Did Chicago’s C.D. Peacock “illegally sell Rolex watches to foreign grey market resellers”? Did they fire Suzana Krajisnik for refusing to participate in the scheme? That’s the charge the ex-employee has levied against the Rolex Authorized Dealer in a wrongful termination lawsuit. Rolex dealer rubbishes racketeering lawsuit watchpro.com‘s headline proclaims . . .
C.D. Peacock hasn’t been legally charged with racketeering. What’s more (or less), WatchPro’s interview with C. D. Peacock’s VP of Development Adam Fried and Jane McFetridge, litigation lawyer at Jackson Lewis P.C., doesn’t “rubbish” Ms. Krajisnik’s claim. It bolsters her credibility.
CDP admits it had discovered at least one instance of watches being sold inappropriately and had fired the employee responsible for it in January this year. There were two other former employees named in the Suzana Krajisnik lawsuit that Adam Fried says were let go for much more severe reasons than poor performance, which was the sole reason given for firing Ms Krajisnik.
“They were let go for rules infractions that violated company policies, in addition to having not great performance,” Ms McFetridge clarifies.
When asked by WatchPro whether any of those infractions related to the way watches were sold, which is at the heart of the Suzana Krajisnik case, Ms McFetridge replies: “For one of them, it was. We looked into it and fired him.”
So at least one of CDP’s employees was participating in a fraudulent scheme to violate the company’s agreement with Rolex. CDP’s defense: “We didn’t know about it. When we did, we stopped it. Ms. Krajisnik’s termination had nothing to do with it.”
WatchPro’s Rob Corder is friendlier with the watch industry than Flipper was with Bud and Sandy, but he’s no fool. The Editor sees clearly enough that CDP’s defense is a leaky boat. So he runs cover for the retailer, Rolex and Patek Philippe.
C. D. Peacock is far from the first authorized dealer of Rolex or Patek Philippe to discover that its employees had been profiting from funneling watches to grey market dealers that can sell pieces like a steel Daytona or Nautilus for double their retail price. Flippers are constantly grooming sales people with promises of splitting the profit of over-retail deals.
The likes of Rolex and Patek Philippe take a tough line if these infractions do come to light, but firing the employee in question is typically sufficient for the brands unless a pattern of repeat offending is discovered or the senior management were turning a blind eye, or worse.
Well exactly. And we’re not going to know who knew what when, what they did and who pocketed the gray market cash until the discovery phase of Ms. Krajisnik’s civil suit – assuming CDP doesn’t reverse its decision not to pay Ms. K to go away.
Meanwhile, CDP’s lawyer signals Ms. Krajisnik’s legal team that they’re going to spend them into the ground. “That whole process can take up to two years,” Ms McFetridge announces. Oh, and FU.
“I hate to sound cavalier, but these cases are a dime a dozen. Disgruntled employees file suits routinely. One third of all litigation in federal court is employment-related claims.
“This complaint that they filed is unusual in terms of its length. You do not normally see something that is that long. But the fact that they threatened to file a lawsuit and then carried through and filed it is the sort of thing that accounts for around one third of all lawsuits in the United States,” she scoffs.
CDP also puts a brave face on the challenge to their integrity. “We have received texts and e-mails from customers saying they support us,” Mr. Fried (above) asserts. Which they would do if they ever hope to get a new Rolex from CDP.
“Everybody is so comfortable and confident that we are going to fight this thing vigorously and come out vindicated,” he soothes. CDP’s support group includes WatchPro – at least publicly. What WatchPro knows or suspects privately is another matter.
First’s first: I have no idea if C. D. Peacock is doing anything wrong. I have no opinion on them or the lawsuit.
However, on a generalizable level: There is no way most of these watches are finding their way into the grey market new/unworn without at least the complicity of the management of the ADs. Every single high-demand watch is allocated be at least store management if not regional/national.
Furthermore, there is a HUGE spotlight on these practices at the mfr level. The head of watches at an AD told me that Rolex scrutinized every single sale they had of high-demand watches to look for “leakage” onto the grey market – and this was two years ago! Clearly there are decisions being made that the risk is worth it. The “bad apples” theory just doesn’t fly no matter how much they doth protest.
