The legal action was disclosed in Leap's annual report, filed with the Securities & Exchange Commission April 30.
Venture Direct filed suit Feb. 17 in New York state Supreme Court, seeking more than $10 million in damages and unspecified punitive damages for defamation, unfair competition and wrongful interference in contractual relationships with clients. The complaint named Leap Group, its Quantum Leap interactive marketing unit and John Fischer, a creative partner at Quantum, as defendants.
TO 2,700 E-MAIL ADDRESSES
At the heart of the suit is an e-mail that Venture Direct's @dVenture division sent to 2,700 e-mail addresses Feb. 10. @dVenture sent the e-mail -- promoting Universal Studios' Web site -- using a new software program. But it mistakenly e-mailed its seven-page mailing list instead of the intended message.
The complaint said Mr. Fischer replied to all the other recipients with a message titled "Boycott @dVenture" and asking, "Do you really want to spend your advertising dollars with a firm that blatantly spams [a derogatory term for mass e-mails] the Internet community?"
According to the complaint, one of the recipients, an @dVenture client, responded to Mr. Fischer's e-mail, asking for more details on his position regarding @d- Venture. The complaint charges Mr. Fischer responded with an e-mail that called @dVenture's e-mail glitch "obnoxious as well as stupid."
Venture Direct President Richard Baumer said the company felt the boycott language in Mr. Fischer's e-mail was an irresponsible overreaction.
"The Internet is an incredibly powerful medium. . . . You need to act in a responsible fashion," he said.
The two sides have reached an agreement in principle that should shortly settle the case. The agreement includes a retraction e-mailed to the recipients of the original e-mail, and a commitment to talks between Venture Direct and Leap about ways to work together.
Leap reached an out-of-court settlement in the suit filed last year in Orange County, Calif., Superior Court by Mr. Rabosky, former co-manager of Leap Partnership's Santa Monica office (AA, Jan 12).
He sought more than $500,000 in damages on charges of breach of contract, fraud and libel following his departure in September.
Settlement details were unavailable. Neither Mr. Rabosky nor his attorney returned phone calls.
Contributing: Alice Z. Cuneo.