|March 10, 2014|
Previously published on March 6, 2014
Dick’s Sporting Goods has sued Modell’s Sporting Goods and its prominent fourth-generation CEO, Mitchell Modell, claiming Modell brazenly visited a Dick’s retail location and impersonated a Dick’s executive to unlawfully gain a competitive advantage.
Building off his 2012 acting performance on the CBS show “Undercover Boss,” where he transformed into his alter ego, rank and file Modell’s employee “Joey Glick”—complete with a shaved head, fake mustache and exaggerated New York accent—Mitchell Modell allegedly appeared at a Dick’s store in Princeton, New Jersey in February and identified himself to the store manager as “Joseph” (perhaps a derivation of Joey Glick?), a Dick’s Senior Vice President. According to the suit, Modell told store management that he was there to meet with Edward Stack, Dick’s Chairman and CEO, and while waiting for this supposed appointment, Modell requested and received access to the store’s private back-room and obtained Dick’s confidential and proprietary information and trade secrets.
The allegedly stolen information includes Dick’s processes and procedures for inventory handling, the planned pricing and quantity of inventory in each store, key store-level metrics and other areas of focus such as overall customer satisfaction scores, the marketing of Dick’s private label credit card program and add-on sales such as warranty programs, and the specific manner in which Dick’s executes at the store level on its omni-channel initiatives such as its “Ship from Store” online fulfillment program.
While it may be considered a good practice for retail executives to visit competitor stores, impersonating a rival executive to gain access to non-public areas and proprietary information crosses the line to the unlawful. If true, Mitchell Modell’s actions are rather shocking, particularly given his very public persona (in addition to the “Undercover Boss” appearance, Modell has appeared in the regional sporting goods giant’s well-known “Gotta Go To Mo’s” ad campaign and many other public appearances). Did he not think he’d be recognized?
So what lesson can businesses take away from Modell’s misadventures (aside from, of course, don’t impersonate a rival executive)? Since a key element in a trade secret case is the precautions taken to protect the secrecy of the information, businesses should ensure that they have policies in place restricting access to non-public areas (also a safety issue) and highly sensitive information, and managers and employees must receive training on these policies. By way of example, non-public areas should be locked, employees should be required to carry company-issued photo identification and, most relevant here, local level management should be required to confirm with headquarters any unannounced site visits. We don’t know what protocols Dick’s had in place to prevent a “Joseph” from doing what he did, but at first blush it doesn’t seem like Modell had a particularly difficult time talking his way into the Dick’s store’s non-public areas and accessing sensitive information. But in the spirit of Oscar season, perhaps we can ask whether more acting roles are in his future.