Harry & David is target of new suit

An Ohio company contracted by Harry & David to provide call center services has filed a nearly $10 million lawsuit after the financially troubled Medford company abruptly severed their relationship last month.

Cincinnati-based Convergys Customer Management Group this week asked a U.S. District Court in Medford for about $6 million because of Harry & David's premature termination and $3.8 million plus interest for services performed in November and December.

Medford attorney Lewis Dahlin, representing Convergys CMG, declined comment. Amy Williams, a spokeswoman for Convergys Corp., said the company doesn't comment on pending litigation. Shane Antholz, corporate counsel for Harry & David, also declined comment.

Harry & David last summer curtailed call center operations at its Hebron, Ohio, plant, where as many as 800 people worked during the peak season. It previously shuttered its seasonal Eugene call center, which had as many as 1,200 employees in 2008.

Jackson County's largest agriculture-related company then turned to Convergys CMG to fill the void.

According to the complaint, on Aug. 1, 2010, Harry & David hired Convergys to handle call center activities in Hazelwood, Mo., Chattanooga, Tenn., and Tamarac, Fla. Harry & David was bound to a two-year "no termination" clause in which it was required to maintain a minimum staff of 25 full-time Convergys employees each month, it said.

In February, Harry & David requested early termination, the complaint said. On Feb. 4, Convergys sent a proposed termination agreement asking for $3.1 million while continuing service through Feb. 18. The emailed proposal from Tom Maddux, client business development executive, asked for a response by Feb. 7.

According to court documents, on Feb. 8, Harry & David Knowledge Facilitator Debi Waddell sent out a transition plan to Medford call center employees.

"As part of our steady state strategy we are routing all calls to the Medford contact center effective "… today," Waddell wrote. "Fortunately, as a result of these changes, more hours and shifts are available to you."

Convergys called Harry & David's move "a clear violation" of its agreement in the complaint.

Harry & David maintained it owed $2.7 million for November and December invoices but never paid the debt, the complaint said.

On March 1, Claudia Cline, general counsel for Convergys' customer management unit, sent Harry & David a material breach notice and gave the company 10 days to pay at least the $2.7 million.

The case has been assigned to District Judge Owen Panner.

The suit is the second filed against the gourmet food and gift company since it began hiring financial and legal teams in a restructuring effort.

Drew Reifenberger, an executive vice president and chief customer officer let go by Harry & David on Jan. 12, filed suit in U.S. District Court in Atlanta on Jan. 26. Reifenberger claims he was terminated without cause and under his contract should have received the equivalent of his $375,000 annual salary and health benefit continuation.

According to the suit, Reifenberger has neither received payments nor benefits since his departure and seeks a minimum of his salary and health benefits, plus interest. Harry & David denies it owes Reifenberger anything.

Chief Executive Officer Steven J. Heyer was replaced by restructuring expert Kay Hong on Feb. 17.

Greg Stiles is a reporter for the Mail Tribune. Reach him at 541-776-4463 or e-mail business@mailtribune.com.

Share This Story