Music merchandisers' discord ends in lawsuit

By Kelly Holleran | Oct 22, 2009

Two music merchandisers will soon be heard in court over allegations that one laid the other off after catapulting the company's musical equipment sales.

Two music merchandisers will soon be heard in court over allegations that one laid the other off after catapulting the company's musical equipment sales.

Philip F. Jost filed a lawsuit Oct. 9 in St. Clair County Circuit Court against Robert G. Heil and Heil Sound.

Jost claims during his tenure as vice president of sales and marketing at Heil Sound, he boosted sales at Heil by an average of 72 percent, but was terminated after the company became successful.

Originally, Jost was enticed into becoming vice president as he had known Heil since the 1960s, when he loaned Heil a classic organ to rent to national music acts who came into St. Louis, according to the complaint.

Later, Heil went on to pioneer a number of innovations in microphone and sound reinforcement technology. He became so successful that some of his inventions are on display at the Rock and Roll Hall of Fame, the suit states.

Jost, too, became quite illustrious, he claims, working more than a decade in Los Angeles as a professional musician and recording engineer. In 1991, he decided to return to St. Louis, where he worked for St. Louis Music as a regional sales manager, then as a product manager for the Crate Pro Audio and Audio Centron lines of professional sound equipment, the complaint says.

In 2005, St. Louis Music was purchased by Loud Technologies, where Jost continued to work as regional sales manager.

Meanwhile, Heil Sound developed a line of microphones for use in music recording, live sound reinforcement and professional radio. However, unlike its previous equipment, the new line of microphones proved difficult to sell in the more competitive market in which well-known companies offered a wide variety of microphones, Jost claims.

Hence, because of Jost's extensive experience in the musical field, Heil Sound approached Jost in February 2008 about becoming its vice president of sales and marketing and its national sales manager, according to the complaint.

"Mr. Heil expressed that he was impressed by Mr. Jost's proven sales skills, his leadership ability, and the personal relationships he had developed with an extensive nationwide network of musical equipment dealers and salespeople while employed at SLM and Loud," the suit states.

Ultimately, Jost was hired on June 16, 2008, after Heil agreed to make a two-year employment commitment and promised to pay Jost an annual salary of $90,000, plus a 10 percent commission on sales to house accounts and international sales, a percentage of all commissions paid to its sales representatives and various bonuses for sales.

"Mr. Jost explained that this minimum commitment was necessary because, among other reasons, he and his wife had pre-existing medical conditions that made guaranteed health insurance imperative," the suit states. "In addition, Mr. Jost explained that it would take a minimum of two years for new sales and marketing initiatives to make Heil Sound competitive in the already saturated professional audio market."

Immediately, Jost began to bring success to Heil Sound when he expanded its network of sales representatives from five to 14 by September of 2008, the complaint says. By November, Jost had more than tripled the number of sales representatives at the company to 16.

As a result, Jost claims he increased the geographic territory in which the Pro Audio Division was sold from 23 states when he started to 48 states by January.

In turn, the number of active dealers carrying the Heil Sound Pro Division line of microphones increased from 91 in June 2008 to 157 by Dec. 31, according to the complaint.

"Mr. Jost's efforts had a positive and significant impact on the sales performance of Heil Sound's Pro Audio division," the suit states. "During the first three months of 2008 (i.e., prior to Mr. Jost's arrival), the Pro Division had suffered at least an 11.4% decrease in sales compared to the same period in 2007, representing an aggregate drop in sale of more than $15,000 for the three-month period."

However, during Jost's tenure at the company, sales increased by an average of 72 percent, representing an aggregate increase of $180,681, the complaint says.

"This achievement is even more impressive considering that it took place during a historic 'credit crunch' and what has come to be described by many economists as the biggest global recession since the Great Depression," Jost claims in his lawsuit.

In addition, Jost helped to implement international sales of Heil Sound's Pro Division in the fall of 2008 when a Japanese firm named All Access International expressed interest in becoming a Heil Sound Pro Division distributor, according to the complaint.

Although Sarah Heil, vice president of Heil Sounds and Robert G. Heil's wife, was against participating in the deal, Jost seized the opportunity and arranged a meeting between himself, Robert G. Heil and an All Access representative. Soon after the meeting, All Access placed an order for $22,810 worth of microphones, the suit states.

According to the employment agreement between Heil and Jost, Jost was supposed to be paid 10 percent commission on the sale. But Heil suspended the payment, then began feigning criticism of Jost's work, the complaint says.

For example, the day before he was terminated, Jost claims Sarah Heil criticized him for occasionally working from home.

On Jan. 29, Jost was fired and was replaced by Greg McVeigh on Jan. 30, who lives in California and could not possibly work from the St. Louis Heil Sound office, according to the complaint.

"Upon information and belief, Mr. McVeigh was engaged as an independent contractor, rather than as an employee, and at a reduced rate of pay," the suit states. "In other words, it is believed that Mr. Jost's replacement by Mr. McVeigh after the sales force was in place represented a cost savings to Heil Sound."

In his two-count complaint, Jost is seeking a judgment of no less than $100,000 and unspecified punitive damages, plus pre- and post-judgment interest, costs and other relief the court deems just.

Mark L. Brown and Marc W. Parker of LakinChapman in Wood River will be representing him.

St. Clair County Circuit Court case number: 09-L-543.

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