Published: May 17, 2008 11:22 pm         

Legal battle begins in suit; court date set

WHITE SULPHUR SPRINGS — The $50 million legal battle between the former president of The Greenbrier, Paul Ratchford, and the resort’s parent company, railroad giant CSX Corp., has begun in earnest, with their first court date set for June 9 in Greenbrier County before Judge Joseph P. Pomponio Jr.

Ratchford, through his Lewisburg lawyer, Barry Bruce, filed the lawsuit in March, alleging, among other things, that he was fired last September for attempting to stop the unethical practice of fringe benefits accrued by both current and retired CSX executives.

According to the suit, those included “free medical examinations at the resort’s clinic, free rooms and meals, excessive discounts from the food and beverage outlets and greatly discounted merchandise from (retail) shops.” Possible taxes for the freebies may have been avoided by CSX executives as well, he claims.

In all, Ratchford named six co-defendants, including CSX Hotels Inc., CSX CEO Michael Ward, Greenbrier employee Bruce Rosenberger and Howard Shapiro of the Georgia-based Head Coach Inc. Court records filed May 5 indicated the Huntington law firm of Huddleston Bolen had been chosen to represent all the defendants. Messages left with defense attorney Marc Williams were not immediately returned Friday.

The June 9 hearing centers on Ratchford’s claim that he was not paid the remainder of his wages within 72 hours after being fired. Although Greenbrier officials said publicly that Ratchford “left to pursue other interests,” CSX now admits it “terminated” Ratchford’s employment, according to documents filed by Williams.

“Defendant admits that on Sept. 18, 2007, Michael Ward, CEO of CSX, met with (Ratchford) to communicate the decision to terminate (Ratchford’s) employment,” Williams wrote.

Bruce filed a motion for partial summary judgment against the defendants for $2.1 million and 3,600 shares of CSX stock. The state wage payment and collection act requires that all wages due a fired employee must be paid within a 72-hour period. Ratchford claims it took more than three weeks to receive his severance pay of $700,000 and 1,200 shares of CSX stock. State laws allow for triple damages against companies that violate this law.

At the time, Ratchford’s salary was $350,000 per year, but a clause in his contract called for $700,000 in severance pay, plus 1,200 shares of CSX stock, if his employment was cut short by CSX. Friday, CSX stock closed slightly down (-0.11) at $65.54 a share.

CSX claims neither Ratchford’s “severance payment nor his stock” constitutes “wages” as defined by the statute. They don’t deny that neither was paid within a 72-hour period.

Ratchford also alleges past and present CSX officials were benefiting from the luxurious lifestyle offered by The Greenbrier, despite the fact the resort was losing “approximately $15 million per year.” Ratchford claims the freebies were recorded on a second set of books known as “the city ledger.” Through court documents, CSX denied nearly all of Ratchford’s allegations of fraud and excess. However, CSX did admit to executives receiving perks at the resort and at The Greenbrier Clinic.

“Defendant admits that certain CSXH and CSX executives or employees received free and/or discounted meals, hotel rooms and/or merchandise from The Greenbrier,” Williams wrote. “Defendant also admits that Greenbrier employees had accounts known as ‘city ledger’ accounts. Defendant admits that some CSX and CSXH executives received free or discounted physicals at The Greenbrier Clinic, which is an independently owned and operated business.”

CSX spokesman Gary Sease previously said Ratchford’s “allegations are without merit and the company will defend its position vigorously in court.” Sease declined to specifically comment further on Friday.