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News :: Labor
Boston Area 'Market Basket' supermarket conflict - Nice Millionaire Boss vs Mean Millionaire Boss
22 Jul 2014
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The kindly former boss is replaced by his unkind cousin. The 'associates' are taking sides. The local media loves giving attention to a 'struggle' that has nothing to do with labor union rights. Politicians can sound like populists without risking anything, or paying one dime. Cheap 'street cred' all around.
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Market Basket’s Storied History of Crazy
23 Jul 2014
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Posted on July 21, 2014 by KT Toomey

Most of you are probably aware, unless you live under a rock or in West Gloucester (same difference), that there’s some upheaval going on at our beloved local discount grocery chain. But why, you ask? OH, LET’S DISSECT THIS SHIT. It’s a soap opera of epic fucking proportions. IT’S GOING TO TAKE TWO FUCKING DAYS. FASTEN YOUR SEATBELTS AND CRACK OPEN A BEER OR EIGHT.

Back in my first Business Law class (I actually graduated from college with a business degree, to the surprise of myself and everyone around me), discussing the Demoulas case took up more than one full week of class. And this was years before this current drama. At the end, half the class still walked out whispering “what the fuck even happened? Is there some kind of elaborate flowchart regarding this case? Where do JFK and the stripper fit in?“

Let’s turn the Clam Time Machine back to 1916 to start this bullshit off, shall we? So back then, a Greek immigrant named Athanasios “Arthur” Demoulas and his wife start a tiny grocery in Lowell selling fresh lamb. American dream, y’all!.

They do this forever, and being a family business eventually pass it off to two of their sons Telemachus (or Mike, because no one can pronounce Telemachus) and George. The brothers expand the business to a supermarket chain of more than a dozen stores in the 50s and 60s. It’s going well, right? Until George dies of a heart attack on vacation in Greece in 1971. Then shit starts getting real.

Mike now owns this huge empire. And although the brothers had promised to take care of each others’ families in the event one of them died, Mike slowly went full asshole instead. Although at first he bought George’s widow and children things every kid loves, like condos and liquor stores, he eventually sneakily had them signing paperwork that gave himself more control of the company.

George’s family didn’t really have the business experience their father had, and trusted their uncle to handle things like he promised. Mike explained to George’s family that he had opened the Market Basket chain to circumvent the laws limiting liquor licenses to one company. He had George’s widow removed from the board of directors over her involvement with another man. Eventually, he left George’s family with a fucking pittance compared to what the chain’s worth should have been at that point – by moving assets into secondary companies owned by only his side of the family (including Lee Drug, a chain he sold to Walgreens for major dollars).

In 1990, George’s family gets tax notices about their sale of company stock. This immediately sets off their bullshit detectors, because to their knowledge, they hadn’t sold any stock. So the family figures out what’s going on and sues Mike. It takes years and it’s an insane court battle worthy of a goddamn Lifetime special. Cousins punch each other in the back of courtrooms and eventually a state policeman has to be present at every hearing to limit the punchings. George’s son dies and family members are barred from the funeral. Six lawsuits span the 1990′s. Every lawyer in the state seemed to be involved – Mike’s family had 19 lawyers at one point involved with the case.

Someone paid a stripper to testify against her ex-boyfriend. A juror offered to change his decision if he was given $220,000. Two of the lawyers for Mike’s family, with the approval and knowledge of his son, Arthur T Demoulas, secretly tape record a law clerk saying incriminating things under the guise of a job interview to prove the judge overseeing the case has already decided the outcome prior to hearing the arguments and is prejudiced against Mike. The clerk finds out it’s a setup and the FBI gets involved. The clerk is wired. The lawyers -one a freakin’ former assistant US attorney, another a former advisor to JFK – say incriminating things themselves while wired.

Oh my god, my fucking head hurts trying to explain this because it can’t even be real, but it is. Two of the lawyers end up being disbarred at the end of the suit, and George’s family is successful: Mike is found to have defrauded them out of $500 MILLION and the judge forces 51% of the company to be turned over to George’s heirs. Is the Benny Hill theme playing in your head yet? Even while his assets were supposed to be frozen, Mike was subjected to another lawsuit after it was found that he’d diverted another $68M into his own holdings from mutual family holdings. You gotta admit, the guy’s got tenacity.

So what does Market Basket’s checkered family past have to do with what’s going on today, and why the hell doesn’t the Basket have any salad fixings at all?

