WestJet Airlines Ltd. co-founder Tim Morgan had high hopes in 2013, having recruited three American executives to spearhead efforts to launch Jet Naked as a low-cost Canadian carrier.
Mr. Morgan, chief executive officer of Calgary-based charter carrier Enerjet, figured that the three U.S. discount airline experts would provide the brain power needed to take Enerjet's Jet Naked plan from the drawing board to the runway.
But the star hires have left the Canadian project and are now suing Enerjet for breach of contract, according to documents filed in U.S. District Court.
David Lancelot, Curtis Berchtold and Cameron Trant are seeking a court judgment in Florida in favour of their claim that they are owed severance and other funds under executive employment agreements that they signed with Enerjet in 2013. They argue that they either "resigned for good reason" or were "terminated without cause."
Enerjet's actions amount to "wrongful, material breach of those agreements, and plaintiffs are entitled to damages," said the complaint filed by Mr. Lancelot, Mr. Berchtold and Mr. Trant. The three men exited Enerjet between Dec. 31, 2014, and Jan. 19, 2015, court documents show.
In a submission in court last week, Enerjet alleges that the "plaintiffs' response goes to great lengths to mischaracterize certain relevant facts."
And in a recent affidavit, Mr. Morgan said the U.S. executives were supposed to relocate to Calgary after Jet Naked's launch. "The sole purpose for hiring plaintiffs was to help develop and launch Jet Naked," he said.
Enerjet hired Mr. Lancelot as the charter company's president effective April 1, 2013, while Mr. Berchtold began as chief financial officer on July 9, 2013, and Mr. Trant started as chief commercial officer on Oct. 1, 2013.
Instead of being on the verge of opening a no-frills airline in Canada, Mr. Morgan finds himself having to defend Enerjet's efforts to nurture Jet Naked, an ambitious venture that aims to carve out a niche by offering cheaper airfares and finding routes underserved by Air Canada, WestJet or regional operators.
There are two other budding entrants seeking to operate low-cost carriers in Canada – Vancouver-based Canada Jetlines Ltd. and NewLeaf Travel Co. Inc. of Ontario. Some industry observers had pegged Jet Naked as having the best chance because of Mr. Morgan's background as co-founder of WestJet, which began flights in 1996 with only three planes.
The backgrounds of Mr. Lancelot and Mr. Trant include working previously at Spirit Airlines Inc., a low-cost carrier based in Florida, while Mr. Berchtold's past experience includes being the chief financial officer at Silver Airways Corp. in Florida.
Enerjet is striving to have the case dismissed, arguing that the lawsuit should not be heard in Florida because "Enerjet never had a South Florida office, but permitted plaintiffs to work for Enerjet from South Florida as an accommodation."
Lawyers representing Enerjet said the legal dispute should proceed instead in Canada. "Plaintiffs' business cards and e-mail signatures contained Canadian mailing and e-mail addresses and Canadian work telephone numbers, making it appear to anyone with whom they interacted that they worked in Canada," Enerjet said.
In the arguments going back and forth, it emerged that two of the American executives had Enerjet business cards that contained U.S. cellphone numbers, but Enerjet noted that neither number is in Florida because Mr. Lancelot's cell has an area code in Texas and Mr. Berchtold's cell has an area code in Minnesota.
None of the allegations have been proven in court.
The three U.S. plaintiffs say they were hired to raise money for Enerjet's Jet Naked project, and that they were permitted to "resign with good reason" if the discount carrier proposal failed to become reality within one year of their respective employment pacts.
They deny allegations by Enerjet that they tried to solicit or divert money away from the project for their own business purposes.
Mr. Morgan and his brother Darcy, Enerjet's chief commercial officer, travelled to Florida in January to retrieve laptops loaned to the plaintiffs.