UPDATE: Employees of a supermarket chain in New England are taking down a corporation

[edbermac]

18. Family dispute, good story here

I feel bad for the employees caught in the middle of all this.

.........

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 that if either brother died, the surviving brother would take care of the other’s family. Seven years later, George died unexpectedly. For years after George’s death all seemed well, and presumably George’s family trusted Mike to do right by them, but in 1987, the Massachusetts Department of Revenue noticed an irregularity in a tax filing of George’s oldest son, which his uncle Mike submitted. As George’s family dug deeper into Mike’s dealings, it turned out that all was not as it seemed.

Prior to George’s death, Mike and George were 50/50 partners in the supermarket chain. It turns out that in the years since George’s death, Mike secretly had been transferring George’s family’s shares to himself and his family, leaving George’s family with only an 8% share while amassing 92% of the company for his family. In 1990, George’s family sued Mike for fraud, alleging losses of nearly $800 million. They also brought a shareholder derivative claim arguing that Mike wrongfully diverted $1 billion of company assets into new companies, such as Market Basket, Inc. Discovery was contentious and carried on for roughly four years, but the first several trials finally began in January 1994.

The first trial, concerning the fraud claim, included a fist fight in the courtroom between the sons of George and Mike, Arthur S. and Arthur T. Demoulas. The second trial, concerning the derivative claim, included allegations of judicial bias and the parties being represented by 22 different lawyers. The third suit included allegations that Arthur S. had wiretapped the defendants and led to charges that a juror offered to “fix” the trial for a payment of $200,000. All three suits were decided in favor of the plaintiffs, resulting in the judge awarding George’s family 51% of the company.

http://www.bostonbusinessdivorce.com/demoulas-v-demoulas-supermarkets-inc/