Robert Elwood, left, and Brendan V. Sullivan III are engaged in a legal battle over Headfirst Baseball. This photo of them was entered into evidence.
Brendan V. Sullivan III and Robert Elwood sat across from each other last week in a federal courtroom, separated by the distance at which they played catch as Little League teammates.
Now the two men — sons of prominent families in the nation’s capital — are opponents in a bitter trial.
“He is a thief,” Sullivan said on the witness stand.
Elwood, at the defendant’s table, glared back.
The ex-teammates — they first played together as youngsters, then as high school stars at St. Albans — are battling in U.S. District Court in Washington over Headfirst Camps, a multimillion-dollar enterprise specializing in youth sports camps, private lessons and recruiting showcases for high school players.
Sullivan, 41, alleges that Elwood, while running the company, used its bank accounts and credit card as a “personal piggy bank,” spending more than $700,000 on hardwood floors for a waterfront home, vacations, iPads, laptops, drones, diapers, toys, a Sub-Zero refrigerator, a stove and even a new doorbell.
Elwood, 43, doesn’t dispute the spending, which his attorney in opening statements called a “messy, dirty, lousy-looking thing.” Elwood’s defense: He is a partner in the business under District law, not an employee, and he and Sullivan agreed to use company money for personal expenses.
One notable piece of evidence shown to the jury: a photo of bags of cash. One for Elwood. One for Sullivan.
“It looks bad both ways,” Elwood’s lead attorney, J. Douglas Baldridge, told the jury during his opening statement, in which he accused Sullivan of buying a $45,000 engagement ring with Headfirst funds. (Sullivan presented evidence on the witness stand disputing the allegation but did confirm taking multiple vacations, with multiple girlfriends, using company money.)
Besides offering a window into the lucrative world of youth sports — a $7 billion industry in which Headfirst is a leading player — the drama has riveted upper-crust Washington because of the pedigrees of the central characters.
Sullivan’s father is Williams & Connolly lawyer Brendan V. Sullivan Jr., one of the city’s most famous and feared litigators. The defendant’s mother, Patricia Elwood, is the District’s director of protocol and international affairs, working closely with embassies and assisting visiting foreign leaders.
Williams & Connolly is representing Sullivan. The firm, which also represents The Washington Post in some legal matters, is known for its courtroom aggressiveness and fierce loyalty to clients. One potential juror — a lawyer herself — was dismissed after she said that she had read about the case and that “scorched-earth” tactics intrigued her.
The dispute, ongoing for three years, has become heated and deeply personal.
Baldridge, a well-known litigator at Venable whose previous high-profile clients have included Tiger Woods, seems to be pursuing a high-stakes, poke-the-bear defense, accusing the elder Sullivan of being part of a plot to destroy Elwood and keep him from cashing in on a major buyout offer.
In his opening statement, Baldridge said that “daddy’s hand” guided Sullivan’s attack on Elwood and that now his client is “fighting for his life.”
In Headfirst Baseball LLC v. Robert Elwood, Sullivan and the company are seeking the more than $700,000 they allege Elwood stole. Elwood has countersued, demanding to be declared an owner of Headfirst. The case is being argued before Judge Reggie B. Walton, who presided over the trial of a former aide to Vice President Richard B. Cheney, I. Lewis “Scooter” Libby, in the Valerie Plame leak case.
Sullivan took the stand first.
“We met in Little League,” he testified.
It was an all-star team. They were 10 or 11. Eventually, they became teammates at St. Albans School, an exclusive, expensive private boys’ school in Northwest Washington. They were pitchers — Sullivan with a wicked sidearm delivery. Their families socialized together.
“We were friends,” Sullivan said as Elwood looked back, rocking in his chair. “We might as well have been family.”
Sullivan went on to play baseball for Stanford. Elwood played for Amherst. They lost touch.
Brendan V. Sullivan III, a minor-league pitcher in the San Diego Padres farm system, throws during spring training camp in Peoria, Ariz., in 1999. (Tom Story/For The Washington Post) Baseball brought them back together.
