By DAVE DANFORTH Daily Press Staff Writer
A long-time Santa Monica businessman is accusing one of his most prolific designers with stealing key accounts by going into business for herself last year.
Gary Mandel, who owns the GMPC accessories design firm, claims Lendy Walker “schemed” to divert business worth $2 million from Disney and Universal Studios before she left GMPC to form Design Labs, her own business.
Walker claims the suit is about Mandel trying to put her out of business.
Walker’s creative designs in placing Disney and Universal movie characters on caps for sale in their theme parks is at the heart of the case. She claims Disney and Universal owned the rights to the characters and asked her to continue to work for them after she opened her firm in January 2002.
Walker had worked for Mandel since 1996 before she left to start Design Labs. Mandel’s firm, GMPC, sells promotional items such as keys, mugs, hats and backpacks.
Mandel claims Walker developed the Disney and Universal accounts at GMPC, and was paid salary and commissions worth $300,000 annually.
The case is a “classic unfair competition” claim, Eddie Woods, Mandel’s lawyer, told the jury. He centered on claims that Walker “appropriated” the relationship he set up with a Taiwan manufacturing firm called “Heads Up” and sought to conceal it from him.
Because Disney and Universal have developed extensive checklists for overseas plants to guard against sweatshop conditions, it can take years to set up such a relationship, Woods argued.
Mandel collected a series of e-mails between Walker and Heads Up owner Shelly Liao in an effort to show they concocted a scheme to invent a fake firm with a new name so Mandel wouldn’t realize she was dealing with Liao and Heads Up.
Walker, however, claimed the use of the fake name “Shan Tai Manufacturing” was Liao’s idea because Mandel owed Heads Up money and Liao feared going unpaid if she worked with Walker’s Design Labs.
“She couldn’t have started that business without a pre-approved factory,” Woods told the jury.
“Gary Mandel would rather compete in a courtroom than in the marketplace,” Berman countered.
“There’s no Coca-Cola formula here. These are hats.” — Larry Berman, Walker’s lawyer, told a Santa Monica jury last week in opening arguments in the case
“This case has nothing to do with trade secrets,”
Walker claims to have built the Disney and Universal accounts by calling them and asking who handled hats.
From 1997 to 2000, GMPC’s sales of Walker-designed products totaled $23 million and produced $6 million in profits for Mandel’s firm, Berman told jurors.
But after Walker left, almost all her designs were new for the two theme park firms, Berman said. Holding a yellow “Sponge-Bob” cap for jurors to see, Berman exclaimed, “Isn’t it adorable?”
Walker also developed a hat design using “Tinkerbell” and a slogan, “Don’t Even Tink About It,” Berman noted.
“Design is all about designing great stuff so a parent will hear a kid say ‘I want that,’” Berman said. “She’s got a gift, a knack for making stuff that little kids and their parents like.”
Disney and Universal bought goods from Walker because it sold well in their theme parks, he noted, adding that the two theme park owners will set up similar relationships with anyone who can make them money.
Walker’s work was good enough that Disney and Universal ordered $3.8 million worth of merchandise from her in 2002, after she left GMPC, she claimed through her lawyer.
Though a prior bid to start up her own firm had failed because Walker is primarily a designer with little business sense, by 2002 she went into business with her fiancé. The fiancé, Adam Beatty, is a Harvard Business School graduate.
Walker claimed to have been dissatisfied with her treatment at GMPC. Her lawyer told jurors that other sales reps were making more than Walker’s 15 percent commission and that Mandel had capped her pay before she left.
Walker had every right to leave, Berman noted. She took with her not trade secrets or confidential lists, but her own superior design abilities, he said.
The only better designer at the firm was Mandel himself, Berman said. Mandel testified on the witness stand that his relationship with Walker was one of a “valued employee and friend” and that he was unaware of her unhappiness.
Mandel claimed that Walker planned her exit and “hoarded sales” in late 2001 in order to complete them after she’d left. Berman ridiculed that notion, contending that sales swooned at GMPC after September 11, 2001 because sales at theme parks declined.
Walker’s defense includes a claim for unpaid commissions and vacation pay.
Originally published in the Santa Monica Daily Press print edition on July 21, 2003. Read the original PDF.