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Company can sue for ‘theft’ of identity

Identity theft is not just a threat for Internet shoppers, according to a new case from Alexandria federal court.

A Washington, D.C.-based corporation claims its identity was appropriated by a former employee who allegedly took the corporate name, its trademark, its Web site address and its role as a trade organization that advocated for flexible benefit compensation in the work place.

The nonprofit corporation formerly known as the “Employers Council on Flexible Compensation” can sue its former executive director for violation of federal trademark and anticybersquatting laws, as well as breach of fiduciary duty, civil conspiracy and tortious interference under Virginia state law, Senior U. S. District Judge James C. Cacheris ruled last week in The Flexible Benefits Council v. Feltman (VLW 008-3-226).

In his June 16 opinion, Cacheris recounted the plaintiff company’s allegations.

Incorporated in the District in 1981, plaintiff Flexible Benefits Council (FBC) spent the first 27 years of its life as “Employers Council on Flexible Compen-sation.”

Between 1985 and July 2007, defendant Kenneth Feltman served as the corporation’s executive director, re-sponsible for the day-to-day operations. Beginning in 1997, Feltman served in that capacity under Management Service Agreements between the corporation and Radnor Inc., a separate association management company formed by Feltman. The MSAs, in combination with Feltman’s status as an officer of the corporation, allegedly “im-posed upon him fiduciary, ethical and other duties toward” the corporation, the opinion said.

Unbeknownst to the plaintiff corporation, its corporate charter was revoked in 1998 for failure to file an annual report and filing fees with the District of Columbia, a chore that fell to Radnor under the MSAs. The company carried on, but Feltman left on July 31, 2007.

FBC only learned it had lost its charter in March 2008, after Feltman and his lawyer formed and registered a new corporation, same as the old corporation. Except of course, it wasn’t.

The FBC complaint contends Feltman and his lawyer Anthony Hawks – who also is defending Feltman in FBC’s arbitration proceeding alleging Feltman “pilfered” millions of dollars from FBC – formed and registered a new corporation in the District under the name “Employers Council on Flexible Compensation, Ltd.,” with the stated purpose of performing the same kind of advocacy work.

Feltman then allegedly reserved the acronym “ECFC” with the D.C. Corporation Division, which kept FBC from reinstating its corporate charter with the old name and acronym. Feltman’s lawyer also applied to the U.S. Patent & Trademark Office to register the mark “Employers Council on Flexible Compensation” and to register a design mark using the acronym “ecfc.” Both the name and the design were used by FBC for 27 years, it alleged.

FBC had been using the domain name www.ecfc.org. The new company operated as www.ecfc.com. The new Web site purportedly is similar to FBC’s Web site “in both design and in the proclaimed mission statement,” Cacheris wrote.

Finally, in a touch that’s almost eerie, “ECFC Ltd. has obtained offices on the same street as Plaintiff’s offices and with the same suite number,” Cacheris wrote.

In ruling on the motion to dismiss, Cacheris said FBC could sue both ECFC Ltd., and Feltman and Hawks individually, for the “alleged scheme to steal Plaintiff’s identity,” as the complaint alleged these corporate officers “personally and actively participated in the commission of these illegal acts,” which stripped them of corporate protection from personal liability.

Likewise, an exculpatory clause in the MSAs afforded Feltman no protection against liability for intentional conduct, Cacheris said. And the intracorporate immunity doctrine – which says two corporate officers add up to only one conspirator – did not spare Feltman and Hawks from facing the civil conspiracy claim.

The case continues in discovery, according to the court docket sheet. Alexandria lawyer Bernard J. DiMuro represents FBC and D.C. lawyer Edward A. Pennington represents the defendants.

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