Raleigh Rickshaw recently filed a lawsuit against a former employee and new competitor, Crank Arm Rickshaw, for allegedly using its business model and attempting to lure employees away from the company.
RPC Leasing, which runs Raleigh Rickshaw, filed the suit against former rider Dylan Selinger, who now works for Crank Arm. In the lawsuit, filed in Wake County Superior Court, Raleigh Rickshaw accused Selinger and Crank Arm of “unfair and deceptive trade practices.”
The lawsuit claims Selinger broke a non-compete agreement and leaked confidential business information to the new rickshaw company.
RPC Leasing sought a temporary restraining order against Selinger and Crank Arm, which was denied, as well as a preliminary injunction against Crank Arm operations for three years from Selinger’s lease termination date.
Raleigh Rickshaw riders lease their rickshaws from the company and are considered independent contractors.
The lawsuit stated Selinger entered into a lease with RPC on August 25, 2010, prior to starting work with Raleigh Rickshaw, and signed a non-compete, non-solicitation agreement. A copy of the agreement, which was provided in the lawsuit, stated that the lessee may not work for or start a rickshaw company for three years after termination, or else face damages of $100 per day.
According to an affadavit from Donald Mertrud, owner of RPC Leasing, Selinger trained with his company and worked there for three months.
RPC Leasing alleged in the suit that Selinger “went and started a rickshaw company known as Crank Arm Rickshaw, LLC.”
But Adam Eckhardt, who is also named in the suit, said is the sole owner of Crank Arm Rickshaw.
Eckhardt declined to comment further on the case.
As stated in the filing, Crank Arm Rickshaw was founded on March 22.
The lawsuit also stated that Selinger registered the company for a domain name on May 25, and used “Raleigh Rickshaw” as a search tag for the site.
“The purpose of this action was to improperly divert business from RPC in violation of the Agreement,” the lawsuit stated.
The lawsuit also alleged that Crank Arm “has attempted to solicit Rod Harder, who is a RPC contractor, away from RPC.”
Raleigh Rickshaw owner Mertrud’s affadavit stated that Selinger asked for blank copies of contracts, applications, and forms at a meeting in late February.
It also stated that Mertrud saw Selinger operate a rickshaw for Crank Arm Rickshaw, and that Selinger has personally acknowledged his involvement in creating Crank Arm.
Mertrud stated in the affadavit that Crank Arm uses the same color shirt as his company, as well as the same make and model of rickshaw from the same company.
RPC Leasing is seeking $100 per day in damages as per the non-compete agreement, starting from May 25, which is when the website for Crank Arm was established, according to the lawsuit.
In an interview with the Record, Dylan Selinger said that he was not owner of Crank Arm Rickshaw and that Adam Eckhardt gave him the opportunity to ride for his company. He said that he decided to leave Raleigh Rickshaw for several reasons, and thinks that the non-compete agreement is unfair.
“I don’t think it’s right for him to prevent me from working for another company,” Selinger said.
Selinger said that he felt the non-compete agreement was unreasonable, and he decided to ride for Crank Arm anyway.
“I mean, it’s a free country. I should be able to perform in my area of expertise,” Selinger said.
Selinger also said he was happier working for Crank Arm Rickshaw.
The lawyer for Crank Arm Rickshaw, Bobby Khot, said that there is no reason for the lawsuit.
“There is no other basis for suing my client other than they want to stifle competition,” Khot said.
Khot said he would be “rigorously defending” his client and that he plans on filing counterclaims.
“It’s my belief that it’s a simple restraint on trade,” Khot said.
Both Donald Mertrud, owner of RPC Leasing, and his lawyer Daniel Tower, declined to comment on the case.