Ex-Ford Europe President Testifies in Lawsuit

The former president of Ford Europe told a federal judge on Thursday that he never meant to resign in August when he told his superiors he was seeking work elsewhere and wanted to negotiate a departure.

Martin Leach testified in the first hearing of his lawsuit against Ford Motor Co., claiming he was fired in August but illegally barred by Ford from becoming chief executive of Fiat Auto or working anywhere else in the auto industry.

Ford has countersued, claiming Leach resigned, and both sides have asked US District Judge Paul Borman to rule whether Ford can enforce Leach's noncompete agreement.

The dispute centers on an Aug. 7 meeting Leach called with David Thursfield, the head of Ford's international operations, and a Ford human resources executive. During that meeting, Leach told the two executives that he believed he had no choice but to seek work elsewhere.

Ford has said Thursfield and the other executive repeatedly asked Leach if he was certain, and Leach told them he had made up his mind. But Leach testified that he thought Thursfield and the other executive were talking about starting negotiations over modifying his noncompete agreement, not his resignation.

"There was no point in resigning. It would have been lunacy to resign," Leach testified.

Leach, a 27-year Ford veteran, has said he felt his job was in jeopardy after Ford Europe posted a surprise $525 million loss for the second quarter and his duties had been cut back.

Leach had a lucrative offer to become chief executive of Fiat Auto, but the offer was dependent on Ford waiving the noncompete agreement Leach had signed barring him from working elsewhere in the auto industry for two years if he left voluntarily.

'Worst Fears' Confirmed

Leach said he had felt attitudes toward him in Ford worsening in the months before the meeting, citing a contentious audit of Ford Europe's spending on motorsports and a worse-than-expected annual review. Leach said in July, Thursfield had told him "you're getting yourself into trouble," citing the amount of time Leach was spending away from Ford's German headquarters.

"This confirmed my worst fears," Leach said. "My integrity was being called into question."

Later that month, when word leaked that Ford was reviewing its European operations, Leach complained to another executive that his duties were being cut back without his knowledge. The executive made a comparison to Jacques Nasser, Ford's former CEO who was ousted in 2001.

During this time, Leach had been contacted by a headhunter for Fiat, and had several meetings with Fiat Auto executives. On Aug. 1, Fiat offered him the CEO job, contingent on Ford releasing Leach from his noncompete agreement.

Leach said since his job seemed in jeopardy anyway, he thought Ford would be willing to negotiate his departure.

"The company was going down the path that was going to end with them forcing me out," Leach testified. "I thought I could offer the company a win-win situation...where all parties could put the most favorable light on it."

After the meeting, Leach returned to work and received a letter from Ford's top attorney saying Ford thought its noncompete agreement was enforceable. The next day, Thursfield told Leach he had assumed Leach was resigning, and the company announced Leach's resignation the following week.

"You clearly resigned," Leach quoted Thursfield as telling him. "You can't stay here after what you said yesterday. It's not doable."

Leach said he thought he could negotiate because Ford had done so in the past with other executives who resigned. Leach also said Thursfield had told a story about resigning once and packing up his office before the company convinced him to stay on.

Ford's attorneys were scheduled to question Leach on Friday, with no timetable set for a ruling from Borman.