SALT LAKE CITY, UT (BRAIN)—Three former sales reps are suing Veltec Sports for $60,000 worth of unpaid commissions on sales booked last summer before they left the company.
The three plaintiffs were among 10 sales reps who resigned from Veltec when it lost exclusive distribution of the Sidi shoe line last year. The plaintiffs now represent Sidi for its U.S. subsidiary formed last September.
“I suspect they are hurt that Sidi gutted their sales force but they told us to keep working and collecting the pre-books. Now they don’t want to pay the reps for their pre-books,” said plaintiff Kelli Polychronis, the longest-running Veltec sales rep who started with Veltec in 1995.
In a complaint filed in Salt Lake City last month, the plaintiffs contend that Veltec has refused to compensate them for the commissions they earned and are still owed for sales that were shipped and or booked by the time they were “constructively terminated” by Veltec.
The plaintiffs argue that because Sidi was their most profitable product line they had no choice but to terminate their relationships with Veltec as a direct result of its acquisition of Lake Cycling. They argue that because this termination was caused solely by Veltec’s actions and concealment of its purchase of Lake, they were “constructively terminated” by the company and therefore due sales that were on the books.
In 2006 Veltec purchased a substantial interest in Lake Cycling, which created an inherent conflict with the existing Sidi shoe line. The plaintiffs argue in the court document that knowing of the conflict, Veltec concealed its purchase of Lake from its sales reps for several years in an effort to keep them from leaving.
The document states that specifically, at a sales meeting on June 15, 2009, Manfred Krikke, Veltec’s president and owner, stated that “Sidi wasn’t going anywhere” and “the relationship was solid” in order to quell rumors that Veltec had acquired Lake and that Sidi would pull out. He instructed the reps to continue to sell it and other lines.
According to the complaint, on August 4, 2009, the plaintiffs were told the truth about the Lake purchase on a conference call and informed that Sidi was “going away” due to the Lake conflict. But, the plaintiffs argue, they were nevertheless told they should continue to sell and they would be paid for their work.
“They kept saying we need you and you’ll get taken care of. They said go out and book orders and so we did; I didn’t want to leave my customers hanging,” said Polychronis. According to the complaint, Polychronis alone is owed $12,399 for her booked orders and $13,931 for her shipped orders prior to her resignation.
Polychronis said she believed that because Veltec took care of Axcent Sports reps when Veltec acquired the license from it for Descente in 2008, it would take care of her. “They set a precedent of saying they value their reps by taking care of the Axcent reps and now they don’t want to take care of us,” she said.
In the suit, Polychronis and the co-plaintiffs are also seeking return of commissions they claim were improperly and illegally withdrawn from their commission accounts in April 2009 to pay commissions Veltec owed to sales reps of Axcent Sports.
The reps are seeking actual damages of no less than $59,904 combined from prebookings and withheld commissions. But under Utah law Veltec is liable for three times the amount of commissions owed to the plaintiffs, plus attorney fees and court costs. Therefore, the plaintiffs contend they are entitled to damages no less than $179,712 plus attorneys’ fees and costs.
Manfred Krikke Jr., outgoing CEO of Veltec Sports U.S., called the lawsuit frivolous. “We’ve always honored our agreements with our reps and we always will. It’s quite disappointing that we have reps that decided to sue us even though they decided to leave us,” Krikke said. “We paid exactly what we agreed to pay them according to our contracts. We feel like we’ve held up to our contracts.”
Veltec has until April 2 to respond to the complaint. The plaintiffs’ lawyer had not received a formal response as of yesterday.