P1050761

The final court decision has been issued in the case of Kevin Brittingham’s lawsuit against Freedom Group and Remington over his sudden firing a couple years back, and it’s a way better read than I expected. Not only is it a complete and total smackdown against Remington, but it was so entertaining that I found myself chuckling at times. The full test is available for download here, but for those who don’t want to wade through all 117 pages of brilliantly written legal analysis I’ll try to summarize . . .

Kevin Brittingham founded AAC, and his success was due in part to the culture that the company cultivated. They even went so far as to give silencers to people who had an AAC logo tattooed on their bodies, a marketing campaign that was so successful that they sunk a quarter million dollars into it before it ended. The company was debt free and making money hand over fist, so Kevin never saw a need to sell. But after a meeting with Jason Schauble (then working for Remington, recently fired from Tracking Point, and now working for SilencerCo), Kevin saw that Remington might be able to help them grow the business beyond what they could do on their own. Kevin wanted silencers to be mainstream, and getting Remington to start marketing silencers would be a major step forward.

The end result of the negotiations with Jason Schauble was that AAC would be a separate entity owned by Remington, but completely independent in operation. And in return, Remington would provide support with ATF compliance, record keeping, and give them access to Remington’s extensive distribution network. It was a sweet deal on its face, but it never had a chance.

To make the deal work, Remington would purchase AAC’s gear lock, stock, and barrel and transfer it to a new Remington-owned entity. This meant transferring all existing equipment to Remington’s possession, along with all of their silencers and R&D guns. But there was a problem. Since day one, Kevin had used his personal gun collection in the design and development of the company’s silencers. Kevin had gotten his start in the gun world by buying and selling machine guns back when the market was starting to take off, and as a result he had amassed an impressive collection of modern and antique guns. He had used these as tools to test new silencer designs, and since he owned the company he never saw the need to officially transfer the guns to AAC or buy replacements.

Realizing that AAC would not be able to function without using Kevin’s personal guns for R&D, the deal allowed time for those guns to remain on premises while the transfer was taking place. The idea was that Remington would either purchase those guns later or get some replacements, but in the meantime Kevin’s stash would remain in the shop and fuel the development of new products. Jason Schauble didn’t see this as problematic, so long as Kevin maintained proper “control and dominion” over the guns as per ATF regulations and federal law.

After the sale, things went south quickly. Technically as soon as the company was sold they needed to start operating under a new FFL, since they had only purchased the assets and not the business itself. But instead of ceasing operation until they had everything figured out under their own FFL, they continued using Kevin Brittingham’s personal and business FFLs and simply rubber stamping his name on the forms. Even after AAC had moved to the new Lawrenceville location and sold the old business, they continued operating as if the old FFL from that old building was valid. On the stand, Remington’s own ATF expert testified that the practice was indeed illegal

Kevin and the AAC guys saw what was happening and were understandably concerned. Despite Remington’s promise to send them support to handle the compliance issues, no help came. Kevin and others repeatedly asked when someone would be assigned to help, but years after the sale there was no permanent employee detailed to handle AAC’s books. In the meantime, AAC continued to use their pre-sale FFLs to conduct business while Freedom Group obtained a new one for the “new” AAC, and even after the new FFL was in place the existing stocks of guns and ammo that had been agreed upon as part of the sale remained in the “old” FFL’s bound books. The guns in AAC’s vaults became a tangled mess, and there was no end in sight to the compliance nightmare.

During this time, as court documents showed, Kevin had succeeded in pissing off Freedom Group to the extent that they were actively looking for a reason to fire him. The terms of his contract were that he would be an employee of the “new” AAC and retain control of that autonomous entity, and if he hit his performance metrics and was still employed come January of 2015 he’d be given an extra $4 million over the $10 million purchase price. Remington still hadn’t paid the full purchase price either, meaning that Kevin was stuck for another few years. The only good news was that Kevin was untouchable — unless he committed a felony, or broke company policy.

Remington and Freedom Group finally had their excuse to can Brittingham when a single antique silencer was delivered to AAC’s doorstep. Kevin had standing orders that any Maxim silencer his employees found should immediately be purchased for his collection, but he also used them as models for designing new silencers by examining their construction. He confirmed via text message that the silencer in question was indeed a Maxim, but he maintains that it was sent by Freedom Group to set him up. Nevertheless, even before it could be determined whether this was Kevin’s “personal” silencer or if it was for R&D at the company, Kevin was suspended.

Kevin immediately tried to contact Freedom Group about the reason for his suspension, and he wasn’t given any information. Despite repeated requests, he was never given a reason for his suspension or the results of an external investigation into the issue. The only thing he hard from Remington was that he had been fired “for cause,” which would void his employment agreement and leave him out $4 million. In reality, there had never been any cause for termination.

Kevin thought that he was canned, but Remington offered him an option. They told him that he had been fired “for cause” and that he could return if and only if he signed a document saying that he admitted fault, agreed to a lower pay (previously $250,000/year), and was on “probation” for a year during which they could fire him without notice. Kevin tried to negotiate the terms of the agreement, but there were no changes. On the dotted line of that agreement he signed only the word “flounder.” According to Kevin that was written in the “title” box, as Kevin had had his title changed from “president” to “founder,” but he doesn’t remember writing it.

It’s not clear whether Remington and Freedom Group realized that Kevin hadn’t signed the document or if Kevin had tried to “dupe” them but either way he came back to work, accepted the lower pay, and kept right on trucking. At court, it came out that the only person on Remington’s side who could sign the employment agreements and make them valid… never did. So even if Kevin had signed, Remington never did.

