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Southampton-based Hamptons Online has filed a multimillion-dollar federal lawsuit against the former publisher of its website, Hamptons.com, which until last year was the region’s most visited internet destination.
Among other allegations in the lawsuit, the company is accusing Robert Florio of taking Hamptons.com’s proprietary computer source code and using it to create a competing website. The lawsuit also alleges copyright infringement, misappropriation of trade secrets, unfair competition, breach of fiduciary duty and defamation by implication. It also claims that Mr. Florio charged Hamptons Online for $100,000 in business expenses that he can’t substantiate, that he owes the company $54,000 in personal loans and advances, and that he transferred ownership of several web addresses—as well as a Volkswagen bus—from the company to his own name before he was fired.
Mr. Florio, a Shinnecock Hills resident who still owns 30 percent of Hamptons Online, was “terminated” from the company in September, according to the lawsuit, as Hamptons.com decided to dial back its news operation and return to being a social life website. Soon after, he started a new Southampton-based venture, VUE Master Media, which launched a news website, NorthForkVue.com, just four months after his departure from Hamptons.com. Just last week, the company followed up with the launch of HamptonsVue.com, also a news website, focusing on the South Fork.
“We are aware of the complaint and find no merit in any of Hamptons Online’s allegations,” Mr. Florio said in an e-mail Monday. “We will be filing our answers to the court in due time. On the advice of counsel, there will be no further comment on this matter until it is resolved in a court of law.”
The lawsuit also names as defendants former Hamptons.com employees Christine Bellini, who was the executive editor; Andrea Aurichio, a reporter; Matthew Cross, a web programmer; and Deborah Capone, a salesperson. All four now work for Mr. Florio and VUE Master Media, doing the same jobs they had at Hamptons.com.
Because NorthForkVue.com launched just four months after Hamptons Online terminated Mr. Florio’s employment, VUE Master Media could not have created the website from scratch without using Hamptons Online’s proprietary source code, according to the complaint.
“Our clients have good reason to believe that assets and computer source code were taken from it without authority and are now being used in a competing organization in an unlawful matter,” said Bryan C. Van Cott, an attorney representing Hamptons Online. “We’re going to do everything we can to protect and preserve our client’s rights.”
Hamptons.com was a coveted URL when it first appeared in the mid-1990s as a website focused on the South Fork. The existing Hamptons.com website launched in 2004, and its source code was edited and refined “through great effort and expense” for more than five years, and the website has also amassed a valuable database of advertisers, according to the complaint.
The lawsuit goes on to state that a line-by-line comparison of Hamptons.com’s public source code and NorthForkVue.com’s public source code confirms that there are identical lines of code between the two websites, and words and syntax unique to Hamptons.com that were clearly copied. NorthForkVue.com has also published articles and photographs that originally appeared on Hamptons.com, the lawsuit states.
“It’s about what’s right and what’s wrong—the company reclaiming assets that rightfully belong to it for the benefit of its employees and its business,” said Joe Kazickas, the leader of a partnership that holds majority ownership of Hamptons Online. He said Mr. Florio split from the company when they disagreed over curtailing Hamptons.com’s news operation.
“[The majority] came to a decision that trying to bring another news outlet into the marketplace didn’t make sense for us to do,” Mr. Kazickas said. “We weren’t equipped for it. The economics weren’t there. So we just decided that we would go in a different direction.”
According to the lawsuit, Mr. Florio’s employment at Hamptons Online was terminated on September 9, 2009.
Hamptons Online is now alleging that in the month before his departure, Mr. Florio transferred ownership of 22 website domain names and a Volkswagen bus from Hamptons Online to himself. Some examples of the domain names are hamptonsblack.com, teenhamptons.com, apexandcurves.com, bikerstylemag.com and hamptonsonsale.com.
Mr. Florio also made unauthorized copies of all of the password-protected information on Hamptons Online’s computers and servers and refused to turn over computer passwords when he left, the lawsuit states.
He also has outstanding loans and unsubstantiated business expenses that he refuses to repay or account for, Mr. Van Cott said. Hamptons Online reimbursed Mr. Florio for $359,050 in business expenses between 2007 and 2009, but he has never presented receipts to substantiate $100,000 of the charges, according to the lawsuit. He showed the company credit card bills, but no line-item receipts, Mr. Van Cott said. A significant portion of the $100,000 was spent on living expenses for Mr. Florio and his family, the lawsuit alleges.
“It was on ongoing issue, but it only became a problem after he was terminated and refused to pay the money back,” Mr. Van Cott said.
He also still owes Hamptons Online $54,000 for personal loans and advances the company extended to him, according to the suit. That includes the trade-in value of a company vehicle that Hamptons Online says Mr. Florio traded in to a car dealership when he bought himself a 2008 Chevy Tahoe.
The lawsuit also alleges that former Hamptons Online employees now working for VUE Master Media have been soliciting Hamptons.com’s advertising clients and disparaging Hamptons Online in the process. “[They] have been trying to harm and have harmed Hamptons Online’s relationship with its advertisers,” the lawsuit states.
The lawsuit also states that Ms. Aurichio was fired from Hamptons.com in November when she was found to be behind anonymous comments left on Hamptons.com in October that disparaged the quality of the website’s articles. Additionally, on January 1, she said in an e-mail to a Hamptons.com advertising client that the employees of Hamptons.com “are just not nice people and do not do business honorably ...”
Hamptons Online suggests in the lawsuit that Mr. Florio authorized her conduct to “hold Hamptons Online up to ridicule, scorn, contempt and humiliation, and intended to impugn its character and reputation.”
In addition to seeking reimbursement of attorneys’ fees and millions in compensatory and punitive damages, Hamptons Online is seeking any profits VUE Master Media has made off the alleged copyright infringements. The company also wants the court to grant an injunction barring VUE Master Media from further use of copyrighted material and to return it all to Hamptons.com.
