Fractured Family: Market Basket Ousts CEO Arthur T. Demoulas

abandoned cart

In the latest iteration of the Market Basket boardroom saga, Arthur T. Demoulas was ousted as Market Basket’s CEO during this week’s election of corporate officers.  In his place, company consultants Felicia Thornton and James Gooch were elected as co-CEOs, effective immediately. In a statement issued by the Board of Directors, the Board stated that Arthur T. Demoulas will not retain any management responsibilities moving forward but remains a shareholder of the corporation. The Demoulas family drama came to a head last year, when Arthur T. Demoulas’s cousin, Arthur S. Demoulas, gained control of the Board of Directors and won a … Continue reading

Everyone Wants a Say: Determining Who Gets to Vote on an LLC Derivative Suit

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The Massachusetts Appeals Court recently issued an interesting decision concerning the authority a group of LLC members needs to bring a derivative suit under Massachusetts law. The case, Williams v. Charles, involved an LLC called Frowmica, which was organized for the purpose of negotiating and financing the purchase of a taxicab business.  Within a year after entering into the operating agreement, relations between the LLC members began to deteriorate.  Some members claimed that the managing member, Jean Bernard Charles (“Charles”), had taken various actions adverse to Frowmica, such as terminating the operations manager without cause, wrongly paying himself a salary … Continue reading

The Saga Continues: Demoulas Family Back in Court

Market Basket

Just when it seemed that the Demoulas feud had died down for the summer, the family was back in Suffolk Superior Court this past month. This time, the side of the family aligned with management of the Market Basket chain (the Arthur T. side) was seeking an injunction to block the issuance of $300 million in dividends to the company’s shareholders. The Arthur T. faction alleged that the board chairman, Keith Cowan, who had voted in favor of the large distribution, is not “independent”, as required by an earlier court order in the case. In response to the Arthur T. … Continue reading

Gold Medal: A Case Study Involving Over 30 Years of Buyout Negotiations

GoldMedal

Last month, the Massachusetts Supreme Judicial Court (“SJC”)weighed in on a contentious family business dispute in Chambers v. Gold Medal Bakery Inc.   This case demonstrates how heated (and litigious) family negotiations for a corporate buyout can become and clarifies the scope of shareholder and director access to privileged corporate documents. Gold Medal involves two closely held corporations that comprise a Fall River wholesale bakery and bread distributor.  (You might recognize their “Fiber One” bread products.)  Much like the infamous case involving the Demoulas brothers that we discussed in an earlier blog post, here the two LeComte brothers (Roland and Leo) … Continue reading

Protecting Your Company in the Case of a Marital Divorce

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Last month, we discussed the legal saga between ex-spouses and fellow shareholders of the multi-billion dollar fashion house Tory Burch.  While it is a good cautionary tale for spouses who own a business together, most family-owned companies are much smaller enterprises.  There are more than 1 million businesses in the United States owned by married couples, and unfortunately, like other small businesses, most of them operate without a formal partnership or operating agreement outlining withdrawal or removal procedures of an owner.  If one partner wants out, or wants the other out, a marital divorce leads to a business divorce.  The … Continue reading

Tory Burch: When Business Divorce Meets Real Divorce

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Even after a marital divorce is finalized, the business divorce discord lingers, especially when both spouses are the co-founders and equal shareholders of a $2 billion fashion brand. Tory Burch, a retailer of upmarket women’s apparel, shoes, and accessories, and her ex-husband Chris Burch are embroiled in a court battle over the successful label and his own year-old fashion venture, C. Wonder.  After their divorce settlement, both remained equal shareholders of the Tory Burch brand and continued to hold their positions on its board of directors. Now Tory’s attorneys allege that Chris Burch used his access to Tory’s business information … Continue reading

Tricky Transfer of an LLC Interest

200 High St Boston MA

The Suffolk Superior Court recently issued a decision on a motion for judgment on the pleadings in Furman v. Gossels.[1]  The Plaintiffs, four sisters, brought suit against their aunt and uncle, Elaine Gossels and Jerome Furman, alleging various claims regarding the sisters’ claimed one-third interest in a family company. The sisters’ father, Walter Furman, had formed 200 High LLC with his siblings Elaine and Jerome.  The company owns the commercial building at 200 High Street in Boston.  In 2008, Walter and his siblings executed an operating agreement for the LLC and in 2010, Walter passed away leaving his estate (including … Continue reading

Demoulas v. Demoulas SuperMarkets, Inc.: A Case Study in Business Ventures Going Bad

Market Basket

The Demoulas dispute started with a trusted family relationship that went bad.  Partly what made it infamous was probably a result of the parties’ wherewithal – they have been able to fund decades of litigation. As the years passed and millions in fees accrued, the animosity built. In 1917, Arthur Demoulas opened a local grocery store in Lowell.  He and his wife operated it for some 40 years and then handed it over to their sons, George and Telemachus (“Mike”).  The brothers grew the business quickly and their families were very close.  In 1964, Mike and George executed wills, stating … Continue reading