CLAIMS MADE, UNDER OATH, BY DAVID DOURGARIAN DURING DEPOSITION
Guaranteed use contracts - contract wherein a client guarantees to use a minimum number of employees - are common for start-ups.
(Attorney) My question was is it common in the industry for companies like Mr. Stemm's to have written contracts with customers regarding how much business they were going to do with the new company?
(Dourgarian) Yes. It is common.
(Attorney) That's what you are used to seeing?
David Dourgarian, President & CEO of a company that, according to his own penned article, caters to start-up staffing companies cannot reasonably interpret the meaning of the term 'start-up'.
(Attorney) Admit that 180 Personnel was a start-up staffing agency. And you deny on the basis that the phrase start-up is vague and ambiguous and not subject to reasonable interpretation. Do you still stand by your answer in this Request for Admissions or do you stand by your testimony that you just gave me?
(Dourgarian) I stand by my answer.
That despite claims of guaranteed contracts being "common" and "what he's used to seeing", only 10% of contracts TempWorks signs result in the placement of a single temporary.
(Dourgarian) I sign a fair number of contracts with companies that were simply never presented with someone to employ. I mean, too many to count almost. Nine out of ten agreements we sign with customers do not result in the placement of a staff consultant. That's the nature of working with start-ups.
(Dourgarian) During the course of my career I have factored or provided or executed affiliate contracts with more than 200 staffing agencies. Virtually every one of them comes to me with the same story. They worked for a national staffing company. They had a book of business supposedly. And they wish to walk out the front door of their former employer and establish themselves on their own and procure our services to help with that. As I mention previously in my testimony, while nearly every single one of my customers in the entire history of my business comes to me with such a story, I only end up with one in ten that go anywhere.
That clients asking for a Certificate of Insurance (COI) PRIOR to the employee starting work is "highly unusual"
(Dourgarian) It would be highly unusual to demand a certificate of insurance prior to the hire having been made.
That TempWorks has, basically, no responsibilities whatsoever in their contracts......
(Attorney) First of all, is it fair for me to say that TempWorks doesn't have many obligations in this contract, right?
(Dourgarian) It would be very fair to say that.
(Attorney) Very fair to say that I think you said?
(Attorney) That's because even though he had a contractual relationship with you you didn't have any duty to ever allow him to do business according to that contract, right?
That David Dourgarian can refuse to approve an employee for hire for "any reason I want"
(Dourgarian) .......The contract quite simply states that I can use any reason I want to refuse the employment of a staffed consultant. Our power under that language is so broad that I don't personally get involved in these decisions.............
That all TempWorks needs to breach their contract and walk away from it is David Dourgarian's suspicion.
(Attorney) With respect to those last two reasons, you didn't have any evidence that Mr. Stemm would be doing such a thing, did you?
(Dourgarian) I didn't need anything.
(Attorney) You were just suspicious ......
(Dourgarian) This contract protects my suspicions
(Attorney) So all you need is a suspicion.
(Dourgarian) That is correct.
FINDING OF A MINNESOTA COURT RE: TEMPWORKS' HONESTY
“The court does not find Dourgarian’s explanation of why he terminated the contract reasonable or credible.”
David Dourgarian, President & CEO TempWorks Software
“The court finds Kautzman’s testimony was not credible that she had resolved the problem Friday morning, given that Sepsey was still waiting for the contract and letter from TMS.”
Mari Kautzman, COO TempWorks Software
“The court does not find Kraus’ testimony that he knew nothing of the workers’ compensation problem credible because he had participated in the email chain the day before and complained about the proposed resolution.”
Casey Kraus, Executive Vice President Tempworks Software
The court does not find Defendant’s explanation credible. Instead, the court finds that Tempworks had an ulterior motive for terminating the contract………..
The court finds that Tempworks canceled the contract not because of any risk to the company but because they believed it would be inconvenient and possibly more expensive to perform, and incorrectly believed that it could simply step away from a contract that it no longer liked.
Defendant argues that the contract provision at paragraph 11.3 gives TMS complete discretion to decide whether or not it wants to go forward. Defendant argues that it bargained for this escape clause and it had a right to exercise it. However, the court does not agree that paragraph 11.3 gives TMS an unfettered right to simply walk away from a contract. Indeed the provision does not say that………
Even if the court had found this a credible explanation for terminating the contract, which it does not, Defendant provided insufficient evidence as to how this behavior fell within one of the identified reasons to call an Event of Default under paragraph 11.3.
There was no evidence that this conduct would affect 180 Personnel’s business operations…….
Nor was there any evidence that these actions would impair the ability of 180 Personnel to perform its obligations under the agreement
The testimony from Defendant’s witnesses was vague…………..
Defendant argues that the words “Tempworks determines” in paragraph 11.3 means that Defendant has complete discretion to decide if it wants to go forward with a contract and that this decision cannot be reviewed. The court disagrees…………