Remington eventually sent a single person to iron out the compliance issues, in the form of a former private investigator with a few days of ATF training and no background in compliance whatsoever. Repeated emails warning that the guy wasn’t qualified went unheeded, and he immediately set to work trying to untangle AAC’s books. I’ll spare you the details (it gets pretty dry), but here are the judge’s own words on the compliance officer:

[The compliance officer] was never intended to be a compliance person – at best, he was unqualified to ensure appropriate compliance; at worst, he was sent to AAC to find a basis to terminate Brittingham.

On November 16th 2011, Jason Schauble was plotting Kevin’s final demise. He had had enough of Kevin, and figured that Kevin didn’t deserve the $4 million that was coming to him. This despite Kevin meeting and exceeding his stated performance goal (growing the company by over 100%, more than the amount required by the employment agreement). In an email recorded in the final verdict, Jason Schauble outlines his plan.

I think you [Scott Blackstone, Freedom Group] and I should seriously consider a Plan B for this business. . . . If we terminate [Brittingham] at our discretion before the end of his year, we might lose Lynsey [manager at AAC and co-plaintiff in the suit] and we might lose Robert [Silvers, R&D genius and 300 BLK designer], and we might get sued, but we will keep a lot of other people and I’ll personally go down there and put people in place that will endure in the longer term and continue to grow this business. Also, this move will get Bob on board and de-risk this business. . . .

[T]he time is now to consider before we double down on our investment of a lot of our personal capital getting him his title and $$ back and enduring his inability to work within our system.

[…]

I have researched our Plan B options with APA, old employment agreements, new employment agreements, term sheets with probation statements, etc and can give you the bottom line tomorrow . . . . I also thought through various replacement options . . . .

I think we are at the juncture to discuss whether we want to make a leadership change for the long term at AAC if we believe that KB is not up to the task. If we do, we have until Jan. 9 or else it becomes a ton harder bc probationary period ends. . . .

It is important to point out that at the time this email was written, Remington and Freedom Group had no knowledge that Kevin had done anything wrong. He had pissed off the management, but that wasn’t sufficient cause for dismissal. Schauble and the rest of the Remington and Freedom Group board were not aware of any misconduct that would give them a reason to can Kevin.

On December 19th, Schauble got his response. Jason wanted AAC to be treated like another “plant,” like Remington or Marlin or Bushmaster, with Remington HQ as the head of operations. But Scott Blackwell at Freedom Group told him in no uncertain terms that AAC would remain a separate entity. At 5:00 PM, Jason Schauble sent in his resignation stating “I just don’t feel that we (fgi) have a fundamental philosophy that I can reconcile with on many levels.”

Back in October, a pre SHOT Show photo shoot took place at AAC’s HQ. During the shoot a number of guns were used which Freedom Group claims were Kevin’s personal firearms, but Kevin denies this claim. According to Kevin these guns all came from the old AAC location and were on the old FFL that was still being used by AAC to do business — the guns that were in the process of being transferred to the “new” AAC — and none of them were his personal firearms. He claims that one of the AAC employees brought them over and that he wasn’t even present for the photo shoot. The judge didn’t find Kevin’s testimony credible on that point, but the lack of evidence to support Freedom Group’s assertion that the guns were Kevin’s makes it a moot point.

Later that month the compliance officer finally arrived, and noticed that some of the guns from the shoot were still present. He immediately started segregating the guns and, with some help, forming a pile that were not able to be positively identified as AAC property. The compliance officer told Kevin verbally to remove any personal firearms from the premises, and Kevin set to work doing exactly that. One of the employees compiled a list of these guns and titled the pile “Kevin’s guns,” despite it actually being a pile of guns whose provenance was not known. At trial many of these guns turned out to not be Kevin’s firearms at all, and the rest were common firearms that were not conclusively Kevin’s guns.

It is important to note that neither the compliance officer nor any of the AAC staff assisting with the segregation process knew about the terms of the sale, specifically which guns of Kevin’s became the property of the “new” AAC. As such all they had to go on were the bound books for the new FFL, and the guns they were putting in the “Kevin” pile turned out to indeed be related to the sale of the company years earlier.

While the guns were being sorted, a hand written list of which guns were under whose ownership was compiled. It was nowhere near accurate or complete, and was intended as a starting point rather than a finished product. But months later when the list made its way to Freedom Group’s headquarters, they took it as gospel that the guns in the “Kevin” pile were all actually Kevin’s guns, did no further fact checking, and decided to fire him without notice.

On December 20th Kevin stayed late after a full day of work, disabled the main security camera, and removed all of the personal items that he could get his hands on. The judge thinks that Kevin might have been after some personal firearms as well, but Kevin says he just wanted to grab his personal effects — when he was suspended previously, Remington didn’t even let him grab his kid’s backpack before being thrown out of the building. The next day he was fired, supposedly for still having personal firearms on the premises.

The issue is that under the original employment agreement, Kevin needed to be issued a written warning and be given an opportunity to fix the problem (over a period of 30 days). That warning never took place, and no time was given. He was summarily fired for guns that either weren’t actually his or were being legitimately used for R&D purposes being in the shop, and that was a breach of the contract from Freedom Group’s end.

