Blood in the Water

The sharks are in a frenzy as Enterprise is wounded by one of its own

Thomas Dunn, the fired controller of Enterprise Rent-A-Car, was in the hot seat, but the lawyers were busy aiming their flamethrowers at each other.

This time, the flare-up was about a comma.

During his deposition, Dunn was asked about financial damages, and his lawyer, Lisa Van Amburg, was livid.

"That wasn't our agreement," she fumed at the company's lawyers. "I'm a little disappointed that you would mislead us."

But Enterprise's Michael Kahn, a legal eagle flown in from California, was adamant: Van Amburg was wrong, and he had the proof.

"Ms. Van Amburg, get out the letter," Kahn directed, referring to a letter written to Van Amburg by his partner Karen Petrulakis.

"The letter said: 'We specifically agreed the deposition was about damages comma including emotional distress."

But Van Amburg said the letter flat-out misrepresented an earlier conversation with Petrulakis. It was no more than a legal trick, and Kahn should have known better.

Kahn pressed: "Get out the letter!... 'Damages comma including emotional distress.'"

Again Van Amburg protested.

Kahn snapped: "It would seem to me that would encourage you to read carefully the letters that she sends."

These were not the sounds of lawyers in love.

Nor were the lawyers any friendlier in April when, over the course of five days of depositions, Petrulakis objected 900 times to Van Amburg's questions.

At one point, Petrulakis accused Van Amburg of "yelling at the witness."

"Perhaps you need a break," she added.

Things have gotten so nasty between the lawyers in the Enterprise case that Van Amburg asked St. Louis County Circuit Judge Colleen Dolan to enter an order limiting Enterprise's objections.

Petrulakis replied with an eighteen-page affidavit claiming that Van Amburg and another lawyer in her office, Matt Ghio, are the ones causing trouble between the lawyers.

Judge Dolan was considering the highly unusual step of appointing a lawyer to referee the depositions, someone to step in to stop the legal low blows and sucker punches.

In a May 30 order, after both sides gave her transcripts of the depositions and tattled on each other, Dolan wrote: "The discovery process in this case has become abusive," many objections "appear to be harassment towards opposing counsel" and some questions "appear to be harassment of the witness."

So what's behind the no-holds-barred battle royal of barristers?

Only the reputation of one of St. Louis' most celebrated business success stories.


St. Louis-based Enterprise Rent-A-Car is the nation's largest car-rental company. Through a related foundation, the company's owners and employees are responsible for contributing tens of millions of dollars to local institutions such as the St. Louis Zoo, Forest Park and Washington University. Because of the company's success and generosity, the family that founded and controls Enterprise is seen as a pillar of the community.

Thomas Dunn has a different view.

A 1982 Mizzou grad, Dunn started at Enterprise in 1986 and worked his way from accountant to controller. In 1994, he was named a full vice president. Along the way, he collected four achievement awards from senior management.

All that came crashing down in early 2001, when he was fired from his $650,000-a-year job.

In a lawsuit filed four months after he was fired, Dunn alleged he got the boot after complaining to senior management about the privately held company's business and accounting practices.

Dunn -- whose allegations are all disputed by the company -- says he questioned practices that included:

· Overbilling of customers for repairs when rental cars were damaged. Eventually, Dunn says, Enterprise stopped the overbilling, but only after the company was investigated by the Iowa attorney general.

· Making customers in Missouri, Alabama and North Carolina pay deceptive surcharges. Dunn worried that the customers might think it was a government-imposed fee, not just another way to line Enterprise's pockets. In 1997, Enterprise settled a class-action case filed in Alabama over the practice.

· Registering rental vehicles in certain jurisdictions with the goal of avoiding high-sales-tax states -- a practice, Dunn claims, is illegal.

· Making customers pay sales taxes on leases -- even when it wasn't required.

But Dunn alleges in his lawsuit that most of his issues with the company's top brass revolved around accounting practices and an aborted effort to take the company public.

In June 1999, Dunn says, Enterprise and investment-banking firm Goldman Sachs held a strategic planning meeting to discuss an initial public offering. At the meeting, Goldman Sachs allegedly raised concerns about the company's practice of overdepreciating cars, as well as "excessive senior executive compensation." According to Dunn, Goldman Sachs told Enterprise that both would have to change before the IPO was submitted to regulators.

Dunn claims that Jack Taylor, company founder and chairman of the board, was at the meeting and that he vigorously opposed altering the depreciation-accounting method.

Just weeks after that meeting, Dunn was placed on 90 days' probation. He claims that the official reason for the probation was his "disrespecting senior managers and for not having a 'vision' in touch with Enterprise's strategic position." The probation period ended in November 1999, and Dunn claims he was told he could stay "as long as he behaved."

But the accounting issues weren't resolved.

Dunn claims that in January 2000, his immediate supervisor, chief financial officer John O'Connell, "came back to me and said the accounting resolutions would not work for the company."

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