LifeWay Lawsuit Against Former CEO Thom Rainer Still Active
First it sued its former CEO. Then it backed off saying it would seek a negotiated settlement.
Then by Friday, LifeWay Christian Resources, the Southern Baptist Convention’s publishing arm, appeared to be going ahead with a lawsuit against Thom Rainer, its former president and CEO, for violating a noncompete clause in his contract. Rainer, a best-selling author himself, also runs a business called Church Answers.
But over the weekend (Oct. 4), Rainer said in a tweet that LifeWay had “put forth six stipulations to end the lawsuit. For the sake of the gospel, I plan to accept all of those terms on Monday.”
The back and forth may be part of a bigger problem for the LifeWay board of trustees: the Christian publisher’s steep financial challenges.
Last year, LifeWay announced plans to close all its retail stores and in April said it will cut roughly 10% of its $281.3 million operating budget through staff reductions, a hiring freeze, and salary cuts.
The company cited the coronavirus as contributing to a revenue shortfall of 24% compared with the same period last year, largely due to a sharp drop in bulk orders from churches for resources such as Sunday school curricula, Bible study materials, and Vacation Bible School curricula.
In addition, LifeWay was exploring the sale of its Ridgecrest Conference Center and Summer Camps near Asheville, North Carolina.
“LifeWay stands to lose tens of millions of dollars of revenue that the organization would normally generate over the summer months from camps, events, VBS, and ongoing curriculum sales,” Ben Mandrell, LifeWay’s CEO, said in a news release at the time. “LifeWay is mitigating these losses as much as possible through various expense reduction plans, including staff reductions and cuts in non-employee expenses.”
The lawsuit against Rainer is likely the fallout of that financial crunch. It alleges that in reneging on his noncompete contract, Rainer caused LifeWay “irreparable harm” and that damages “are not an adequate remedy.”
Last Monday (Sept. 28) a lawyer for LifeWay filed a suit in chancery court in Williamson County, Tennessee. It alleged that Rainer had signed a multibook, multiyear agreement with Tyndale, a competing Christian publisher, in violation of a noncompete clause in his contract. (He continues to serve as chief advisory officer at LifeWay until Oct. 30, with a salary and a company car.)
Then on Wednesday, Todd Fannin, chair of LifeWay’s board of trustees, issued an update saying that “both parties are currently exploring the possibility of an agreed upon resolution of the differences.”
But a clerk at the Williamson County court said the lawsuit had not been withdrawn as of Friday afternoon.
And Rainer’s son, Sam Rainer, wrote in a tweet that LifeWay “has gone back on its word and will continue with their lawsuit.”
On Thursday, Rainer told RNS he had been returning his salary for the past four months at Mandrell’s request.
Meanwhile, a change.org petition calls on LifeWay trustees to “resolve their conflicts with Rainer out of court.”
In Rainer’s tweet explaining that he would accept LifeWay’s six stipulations—he did not specify what those stipulations were—he said, “This legal battle between Christians before the watching world has to end. I will end it.”
Christina Darnell contributed to this story.