The conclusion of the decision is pretty awesome to read, and I recommend you do it in full. But here are the cliff notes:

  • Kevin had been suspended for no reason — there was insufficient evidence that a single silencer whose provenance and purpose was unclear was justification for “cause” to fire him, especially when Kevin’s personal guns were still being used for R&D purposes as per the terms of the agreement.
  • Freedom Group and Remington had been incorrect about their finding of “cause” for terminating Kevin, had withheld information by never providing him with any documentation about the investigation or even a detailed description of what he did wrong, and issued an ultimatum to sign the new employment agreement or lose out on all his money. Because of the false pretenses, even if Kevin had signed the document it would have been void and the original agreement would have remained in place.
  • Freedom Group and Remington had conspired to find a way to fire Kevin in order to save $4 to $8 million that he was due as performance incentives and pay.
  • Kevin never signed the new agreement, and Freedom Group should have known better than to consider the word “flounder” as Kevin’s official signature on an important document. The judge described it as an act of defiance and not a binding signature.

Due to these decisions, the judge ruled that Kevin had been terminated without cause and was due every cent of the damages that he demanded: somewhere around $14 million plus lawyer fees and interest.

[1/20/2014 – 10:38 AM: This post was updated thanks to an interview with Kevin Brittingham. Comments from Kevin are marked as such.]

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100 Responses to Judge’s Ruling Reveals the Truth About Kevin Brittingham and Freedom Group

  1. I apologize, but I’m going off on a tangent here.

    Scummy business practices that too many companies engage in these days, and why I can’t side with the bullshit free marketeers who want places like that to have no laws or regulations controlling their bullshit.

    These types of companies even try to violate laws on the books specifically written to prevent them from being scumbags. Example, my girlfriend is trying to get a new job and through the grapevine HR found out and told her she would have to give ONE MONTH’S NOTICE before leaving, or she’d forfeit all her earned vacation time.

    Problem is, it’s state law where we live that this practice is 100% illegal, and the AG even sent letters out to remind companies of this. If my girlfriend was fired tomorrow, she gets all her vacation time because it’s earned wages, and the company withholding them is essentially theft. The law even states you can’t make someone sign an agreement to forfeit it.

    Needless to say, if they try pulling that crap when she leaves I’m not allowing them to get away with it. And this is just one company, the company I work for is even worse at violating laws and regulations.

    • Scummy business practices that too many companies engage in these days, and why I can’t side with the bullshit free marketeers who want places like that to have no laws or regulations controlling their bullshit.

      Your above incontinence misses the main point of this post: Private contracts between two parties were treated as toilet paper by one party. Can you name a “bullshit free marketer” who opposes the sanctity of private contracts?

      Also, you forgot the talking point about how the US will become Somalia if income tax rates are reduced more than 2%.

      • I can name one: Remington. Apparently.

        A free market is better than the centrally controlled and redistributive alternatives, but it doesn’t have a “benevolent hand” like some sort of benign deity. It’s an amoral, uncaring thing that has enormous benefits for those who can harness it and carelessly crushes those who fall afoul of it. It is only as good or benevolent as the people in it.

        • I can name one: Remington. Apparently.

          REALLY? Got a quote from Remington’s web site or one of their executives? Good luck getting one.

          Remington is corporatist. They are in bed with government (including the odious State of NY) on numerous levels. There is no way in hell Remington’s culture could vocally support classically liberal economics and a strong rule of law. They’re too busy grabbing ankle for and asking favors from political types with ‘D’ as the first letter of their party affiliation.

          Remington makes good products. I own some. But don’t think for a minute they’re strong defenders of classical markets. They’ll do what they have to do to survive, just like Garbage Motors did.

      • “Can you name a “bullshit free marketer” who opposes the sanctity of private contracts?”

        I was going to name Barrack Obama, then I noticed the “bullshit free marketer” clause and realized he was not appropriate.

      • 1. You’re dumb, because I’m not talking about Remington and I indicated it was a tangent for a reason.

        2. Why would I say that about Somalia? It makes no sense.

        Pay attention next time cock a doodle doo.

        • 1. You’re dumb, because I’m not talking about Remington and I indicated it was a tangent for a reason
          Careful. I never mentioned Remington, ING did.

          2. Why would I say that about Somalia? It makes no sense.
          A trope of the left is that low taxes and government regulation = failed states.

          My point: Free market proponents expect contracts to be enforced quickly and effectively. I disagree with your assertion that “bullshit free marketers” want no laws. Those who advocate for markets generally want fewer, but strongly enforced laws.

    • If it hadn’t been for the unconstitutional gun control insanity, none of this would ever have come up. The business deal would have worked fine, and they’d have all lived happily ever after.

      Admittedly, I’m kind of surprised that somebody’s buying 100 silencers a month.

    • Unions aren’t perfect, but as a member of a construction trade union all of my benefits are rolled into one hourly rate that the contractor pays. The taxed portion goes into my pocket, the rest is paid to various funds and accounts that cover health, dental, retirement, etc.

      Sure there are downsides to unions (some more than others); but my vacation, pension, retirement, health, etc accounts are all in my name and cannot be touched or withheld by anyone, and are not dependent on the further health and good management of any employer or even the union (with the exception of my pension account, which is only part of my retirement and one which I am not going to rely on having in 30 years).

      People really need to understand that if you don’t get paid up front, free and clear, without strings attached, then you are getting ripped off. This is what has happened all over the country with pensions. Big promises were made, but without a real requirement to pay as they go all the various governments and corporations simply did not pay. Now the retirees are finding out that they worked for decades at far below the rate that they thought they were getting.

      • Bang on, CA-Chris. Building on this:

        People really need to understand that if you don’t get paid up front, free and clear, without strings attached, then you are getting ripped off.

        Or, perhaps more subtly, for anything that pays out “later”, you either have enforcement costs, or you better design things so everybody benefits together. You’re betting that you are at least as good at working the ref as the other guy, and willing to do so.

