* Sues Borders for fraud and breach of contract
* Says Borders' suit designed to pass blame, extract money
(Adds comment from Borders)
By Nick Brown
NEW YORK, Sept 9 Website operator Next Jump Inc
has lodged a counter-suit against Borders Group Inc BGPIQ.PK,
saying the bankrupt bookseller "duped" it into taking the blame
for the weakening value of the Borders customer rewards
Responding to trademark infringement and other accusations
levied by Borders on Aug. 31, Next Jump sued Borders for fraud,
breach of contract and other transgressions. It said Borders
allowed it to transfer customer accounts to its own website,
but then accused it of stealing the accounts as a pretext for
Borders has accused Next Jump of emailing the bookseller's
customers in an attempt to redirect them to its own website,
OO.com. Next Jump was hired in 2007 to operate Borders'
outsourced customer perks program.
Next Jump said in court papers filed on Friday that the
decision to transfer the accounts was made cooperatively as a
way to salvage the Borders rewards program, which was
hemorrhaging members in the wake of Borders' liquidation.
Borders filed for bankruptcy in February, unable to
withstand rising competition from online booksellers and
e-readers such as Amazon.com Inc's (AMZN.O) Kindle and Barnes &
Noble Inc's (BKS.N) Nook. [ID:nN16268041]
The bookseller is trying to sell its customer lists,
website and trademarks, and has said interference by Next Jump
could diminish the value of those assets.
Next Jump said in its court papers that Borders' lawsuit
was an attempt to monetize the floundering rewards program,
while placing the blame for its downfall on Next Jump.
"This scheme was initiated so that Borders ... could pass
the blame to Next Jump, insulate themselves from liability, and
lay the groundwork for a meritless lawsuit designed to extract
money," Next Jump said.
The company said it was "duped" by Daniel Angus, Borders'
vice president for customer loyalty, who authorized the
transfer of customer accounts. Angus is named as a defendant in
Next Jump's counter-claims.
Borders balked at the counter-suit, calling it a move to
"deflect attention from Next Jump's improper actions."
"Borders stands behind each and every allegation made in
(its) complaint," the company said in a statement. "Borders
anticipates a favorable judgment with regards to this matter."
Next Jump is demanding damages and reimbursement for costs
incurred in transferring Borders' customers to OO.com.
After Borders sued, Next Jump agreed not to communicate
with Borders' customers or reference its rewards program on the
Borders, long a retail staple in shopping centers across
the country, had hoped to find a buyer to carry it out of
bankruptcy, but a deal with private equity firm Najafi Cos fell
apart due to creditor opposition, forcing it to close its doors
The bankruptcy case is In re Borders Group Inc, U.S.
Bankruptcy Court, Southern District of New York, No. 11-10614.
The lawsuit is Borders Inc et al v. Next Jump Inc in the same
court, No. 11-ap-02567.
(Editing by Steve Orlofsky; editing by Andre Grenon)