A Delaware court ruled that the ousting of former Market Basket CEO Artie T was valid.
“Arthur [T. Demoulas] had the burden at trial to prove that a majority of the Current Directors acted in bad faith. He failed to carry his burden,” Vice Chancellor of the Delaware Court of Chancery J. Travis Laster wrote in a decision published Monday.
After Demoulas was fired in September, the company’s board filed a suit to uphold its decision, and Demoulas immediately countersued in Delaware, where the grocery store chain is incorporated.
The booted leader argued that the board, backed by his sisters, had unlawfully removed him in an attempt to assume control for themselves and their children. Still, the board contended that Demoulas refused to effectively work with them.
Although Laster acknowledged that Demoulas ran the business profitably, he noted that Demoulas “stubbornly resisted board oversight and excluded his sisters and their families from the business.”
Laster referred to Demoulas’ leadership style as “imperious” and wrote that the board feared a repeat of the stand-off Demoulas had with his cousin Arthur S. Demoulas in 2014 that led to a customer boycott, employee walkout, and the eventual departure of the other Arthur.
The business judgment rule protects the Current Directors’ decisions to suspend Arthur and his allies and subsequently to terminate Arthur,” Laster wrote. “The court will enter judgment determining that Arthur’s removal as President and CEO was valid.”
This story is developing. Check back for updates.
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