        I wrote a piece about this some years back titled “Chinese Contracts” – got me a couple nice reviews, for example from “The Trusted Advisor.” (Apologies to our Dear Overlords if I’m over the self-promotion line with this. I don’t think so, but it’s your sandbox, so your call.)

        Accounting for enforcement is particularly important when “the system” in which you operate is powerful, complex or arcane, so working the system can pay off better than doing the work. Interesting to me, it’s good strategy to work the system (vs. do the work) if you aren’t particularly good at doing the work.

        It’s also interesting how so much “common sense” gun (health care, education, environmental, media & communications, food, drug & finance) legislation creates arcane processes that play out later, and are subject to “working the ref.” So, lobbyist and activists advocate to throw gun (& etc.) management into systems influenced by lobbyists and activists. I’m shocked. Shocked!

        Mr. Brittingham’s mistake was doing business with jerks. There’s no systemic cure for that. Indeed, it seems the more powerful the system, the more coverage and leeway for jerks.

    • You post as if “free market” and “equitable rule of law” are opposites. They are not. Very much not. The opposite of rule of law is anarchy. The opposite of equitable rule of law could be an oligarcy, feudalism, corporatocracy, or any various flavors of totalitarian collectivism littered throughout history where the law, such that it is, is used to bludgeon the “little people” and potential competitors, but passes are handed out like candy on Halloween for the properly connected and/or titled (ahem Obamacare ahem).

      In fact, a free market cannot exist in the absence of equitable rule of law. What you’d have instead are forced monopolies and whatnot.

  2. Dang… Go Kevin, I might use the word flounder if I am ever asked to sign something I do not agree with.

    I hope Kevin starts a new company and blows freedom groups profits out of the water.

  3. Anyone who has been around small businesses knows that they are hornets nest of incompetence, greed and outright fraud. Honestly the revenue and sale of business dollars here are at the bottom end of business. Matter of fact most of the gun industry is pretty much Tony’s Car Repair stuff. I used to sell THOUSANDS of computers and somehow we managed to keep track of each and every machine, what it had installed, every card and all the associated history, even what location at the customer it was in. Period. This guy couldn’t keep track of a couple of hundred suppressors and his personal guns? Check out the CMP where guys have HUNDREDS of PERSONAL M1’s etc and they know every SN, part and the freaking throat erosion number. As for Remington, the last time I had energy to look at its books it was bleeding like a stuck pig.

    So you have one failed business buying an out of control business. Guys screwing over each other for peanuts. Ethically challenged executives and managers are pretty much the standard. Ya ain’t gonna run across Billy Graham in these small companies. Its basically a non-story.

    P.S. always recommend folks watch “Glengarry Glen Ross” written by David Mament. Brilliant portrayal of the real world.

    • David MAMET, not “Mament”.

      “Disarmament rests on the assumption that all people are good, and, basically, want the same things. But if all people were basically good, why would we, increasingly, pass more and more elaborate laws? The individual is not only best qualified to provide his own personal defense, he is the only one qualified to do so: and his right to do so is guaranteed by the Constitution.” – David Mamet

      • For the sake of argument (and the edification of someone who has neither sold computers nor wrangled an FFL), “what’s the difference?”

        • Just out of curiosity, what experience do you have with selling highly regulated products where every little thing has to be done by the books? Dont mean that as a demeaning response, just that I think youre underestimating the issues that can arise when keeping in compliance.
          When youre transferring a fairly large amount of machine guns from three seperate FFLs dependent on set dates of the sale, some of which are private owned and on site at times and not at other times, every time it changes possession every move that needs to be recorded, but theres photoshoots, testing, etc often. I can absolutely see why their compliance was a mess.
          Ive seen it happen with a number of FFLs and that was with less of a clusterfck and much less going on.
          To compare anything thats done in regards to NFA items, to selling computers is just asinine.

        • Well what experience do you have building and running a tech company? Don’t mean to be demeaning. HOW MANY multi year rolloutS of 10k desktops? Or carry a 50 million dollar quota? Or in my prior life work in LE at Customs brokerage? I guess we ‘ll have to agree to disagree LOL. As Gunsmith points out, any decent exec knows when to hire folks who can handle such matters. Don’t do your own surgery or represent yourself in court. Thats why you are generating profit. To pay for stuff.

        • Im not arguing that. They absolutely should have hired people to keep their ducks in a row. All I was saying is, with just them doing it, its understandable their compliance was a mess.
          Keeping yourself legal, when your entire revenue relies off it should be top priority, instead of relying on another company to do hopefully do it.
          I think we just misunderstood each other

      • As far as maintaining a list of serial #’s, descriptions, and ownership there shouldn’t be any difference. What the ATF requires can be handled in a separate file. For what the business needs for basic internal control a simple word document would work.

        For example:

        #123456abc Scary Black Rifle Industries. Model 123. Black AR-15 style .223/5.56 Rifle with shoulder thingy that goes up.
        #654321cba Pink Fluffy Hunter Firearms. Model 321. Pink bolt action .22LR rifle with optics and no shoulder thingy that goes up.

        Each part of the description could go in a corresponding column and be searchable. I did as much with 15mins of free online tutorials and a couple hours of company time while working in a corporate mailroom years ago. Tracking the name, title, department, location(s) etc of some 5000+ people is certainly larger in scope than a collection of even several hundred firearms and accessories.

