Lawsuit alleges Starkey execs were fired in battle with CEO's stepson

A lawsuit filed Friday alleges that Starkey Laboratories Inc. CEO Bill Austin fired President Jerry Ruzicka and seven other employees earlier this month in retaliation for Ruzicka's refusal to promote Austin's stepson.

The lawsuit, filed by former Operations Vice President Keith Guggenberger, alleges breach of contract, defamation of character and spying. It accuses Austin of creating a hostile and vindictive work environment and is seeking damages in excess of $10.9 million.

Austin, his stepson and Starkey's attorney did not return calls Friday asking for comment.

Guggenberger worked at Starkey for 29 years and claims in the lawsuit that he was wrongfully terminated and owed $1.2 million in wages plus benefits he has been denied.

In the industry, Ruzicka and Guggenberger are largely credited with helping build Starkey's hearing aid business to one with $800 million in annual revenue. While Austin is CEO and founder, he was largely engaged in patient care and in the philanthropic work of the Starkey Foundation. The court filing said "Ruzicka's role in building the company to $800 million in revenue was even greater than Austin's."

But, the lawsuit said, Austin "marginalized and ignored Ruzicka" after Austin's stepson, Brandon Sawalich, the company's marketing senior vice president, was not promoted. Austin, the lawsuit says, began yelling and bad mouthing Ruzicka and Guggenberger around the office.

Austin "detests any limitation on his authority and power in the company," the lawsuit said.

The lawsuit said Sawalich learned of this and arranged to intercept e-mails between Ruzicka and Guggenberger. Sawalich then worked to "further [poison] Austin's mind against Ruzicka."

On Sept. 8 and 9, Austin began terminating executives, targeting those who were close to Ruzicka, the lawsuit alleged.

After Austin fired Ruzicka, sheriff's deputies escorted him from the building, the lawsuit said.

Ruzicka's attorney, Marshall Tanick, said his client did nothing wrong and had an employment contract that should have been honored.

Austin fired Guggenberger on Sept. 9, accusing him of planning to open a competing business with Ruzicka. Guggenberger denied those charges and told Austin that he "had no intention of leaving Starkey." Still, Austin sent Guggenberger a termination letter alleging "a long list" of "groundless" offenses and denied him wages and benefits, the lawsuit said.

"My client didn't want to leave the company," Briol said. "He had no intention of doing anything against the company. He was not feathering his own nest. He was not looking to compete with Starkey. He was not going anywhere. He [still] had a 13-year contract worth $375,000 each year. It was Jerry who was the one who was looking."

In addition to Ruzicka and Guggenberger, Austin terminated CFO Scott Nelson; Larry Miller, senior vice president for human resources; and executive assistants Julie Miller and Kim Mohlis. Each had worked at Starkey between 19 and 40 years.

Mohlis said she believed it was a power struggle that led to her termination. She added that she's not entirely sure and did not feel comfortable asking the temperamental Austin for an explanation.

On Sept. 13, Austin fired Jeff Longtain, the president of Starkey's Oregon subsidiary Northland Hearing Centers. Two days later, he fired Susan Good, the senior director of Starkey Medical Partner Network. Good, who worked at Starkey for 12 years, could not be reached for comment.

Longtain's attorney, Josh Stump, said his client has no idea why he was terminated. "Right now, my client is genuinely in the dark," Stump said.

Longtain helped Starkey build its business in the Northwest, Stump said.

Dee DePass • 612-673-7725