By Grant Welker
Two lawsuits have been filed this week in the ongoing Market Basket board of directors feud, worsening a rift within the company that formed last June when power over the company shifted from one side of the Demoulas family to the other.
The first lawsuit, filed Tuesday in Suffolk Superior Court, came after after one side of the board -- those affiliated with CEO Arthur T. Demoulas -- allegedly boycotted the board's March 31 meeting.
In that lawsuit, a group of shareholders affiliated with Demoulas' rival -- cousin Arthur S. Demoulas -- has asked a judge to require two directors, Terence Carleton and William Shea, to attend the next board meeting on April 28. The shareholders have sued Carleton, Shea and the company itself.
On Thursday, Carleton and Shea filed a lawsuit of their own, saying they've been "marginalized" since the makeup of the board changed last June, when they were suddenly on the side appointed by the minority shareholders. They also alleged that Carleton was recently left off a committee agenda.
"It is not only the last straw but symptomatic of the profoundly disturbing dynamic that has increasingly infected this board since you have been appointed chairman," an attorney for Carleton and Shea said in a letter to board Chairman Keith Cowan.
It was shareholders affiliated with Arthur S. Demoulas' side of the family, those who own what's known as Class A shares, who gained a slight majority stake in the company last June. Since then, the Class B shareholders, those on the side of the company CEO, have seen their power wane and the company's operations have been affected.
Directors have battled over a $300 million dividend to Demoulas family shareholders, and at least two stores, in Attleboro and Revere, have had their openings delayed as an apparent result of the tension between the board and the company's front office.
Carleton and Shea said in their lawsuit against the company they've been prevented from attending board of director committee meetings "where much of the substantive work is accomplished, denied access to documents and the innumerable consultants the new board has hired."
They've also been "deprived of the ability to perform their duties," the lawsuit said.
The board once had a tradition of including one director from each category -- one appointed by A shareholders, another by B shareholders, and A/B, which are appointed jointly -- on committees, but now staffs all but one of the committees with only directors appointed by the A shareholders, the suit says.
"Carleton and Shea have been completely foreclosed from participating on, observing, being notified of meetings or agendas of (those meetings), or access to the documents and materials considered by these committeees," their lawsuit says.
The lawsuit filed April 1 is not the first filed because of directors not attending a meeting. The same thing happened last summer when a few directors who side with CEO Arthur T. Demoulas skipped out on a meeting so there wouldn't be a quorum and no votes could be held. The fear at the time was that the board would vote to remove the company's leader, who has been enormously popular with employees and shoppers.
For years, Arthur T. Demoulas had broad support from directors because the majority of the seven-member board was appointed by his side of the family. In the face of questions over Demoulas' future with the company, the board of directors has said it has no plans to remove him from the job.
Market Basket management released only a brief statement on the lawsuit. "Management has not seen the lawsuit but it is clear that management is in complete conflict with the new majority of the board," the statement said.
The latest lawsuit asks that directors Carleton and Shea be ordered to attend the next board meeting, or if either or both refuses to participate that quorum requirements will be waived.
The lawsuit from those two directors asks the court to allow them access to documents in the hands of any directors or law firms retained by the board.
Follow Grant Welker on Twitter and Tout @SunGrantWelker.