of his fiduciary relationship with Hooters.”
Twin Peaks executives say that they have developed their own brand strategy, with systems and procedures that are unique to Twin Peaks. “All of our franchisees, including La Cima, are required to use our systems and not use the strategy and systems from their previous company,” said Twin Peaks’ CEO. He found Hummel and the entire La Cima team to be highly ethical, experienced and capable restaurant executives. “We wanted them as franchisees for those reasons. It made no difference to us what brand they were associated with previously,” DeWitt exclaimed.
The CEO also emphasizes that he and his co-founder Scott Gordon started Twin Peaks in 2005. “We never worked for Hooters and only went there a few times as customers. We did not think the food was very good and the brand was stuck in the 1980’s, but not in a cool retro way. The fact that they employ an attractive all-female service staff is hardly a secret.” Bottom line, DeWitt said any significant competitive advantages La Cima enjoys will come from Twin Peaks, not from the company the executives left.
Other counts in the lawsuit brought against La Cima are violation of Georgia Computer Systems Protection Act-Computer Theft, misappropriation of trade secrets, and tortious conversion. Hooters of America is represented by Sutherland Asbill & Brennan LLP in Atlanta.
|Hooters Complaint.pdf||2.09 MB|