Saturday, February 16, 2013

Jury Awards Partial Victory To Marsh Grocery Against Its Former CEO

The federal civil trial Marsh Grocery brought against its former CEO and namesake, Don Marsh, for breach of contract and fraud to recover millions of dollars it claimed he ripped off the company by charging the company for extravagant personal expenses over a period of years before the company was sold to its hedge fund owner, Sun Capital, ended last night with a partial victory for the company against its former CEO. The jury found Marsh liable to his former employer for $2.2 million, which was far less than the $7 million the company sought to recover from him. According to the Star, the jury found the company was equally responsible for the harm it had suffered and denied the company's request for punitive damages, and it denied the company's request that Marsh be held liable for punitive damages.

This is one of those civil cases where neither side winds up winning much of anything by taking it to trial other than the attorneys who are a few million dollars richer from all of the legal bills paid by their respective clients. Both sides would have been better off if they had reached a settlement long ago without taking the case to trial. The Star story doesn't say anything about whether the verdict requires Don Marsh to pay the attorney fees of his former employer, which had already been required to pay back a several million dollar penalty to the IRS for improper expenses for which it had reimbursed Marsh. An earlier IBJ story pegged the amount of disallowed deductions taken by the company at $5.3 million. Judge Sarah Evans Barker still has to rule on whether the company has to pay Marsh $2 million in severance payments it withheld from him after being dismissed as the company's CEO, or whether he should be asked to repay the $2 million already paid out to him. I'm assuming Judge Barker's ruling will also rule on whether one side is required to pay attorney's fees to the other side.

UPDATE: An IBJ story provides a little more detailed explanation of the jury's verdict:
After a two-week civil trial, jury members found Marsh, 75, had commited breach of contract and fraud, but stopped short of delivering Marsh Supermarkets a total victory. Although the grocery chain had asked for $1.6 million to cover expenses and penalties related to an IRS audit that focused on Don Marsh's expenses, the jury awarded the company half that amount, saying it shared responsibility . . .
The jury agreed with four of Marsh Supermarkets' eight breach-of-contract claims, ordering him to repay $1.4 million in unauthorized expenses. It did not award punitive damages.
Marsh Supermarkets was asking its former CEO for a total of about $5.6 million.
Judge Barker will rule separately on whether the company can recover the $2.2 million in severance it paid to Marsh.

No comments: