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Fight for control of Market Basket leads to new lawsuit

Arthur T. Demoulas filed suit in Suffolk Superior Court. It is the latest legal battle over Market Basket.

WEndy Maeda/Globe Staff

Arthur T. Demoulas filed suit in Suffolk Superior Court. It is the latest legal battle over Market Basket.

The president of Market Basket filed a lawsuit Thursday challenging the authority of the company’s chairman and asked a judge to put on hold a recent decision to distribute $300 million to shareholders.

The suit filed by Arthur T. Demoulas in Suffolk Superior Court is the latest salvo in a long-running family war over the management of the private Massachusetts-based company. He argues that interim board chairman Keith O. Cowan, a former executive at Sprint, is biased in favor of Demoulas’s opponents and should not be allowed to remain in his post.

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The complaint asks the court to set aside a recent board vote to make a $300 million distribution to the company’s nine shareholders until a ruling is made on whether Cowan can retain his position.

Cowan could not be reached for comment Thursday. An attorney and public relations firm that have represented his side of the dispute did not return phone calls.

Although the lawsuit focuses on Cowan, it is really aimed at Demoulas family members who oppose Arthur T. Demoulas and have been battling with him for control and management of the company for more than 20 years.

A legal fight in the 1990s ended in the company being split between opposing sides of the Demoulas family and required that its board include representative of both sides as well as independent directors.

In the latest legal twist, Arthur T. Demoulas is asserting that Cowan, though recently elected as an independent director, is acting on behalf of his chief rival in the family, Arthur S. Demoulas. The suit notes that Cowan had previously served on the board as a representative for Arthur S.’s side, arguing he cannot now serve in an independent role.

In recently voting for the $300 million distribution, the suit says, “Cowan voted as he was told by Arthur S. Demoulas and did not exercise disinterested and independent business judgement.”

Arthur S. Demoulas has previously advocated for greater distributions to shareholders and sought Arthur T.’s removal as president. Though the board has not voted on Arthur T.’s removal, it recently voted to hire the executive search firm Spencer Stuart.

Despite the constant infighting, Market Basket has remained a successful company with dozens of stores throughout New England. Last year, the company recorded net income of $217 million on $4 billion in revenue.

Casey Ross can be reached at cross@globe.com.
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