Conde Nast’s parent company is not looking to quietly settle the $1 million-plus lawsuit that was filed against it in a New York state court in June by former W magazine editor-in-chief Stefano Tonchi. In response to Mr. Tonchi’s suit, which came just one day after he was fired from his position of nearly a decade, the publishing giant has filed its formal response, denying almost all of Tonchi’s allegations, including that Advance enlisted him to help find buyers for W and that they agreed to pay him a $130,000 “closing bonus” if he remained employed through the closing date of a sale of the magazine.
Advance goes on to deny that Tonchi “fully complied with the terms of his Employment Agreement … [or] introduced [representatives for Advance] to prospective buyers for W” – which it ultimately sold to Future Media Group in June in a deal worth a measly “$7 million to $8 million,” according to media reports. The media giant also takes issue with Tonchi’s claims that he was fired “without cause” just an hour after the sale was announced, and thus, is entitled to severance benefits and the result of his salary, a sum that is “no less than $950,000,” plus $130,000 in connection with the alleged closing bonus.
In addition to putting forth 12 affirmative defenses (i.e., claims that, if proven, will defeat or mitigate the legal consequences of its otherwise allegedly unlawful conduct), including unclean hands, essentially asserting that Tonchi acted unethically in connection with the matter at hand, Advance asserts four counterclaims against Tonchi, 59.
In a lengthy complaint of its own, Advance argues that Tonchi significantly interfered with its attempts to find and secure a buyer for W magazine, and that such “disloyal actions were designed to, and did, interfere with the sale process, which resulted in a final price of up to $15 million less than first round indications.”
Tonchi – allegedly – obstructed the sale process “by selectively and without authorization, disclosing confidential and sometimes false information to the press,” including Women’s Wear Daily, as well as “various bidders.” In doing so, he sabotaged a deal with at least one of the potential buyers, and violated the publishing company’s sale-specific rules, including sweeping confidentiality when it came to the identities of the potential buyers, the timetables at play, and the asking price, among other things, per Advance.
More than that, Advance asserts that Tonchi further ran afoul of its rules – and his various fiduciary duties as an employee of the company – by engaging in secret meetings with potential buyers, blocking potential meetings between potential buyers and W’s editorial staff, and even going so far as to inform one of the potential buyers that W’s parent company “Conde [Nast] is a real mess … I want out.”
All the while, Advance claims that Tonchi “attempted to extort an extra-contractual payment of $1 million dollars” in connection with his involvement in the sale process. Initially, Advance claims that despite Surface offering him a job with “a higher annual salary” than what he earned at W, Tonchi refused to take the job unless “either [Advance] or Surface agreed to pay him an additional $1 million upon closing of the sale.” He also stood in the way of the deal by “initially refusing to meet with Surface’s Chief Executive Officer, Marc Lotenberg; [and] encouraging [other] W employees not to work for Surface.”
Later, in furtherance of the same quest to receive the $1 million payment, Advance alleges that Tonchi demanded that in order “for him to take a meeting with [its] preferred buyer in the auction process, Advance would need to accede to his demand for payment.” And still yet, he allegedly “lied to W’s management team in an attempt to cause them to resign en masse if he wasn’t paid, an action that had no benefit to them and put their jobs at significant risk.”
Finally, Advance claims that “the market value and ultimate purchase price of W decreased as a direct and proximate result of Tonchi’s violation of his obligations under the Employment Agreement, including his unreasonable and bad faith demands regarding his own potential employment with Surface.”
With the foregoing in mind, Advance argues that Tonchi has “suffered no damages” and in any case, recovery is limited since Tonchi failed to mitigate any damages he suffered.
*The case is Stefano Tonchi v. Advance Publications, 653720/2019 (N.Y. Sup).