Designer, company speak out

Fourteen letters, a black background and no sign of the smiling monkey Julius.

It’s not exactly the most animated design for the Costa Mesa company that creates 1,600 new items a year, but the message comes across clearly.

“We Are Paul Frank” screams the new T-shirt of the nearly 130 busy employees at Paul Frank Industries, one of the first public statements of the $40-million-a-year company embroiled in an ugly dispute with its co-founder and namesake Paul Frank Sunich.

After a month of deafening silence, co-owners John Oswald and Ryan Heuser have come forward to discuss Sunich’s exit, his cult of personality and contribution to Paul Frank Industries.

“Paul Frank is an identity. It’s an ideal. It’s a feeling. It’s not just one person,” Oswald said from inside the company, where the art department works in a treehouse and all employees can use the rock rehearsal space.

“This company is bigger than us, and it’s bigger than the man named Paul Sunich.”

Sunich has his own take on the affair. He describes a tale of corporate takeover and decades-old friendships ended over money and ego.

“It’s like a Snickers Bar,” Sunich said. “Any way you slice it, it’s still peanuts.”

IT’S ONE OF THOSE quotes that has taken on legendary status at the West 16th Street warehouse in Costa Mesa, repeated dozens of times over lattes, sketches and iMacs.

During an Aug. 2 board meeting, Sunich reportedly dropped a bomb on his colleagues.

“He told us he was unhappy and wanted to leave the company,” Oswald said. “His exact quote was, ‘I just want to go work at Home Depot.’”

Coming from the man who ? in Heuser’s Huntington Beach garage ? created the famous Julius monkey, the announcement was a shock.

After creating the first designs of Julius on a sewing machine at Orange Coast College, Sunich later teamed up with Oswald and Heuser to build Paul Frank Industries into an Orange County powerhouse, manufacturing hundreds of items, including handbags, T-shirts and beach-cruiser bicycles.

As Sunich attempted to leave, his attorneys approached Paul Frank Industries with a proposal to let him remain with the company in exchange for a limited salary and ownership of his shares in the company, sources close to Sunich said.

That mediation attempt failed in November, and the company eventually opted to enforce a buyout agreement in Sunich’s contract.

According to Heuser, that document stipulated that if any of the three founders are terminated without cause, they would be compensated according to a formula, which as it turned out yielded $611,000 for Sunich.

“We all signed the same contract,” Heuser said. “If any of us quit, we get the same amount. The only difference is that John [Oswald] and I don’t want to quit.”

Sunich maintains that the firing was a particularly sordid affair, conducted by a conference call with a board of directors stacked with Heuser and Oswald’s friends and relatives, who cracked jokes and talked about golf before canning Sunich.

“It felt very planned, very premeditated,” Sunich said.

Over the next few days, Sunich’s company-issued cellphone was shut off, and his name and likeness were scrubbed from the company website. Paul Frank Industries issued a short statement saying Sunich had left “to pursue other interests.”

“It was creepy, like my identity was being erased,” Sunich said.

For Sunich, it was the end of a long battle for recognition at his company. His role as creative director was being increasingly diminished, he now says. Designs were being nixed without his approval. He was often left out of business decisions.

But with each complaint about his role at the company, Heuser and Oswald said they began to tire of the antics of the 37-year-old Sunich who, they say, had to be pampered for nearly a decade.

Sunich was missing meetings and important dates, Oswald said, so they hired him an assistant. Oswald said Sunich is afraid of flying, so company officials bought him a $100,000 recreational vehicle to tour the country.

“If John [Oswald] and Ryan [Heuser] were wrong in anything, it was overindulging him,” said Parker Jacobs, a company artist and an acquaintance of Sunich. “It was like he was a spoiled kid.”

Oswald and Heuser also agreed to rent a 3,000-square-foot studio in Huntington Beach where Sunich could develop his designs.

Sunich said he needed the space to focus on work, but the move only further isolated him from the company.

He sometimes wouldn’t make an appearance at the company for weeks, and Jacobs said many of the day-to-day employees were losing touch with their founder and namesake.

“There were only a handful of people that knew him,” Jacobs said. “He was just the guy who got credit for everything.”

Officials said the company has seen a boost in sales since Sunich left. After years of flat sales, the fall 2006 line ? the first campaign Sunich wasn’t involved in ? saw a 20% increase in retail orders, making it the most successful line in company history.

A LONG LEGAL BATTLE looms for the two sides in the dispute. Sunich has hired L.A. attorney Howard King to represent him, arguing in federal and Orange County Superior Court that Sunich’s original contract should be thrown out because it was drafted under false pretenses.

For their part, Oswald and Heuser have started talking with the public after a month of silence. They are very careful not to refer to their estranged co-founder as Paul Frank Sunich, but as Paul Sunich.

Both sides are litigating to what extent Sunich can use any part of his name to seek new employment; there’s some debate about what images Sunich can include in his portfolio to market himself to companies like the retail giant Target, which he approached recently.

“It’s not the end of my life ? I know my abilities,” Sunich said. “You can’t take away someone’s aesthetics, their sense of humor, their imagination.”

When asked about the possibility of career comeback, Sunich responded, “I don’t see what there is to come back from because I never left.”

Though many of Sunich’s friends at Paul Frank Industries have cut off communication with him, some say he still has a lot of artistic energy.