News: Analysis & Commentary: COMMENTARY
COMMENTARY: CAUGHT: A JOB-HUNTER. PENALTY: HOUSE ARREST
Who owns the contents of Rich Cronin's brain?
A judge in a Manhattan courtroom is mulling that question right now as Cronin, his former employer, Viacom Inc., and his prospective new employer, News Corp., wage a particularly nasty battle over the future of a valued executive. At issue is the leeway that any executive under contract has to plan his or her career and the lengths to which an employer can go to claim ownership of the expertise of their executives.
Cronin, who until recently headed Viacom's Nick At Nite and TV Land cable networks, is asserting what many executives across Corporate America view as an absolute right--to advance his career by looking for a new job elsewhere. In October, Cronin agreed to leave Viacom after his contract expired in June, 1998, to head News Corp.'s Fox Kids broadcast unit and its huge Family Channel cable network.
Viacom fired him on the spot and sued, arguing that Cronin had no right to make such formal plans before his contract expired. Cronin's behavior was so heinous in Viacom's view that it is trying to keep the now unemployed Cronin from joining Fox, perhaps indefinitely. Says Cronin: "This is insanity. I thought these people were my friends."
POUND OF FLESH. But there's more. If Cronin works again, Viacom says it's entitled to a cut. How so? Viacom contends that he amassed knowledge and formed relationships on Viacom's dime. Now, Viacom wants a return on its investment. If Cronin is allowed to join Fox, Viacom is asking for an unspecified percentage of any increased value of the assets Cronin oversees. Otherwise, Viacom argues in court papers, "a key competitor [will] profit from the very skills and relationships that MTV Networks paid Cronin to develop for its own benefit."
Viacom is way out of line. It is standard for companies to put noncompete clauses in employment contracts and make departing execs affirm that they will not share trade secrets with rivals. But in its case against Cronin, Viacom is seeking restrictions that would make normal job jumping impossible.
Viacom seems to be saying that its executives may not even have exploratory discussions with other employers until their Viacom contracts expire. But much of what Cronin did is common practice and hardly constitutes betrayal worthy of the penalties Viacom seeks. Courts recognize "the need to allow people the freedom to talk about job opportunities, if not done on company time" says Joseph E. Bachelder, a Manhattan attorney who specializes in executive compensation. "You're not a monk, dedicating your life to thought and prayer on behalf of the company and nothing else. Planning to leave after you've properly ceased to be employed is not in my book breach of loyalty."
It's possible Viacom is simply trying to intimidate its remaining employees. "Many of these lawsuits are really a signal to other employees not to do the same thing," says Andrea Christensen, an employment attorney with Kaye Scholer Fierman Hays & Handler in New York. Viacom's lawyer lambasted Cronin for using his company phone to talk with Fox executives, for not taking an official day off when he met with Fox, and even for using his office phone to call his wife. These are minor offenses, and Cronin should reimburse Viacom accordingly. However, such transgressions don't normally lead to litigation.
"OPEN SEASON." Viacom maintains that it is simply making sure that it gets the full efforts of its executives for the duration of their contracts. Says an MTV Networks spokeswoman: "This conduct sanctions an open season for the poaching of executives."
But Viacom has let other high-level executives leave without a fuss. Nickelodeon President Geraldine Laybourne left before her contract ended in early 1996 to head Walt Disney Co.'s cable operations, and Nickelodeon International chief Jon Miller was allowed to go to work for Barry Diller in 1997. "[I] may have been the straw that broke the camel's back," Cronin says.
Cronin maintains that he was fired without cause, is therefore not subject to a noncompete clause, and should be allowed to start working for Fox immediately. That's a bit much: Viacom shouldn't have to compete against Cronin for the period it thought he would be under contract. But come July 1, Cronin should be free to run the Family Channel, motivated to knock the daylights out of Viacom's Nickelodeon. Who knows? If Cronin does a good job, maybe Viacom could call one Friday afternoon with a better offer. It has worked before.By Elizabeth Lesly Stevens