Court gymnastics continue in Starkey wrongful termination lawsuits

The court gymnastics surrounding lawsuits filed by fired executives and workers against hearing aid giant Starkey Hearing Technologies are continuing.

This week, a whistleblower lawsuit filed by former company President Jerry Ruzicka was moved back to state court after he agreed to drop one of his four key allegations — that Starkey intentionally lowered the value of its employee stock ownership program (ESOP).

The Hennepin County District Court, where the lawsuit was filed originally in January, will hear Ruzicka's claims of defamation of character, unpaid wages and wrongful termination due to whistle-blowing.

Starkey's attorneys had won a motion to move to federal court based on the ESOP charges.

Ruzicka's attorney, Marshall Tanick, told the Star Tribune that the decision to drop the ESOP complaint "was not a reflection on the merits of the case." Instead, he said, "a decision was made to remand the case to the state courts so that the case could proceed in an expeditious and economical fashion."

Tanick and Starkey's attorneys both filed motions for the move on Tuesday.

Ruzicka's breach-of-contract allegations against Starkey continue to proceed through arbitration at a faster pace than the lawsuit, Tanick said.

Since the termination of several executives and managers at Starkey began, allegations have been flying from both sides accusing each other of wrongdoing, including criminal acts.

The FBI and Internal Revenue Service opened an investigation in the fall.

Starkey officials have declined to comment on the case beyond repeatedly noting that they believe they may be victims of possible wrongdoing by the fired executives. Starkey's attorneys have repeatedly stated in court hearings and briefs that there is a federal investigation. There have been no indictments to date, however. FBI and IRS officials have declined to comment.

Starkey CEO Bill Austin and his stepson, Brandon Sawalich, are now running the company and have said the business is moving forward.

In court filings, Starkey officials have asked that various aspects of the lawsuits be dismissed. On Friday, a judge approved requests to allow one judge to oversee the discovery efforts of both the Guggenberger and the Miller cases.