    • Reminds me of a conversation I had with a young man who is a sophomore at Penn, was basically convinced of the proposition that unless it is illegal, it is fair game. Despite the fact, for example, that the big investment banks are paying out billions of dollars to the feds for their unsavory mortgage practices that lead directly to the last recession, he argued that the mortgage brokers and bankers owed no duty at all to the borrowers not to lie to them, not to mislead them, not to falsify loan documents. He blamed the borrowers solely for the fiasco, contending that these folks (most with no education beyond high school) should have known that they cold not have afforded the loans, and should have told the brokers, who were assuring them it was doable, to pound sand. Which is just like saying that cheating is ok as long as you don’t get caught. Remington–and in particular Shauble–got caught, Schauble because he got greedy and wanted to “own” AAC, notwithstanding the deal he had cut with kevin.

      • Students are such easy targets. They feel free to deride various systems in favor of the ideological flavor of the day, even as they enjoy the benefits of a society that works within a set of rules for the mutual good. “Buyer beware” may be the law of the capitalism jungle, but society also understands the need for social contracts that allow individuals and businesses to function with a reasonable expectation that what they pay for is what they get without expending all of their energy on investigation and asset protection.

      • About six things lined up to allow the mortgage-based financial crisis. There’s a very good readable breakdown in this book:

        http://www.amazon.com/The-Big-Short-Doomsday-Machine/dp/0393338827/ref=sr_1_1?ie=UTF8&qid=1390243182

        It’s interesting to me that everything done in the run-up, with the possible exception of conglomerate financial firms falsely reporting the value of their assets when they knew better, was perfectly legal. Much of it was encouraged at the time by speeches, quite a bit by regulation & “guidance”, and some by legislation.

        They weren’t just greedy, they were encouraged. For several values of “they”, as we say in the nerd-pool.

        Most interesting to me is that during the run-up, the folks speaking out against the bubble, and indeed betting against the bubble with their on money were the most demonized. They were right. They saw through the Ponzi scheme. And they were ignored.

  4. Lesson here is, if you own a company and have another, larger company come in an “help”, you don’t own your company anymore. I work with a lady who just left a firm that used to be owned by a sole proprietor. The owner was having some cash flow issues, so he sold controlling interest to larger company. 2 years later, he’s fired “from his own company”, and she can’t understand how. Simple answer: it’s not his company anymore, and it wasn’t the day he sold ownership and went from employer to employee.

    • Yeah if I were him I’d never sell, not unless I was getting out of the business altogether. Becoming an employee is a trap, they’re just looking to screw you.

    • The owner was having some cash flow issues, so he sold controlling interest to larger company. 2 years later, he’s fired “from his own company”, and she can’t understand how.

      If you have cash flow issues so bad they’ll take the company down, you don’t have a company any more. It’s gone.

      I’ve worked a couple times in the follow-on to people “selling” their business and staying on. They didn’t get the three hints, unequivocal in the balance sheet:

      – You don’t have a going business, or you’d be making money & getting things done.

      – The guys buying in insist on a controlling interest, board seats, the charimanship and injecting a new CEO because they’re the boss.

      – You are trading complete ownership of a pie you can’t make work, for a slice of a pie someone else thinks *they can* make work.

      If that isn’t the deal you want, don’t make the deal. If that’s the only offer you can get, that may be a hint.

      The strategy is to try to be useful & learn all you can about how they can (probably) make the business work when you cannot. Behave honorably and competently and they’ll gladly be customers, partners and advocates when you eventually decide to try again on your own.

      Brittingham’s mistake, along with cutting a deal with jerks, is orchestrating a sale when he wanted a cash infusion & channel resale relationship. Remington, etc. were clearly treating this as an owned property, another “plant” in their portfolio, with Brittingham another employee. The thing was doomed because there was perhaps no meeting of minds, but certainly somewhere along the line the understanding of the deal diverged. Like a lot.

      I have little sympathy for any of the players. This story reads like everybody hearing what they wanted to hear. You gotta say “no” up front. Brittingham needed (and maybe still needs) better business advisers to point out stuff like this. Remington should have know better.

  5. OK, I’m plowing through the decision. Several things jump out at me:

    1. The deal was structured as a $10 mil+ lump sum up front, and $8 mil in contingent comp, based on whether Kevin was still with AAC in 2015 and “met certain goals.”

    BAD MOVE. Never, ever take a buy-out package that is contingent upon you, the founder, still being there at some date in the future. You’ve now structured a deal where it is well within the buyer’s benefit to get rid of you and the founders of the company being bought out.

    No, you never, ever do this. If they want you to remain on, work for a set dollar amount per month or year. Your continuing to work for a company that is no longer yours is a completely different matter than the buy-out price of the existing company at the point where ownership and control is transferred to the buyer. At the point when they want control, they need to cough up the full fair value in the deal. Not later, not contingent upon some future issue. Now.

    2. When some buyer of your company says that their back-office IT systems can benefit you, that’s a sure sign that they’re going to quash your culture. Culture follows process, and vice-versa. If you don’t want to work for a bunch of hide-bound morons who spend their days filling out TPS reports, then don’t accept a buy-out offer from a company that promised you how TPS reports are going to cure all your record-keeping problems.

    3. For founders of small companies, get a lawyer. Really. The big companies who are buying you have scads of lawyers on their staff. You should make the effort to get at least one hot-shot lawyer on your side. This will cost money. This might well save you lots of money later.

    4. FGI’s management are not “gun guys.” They’re a bunch of Wall Street parasites. Nardelli is an infamous jerk. As such, their word is worthless. They don’t know what they’re talking about, and the only thing they’re interested in is making money for themselves. Customers, employees, et al can go screw themselves, as they’re completely expendable.

    • DG, as a lawyer who represented both small and huge companies in mergers and acquisitions, all I can say is: you nailed it.

