Spa Wars

A chic Uptown salon plays hardball with its ex-employees

Since September 1, when she opened her specialty skin-care shop, Autumn Williams has been busy tending to the little details. Appearances, after all, are important in the beauty racket. Her shop, the Refinery, is housed in a smallish warren of rooms in the second story of an old store in Dinkytown. It has a clean, spare feel. A fresh coat of yellow paint covers the walls. Tasteful, natural slate countertops have been installed. Brand-new linoleum flooring has been laid. The tools of the trade are on display as well: three brand-new massage tables, a $1,000 facial steamer, and row after row of carefully arranged bottles of exfoliants, creams, and lotions. All told, the 29-year-old Williams figures she has invested some $10,000 in start-up costs. And so far, she says, business has been reasonably good. "I can't complain. I covered the rent the first month, and that's a start," she says enthusiastically. "Of course, it takes awhile for word to get around."

But Williams's efforts to drum up more business (most of which, she says, has consisted of "waxing sorority girls from the U") have taken a back seat to a more pressing concern. For the past three months, Williams has been fighting off a legal assault from Tom Schmidt's Urban Retreat, the prestigious Minneapolis salon and day spa in the Uptown neighborhood, where Williams previously made a living. The David-and-Goliath courtroom wrangle, which is now bound for the Minnesota Court of Appeals, has produced a blizzard of allegations from both sides, including accusations of broken contracts, stolen customer lists, defamation, and sexual harassment. In the latest twist, Urban Retreat is suing Williams and former Urban Retreat employee Fiona Burr for using their own names in a two-line advertisement. "Autumn and Fiona, now at the Refinery," read the classified ad, which ran in City Pages on August 30.

In the view of Joanne Turner, one of Urban Retreat's lawyers, the advertisement violated a court order that barred Williams from seeking out Urban Retreat's clientele. "Our position is that unless you dealt with Autumn Williams or Fiona Burr at Urban Retreat, the names Autumn and Fiona would mean nothing to you," explains Turner. "That ad was directly aimed at Urban Retreat customers." For her part, an exasperated Williams argues that this is just another legal ploy designed to run her out of business. "Now they're telling me I can't use my own name? It just doesn't make sense," she says.

Chrysa Otto

The first salvo in the messy dispute was fired in late May, shortly after Williams announced her intention to leave Urban Retreat. She had worked as an esthetician (industry jargon for a skin-care specialist) at the chic Lake Street salon for three years, but had become increasingly unhappy with the job. Long hours without breaks, temperamental managers, and a "factory" atmosphere all contributed to her discontent, she says. Williams also contends she was not paid what her contract promised. After cobbling together the financing for the Refinery, Williams gave two weeks' notice on May 21.

Four days later she received a sternly worded letter from Urban Retreat lawyer Michael Gray. Gray, who had caught wind of Williams's business plans from his client, reminded her of the employment agreement she had signed when hired. According to the non-compete clause in the contract, Williams is prohibited from "engaging in competitive conduct" in a five-mile radius of Urban Retreat for a full year. Gray pointedly noted in the letter that Urban Retreat "takes compliance with its employment agreement very seriously" and "strongly" suggested Williams retain "competent legal counsel."

Williams was fully aware of the details of her contract. Before signing the Dinkytown lease, she drove her car from the new shop to Urban Retreat. According to her odometer the trip was just a hair over five miles. So she was surprised when, on June 28, Urban Retreat served her with notice that she was being sued for violating the radius restriction. The company's contention? Williams broke the non-compete because the Refinery is less than five miles from their salon "as the crow flies." Ben Skjold, Williams's lawyer, takes issue with that means of measurement, dryly noting that "customers do not travel to the plaintiff's storefront via helicopter." In their lawsuit, in which Urban Retreat also charged Williams with trying to steal customers, the plaintiffs asked for $50,000 in damages and requested a court order barring Williams from opening in her chosen locale.

Having already signed a lease, Williams says she had no choice but to fight back. On July 20 she filed a counter claim charging Urban Retreat with fraud, breach of contract, defamation, and sexual harassment. After a flurry of memorandums and two hearings, Hennepin Country District Court Judge Peter Lindberg issued a preliminary ruling on July 21. Citing the non-compete, the judge prohibited Williams from soliciting customers or employees of Urban Retreat. But Lindberg rejected Urban Retreat's request that Williams be barred from opening her Dinkytown shop because, he wrote, Urban Retreat's suit lacked merit. In addition, Lindberg questioned the "reasonableness" of Urban Retreat's five-mile restriction, along with the "compounding" factor that Williams was required to sign the contract as a condition of hiring. On September 1 Urban Retreat filed an appeal, which is still pending.

