AppleOne wins lawsuit against CoreStaff

FORT COLLINS – The verdict is in. A U.S. District Court jury in Denver has awarded AppleOne Service Inc. $4.8 million, finding that CoreStaff Acquisition Sub #5 Inc. infringed on AppleOne’s trademark and misappropriated trade secrets when it purchased Richard Keith Enterprises, a local company operating as AppleOne Employment Service of Colorado.

A two-week trial upheld AppleOne’s claim that a franchise agreement existed between Richard Keith Enterprises and AppleOne, and that company owner Richard Keith sold his company to the Fort Collins-based division of CoreStaff Inc. in violation of that agreement.

AppleOne attorney Ken Roberts said the company is pleased with the verdict, which has been entered as the final judgment in the trial, but believes CoreStaff is contemplating post-trial action.

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“This trial should be considered the first round, and not the final outcome of the case,´ said Austin Young, executive vice president of finance and administration for CoreStaff.

CoreStaff had not filed an appeal as of April 28.

Keith worked for AppleOne in Southern California for several years before proposing expansion of the company into Colorado. By 1995, Keith operated eight offices in Colorado, one in Cheyenne and one in Illinois, with revenues of $17 million a year.

According to court documents, Keith entered into a franchise agreement with AppleOne in December 1989, and in February 1995, sold Richard Keith Enterprises to CoreStaff Acquisition Sub #5 for approximately $9 million.

After the acquisition, Keith took a position in CoreStaff’s Fort Collins office as president and CEO of the company’s national expansion group. Shortly before the case went to trial, however, CoreStaff and Keith severed their working relationship.

“Richard’s departure was unrelated to the litigation,” Young said. “When his firms were acquired, he had an agreement to stay for a period of time. That time is up, and he’s left to pursue other interests.”

Young said Keith was tasked with looking at and leading the company into franchising, but CoreStaff decided not to pursue that direction.

Keith now owns and operates Center Partners with partner Jerry Tschikof. The company is a call center that provides technical support for customers of Hewlett-Packard Co. and Colorado Memory Systems Inc.

Neither Keith nor Richard Keith Enterprises were defendants in the case against CoreStaff, but both have been sued by AppleOne Service and AppleOne Franchise in California state court in Los Angeles, alleging breach of the franchise agreement, failure to pay franchise fees and failure to pay promissory notes owed by Keith to AppleOne Service. The California case is set to go to trial this summer or early fall, AppleOne attorney Ken Roberts said.