      Any contract that calls for payment to the seller “on the come” provides an incentive for the buyer to jack with the seller. And as everybody knows, a stiff corporation has no conscience.

      • Its true, although a lot of companies do it.
        Ive seen countless contracts that are all performance based, requiring quotas.
        Not something id want my career dependent on. Oh, slow quarter since this years economy crashed? See ya!
        No thanks!

      • I agree. A fool and his company are soon parted. He lucked out that Remington was even stupider than he was. I think I will avoid both people and their companies and products.

        I wonder why he couldn’t just hire someone to fix their paper work and compliance issues. He seems to be sloppy, lazy, and foolish. Sloppy in his paperwork. Lazy in wanting some other company to magically make the problem go away, and foolish to relinquish control of his company.

        Remington could have gotten exactly what they wanted if they had just been patient. Idiots.

      • There’s nothing wrong with some post-closing inventive payments, so long as Seller is ok with the fact that he might not see a dime of it (i.e. it’s above the asking price he wants/needs).

        A big thumbs down to FG/Remington for not insisting that all the FFL/NFA/ownership stuff not be cleaned up prior to closing. That’s the sort of thing that should be identified prior to Closing, and it should be a term of the Acquisition Agreement that it be resolved prior to the actual Closing – Buyer’s lawyers should be doing their job to keep their client from buying into a legal mess.

    • I don’t disagree on any particular point. However, Kevin was a gun guy. He still is a gun guy. With the help of some decent legal counsel, he’ll continue to be an innovator, and he won his case against corporate big wig a$$holes. Further, the actions of “Freedom” group are on display for all of the AI to see.

      I hope Remington and Marlin excuse themselves from the toxic environment of FGI, and I’m glad that Kevin is free. Wealthy and free, actually.

    • Bang on.

      The one exception I’ve seen is acquisitions in hot areas of IT / Software. There, the acquiring company often has a retention payment for key players to keep them around through the integration. These (that I have seen) have a buyout if they let the individual go early. In practice they often buy people out of these even when it’s an early ejection for egregious behavior.

      One example is the migration of the Activision guys through Microsoft, then into Smith and Tinker (which eventually didn’t work, exactly.)

  6. Wow, lot of work went into this one. Good read though. It’s nice to see the innovator and underdog in the market smack the big lazy dog that was trying some underhanded crap.

  7. 3. For founders of small companies, get a lawyer. Really. “

    Agreed. When the company grows beyond a certain point, the owner/founder should have someone to handle the legal stuff. Engineers should engineer, lawyers should lawyer, managers should manage and worker-bees should worker-bee.

    If nothing else, hire a bookkeeper to do nothing else but keep the NFA stuff straight. Running a company from inside a jail cell is tough.

  8. “Throw into that confusion the fact that the R&D department was using some of Kevin’s personal firearms as design aides and you can see where there was a lot of potential for disaster.”

    So it seems as if there was a lot of confusion and scheming around this issue. The question I have is why? As in, why should there be any problem whatsoever with a company using a personal possession to facilitate R&D? It doesn’t surprise me that our government would put in place rules/regulations that stifle design and innovation, they do that all the time. But this R&D is related to our RKBA, so why is it ok to do this? If I were the judge, I’d have been tempted to issue a ruling that called into question the legality of these rules.

    • The owner of a business has a great deal of leeway on how they run that business. As it should be, but it gets complicated when control changes or there’s nebulous IP or physical property rights. The problem was not anticipating these problems and accounting for them enough. No insult intended to Brittingham, but I suspect he would have preferred to have done things differently and avoided all of this in hindsight.

    • Lots of reasons…and someone can probably say this better and with more authority than I can but.
      These were class 2 and 3 items, SBRs and full autos. You have to file paperwork when they change hands, get moved, or change owners. Even though KB owned the company, his employees and the company weren’t “him” legally for purposes of the ATF. Depending on how his FFLs were structured, the company might have been considered two different entities from the ATF’s perspective.
      So, say he leaves a pre-ban m16 on premises and an employee begins testing a new silencer design on the gun. At some point, he is no longer considered to be in control of/owning that silencer. So now you’ve got tens possibly hundreds of NFA items being transferred between, moved around, and otherwise commingled by the original owner and a company with two different FFLs any one of which may or may not technically be in constructive possession of those item(s) at any given time.
      That is a huge amount of paperwork and possible violation bate. Now add FG, who is coming in, buying the company with the two FFLs, and which may be taking possession of some of those NFA items…and you have a huge problem.
      Case in point, the described photo shoot where non-owners of the items had access and moved them around to where other non-owners had access without the knowledge of the supposed owner. Or where a random suppressor may or may not have showed up not-so-randomly on company property for KB’s personal use.
      Now add to this the fact that the company is manufacturing NFA items for two different FFLs and we’re talking about epic amounts of paperwork…hundreds of NFA items being made each month, not including what was being done in R&D.
      I’m just guessing here, but it sounds like FG was looking for a reason to fire KB and used an alleged improper transfer/possession of a maxim suppressor to justify termination.
      There’s a reason I don’t want to deal with NFA items…and the big one is that the amount of paperwork just isn’t worth it to me.
      Someone please correct me if I’m wrong, but that’s what I think is the answer to your question.

      • You’ve mostly answered ‘what’ or ‘how’. ‘Why?’ goes a bit deeper. This is what happens when we concede to ‘reasonable’ gun control measures, high levels of unreasonableness.

        • Thanks, ok, if you want why I’ll give it a shot, with the same disclaimer as above. I can’t rattle off specific cases and dates without some research. I can paint the outline in broad strokes though.