Other former employees who have run afoul of Urban Retreat have had less luck in the courts. Last month, for instance, the company received a restraining order barring a nail technician named Lisa Cannon from working at a rival business. According to an affidavit filed by Jeff Lillemoe, Urban Retreat's director of operations, Cannon was fired "after she refused to return to work following a European vacation." Cannon tells a different story. In her version, she ran into a travel snag and had called a fellow employee to inform a manager she would be a day late. Following her dismissal--and, she claims, considerable wrangling over a final paycheck--Cannon accepted a nail-tech job at Litespa in downtown Minneapolis. Urban Retreat responded by suing both Cannon and Litespa. As it happens, Cannon had already left Litespa. But she is still angry over her former employers' legal tactics.

Esthetician Fiona Burr also found herself on the receiving end of the company's lawyering. Burr, who had planned to work at the Refinery, reached a tentative settlement with Urban Retreat last month. Under the terms of that settlement, her non-compete will expire on December 15, rather than the following May. Burr says she settled only because of an additional clause in the employment contract: a stipulation that the employee can be made liable for all of Urban Retreat's attorney's fees in the event of a legal dispute. Now earning her living as a coffee-shop server, Burr says she couldn't afford the risk of fighting on. She says she regrets ever signing the contract: "I was still in school when I took the job, and I just didn't pay a lot of attention. I was just happy to get hired."

While no hard numbers are available on the use of non-compete clauses in salons, the practice has become increasingly common in recent years, says Jessica Hafetz, the member services director of an Arizona-based trade group called the Salon Association. The organization, which boasts some 1,900 salon-owner members, was formed five years ago. According to Hafetz, one of the group's "pivotal" early efforts was a drive to educate salon owners about non-competes. Opinions about the propriety of the practice vary. "Many of our members don't use non-competes because they wouldn't want to sign one themselves, and don't feel comfortable asking their staffs to sign," says Hafetz. "But I know quite a few salon owners who have gone into court and won." Among the latter, Hafetz notes, is Tom Schmidt, the owner of Urban Retreat and a founding member of the association. In at least two other cases filed in Hennepin County, Schmidt has prevailed on non-competes.

Nolen Collins, a former spa manager at Urban Retreat, says the enforcement of non-competes against fired workers such as Lisa Cannon and Fiona Burr is unusual. "Usually, if you get fired you can take your chances, work where you want, and you won't get sued," he says. But Collins isn't surprised his old employer went after Cannon. After Collins himself was dismissed this summer, he received a notice from Urban Retreat reminding him of his own contract, which prohibits working within a ten-mile radius of the salon. "Non-competes are pretty common, but Tom Schmidt is the only company around here that really seems to go after people and try and make their lives miserable," Collins opines. The terms of his contract, he adds, has forced him out of his chosen field. He's now working in home-improvement sales. "It was not exactly my career goal," he says.

Tom Schmidt did not return City Pages' calls seeking comment for this story, but did pass the message along to his attorney Joanne Turner. In Turner's view, the number of current suits against former employees is merely coincidental. Urban Retreat, she says, is doing what any other business in a highly competitive field does: protect the interests of its "intellectual capital" and the goodwill of its customer base.

But Ben Skjold, who is the attorney for Williams, Burr, and Cannon, argues that Urban Retreat's non-compete clauses are unfair, reducing workers to a status of indentured servitude. "This is a free-market economy and workers should be allowed to sell their labor where they like, and when they like. Especially when you're talking about people who are making low wages in entry-level jobs, and who are maybe being treated poorly and sometimes even getting fired," Skjold says. "If you're talking about doctors or executives, I can understand using non-competes. Sometimes, I defend non-competes in court. But to me, beating up on people who are making $20,000 or $30,000 a year is unconscionable."

Back at her shop, Williams says she is less worried about prevailing on the legal merits of her case than her ability to fund the battle. She has already spent $5,000 on legal fees, and expects that sum to double before it's all over. "I think they just want to make an example out of me," Williams says. "I feel like they're saying, 'If you leave Urban Retreat, here's what will happen. We will bankrupt you.'"

"If they'd back off, I'd drop my countersuit," she adds. "I only want to be left alone."

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