After college, Sullivan was drafted by the San Diego Padres to play in the minor leagues. During the offseason in the late 1990s, to make extra money, Sullivan photocopied his baseball card and used it in a brochure advertising pitching lessons for youth baseball players in the Washington area.
Sullivan called the business Headfirst Baseball. His younger brother Ted, also a minor league player, joined in teaching lessons.
At some point, Elwood and Sullivan reconnected. Elwood told Sullivan that he was also coaching in the region.
What happened in the ensuing months and years is now the focal point of the dispute. Sullivan says Elwood was simply an employee. Elwood says that they eventually decided to become 50-50 partners, striking a deal at a Ledo Pizza.
What’s not in dispute: The business grew rapidly, coinciding with the boom in elite travel teams and the era of $300 baseball bats. Headfirst added clinics, summer camps and after-school programs, with Elwood running operations.
It was clear from court testimony that the business generated tremendous amounts of cash and that the former teammates handsomely rewarded themselves. Sullivan and Elwood paid themselves six-figure salaries. They also began using company funds for personal purchases. At one point, according to court testimony, they were each taking $5,000 a month for incidental expenses. They stored bags of cash in office drawers and cabinets.
Though Sullivan consistently referred to Elwood in emails and other communications entered into evidence as his “partner” and an “owner” in Headfirst, the relationship was never codified in writing, despite Elwood’s requests. In late 2012, that became — to Sullivan — a powerful detail, giving him the authority to send Elwood an email saying he was fired, effective on New Year’s Eve.
Sullivan testified that he fired Elwood after discovering a series of financial irregularities, including that he repeatedly used the company credit card for personal purchases, coding them as business expenses. On the witness stand, Sullivan spent several days going through nearly 1,200 purchases, describing them repeatedly as thefts.
His attorney asked if Headfirst had any need for a Sub-Zero refrigerator.
“No,” Sullivan said.
A stove?
“No,” Sullivan said.
But to Elwood and his defense team, the legal drama never had anything to do with appliances.
They contended in court that it was a greedy plot by Sullivan, his brother, his father and Williams & Connolly to get rid of Elwood after an investment firm controlled by New York hedge fund titan Warren Lichtenstein offered to buy Headfirst in a deal potentially worth $19 million.
“That’s what triggered this,” Baldridge said in his opening statement.
Elwood took the stand last week for what could be several days of testimony. The questioning has not yet addressed the firing and the buyout offer, but his attorneys have detailed their theory of what happened in numerous court filings.
After the buyout offer, “Elwood was conveniently re-cast as an ‘employee,’ ” his attorneys wrote in court papers. “Williams & Connolly . . . took this well-established and open practice of spending and turned it on Elwood suggesting that he had misappropriated company funds.”
But under a District statute and case law, Elwood’s attorneys argue, he is more than just an employee — a partnership exists if the individuals share in profits, liabilities and management.
Sullivan contends that can’t be true because Headfirst Baseball and a later enterprise were set up as limited liability companies, or LLCs.
“This is not exactly so,” Walton wrote earlier this year, in a decision allowing Elwood’s position to move forward. “Under District of Columbia law, a partnership exists where there is an ‘association of [two] or more persons to carry on as co-owners of a business for profit . . . whether or not the persons intend to form a partnership.’ ”
He added: “A jury could reasonably believe that he and plaintiff Sullivan formed an overarching Headfirst partnership.”
The trial, which resumes Monday, is expected to last at least another week.
Neither side would comment on the case beyond the court testimony.
Elwood clearly feared he would wind up in this position — in a courtroom facing not just his former teammate but also his father’s powerful firm.
“So many times over the years,” his attorneys wrote in a filing, “he had seen the Sullivans’ ‘take-no-prisoners approach’ and well knew that discovering the truth was not their objective.”
After the firing, Elwood wrote Sullivan an email asking to meet with him. Sullivan refused, Baldridge said in his opening statement. He told Elwood to meet with his father.
