Earlier. I reported on Mark Penn's health care company ties and how they have provided a problem for Senator Clinton's credibilty during the Presidential Run. Here's a new development.
Pollster vs Pollster: Nasty Polling Company Lawsuits Threaten to Become Diversion for Clinton Campaign
July 9, 2007 11:49 PM
Judges and juries will decide who is right and who is wrong in the legal battle between Mark Penn, Hillary Clinton's chief adviser, and a group of former employees of Penn's polling firm.
Regardless of the outcome, the lawsuits themselves reveal the corporate underbelly of Penn, Schoen and Berland, a company that celebrated the dissolution of its partnership with spying, double-crosses, back-biting, broken promises, and bitter legal accusations.
At a time when Democratic primary voters are particularly suspicious of electronic eavesdropping and wiretaps by the federal government under the Patriot Act, Penn's involvement in corporate spying, legal or not, is likely to hurt his political standing.
No one emerges from these dueling lawsuits with clean hands.
In a nutshell, Penn is accusing two former business associates, Michael Berland and Mitchell Markel, of violating a non-compete agreement they had with PSB by setting up their own polling and market research firm. One of those former associates has counter-sued, charging that Penn and his subordinates electronically invaded his BlackBerry email in order to illegally monitor private messages.
PSB, a highly profitable political and business consulting firm once owned by Penn, Douglas Schoen and Berland, became a major political force after President Bill Clinton anointed Penn as his chief pollster and strategist in the 1996 re-election campaign. Since then, Penn has played the same role in Hillary Clinton's two successful Senate campaigns, and in her current presidential bid.
Over the past six years, PSB has undergone major corporate restructuring. In 2001, it was acquired by Burson-Marsteller, a giant public relations company, which, in turn, was taken over by an even larger conglomerate, WPP.
Penn stayed on, and has since become CEO of Burson and continues to be president of PSB. Schoen and Berland left at the end of 2006, after fulfilling an agreement to stay with PSB for five years. Court documents show that Berland was paid $15.5 million for his shares.
At this point, the tale gets messy.
On April 7, 2007, Markel, a PSB vice president, resigned, telling the Chief Operating Officer, Jonathan A. Gardner, that he was going into the family's bagel business, according to a written statement Gardner filed in federal court in New York.
Markel also took with him his Cingular BlackBerry, telling Gardner that he had purchased it, according to Gardner. Even though "I did not agree with him [Markel], I allowed him to keep the device but required him to change the telephone number associated with the device," said Gardner.
Less than a month and a half later, however, Gardner became deeply suspicious: "I received a chain of emails in which Markel responded to an email directed to his PSB address, even though he was no longer with PSB." Gardner summoned PSB's technology chief, Merrill Raman. Raman then discovered that even though Markel's PSB "network and email credentials had been disabled," he was still connected to PSB's "RIM/Cingular account," according to Gardner's sworn account.
Raman then counterattacked, and secretly bugged Markel's BlackBerry. "Raman immediately set up a 'blind carbon copy' (bcc) of Markel's outgoing mail on the RIM/Cingular account. This ensured that as long as Markel's BlackBerry device was connected to PSB's RIM/Cingular account, all emails sent from his Blackberry would be bcc'ed to" an email address created by Raman, according to Gardner. In other words, a copy of all of Markel's outgoing email, unbeknownst to him, went to PSB.
Gardner additionally decided to examine the personal computer Markel had used while working at PSB. There, according to his statement to the court, Gardner found what he claimed was a plan by
Markel and Berland for Markel to set up a company, Global Insights & Strategies, which would go after PSB's clients, in direct violation of non-competition agreements applying to all PSB employees for a
year after leaving the firm.
"Through these emails, I discovered that Berland had been working with Markel in a competitive business that was set up by Markel immediately following Berland's departure from PSB....[W]hile Markel was still an employee of PSB, Markel formed the new business and set up a website for it," Gardner said.
Emails collected from the computer and through the bcc address provided evidence, according to Gardner and PSB's lawsuit, that Markel and Berland were doing business with or soliciting work from at least five of PSB's clients, including the National Hockey League, Quest, and Estee Lauder.
In its lawsuit, PSB contends that Berland, Markel and two other former PSB employees engaged in "an orchestrated and illegal plot to sabotage PBS's business in New York by soliciting PSB's most significant clients."
PSB is asking the court to order Berland, Markel and Global Insights to stop all such solicitation, to award compensatory and punitive damages, and to force Berland to pay back $11.2 million of the $15.5 million he got for his shares.
Markel and Global Insights quickly came back with a countersuit demanding "equitable relief and damages" from PBS, Penn, Gardner and Raman for "illegal interception, use and disclosure of plaintiff's personal electronic communications without Plaintiff's knowledge or consent," in violation of the Federal Wiretapping Act and the New York Penal Code.
Markel contends in the suit that PSB had no grounds to invade his BlackBerry account, that "each and every email sent and received from Markel's BlackBerry since on or about April 18 was charged to Markel's personal Cingular account and paid for by Markel, [that from] April 18, 2007, Markel did not use any PSB account, Cingular or otherwise."
No trial date has been set for the two lawsuits, but the court battle is likely to take place in a few months, just as the early caucuses and primaries heat up. It is not a diversion welcomed by the Clinton camp.
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