I explained that Mike’s son, Arthur T Demoulas, was involved with his father’s legal team and the whole “secret recordings” and “blackmail a court employee” debacle. He’s the center of today’s fight, having just been ousted as CEO. It’s complicated. Of course. Like everything else involving the name “Demoulas”.

Anyway, after the lawsuits of the ’90s into the ’00s shake out, the judge forces Mike’s side of the family to give up 51% of Market Basket to George’s side. Mike’s side of the family lost the lawsuits pretty soundly – it’s hard to excuse flagrant fraud, forgery, and hiding assets from your family.

Back in early 2008, Market Basket’s board votes Arthur T Demoulas in as CEO. He is by all accounts a pretty reasonable guy who is hell-bent on treating his employees like family. Or, better than family, seeing as how the Demoulas family has beaten up and defrauded each other for decades now and OSHA and the Department of Labor aren’t keen on doing that to produce clerks.

Artie D is so reasonable that during the economic downturn, his profit-sharing employee account loses $46m in a quarter and he REPLACES THOSE FUNDS with his own company’s profits so his employees don’t suffer. This is relatively unheard of -all investment is risky, after all, and most people in America lost money from pensions or 401ks in 2008. This move majorly pisses off his cousins on George’s side of the family, who like things like “profits” and whatnot.

For five years, Arthur T Demoulas, despite his side of the family’s past shady and questionable tactics, is a beloved CEO to his workers. He is described as an affable, friendly, and humble leader. He pays well, employees have good health insurance. Workers trust him and are fervently loyal to him.

But in the summer of 2013, Arthur T’s cousin, George’s son Arthur S Demoulas, gains control of Market Basket’s board and calls a vote to oust Arthur T amid claims and a lawsuit that alleged he mismanaged the company, engaged in improper business deals with companies owned by his wife and her family, and withheld important information from the board. Meanwhile, Arthur S’s side has long been painted as interested in as much money as possible from their holdings (which explains their anger at Arthur T’s profit-sharing fund placement), without putting in the elbow grease Mike’s family did. This move was seen as a way for George’s side of the family to get dividends from their stock.

There was a massive outpouring of support for Arthur T Demoulas - employees who had been at Market Basket for decades showed up for the board meeting and stood outside in August heat to support him. During the meeting, the board didn’t oust him, and he saved his job – for a bit. But Arthur S continued to push for his cousin’s dismissal.

Finally, late last month, Arthur T Demoulas was fired as CEO and replaced by a former Radio Shack executive named Jim Gooch (holding back laughter at unfortunate last name there) and Felicia Thorton, former executive at Albertson’s. A few upper level executives were also fired at the same time.

And then the shit hit the fucking fan.

Remember when I said his employees were fiercely loyal? Well, because unions have fallen out of favor in the states, Market Basket’s employees aren’t unionized. They have no recourse if the new board, in order to boost profits (remember those dividends Arthur S’s family lusted after?), slashes their benefits and profit sharing. Many employees have been with the company for decades – the company is known for promoting from within. They knew that Arthur S’s takeover of the board spelled the end of employee-friendly policies as they knew it, and they were PISSED.

The board couldn’t have predicted the intensity of what came next. Despite the lack of union, workers started protesting. They threatened to walk off the job if the board didn’t reinstate Arthur T – putting their own blue-collar jobs on the line for one of the state’s richest men. Last Friday, the murmurs of work disruption boiled over into a full-scale revolt – warehouse and store workers showed up at the company’s headquarters to protest despite warnings they’d lose their jobs, meaning Market Basket’s deliveries ground to a screeching halt. It has spiraled from there. Eight workers who organized the protests – supply chain supervisors with the company for 30 or 40 years in some cases – have been fired via a courier service. This has only served to fan the flames. Yesterday, the protests moved to store branches – here in Gloucester, a protest outside the Gloucester Crossing Market Basket grew despite the searing heat.

The protesters here in Gloucester, at least yesterday, are mostly younger folks. Kids for whom Market Basket was their first job. Single moms brought toddlers. My blog partner Jim showed up this afternoon, ostensibly to buy supplies for frittatas and organic beet salad, and instead grabbed some photos and video of the hoopla.

Think about this. It isn’t exactly the Anthracite Coal Strike of 1902, but how often do you see a worker action these days? And one not looking for higher wages or increased benefits, but one in favor of a company leader who the workers felt treated them decently. Here are young people taking a stand for something that is important to them and being pretty goddamned polite and articulate about it. They are risking their jobs. These are kids who are working because they need to, either saving for college or helping out their own families. Their jobs are massively important to them, but doing what they believe is the right thing is more important.

