Sears Denies Executive’s Defamation Suit as General Counsel Departs

Hours after the announcement that Sears, Roebuck and Co. had filed a motion to dismiss a defamation suit filed against it by a former high-ranking executive, Sears’ general counsel resigned.

The company would not confirm that Anastasia Kelly, the general counsel, resigned on Monday as news reports said. "I can’t confirm whether she quit or not, but I can confirm that she left the company," said Peggy Palter, spokesperson at Sears, Hoffman Estates, IL.

Kevin Keleghan, the former chief executive of Sears credit division, was fired on Oct. 4 by company CEO Alan Lacy. Three days later, Lacy said Keleghan had withheld information from him about the large number of delinquencies in Sears’ nearly $30 billion credit card business.

Keleghan filed his suit in November claiming Lacy had attacked his character and credibility.

Kelleghan’s attorney, Thomas G. DiCianni couldn’t be reached by press time.

In its motion, filed earlier this month, to dismiss the defamation claim, Sears stated that Keleghan "gave [Lacy] many assurances that things [in Sears’ credit business] were on track" and Keleghan "had become a barrier to [Lacy’s] getting accurate information."

Keleghan also claimed Sears wrongfully withheld severance benefits due him under his employment contract. He asked for damages of $50,000.

"We believe that Sears acted appropriately in the dismissal of Kevin Keleghan, said Palter.

The company also denied that Keleghan was due severance payments.

In court documents, the company said that Keleghan "fraudulently induced Sears to enter into a Sept. 4, 2002 Executive Severance/Non-Compete Agreement by signing the Agreement and asking Sears to execute it without disclosing…facts that [Keleghan] feared would lead to termination."

Sears’ reported its third-quarter net income as $189 million, down 26% from the previous year. The decline was the result of a $222 million increase over the prior year to cover uncollectible accounts.