          Back in the early 1900s, 1930 or so I believe, a law was passed creating the class 2 and 3 NFA tax stamp nonsense. This was set up as a means of getting pretext charges against gangsters who were fond of the military grade hardware of the age. The tax stamp was equivalent to about $2,000 in today’s money, easily pricing the average citizen out of such purchases. Prosecutors would grab them in possession of non stamped weapons and then build the rest of their case—or that was the theory anyway. It would be like the IRS pulling a kingpin in for tax evasion and then pumping him based on his drug trafficking activities now a days. Like concealed carry laws that followed, they were supposedly never intended to be applied to John q public—just the bad element. Of course it didn’t stay that way. In reality the $200 stamp was a near defacto ban on new ownership. Inflation and public interest would work to somewhat normalize the stamp issue, but by now the sheer volume of bureaucracy surrounding the process is a barrier in and of itself.

          The second nail in the coffin was hammered down in the early 80s after an assassin took a shot at the president. He failed, but the political blowback was such that another law was passed, this time banning civilian ownership of any full auto weapons produced after 1983 or so. This is a trend in gun control laws—the 1994 AWB was pushed through by the Clinton administration after another public shooting. What this meant was that there was and is a finite pool of class 3 weapons available for civilian ownership—a pool that continues to shrink in quantity and grow in value.
          Today the laws that KB fell afoul of are run on autopilot—a self-perpetuating government machine. Class 2 and 3 weapons are strictly tracked—you have to file paperwork to transport them most of the time, to sell them, to buy them, and to transfer them into a trust/company/FFL holder, and that’s assuming that your state allows ownership in the first place. What with the general availability of 20-30 cap mags for accurate semiautomatic weapons it’s debatable whether even the remaining pool is practically more useful than the much larger pool of ar15s, AKs, FALs…etc. Jeff Cooper and others have made strong arguments for the idea that aimed semiautomatic fire is more dangerous and desirable than burst or full auto save very limited situations like suppressing fire. Regardless, short of repealing the NFA, Ownership, manufacture, maintenance, and transfer of such items is a legal nightmare, especially if you want to do it on a corporate level. To make it worse, full automatic weapons eligible for civilian ownership are now valuable investments worth anywhere from five thousand to hundreds of thousands of dollars for collector’s items. Their scarcity has driven a level of cultural acceptance of their restriction. The intent of the law was to get bad people off the streets—in theory. Since then it has become accepted by MSM and government that the purpose is to keep dangerous weapons out of the hands of citizens who supposedly have no justifiable reason to own said items. (You can probably guess how I feel about this assumption.) One major legal case challenged the NFA, and would have been successful save for a technicality causing the plaintiff to drop/abandoned the action.
          My personal thought is that the longer a law stays on the books, the more paperwork gets dropped on the issue, the more government gets vested in the idea, the harder it is to get rid of this sort of thing. “Shall not be infringed” seems pretty straight forward from a pro-2a standpoint. The issue is that what constitutes “infringement” has been warped and watered down for decades. So, getting the NFA repealed looks simple on paper, but is in reality a direct challenge to a lot of established law, regulation, and cultural acceptance.
          I’ve skipped over a lot of detail. Others, some on TTAG, have written more comprehensive and eloquent summaries than this. But that’s the gist.

      • But, but … pretty.

        Not that it matters to me pragmatically. I live in New York Territories under the administration of Procunsul Cuomo the Younger. (Personal reasons. Extraction pending when some personal attachments clear.)

  9. Some pretty flagrant violations of contract there… Kinda puts me off of getting anything from Remington or any FGI owned company for that matter.

      • I would otherwise be interested in the R51 as I love weird action types, but it is unfortunately illegal in Canada, the barrel is too short. However, even if they came out with a longer barreled version to make it Canada compliant I would not buy it now knowing what FGI has done.

        It’s a shame really, I was thinking of doing a 700 build on the shiny new MDT LSS chassis, and the versamax looks very cool. Guess I’ll have to look to other manufacturers now.

  10. I still cannot decide if I should buy a 300 Blackout Handi-Rifle or not. Do I support AAC or not give my $ to Remington.

    • It’s a great compact rifle, especially shooting suppressed! Don’t look at it as who gets your money. Besides, the 300 BLK Handi Rifle is listed on AAC’s website, not Remington’s, and not even on H&R’s.

      • It is the same company. Freedom Group owns the following: REMINGTON
        BUSHMASTER
        REMINGTON MILITARY
        REMINGTON LE
        MARLIN FIREARMS
        H&R 1871
        DAKOTA ARMS
        TAPCO
        DPMS / Panther Arms
        PARKER GUNMAKERS
        BARNES BULLETS
        ADVANCED ARMAMENT
        PARA USA
        REMINGTON PMPD
        MOUNTAIN KHAKIS
        REMINGTON 1816

    • Don’t.

      There’s a hard product version of Conway’s law: “Any software system reflects the organization that created it.” (There are variations on the exact quote. As I didn’t know Conway personally, I’ll go with “this one is close enough to make the point.)

      This kind of organizational nonsense will come out in the products eventually. That is, if it hasn’t already.

  11. I think I’ll defer any future purchases of products owned by or associated with Remington or the freedom group.

    Plenty of viable (and more desirable) alternatives to give my hard earned money to.

  12. The smaller the niche a small company operates in (in this case, silencers), the more reason to remain small and independent. Remington and Freedom Group manage products for the masses….completely out of line fundamentally with AAC’s products. The buyout was doomed from the beginning.

    Silencerco I hope you guys are listening…..