And local politicians are behind them. At last count, 19 local lawmakers had signed a statement in support of boycotting Market Basket. That’s a pretty good gauge of the seriousness of the situation – Market Basket hasn’t done anything illegal or even morally reprehensible, but it’s that serious that Martha Coakley has stood up and supported the workers’ demands to reinstate the CEO.

It’s a pretty engaging situation to be sure, and where it develops from here is anyone’s guess. It’s unlikely Arthur T will be reinstated, but Market Basket’s completely lost control of the situation. Someone get the popcorn and let’s all watch the schadenfreude.

Oh fuck, they sold out of popcorn.
Market Basket mulls ex-CEO's buyout offer as employees rally
25 Jul 2014
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TEWKSBURY Mass. (Reuters) - Family-owned New England supermarket chain Market Basket said on Friday it will "seriously consider" a buyout offer from its ousted CEO Arthur T. Demoulas, as thousands of people rallied near the company's headquarters for the executive's return.

Demoulas was fired by the board of directors in June after a power struggle with his cousin Arthur S. Demoulas, triggering a rare revolt by employees who hailed his worker-friendly policies. The Demoulas family founded Market Basket in 1962.

"The Board will evaluate and seriously consider this proposal, along with any other offers previously received and to be received," according to a statement from the board of Demoulas Supermarkets, which owns the Market Basket chain.

"It is now clear that it is in the interests of all members of the Market Basket community for normal business operations to resume immediately," it added.

Arthur T. announced on Thursday that his side of the family had offered to purchase the 55 percent of the company it did not current own, but did not detail the offer.

Market Basket, based in Tewksbury, Massachusetts, is one of New England's leading privately-held supermarkets with some $3.55 billion in revenue from its more than 70 stores around the region. It competes with New England chains like Hannaford Brothers, Shaw's, and Stop & Shop.

But the Demoulas family feud has put the company's operations in disarray. Work stoppages and a boycott call by angry employees - who say Arthur T. provided good wages and benefits - have led to empty shelves in some stores.

Thousands of people, including many Market Basket employees, rallied in a parking lot near the company's headquarters on Friday, holding placards reading "Down with greed, support Arthur T." and "Arthur T. is our CEO." A plane flew overhead dragging a banner reading "Artie T. Save M.B. - Buy Them Out!"

"Our only demand is the return of Arthur T. and the leaders who were wrongfully terminated," Michael Maguire, director of produce for Market Basket, said at the rally, which responded in a torrent of cheers.

Zeynep Ton, an adjunct professor at MIT Sloan School of Management, said the outpouring of support from workers for an ex-top executive was very rare. "I have never seen this kind of support for an executive," she said.

After Arthur T.'s firing, former Radio Shack executive James Gooch and ex-Albertsons executive Felicia Thornton became co-CEOs of Market Basket. The new management has said it plans no immediate changes to the company's worker policies.

The family feud began decades ago over allegations by Arthur S.' side of the family that Arthur T.'s father had stolen ownership shares by setting up shell companies. A judge sided with Arthur S.'s family in 1994, giving it a 51 percent share.

Despite family tensions, Arthur T. became head of the company in 2008. The board shifted in Arthur S.'s favor in 2013, however, after two members were replaced.
'Market Basket' - Millionaire Boss vs Millionaire Boss
30 Jul 2014
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BOSTON (CBS) – The local news story of the summer is, hands down, the saga of Market Basket, the regional supermarket chain that’s been brought to its knees by employees and customers angry over the firing of a beloved CEO and some of his top managers.

My colleagues at say any new wrinkle in the story immediately jumps to the top of our “most-read stories” list.

And no wonder.

The Market Basket meltdown raises a crucial question for the ruling classes of our economy that’s been on the minds of millions of Americans for some time now – what on Earth are you thinking?

Whatever his shortcomings, deposed CEO Arthur T. DeMoulas has clearly been giving Market Basket’s amazingly-loyal workers and customers what they want – respect, appreciation, decent wages, and the opportunity for advancement for the employees, price breaks and good service for the customers.

Don’t take my word for it, check out the comments by current and former employees online, they’re almost entirely positive.

And the result has been strong growth and profits for Market Basket’s owners, just like other companies such as Costco that follow a similar customer- and worker-friendly blueprint.

So why would you run a business any other way?

Why do too many businesses bleed their employees, disrespect their customers, and laugh about it on their way to the bank?

The Market Basket revolt, notably occurring in a non-union company, is a giant warning shot across the bow of Scrooges everywhere.

What are the odds they’ll hear it?