Mitsubishi, Partners Clash Over Job Suspensions : Civil suit: Three minority owners of Value Rent-A-Car charge that they were improperly suspended. A Mitsubishi attorney says their lawsuit is without merit.
Mitsubishi Motor Sales of America’s landmark purchase of a U.S. car rental firm has crash-landed in a Florida court, where the importer is battling its minority partners at Value Rent-A-Car Inc. in a case involving allegations of missing cash, cocaine possession and corporate spying.
In a civil suit filed Feb. 17 in Broward County Circuit Court in Fort Lauderdale, three minority partners of Value are charging that Mitsubishi improperly suspended them from their $156,000-a-year jobs on Feb. 6.
The three men--Sidney H. Cohen, president of Value, and his two sons, Jeffrey A. and Steven M. Cohen, both vice presidents of the Deerfield Beach, Fla., firm--are seeking more than $45 million in damages.
Sidney Cohen’s daughter, Wendy Cohen, also was suspended Feb. 6, from her position as vice president of marketing. She has filed a separate claim against Mitsubishi seeking unspecified damages for defamation of character and false imprisonment, alleging that she was detained in her office by several armed security guards.
Officials at Cypress-based Mitsubishi Motor Sales had no comment Monday. That company is the U.S import, distribution and marketing arm of Mitsubishi Motors Corp. of Tokyo. Martin Reeder, a West Palm Beach, Fla., attorney representing Mitsubishi and Value, said the two suits are “utterly without merit.”
Mitsubishi is the first Japanese-owned auto company to acquire a U.S. car rental firm. In announcing the acquisition last year, Mitsubishi said the deal would increase the visibility of its automobiles to consumers and create a steady stream of low-mileage used cars for Mitsubishi dealerships to sell.
Value was already using Mitsubishi cars in about 10% of its fleet of 20,000 vehicles at the time of the acquisition, and Mitsubishi said it intended to boost the share to 85% of the Value fleet this year.
Internal Mitsubishi documents filed with the Cohens’ fraud suit show that the leasing firm’s board of directors--controlled by Mitsubishi officials--suspended the three men in connection with a variety of issues, including: their possible roles in an alleged attempt to bug the office of a Mitsubishi executive; Steven Cohen’s Jan. 17 arrest in Boca Raton, Fla., on suspicion of cocaine possession, and the possibility that “some or all of the Cohens may have committed other improper acts . . . including diversion of company funds.”
That last allegation is not elaborated on in the court documents, and Reeder said he could not comment except to say that the company is conducting an internal investigation of all the allegations.
Alan C. Kauffman, the Cohens’ attorney, said Monday that the allegations made by Mitsubishi are groundless. He said that the reason the four were suspended is that Mitsubishi wants to push them out so that it does not have to honor an agreement to pay the Cohens as much as $15 million from operating profits over the next five years.
In the suit, the Cohens claim that Mitsubishi also has fired several other top Value managers since Feb. 6--all people loyal to the Cohens--in an effort to consolidate its hold on the rental company.
Mitsubishi bought 80% of Value stock from the Cohens in June, 1990 for $17.5 million and 10% of annual operating profits--up to a total of $15 million--for five years. The purchase agreement also calls for the company to acquire the remaining 20% of the company from the Cohens at the end of five years.
The Cohens’ fraud suit claims that Mitsubishi had no intention of helping them make Value as profitable as possible to enhance the value of the stock. Instead, they allege, Mitsubishi wanted to use the company “as a conduit for disposing or or dumping Mitsubishi automobiles in the United States. . . .”
In addition, the suit alleges, Mitsubishi sought to boost its own profits by selling Mitsubishi automobiles to Value.
The suit claims that Sidney, Jeffrey and Steven Cohen were suspended shortly after they declined to order Mitsubishi automobiles for the Value fleet and instead ordered cars from Ford at a lower price.
Kauffman said the Cohens ordered the Ford cars in 1990, shortly after Mitsubishi acquired control of Value, when Mitsubishi was unable to match or beat Ford’s terms. Kauffman said Ford offered to sell Value the cars it needed at a price that was $25 million less than Mitsubishi’s.
Kauffman said Monday that he does not know whether the deal was for all 20,000 cars in the Value fleet. But he said that “rental firms normally turn their fleets over every four months, so the Ford deal represented savings of as much as $75 million a year.”
Reeder, the Mitsubishi attorney, offered a slightly different version. Although he agreed that Mitsubishi was unable to match Ford’s offer in 1990, he denied that the Cohens were suspended for having ordered Ford cars. In fact, he said, Mitsubishi guaranteed the loan that Value used to acquire the Ford cars.
Earlier this year, he said, Mitsubishi matched Ford’s terms and Value subsequently ordered 1991 Mitsubishi vehicles for its fleet just before the Cohens were suspended.
No trial date has been set for the two suits involving the Cohens. A Circuit Court Judge ruled Thursday that Value Rent-A-Car must act by March 23 to either reinstate Sidney, Jeffrey and Steven Cohen or to terminate them and state whether termination is with or without cause.
If the company does not act, the judge said, the court will declare that the three were terminated without cause. That is a critical issue because the Cohens’ employment contracts enable them to collect substantial payments should termination be without cause, Kauffman said.