Olivia Cruises: Out to Sea

After 35 years as a leading lesbian-focused business, Olivia faces an ongoing lawsuit by former executives that could mean stormy weather.

BY Julie Weisberg

February 26 2008 12:00 AM ET

Having charted
the challenging waters of lesbian entertainment and travel
for 35 years, you’d think business would at last be
smooth sailing for Olivia. But for the past several
months the brand has found itself in troubled waters
after former chief executive officer Amy Errett and three
members of her senior management team filed suit against the
company, claiming they were unjustly fired or forced
to resign in March 2007 by Olivia founder and
chairwoman Judy Dlugacz. The plaintiffs -- who include
Olivia's former chief financial officer Dianne Dubois, chief
business development officer Brad Lande, and chief
marketing officer Sabrina Riddle -- are seeking
several million dollars in unpaid severance, bonuses,
and stock options. Not surprisingly, Olivia has countersued,
claiming in court documents that Errett had
“grossly” mismanaged the company during
her tenure from 2002 to 2007 and schemed to “wrest
control” of the company from Dlugacz.

Since entering
their legal battle last year, the two sides have used
their legal filings in San Francisco superior court to shoot
accusations of smear campaigns, backstabbing, and
jealousy back and forth. The fallout has seen a
startling and public clash between two ambitious,
successful women who approached the rise of Olivia from
different sides of the business world.

In the 35 years
since Dlugacz cofounded Olivia in 1973, she has produced
more than 40 albums (which have collectively sold over a
million copies); hundreds of entertainment events,
including four sold-out concerts at Carnegie Hall; the
PBS documentary The Changer: A Record of the
Times
; and an HBO comedy special with comedian Suzanne
Westenhoefer. That success, compounded by the creation of
Olivia's lesbian-focused travel business, has earned
Dlugacz the iconic status of pioneer and visionary
within the lesbian community.

Errett lays claim
to different successes. After earning her MBA in
finance from the University of Pennsylvania's respected
Wharton School, Errett founded the international
strategic consulting company the Spectrem Group, where
she served as CEO and chairwoman. In 2000 she joined
the senior management team at E*Trade, which is where she
was working when Dlugacz talked her into joining
Olivia two years later. Errett currently serves as
“entrepreneur-in-residence” for the venture
capital firm Trinity Ventures in Menlo Park, Calif.

Beyond the
spectacle, the lawsuit has been a cause of concern for those
who travel on Olivia's voyages. Numerous postings expressing
worry about the future of the company and its
financial health have appeared on Olivia.com message
boards, particularly after the plaintiffs sought to
force the company to dissolve in their initial filings. In a
legal victory for Dlugacz, however, that request was
dismissed by the San Francisco superior court in
October and is no longer part of the suit, allowing
the company to stay intact and operating.

According to
Errett's lawyer Michael Rugen, the dissolution request was
not an act of "ill will" but simply "a procedural method"
to try to force Dlugacz to pay the former executives a "fair
buyout for their shares." Errett, Riddle, Lande, and
Dubois currently own some 30% of Olivia’s
shares, with Dlugacz controlling the remaining
balance.

Tags: Business

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