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Shareholders Move to Dismiss Demoulas Suit

TEWKSBURY, Mass. — On the eve of a board meeting that could have wide-reaching implications for Market Basket stores, “Class A” shareholders of parent Demoulas Super Markets asked a court to dismiss a lawsuit seeking to invalidate recent board decisions including its ongoing evaluation of the company’s embattled president, Arthur T. Demoulas.

The motion to dismiss was filed this week by Arthur S. Demoulas, representing the “Class A” shareholders that gained control of the family-owned retailer’s seven-member board in June. Arthur S. is a cousin to Arthur T. Demoulas. The company, co-founded by their fathers, has fallen into years of infighting between their descendants.

Read more: Demoulas CEO Sues Over Board Dispute

The motion defends board actions since June including the approval of a $300 million dividend, the removal of profit sharing fund trustees, and the consideration of replacing Arthur T. Demoulas as president.

The board, which brought a motion to vote out Demoulas in July, last month approved appointment of an executive search firm. The board is scheduled to meet again Thursday in Boston.


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The motion reiterates claims made in a separate suit earlier this year that Arthur T. was openly defiant of the board’s authority, and engaged in any number of business deals with companies controlled by his wife and in-laws without board approval. Profit margins have declined considerably since Arthur T. took office, the shareholders also allege.

The decision to distribute $300 million to shareholders was justified by the company’s cash position and a projection of its future cash needs, the motion argued. The company had in excess of $500 million in cash in late July, the motion noted, and made a distribution of more than $500 million in 2002 under similar circumstances.

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