Starkey argues 'too many red flags' in bid to group defendants in lawsuit

Keith Guggenberger — who was fired in a sweep of Starkey Hearing Technologies' executives that led to federal fraud charges against his boss — has claimed that his wrongful termination lawsuit against the company should not be stalled "by piling into it all of Starkey's disputes" with the other fired employees.

Lawyers for Guggenberger, Starkey's former chief operating officer, argued in a court hearing Wednesday that the case should be about whether Starkey breached their client's employment contract and whether he is owed money because of that.

Guggenberger's attorneys complained about court documents Starkey filed last week. In them, Starkey countersued and took the step of including 10 other defendants in its lawsuit, including Guggenberger's former boss, Jerry Ruzicka, and two other fired executives who have been indicted on federal criminal charges that they are part of a $20 million embezzlement scheme.

Starkey's lawyers claim that the actions of the other employees need to be attached to Guggenberger's case because "there were way too many red flags for [Guggenberger] to not know he was committing and aiding and abetting a massive fraud."

The two sides made their case during a Wednesday hearing in front of Hennepin County District Judge Kevin Burke.

Guggenberger was fired in 2015 after the company said it discovered questionable dealings by Ruzicka and Scott Nelson, fired president and chief financial officer, respectively. Ruzicka and Nelson, along with Larry Miller, the former human resources head, and two business associates were charged in September on the embezzlement charges. All have pleaded not guilty.

Guggenberger, who was not charged, filed a wrongful termination lawsuit against Starkey in 2015. Ruzicka and Julie Miller, Larry Miller's wife and Ruzicka's executive assistant, also filed wrongful termination lawsuits in civil court.

Starkey and Ruzicka had asked that Ruzicka's civil termination lawsuit be suspended until after the federal criminal case was completed. The court agreed.

But now Starkey attorneys are arguing that the other fired employees need to be attached to the Guggenberger proceedings because their actions are all part of the same fraud.

Starkey is "claiming that Guggenberger and the third party defendants are all jointly and severally liable to Starkey," the company's attorney, David Bradley Olsen, argued Wednesday. "Guggenberger's motion to preclude joinder of parties should be summarily denied."

But attorneys for Miller and Guggenberger argued the other employees' actions have no bearing on their clients' cases.

"None of the parties who have been joined to our case are necessary" or relevant, said Guggenberger's attorney Mark Briol. "Our case is simply a simple breach of contract case and a case about defamation of character."

For Ruzicka's civil attorney Marshall Tanick, Starkey's move was a surprise after the stay of his client's wrongful termination lawsuit.

Burke asked Olsen pointedly Wednesday what happened to the stay agreement. "How do I get around that? You made a deal," Burke told Olsen.

Olsen said that attaching Ruzicka to the Guggenberger lawsuit could not be avoided because Ruzicka was affiliated with Guggenberger's and Miller's employment agreements and with payments they received. Other aspects of Ruzicka's case would not be handled as part of the Starkey's counter claim, Olsen said.

Guggenberger and Julie Miller have not been charged criminally. But in the court papers, Starkey said its defense to firing them arose from the fraud allegations made in the government's criminal complaint. Starkey alleges that Guggenberger and Miller benefited from that fraud. And they claim that the duo's employment agreements are part of that fraud and therefore should not be honored.

In court filings, Starkey claims the two received "hidden and extraordinary unauthorized bonuses" and "secret insurance accounts."

Guggenberger and Julie Miller, who both worked decades for Starkey, have said they did nothing wrong and are they seek damages and access to pay and retirement funds.

Dee DePass • 612-673-7725