Great Business Trials I: DeMoulas v. DeMoulas

Being raised in the section of Lowell I am from you don’t go very far before you bump into the DeMoulas family.  Our kids played soccer together and I have known the late Mike DeMoulas and his son Artie pretty well. There house is a favorite stop on Halloween much to my partner Bill Martin’ s chagrin he lives across the street and his candy gets wiped out in 20 minutes .

So it is interesting now as a business lawyer in Massachusetts and New Hampshire that so many legal briefs refer to any number of the DeMoulas cases that were tried and appealed through the 1990’s leaving a trail of disbarred attorneys, scorned judges, death and reputaional destruction.

Innocuously enough, I recall having a conversation with Artie DeMoulas at our sons’ soccer game about what you could do if you disagreed with a judge’s decision and had anyone ever challenged a judge who he believed was corrupt!

Had I only known!

The rest is history — wire taping, a business sting operation the likes we have never seen, deaths, fraud charges against lawyers. The standards set by the DeMoulas case are as important to you for the facts as they are for the law that they created. But more importantly they represent what every business client I have ever represented really wants to do!

They want to fight to the death! 

In every initial consult I have ever had where litigation is contemplated, tempers are hot. The anger is a great motivator and people are dying to seek justice and spend every ounce of your blood for their fight.  They want to do what the DeMoulas’ did — fight forever!

Unfortunately of fortunately, most clients don t have the DeMoulas’  budget. But they all wish they had.  

I recall Mike coming up to me in a restaurant in Lawrence, Masssachsuetts saying that his son should hire my family’s firm.  I though that was a great idea.

While my family represented the DeMoulas’ on numerous cases following that discussion, I never did. 

So with that disclosure, I  begin my series of commentary on” Great Business Trials”  with a hope that they are instructive to you as you operate your business.  There is no better place to start than with the DeMoulas /Market Basket empire cases.

From “Mom and Pop” Store to Billion Dollar Corporation

In 1917 Greek-American Athansios “Arthur” Demoulas and his wife Efrosine left their factory jobs and opened a “mom and pop” grocery store in Lowell, a working-class city in northeastern Massachusetts. Their specialty was fresh lamb, processed at a slaughterhouse behind their home. In 1938 their bank threatened to foreclose on the family home if a $100 payment was not made. At this point son Telemachus (later known as “Mike”) left school to work at the store. The family raised the $100 payment, and their business stayed afloat. After World War II, the oldest son in the family, George, returned from serving in the Army and also joined the store.

Arthur and Efrosine Demoulas continued to operate the same store for over 40 years, until it was finally replaced with a new building in 1950, which was then bought by their sons, Mike and George, in 1954. The brothers expanded the store in 1956 and the business began to grow; between 1950 and 1956 annual sales rose from $2,000 to $900,000.

Mike and George Demoulas and their families were extremely close.

In 1964, the two brothers and their wives met at the office to sign the brothers’ wills, in which each was named executor of the other’s estate. At that meeting, Mike and George reportedly made a verbal agreement to the effect that whoever of the brothers lived longer would care for the other’s family, and that the business would be divided evenly between the two sides of the family. This agreement would later become the basis for a decade of lawsuits.

All in the Family…Whether You Like It or Not

By the end of the 1960s, the single store had been expanded into a 15-store chain. After George Demoulas died unexpectedly of a heart attack while vacationing in Greece in 1971, his widow Evanthea and their children acquired half of the shares of the business.

The first sign of real trouble brewing came in 1980, when Mike Demoulas had Evanthea removed from the board of directors. According to a statement filed in one of the later lawsuits, Mike Demoulas had apparently discovered that his sister-in-law was carrying on an affair with a married man and thus found her unsuitable for sitting on the board of the family business. (Source: Answer.com)

Rule No 1: You can’t fire your family

Stay Tuned For Part II in July