24 Hour Sues Bally Again Over CEO Hire

CHICAGO -- 24 Hour Fitness, San Ramon, CA, has filed another lawsuit against Bally Total Fitness, Chicago, on the grounds that Bally CEO Michael Sheehan stole trade secrets from 24 Hour, where he formerly served as its chief operating officer.

24 Hour Fitness filed the latest lawsuit on Oct. 24 in U.S. District Court for the Northern District of Illinois in Chicago, according to the Internet publication Law360. Another lawsuit containing the same allegations was dismissed the day before by federal Judge Joan Lefkow in Chicago, on jurisdictional grounds, based on the finding that Sheehan was a California resident at the time of the July filing, Crain’s Chicago Business reports. Sheehan took over as Bally’s CEO on July 1.

The latest lawsuit alleges that Sheehan downloaded confidential company information onto a flash drive bought with company money and transferred the information to a home computer once he knew he was headed for Bally. The suit also alleges that Sheehan “requested assembling of 11 four-inch binders” containing profit and loss information for each of 24 Hour’s 400 locations, Crain’s reports. Although the complaint says that Sheehan destroyed home files after he left 24 Hour, Sheehan “possesses the proprietary 24 Hour Fitness trade secrets and confidential information in his head,” according to the lawsuit.

A Bally spokesperson said that the company does not comment on pending litigation. A spokesperson for Winston & Strawn LLP, the law firm representing Bally, declined to comment on the case.

24 Hour released a statement, saying that it will continue to pursue its case against Sheehan and Bally in federal court, but that it will not provide further comment on the case. A call placed to an attorney with Lovells LLP, which is representing 24 Hour, was not returned.

This is the third lawsuit involving Sheehan’s departure from 24 Hour. The first complaint was filed in a California state court four days after Sheehan left 24 Hour, according to Law360, and raised similar claims of trade secret misappropriation and alleged violations of California laws. 24 Hour voluntarily dismissed that suit after the state judge denied its request for a temporary restraining order, according to court documents researched by Law360.

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