A top GOP ad firm’s split took a litigious turn earlier this month, when Rex Elsass, the CEO and founder of The Strategy Group for Media, filed suit against his company’s former president, Nick Everhart.
Elsass fired Everhart via email in early April, accusing his former employee of a litany of grievances ranging from stealing company computer files and “trade secrets” to erratic personal behavior.
Republican consultants across the country have devoured the public legal document, which was filed May 8. Some of the GOP’s hired hands compared the lawsuit to a campaign opposition research book.
Everhart’s attorney, James Mowery, denied the allegations and called it “a strategic move to discredit Nick.”
Elsass’ attorney, Jeffrey Lipps, stood by the complaint and said he has the forensic and email evidence to back up the allegations of corporate theft and violation of a non-compete agreement. The legal complaint also accuses Everhart of unprofessional conduct, from a rumpled appearance to lewd behavior.
“We make it clear to the court and others that will evaluate this case if it goes to a jury that they understand why you would terminate the president,” Lipps said. “Unfortunately, it has to include descriptions of some of his conduct and the nature of it that gave rise to the company having to make that decision to terminate him. It’s not gratuitous.”
The most significant legal issue is the non-compete agreement Everhart signed about two weeks before his termination. The dispute centers on how broadly the firm can interpret who should be considered a competitor to the SGM. Mowery argues for a narrower interpretation of the non-compete to allow Everhart more employment options.
The SGM makes television ads for dozens of members of Congress, producing, for example, Wisconsin Rep. Sean P. Duffy’s highly praised series of lumberjack ads. At the same time, Elsass is a highly controversial force in the business of Republican politics.
Besides Duffy, the company’s 2012 client roster included Indiana Gov. Mike Pence, Pennsylvania Rep. Keith Rothfus and, most memorably, former Rep. Todd Akin’s disastrous bid for Senate in Missouri.
Privately, other GOP consultants wondered if the legal drama would soften the firm’s hold on its lengthy client list.
A competitor said there had been minimal immediate client fallout for SGM. But he and others said it is too early for those sorts of changes to occur, arguing that clients are more likely to leave the firm in the third or fourth quarter of this year — if they ever do depart.
“You would expect that anyone considering working with him again will have pause,” another Republican media consultant said of Elsass.
When CQ Roll Call tried to interview SGM clients in Congress during votes last week, Minnesota Rep. Michele Bachmann refused to answer any campaign-related questions. Another client, North Carolina Rep. Renee Ellmers, said she had no knowledge of the dispute.
But many of the controversial firm’s competitors plan to continue watching the legal dispute .
“It makes the whole industry look bad,” the same GOP media consultant said about the litigation.
Leaders from military and veterans service organizations joined Sens. Roger Wicker, R-Miss., Kelly Ayotte , R-N.H., and Lindsey Graham, R-S.C., at a press conference to urge the Senate to replace a provision in the budget proposal that cuts retirement benefits for veterans. Wicker, Ayotee, and Graham earlier called for a bipartisan solution to replace the $6.3 billion in cuts to military retiree benefits.
Each year since 1990, CQ Roll Call has reviewed the financial disclosures of all 541 senators, representatives and delegates to determine the 50 richest members of Congress. This year's report, derived from forms covering the calendar year 2012, shows it took a net worth of $6.67 million to crack the exclusive club.