  13. This is the second major ethic issue we’ve seen with Freedom Group that I know of. The first was the absolute wreckage they made of Marlin and the damage done to Marlin’s employees and above all quality control.

    For a horrifyingly long period of time Marlin levergun quality control was bad enough that the end products were fairly described as “vaguely gun-shaped objects” that should never have shipped.

    With this ruling we have a pretty good case that we need to consider a mass boycott of FG, period.

    Jim March

  14. Wow, AACs operations sound like a Cluster. Rather than selling out to the Freedomless Group he should have hired a couple people to straighten the mess out. I haven’t seen too many buyouts turn out well and this is one of them. Having said that, Freedomless group tried to pull a dirtbag move and they received the punishment they deserved. This is what happens when people think they can get away with whatever they want.

    • Yep.

      Sounds like the best course of action for him would have been to hire a couple of adults to run the business office and leave him free to do his design work.

    • Precisely this. Once you start dealing fit 7 digits in front of the decimal point, everyone is a scumbag.

      Don’t buy any Freedom Group Products. They’re akin to blood diamonds.

  15. No wonder Barnes blacktips are so expensive. Not going to purchase anything under the FG banner. I expect many of you to do the same.

  16. My takeaway from this is there’s a market for an independent consulting/auditing group that specializes in NFA compliance for small firearms businesses. If only I were qualified and had the money/contacts to form such a company.

    • 10 years ago, I would have said “Nah.”

      5 years ago, I would have said “Do you really think so?”

      Now I believe you’re right. I cannot believe how the NFA market has exploded in recent years, particularly for SBR’s and suppressors. If I wanted to do anything with SBR’s or cans, I’d hire a consulting firm to help walk me through everything, from applying for the FFL and additional licensing, the ITAR crap and then and do compliance audits before the ATF does.

      There’s nothing intrinsically technically difficult about SBR’s, suppressors, etc. The issue that keeps most people like me out of that market is the paperwork compliance. I want to work on guns, not paperwork, but since there’s only 24 hours in a day, if you want to make product, you have to choose where you’ll spend your time: Making products or filling out paperwork?

  17. I wonder if Kevin Brittingham would be interested in investing in a line of flamethrowers.
    I have been working on a few designs and would not even need $50,000 to get a working product. I think I can build and test a few for less than 10K but biz stuff will bring the most cost I am sure.

  18. I can’t help but see some fault from Brittingham as well. Seems like keeping track of your personal and business property would be a no-brainer…..

    • Especially if they were MY guns. I would have looked at how to replace my personal weapons with new weapons for prototyping. Too much can go wrong and stuff can just end up walking out of the door.

  19. Just read your analysis and also read the decision. I see a few things in your writeup that seem incorrect.

    “Jason wanted AAC to be treated like another “plant,” like Remington or Marlin or Bushmaster, with Remington HQ as the head of operations. But Scott Blackwell at Freedom Group told him in no uncertain terms that AAC would remain a separate entity.”

    That is not how I read it. I think it says that Jason wanted AAC to be a separate P&L and the President of Remington wanted it to be another plant. I think you have it backwards. He resigned because there was no plan to keep it independent.

    “but the lack of evidence to support Freedom Group’s assertion that the guns were Kevin’s makes it a moot point.”

    It was a moot point, according to the judge’s decision, because Kevin was present during that photo shoot. So Kevin could have admitted they were his.

    “Freedom Group and Remington had conspired to find a way to fire Kevin in order to save $4 to $8 million that he was due as performance incentives and pay.”

    My read of the decision is that Jason was the only person who wanted Kevin fired and it was due to unprofessional behavior and insubordination. Money was mentioned but that seems to have been to build consensus rather than the reason.

  20. Disabling a security camera to remove disputed items from your place of employment is a shady act. Signing a contract with the word flounder in such a way that it appears as a signature on casual inspection is not an upstanding move either. He wanted Freedom Group money to expand but he wanted to lose none of his control of the business. Mr. Bittingham is not blameless in this episode. I’ll wait on getting any “NFA items” until the law is repealed or invalidated. What happened to “registration is prelude to confiscation?” Doesn’t apply to silencers, machine guns, and short barreled long arms?

    • Disabling a security camera is NOT shady — compared to a major corporation trying to cheat you out of $10,000,000!!!! That’s TEN MILLION DOLLARS. Kevin and his buddies and his wife who built AA are good guys. They made something, made it well, and EARNED every penny, WHILE treating their employees very well. I haven’t shot a gun in 30 years, but I’ve bumped up against them for years in family/school settings. Great people, period!

  21. My what a tangled web we weave. I hope he gets his money but I would be betting he doesnt. Remy, Freedom group, whoever has 18million reasons not to pay him and spend at least half that money on lawyers to try and keep from paying him. Think about it.

  22. I’m kinda leery of both of them know. Remington acted like a giant back of dicks, but it seems like he wasn’t running the business solidly before the buyout too. Remington definitely looks worse than he does though.

  23. Briefly, I worked for the company that most of the Freedom Group management came from and if Kevin had talked to anyone from that company he never would have entered into the agreement he did with them. Thankfully, given their total incompetence in so many areas he won what never should have been an issue. Hope he will go on to do great things in the silencer arena. I also read the entire 117 page judges ruling in the case

  24. Kevin Brittingham was quoted as saying he hoped FG jacked him around until the money went to his grandkids, because they are required to pay 9% interest on it. It’s hard to find an investment that is guaranteed by law to pay 9%/year. And he did get $10 million up front, so it’s not like he’s having to collect aluminum cans in parking lots to feed his kids..

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