Mellon Bank Corp. has accused its former technology chief, Bipin C. Shah, of stealing trade secrets and improperly recruiting bank employees for his new business.
In a civil lawsuit filed Wednesday in Pittsburgh, Mellon is seeking compensatory damages in excess of $20,000, unspecified punitive damages, and reimbursement of legal costs from Mr. Shah, who was executive vice president of Mellon's technology products division.
Mr. Shah resigned July 27, less than five months after he joined the bank, to set up his own company, Transaction Processing Inc.
Mr. Shah's venture, to provide electronic funds-transfer services to banks, will compete with Mellon in some areas. The bank currently garners significant fee income from providing computer and network services to other banks.
Mr. Shah said Wednesday that he had not seen the complaint and could not comment on specific charges. But he added: "I don't think there is anything I have done that would prompt this."
Breach of Duty Claimed
The suit, filed in the Court of Common Pleas of Allegheny County, Pa., charges Mr. Shah with breach of loyalty to Mellon Bank, unfair competition, diversion of corporate opportunities to Transaction Processing, and violation of fiduciary duties.
Mellon alleges that Mr. Shah negotiated with venture capitalists to set up TPI while still employed at Mellon, and that he is in a position to take advantage of his knowledge of Mellon's businesses.
Abrupt Termination at Mellon
Mellon's complaint said an investigation begun after Mr. Shah announced his resignation revealed that he was involved in forming, financing, and staffing the new company while still employed by the bank.
When Mr. Shah resigned, Mellon at first asked him to stay on until Aug. 21, to help with the transition. Then he was abruptly asked to leave in early August, sources at the bank said.
The suit charges that Mr. Shah and other Mellon employees who now work for Transaction Processing possess sensitive, confidential, and proprietary information, learned in the course of their employment at the bank, which could be used to complete against Mellon.
Named in the complaint are Janet S. Hartung, who headed network services at Mellon, including ATM sales, client support, and merchant payments; Gary T. Staub, a first vice president in merchant payments; Elizabeth P. Costa, a senior manager for strategic development in network services; and Paula R. Kramer, a marketing manager in network services.
When Ms. Hartung and Mr. Staub handed in their resignations on Aug. 13, they were immediately escorted out of the building, sources inside the bank said.
Mr. Shah, 54, never concealed his interest in running a networking company. He left CoreStates, where he set up its MAC teller machine unit in the early 1980s. Mr. Shah took a job at Mellon after trying unsuccessfully to buy first the MAC network, and later the NYCE network, according to banking sources.
Sources also said Mr. Shah had at several points offered to buy Mellon's network services business for over $100 million, and that he had been in talks with Mellon as recently as several weeks ago -- just before he resigned.