A former Cable One Inc. system manager has become a private consultant, and now his former employer has sued him for $1 million over alleged breach of contract.
In a civil suit filed in U.S. District Court for the Western District of Oklahoma, the MSO claimed that Jerald D. Stone is using proprietary information he was privy to as a Ponca City, Okla., system manager.
The 15-year cable veteran will advise potential competitors to Cable One franchises in Oklahoma, the suit said.
An answering machine at Stone's residence identified his new venture as North Central Consulting. He did not answer or return a phone message last week.
The suit claims disclosure of trade secrets, breach of contract, breach of Stone's duty of loyalty to his employer, tortuous interference with Cable One's business relations and unfair competition.
Stone has firsthand knowledge of system operations, and he viewed the company's year-2000 marketing plans and five-year sales and capital-expenditures projections-information he now may provide to his clients, Cable One claimed.
Stone resigned in February. According to the lawsuit, he told a cable-system sales executive that day that he expected to sign a consulting deal with a competitor and with Ponca City that would net him $320,000.
Ponca City is located northwest of Tulsa, near the Nebraska state line. Its commissioners are currently considering a feasibility study of a municipal overbuild.
After Stone's departure, Cable One officials unearthed records indicating that Stone promoted the city project, according to the civil suit.
According to Cable One regional vice president Thomas Basinger, Stone told him Feb. 24 that the Ponca City mayor was talking to a consulting firm, Hypernet Solutions Inc., about a municipal cable study. According to Basinger's recollections quoted in the suit, Stone said the city would request a six-month study of an overbuild.
If Hypernet gets the contract, Stone would work for Hypernet, according to the executive.
The company also claimed that Stone told Ponca City officials that the "incumbent operator has chosen to not invest the capital dollars necessary to do it all.One man's neglect creates opportunity for another."
Stone is also quoted as advising the city against creating the cable venture in an open meeting, instead suggesting a veil of secrecy over a venture headed by the mayor and a few others on a need-to-know basis.
Stone further abused his position during the possible sale of a cable system in Blackwell, Okla., the suit said.
In 1998, Cable One bought two systems in that area from TCA Cable Partners, and it considered expanding the cluster via the purchase of the Blackwell properties held by owner Gred Deffner.
Stone was the company's delegate in those inquiries, which did not result in a sale. Now, Stone has reintroduced himself to Cable One as Deffner's broker in a proposed sale.
Each of these activities, according to the company, violated a company standard of ethics, which is periodically reviewed and signed by employees.
Stone signed the current version of the policy last July. It generally states that employees must avoid situations that involve possible conflict of interest. The document states that conflict can't be defined precisely, but it attempts to give some examples. Specifically, consulting outside of the cable franchise is cited as a conflict.
Cable One's suit seeks $1 million in actual damages, plus punitive damages. Also the operator wants the court to enjoin Stone from consulting for any direct competitor to his old employer.
Officials at the MSO, which is owned by The Washington Post Co., declined to comment beyond information contained in the suit.
