On the one hand, the annual convention of Destinations International (formerly Destination Marketing Association International) July 11-14 in Montreal was a smooth success as the rebranded organization which underwent a top-to-bottom management change early last year seems to have found an ideal blend of a trade show cum education and networking event.
On the other hand, and what many talked about at some point during the convention, was the litigation that has ensnared the association in the wake of the forced departure of Michael Gehrisch, who served as DMAI’s president and CEO for 15 years until he formally left in January 2016. He actually had to go, in a de facto sense, in September 2015, albeit with a nice severance package, with the organization deeply in debt (to the tune of $1.8 million) and a forensic audit report showing “significant financial mismanagement” under Gehrisch.
Under that separation agreement, DMAI/DI was to pay Gehrisch in the form of “salary” through Dec. 2015, and then an additional year’s worth of “salary” – $397,000 – over 18 months. The association would also continue to provide health benefits for Gehrisch and his wife until Dec. 31, 2016. Then, last September, Gehrisch sued the association, charging it with not meeting the terms of the agreement. Why? Because Destinations International had notified Gehrisch it would stop payment in Aug. 2016 unless he supplied documentation it sought. Court documents say when Gehrisch did not provide the requested documentation, the payment of his buyout—as well as his and his wife’s health insurance–ceased. More than $165,000 had been paid at the time Destinations International stopped payments.
A month later, Gehrisch sued DMAI/DI (He sought $694,751 for violation of the wage law and $1,191,000 for a board member or members’ who allegedly slandered him). Such litigation, with depositions and interrogatories and amended filings, etc., takes time. With the association facing the possibility of a triple damages award should it lose the case, and with Gehrisch facing expensive legal costs in the interim, the whole matter suddenly came to close last week when it was announced that the two parties had reached an agreement.
A statement furnished to the trade publication USAE News by Destinations International said, “Destinations International (formerly Destination Marketing Association International) and Michael Gehrisch have agreed to settle and dismiss the lawsuit between them. The parties wish to resolve this dispute, to put it behind them, and to focus on their future endeavors. The terms of the Settlement will be kept confidential. On behalf of Destinations International, no additional comments will be made, and no interviews will be granted.”
But it’s not Completely over: Still pending is a suit Destinations International filed last February against the law firm of McDermott, Will & Emery LLP–a Chicago-headquartered mega-firm with more than 1,100 attorneys—charging legal malpractice, saying the law firm and two of its lawyers gave it bad advice about how to fire the group’s CEO and failed to fully disclose its prior relationships with him. In its suit filed in New York Supreme Court, Destinations International accused McDermott Will and two partners, Banks Brown and Kristin E. Michaels, of malpractice because they allegedly advised the group to characterize termination payments to the ex-CEO Gehrisch, as “salary,” thus exposing the group to an ongoing suit by Gehrisch under Washington, D.C.’s Wage Payment and Collection Law.
“The drafting of the separation agreement was so flawed as to constitute legal malpractice,” the association charged, adding “The defendants also advised DMAI to make substantial payments to Gehrisch, even though they knew or should have known that Gehrisch was in breach of his underlying employment agreement with DMAI, and that in fact Gehrisch should have been forced to return money he improperly took from DMAI.”
In addition, Destinations International alleges that the lawyers failed to disclose the full extent of their prior personal and professional relationships with Gehrisch. The suit claims that the McDermott Will defendants’ misconduct and ethical violations support an award of punitive damages based on their professional malpractice and receipt of payment for conflicted legal representation.
Brown and McDermott Will represented the American Hotel & Lodging Association (AHLA) while Gehrisch was its executive vice president between 1988 and 1999, prior to his serving as CEO of Destinations International, according to the suit. Although McDermott Will disclosed to the group that it had worked with the AHLA while Gehrisch was there, “it did not disclose the volume of work that Brown did for the AHLA and how closely he worked with Gehrisch,” the suit said.
While Brown also disclosed to Destination Marketing that he was personally friendly with Gehrisch, he didn’t advise the board of directors to seek other counsel to handle Gehrisch’s termination or tell the board that he had also represented Gehrisch personally, the suit said.