I recall reading about similar manufacturer scrutiny on dealers in the auto business, to prevent arbitrage of models desirable and pricey in China. In that case, the problem more recognizing straw purchasers than dealer complicity, but it was stated that when a new item was found with an unoriginal owner out of country and traced back, that the dealer could expect to be penalized with undesirable stock allocation for a while. I am unaware of the possible repercussions here, although presumably yanking of franchise would be the worst.
Of course I suspect this is a bit like shoplifting in that offenses are not publicized as coverage can become a how-to manual.
What a lot of non-denial and beating around the bush.
1. Hey, this is a respected established company! Do we look like bad guys to you?
2.The suit demands damages! They just want money, what a shakedown!
2a. Well yeah, the amount precludes a settlement and financially justifies going to trial.
2b. But this will be a long, expensive process!
3. Those do-gooder complainants did something (unspecified) not by the book and were otherwise imperfect employees, so we canned them.
3a. Well yeah, we had to fire someone else that was doing that thing we deny happened.
4. Hey, we’ve been sued before and are still an AD! Your argument is invalid!
5. These are disgruntled employees! Happy employees don’t sue.
6. Hey, who knows how this case could go?
7. Did we mention that we have unnamed support from business associates who know nothing about the validity of the charges?
“‘What we would do is file a motion to dismiss, certainly on the Rico counts…'”
“…no evidence. If CDP had been selling … outside its territory to grey market operators, that would show up in financial records, e-mails and other documents that might be asked for if the Rico-related complaints were not dismissed and a judge proceeded to discovery.”
Well, I can see why the RICO charges scare them while they essentially admit to violating whistleblower protection. I’ll go out on a limb and say that light discovery should find lots of evidence of wrongdoing. #SeedyPeeCock
Unfortunately can’t triple star like your response.
Who’s to say that Rolex (ie its “people”) isn’t occasionally turning a blind eye. Yea, yea I know what Rolex proclaims, but how do they lose by their brand being rationed to the general consumer and its grey market price being double MFR? High prices in many cases beget more consumer demand. Good short Wall Street Journal video from TODAY’S journal I wish could get embed here, “Behind the Price Tag of the Most Expensive Watches in the World”.
There is certainly some blind-eye turning going on given that Rolex (and everyone else) have some extremely powerful levers that they could pull at any time.
When you can get all the Rolexes you want on the gray market, while virtually unattainable through ADs… There’s no way the ENTIRE “chain of command” doesn’t know EXACTLY what is going on. And, by “entire,” I mean all the way to Switzerland.
It’s not just one AD that doesn’t have any in stock. NONE of the ADs have any in stock… while gray market dealers have them by the bushel (for at least double the MSRP, of course).
Just watched “The time piece gentleman” and he already had Feb 2021 Daytona’s (with the stickers still on). It’s pure comedy at this point.
An amusing aspect of this litigation is that the unredacted complaint is widely available (Robert linked it here: https://wp-aws-media.s3-accelerate.amazonaws.com/2021/02/Krajisnik_v_CD_Peacock_Inc_et_al__ilndce-21-00775__0001.0.pdf ).
However, the brilliant attorneys at mediocre law firm Jackson Lewis P.C. fought to have the complaint redacted after it became widely available, getting the court to agree to redact the following sections:
Paragraphs 39, 40, 41, 42, 43, 44, 47, 48, 49, 50, 51, 52, 53, 54, 58, 61, 62, 63, 87, 93, 106, 121, 161, 178, 179.
So if you do not have time to read the entire 52 page complaint those are the good sections. Thanks to Jackson Lewis P.C. for highlighting them.
As I mentioned when Robert covered this before, the Oakbrook C.D. Peacock was my local AD before I escaped the thuggish public sector unions and crushing government “worker” pension debt of Illinois.
When I tried to buy a Professional series (“steel sports”) Rolex from C.D. Peacock in 2018 they rudely blew me off.
I need to thank them for that. Because C.D. Peacock below me off in 2019 I bought a Professional series Rolex from an offshore AD for under US MSRP, and the offshore AD was incredibly polite and helpful.