Two former Marines must pay a $246,000 judgment to their former employer, Pure Power Boot Camp Inc., New York, after a judge found they had breached their duty of loyalty.
Lauren Brenner, founder of Pure Power Boot Camp, alleged that her former employees, Ruben Dario Belliard and Alexander Kenneth Fell, had stolen her business model, customers, and confidential and commercially sensitive information (including her start-up manual, operations manual and business plan for franchising the concept) when they started Warrior Fitness Boot Camp in 2008.
The judge in the case, Theodore H. Katz of the United States District Court, Southern District of New York, dismissed 12 of the 13 claims in the suit, including several counterclaims brought by the defendants against the plaintiff.
The one claim not dismissed was that Belliard and Fell breached their duty of loyalty. Katz ordered Belliard to return $55,196 in salary that he earned at Pure Power while he was planning the Warrior Fitness business as well as punitive damages of $110,393. Fell was ordered to repay $40,177 in salary and punitive damages of $40,177 to the plaintiff. The court allowed Belliard and Fell to keep their company open.
Carolyn D. Richmond, partner at Fox Rothschild LLP and co-chair of the firm’s Hospitality Practice Group, represented Warrior Fitness. Richmond and her clients have not yet decided whether to appeal the decision, which came Monday and runs 148 pages, she says.
“It was obviously a very long process, but ultimately, we are very satisfied with the result,” Richmond says, adding that the plaintiff had wanted more than $1 million and for Warrior Fitness to be shut down. “We wanted to fight for the right for Warrior to keep their business open.”
When contacted about the case, Brenner had just received the decision and had not read through the entire document. However, she had read the judge’s decision about the loyalty judgment.
“Did I win? Yes, it shows that I won,” Brenner says. “They stole from me. They did all this to me. I will publish their deposition of how they got caught. That’s my vindication. Am I disappointed that I only got a couple hundred thousand? Yes.”
She says the judgment amount is nothing for a business that is worth more than $1 million and for all the legal fees she has had to pay. While Belliard and Fell were allowed to build their business during the three-year legal process, Brenner says she put growth on hold and found it difficult to hire former Marines because she no longer trusted them.
Pure Power Boot Camp, which Brenner opened in December 2003, was modeled after U.S. Marine Corps training facilities. Brenner, a former Wall Street trader, gained media attention with the concept, appearing on “The Today Show,” “The CBS Early Show” and other TV programs promoting her concept.
Belliard worked as an independent contractor at Pure Power in April 2005 but was hired as a full-time drill instructor (the term used for the company’s boot camp leaders) in July 2006. Belliard soon became the head drill instructor and was left in charge when Brenner was not at the facility, according to court documents. Fell began as an independent contractor in August 2005 upon Belliard’s recommendation, becoming a full-time drill instructor in September 2006.
The court documents say that Brenner hired a franchise attorney in 2006 and developed a business plan, start-up manual and operating manual for franchisees with the intent of franchising the concept.
In preparation for that plan, Brenner asked her employees to sign an employee agreement that included a non-disclosure provision, a non-solicitation provision (against soliciting any Pure Power clients) and a non-compete clause in which the employees could not work for a similar company anywhere in the world for 10 years after the termination of employment with the company. Fell denies having signed the employee agreement, but Belliard acknowledges he did sign it. The judge, however, did not uphold the non-compete clause in this decision.
The court document says that Belliard and Fell began planning Warrior Fitness in July 2007 while still employed at Pure Power. Brenner fired Fell in March 2008 after a heated exchange in which Fell dared her to do so, according to the court document. The next month, Belliard quit. The two, along with their girlfriends at the time, Nancy Baynard and Jennifer J. Lee, then opened Warrior Fitness in May 2008. Baynard and Lee had been Pure Power clients, and Lee is now married to Fell.
Warrior Fitness Boot Camp has one location in New York, about 15 blocks from the original New York location of Pure Power. Brenner recently moved the location of that facility and has a “bigger, cleaner facility” than Warrior Fitness, she says. Brenner also had a second location in Jericho, NY, but she recently franchised that location, and she plans to begin more franchising soon.
“I’m not going to crawl in a hole,” Brenner says. “I go out and show that I am bigger and better. I show that at the end of the day, I am vindicated.”
A call to Belliard and Fell had not been returned at the time of this posting.