A dining services company has filed a lawsuit in federal court claiming it is owed more than $1 million in contractual damages by Keene State College, Plymouth State University and the University System of New Hampshire, court documents show.
On Dec. 20, Sodexo Management, Inc. — Keene State’s and Plymouth State’s former dining services provider — filed a complaint in U.S. District Court in Concord alleging that Keene State, Plymouth State and the state university system allowed Sodexo’s direct competitor to hire away managers and supervisory-level employees in breach of a “no-hire” provision in the institutions’ contracts with Sodexo.
Both institutions switched to a new provider, Chartwells Higher Education Services, this academic year. Chartwells was selected through a public bidding process after the schools’ previous contracts with Sodexo expired, according to Keene State spokeswoman Kelly Ricaurte.
Ricaurte said in July the competitive process allowed the college to secure a 10-year agreement that would save it $4 million over the life of the deal, compared with the other bids submitted.
A July news release from Keene State announcing the switch noted that all dining services employees at the college would be offered positions with Chartwells and would maintain their current salaries, benefits and seniority levels with the new provider.
At the time, Ricaurte told The Sentinel Sodexo employed about 150 people at the college.
But according to the suit, Chartwells’ hiring of some of those employees violated the terms of the college’s agreement with Sodexo.
The contract stipulates Keene State and the university system shall not “hire, make any agreement with, or permit the employment of, in any operation providing food service, any person who has been a (Sodexo) management employee at the Food Service within the earlier of one (1) year after said employee terminates employment with (Sodexo) or within one (1) year after the termination of the Agreement,” according to the complaint.
Nearly identical language is included in the company’s contract with Plymouth State, as quoted in the suit.
The clause also stipulates that should Keene State breach the provision, the college would be liable for damages equaling two times the annual salary of each employee hired, according to the complaint.
The company identified five management-level employees — a retail manager, a service manager, a conference services general manager, a controller and a payroll/human resources employee — who were hired by Chartwells to continue working at Keene State, according to the suit. For those employees, the damages would equal more than a half-million dollars, the complaint states.
Sodexo also alleges Plymouth State and the university system owe the company more than $600,000 in damages for the six supervisory employees hired by Chartwells to work at the Plymouth university, bringing the damages sought to more than $1 million.
The complaint states Sodexo worked with Chartwells and the university system to facilitate interviews with Sodexo employees, but notes that Sodexo made them aware of the “no-hire” clause for management positions and its implications.
According to the suit, Sodexo notified the university system on July 18 that it considered the system and the schools to be in breach of their contracts. The system responded by email two days later asking to be released from liability, the document notes.
Sodexo declined to do so, and after further discussion between the two parties, the university system sent a cease-and-desist letter to Chartwells in August, according to the complaint.
“USNH’s August 6th cease and desist letter to Chartwells was not issued in earnest, but rather as an attempt to absolve itself of liability under the ‘No-Hire’ provisions of the KSC and PSU Contracts, by creating a ruse that it was not ‘permitting’ Chartwells to employ the former Sodexo management and supervisory employees,” the complaint reads.
On Aug. 28, Sodexo issued invoices for the damages, the complaint states.
According to the suit, the institutions and university system refused to pay, arguing they are not liable because “employees were not ‘hired by’ USNH, KSC and/or PSU directly, and instead were ‘hired by’ Chartwells.”
Sodexo is now requesting liquidated damages, punitive damages and accruing interest, in addition to costs and expenses related to legal fees, and “such further damages and equitable relief as are just and proper,” the complaint states.
Ricaurte, the Keene State spokeswoman, shared an emailed statement with The Sentinel Friday denying any breach of contract on the university system’s part.
“The University System of New Hampshire (USNH) fully met its contractual obligations and is disappointed that Sodexo, having lost the contract through a public bid process, has chosen to file suit in federal district court,” the statement reads. “USNH is confident in its position and will vigorously defend the lawsuit.”
Michael R. Perry, the lead attorney representing Sodexo in the suit, was not reachable for further comment Friday. An email sent to a media relations representative at Chartwells Friday afternoon was not returned by press time that night.