Apple One sues CoreStaff unit

Apple One Employment Services of Glendale, Calif., has filed suit against a unit of CoreStaff Inc. of Houston over that company’s acquisition of

Apple One’s former Colorado affiliate.

The suit, filed in U.S. District Court in Denver April 15, alleges that CoreStaff, which bought Richard Keith Enterprises Inc. in February, has

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infringed on Apple One’s trademark, misappropriated trade secrets and interfered with the employment agency’s ability to conduct business locally.

The lawsuit comes even as Apple One is attempting to reassert a position in the local employment-services market. The company has opened an office

in Fort Collins, with plans to occupy space that formerly housed Keith’s Apple One Employment Services of Colorado.

CoreStaff on Feb. 14 purchased the local employment agency operated by Richard Keith Enterprises, which conducted business under the name

Apple One Employment Services of Colorado.

Apple One alleges that Keith’s operation was a franchise of the company and that franchise fees exceeding $1.7 million are owed; Apple One seeks

more than $5 million in damages.

Apple One chief financial officer Michael Hoyal declined to comment on the lawsuit, saying the case was in the deposition stage.

“Obviously, they didn’t take well to the CoreStaff acquisition,” Keith said, noting that CoreStaff and Apple One are “serious competitors.”

Nevertheless, he said, “It’s a dispute I think we can remedy,” adding that “optimism is high that it can be settled before any court hearing.”

He said that once the cooperative venture with Apple One was no longer in place, Apple One sought payment for Keith’s use of the Apple One

trademark over six years. Keith said the two sides remain far apart over what that trademark was worth.

He said he had talked about selling his Colorado-based company to Apple One but that discussions broke down over the same issue, namely what

Apple One expected for the trademark.

Keith added that Apple One was aware that his company was posting big numbers, specifically 1995 revenues of about $16 million.

His company was named by Inc. magazine as one of the fastest-growing private companies in the country in 1995, with revenues surging 1,565

percent over a five-year period. Keith was also named entrepreneur of the year by Fort Collins Inc., the city’s economic-development organization.

Keith said the California company undoubtedly wants some of the estimated $9 million paid for his company by CoreStaff. He said the CoreStaff

branches that constituted his former business are on track to record $22 million to $23 million in sales this year, counting projected revenues from

soon-to-be-opened locations.

According to its complaint, Apple One gave Keith notice on Jan. 8, 1996, that it planned to terminate his franchise for failure to pay franchise fees.

Keith accepted the termination in a letter dated Feb. 14, the day of the CoreStaff acquisition.

Apple One alleges that since Feb. 14, CoreStaff has:

¥ Identified its business premises as Apple One Employment Services.

¥ Advertised in newspapers under the trademark Apple One that by calling a certain number, callers would be calling Apple One.

¥ Used the Apple One trademark on marketing material, business forms, etc.

¥ Represented to the public that Apple One and CoreStaff are the same entity.

¥ Represented to the public that Apple One is a “CoreStaff company.”

¥ Caused phone calls to Apple One to be rerouted to CoreStaff.

Apple One’s concern is sparked partly because of its own plans in Colorado, where the company has “diligently moved to establish business

operations,” according to the lawsuit.

Keith said Apple One is attempting to capitalize on the good will he’s built in the community over the years.

“I don’t quite think the California corporation will be embraced with open arms, but only time will tell,” he said.

Apple One’s re-entry into the market has included advertisements that proclaim “Back by popular demand” and “We’re back.” Keith has retaliated with

ads of his own seeking to clear up “confusion” he says is being engendered by Apple One.

Keith began operating as Apple One under agreement with the company six years ago. His out-of-state offices operated under different names,

specifically Cheyenne Temporary Services in Cheyenne, and Provincial Staffing Services of Naperville, Ill.

Keith is proceeding with plans to expand CoreStaff’s reach first in Colorado and then in an ambitious franchising plan. He’s set to open a branch in

the Denver Technological Center within the next 30 days, and an Aurora site is next, to be followed by Pueblo and Grand Junction.

Keith also serves as president and CEO of CoreStaff’s national franchise operation, which seeks to expand the company’s reach even more.

CoreStaff operates more than 100 branches across the United States and maintains operations in the United Kingdom. The company recently

completed a $137.5 million secondary stock offering. The company is traded on the NASDAQ exchange under the ticker symbol CSTF.