A lawyer for Market Basket’s board has issued a stern warning to sidelined chief executive Arthur T. Demoulas, accusing him of orchestrating a PR campaign to ratchet up “public vitriol” against the directors and the company’s majority shareholders, Demoulas’s three sisters.
The board put Demoulas and several allies and family members on paid administrative leave in late May while its law firm Quinn Emanuel investigates rumors that he might have been planning a work disruption to protect his job. Demoulas and the board had been at odds, with the board saying the CEO needed to share more budget information and bring more managers to its meetings. The investigation is close to completion and the two sides are planning to meet on Sept. 3 for a mediation session.
On Friday, Quinn Emanuel partner Harvey Wolkoff sent a letter to Andrew Liazos, an attorney who represents Demoulas, accusing Demoulas of coordinating efforts to paint the board and, to some extent, his three sisters in a bad light. The sisters together own 60 percent of Demoulas Super Markets, the formal name of the 90-store New England chain, and Demoulas owns 28 percent.
Wolkoff’s letter included a terse warning, saying Demoulas “should be made aware that the chances of any successful outcome from his perspective at a mediation are substantially diminishing with each egregious public act that my clients believe he is behind.” In a related move, Quinn Emanuel filed a complaint on Monday in Middlesex Superior Court on behalf of Market Basket, seeking a court order to block two recently ousted lieutenants of Demoulas from visiting any of the stores.
On Saturday, Justine Griffin of PR firm Rasky Partners issued a rebuttal to Wolkoff’s letter, saying Demoulas remains committed to behaving in a dignified manner even though it’s become clear that if anyone speaks out against the board, they risk getting verbally attacked by a board member or by Wolkoff. She noted that the public sentiment is clearly behind Demoulas, not the board.
Wolkoff cited examples of a PR campaign against the board: a critical letter written by Bill Shea, the sole board member aligned with Demoulas; a guest column in the Globe by former John Hancock chief executive David D’Alessandro calling for a boycott; and a letter to the board complaining about harassment and intimidation at the Tewksbury headquarters and asking for Demoulas and his lieutenants to be reinstated, penned by longtime manager Valerie Polito.
Wolkoff also pointed to Demoulas’ lieutenants Tom Gordon and Joe Schmidt, who have spoken publicly about their frustration with the board, visited two stores after they were told not to after being put on paid leave, and were ultimately fired last month. In the letter, Wolkoff said Gordon and Schmidt have visited at least 18 Market Basket stores in recent days, and Schmidt entered the headquarters last week.
(Griffin said Gordon and Schmidt, longtime executives, visited stores to check in on their colleagues and give reassurance amid the turmoil, and Schmidt visited the corporate office on Thursday to return his company car and talk to a few employees.)
On Monday, Wolkoff’s firm filed a complaint against Gordon and Schmidt, asking for an injunction to block them from visiting Market Basket properties. By that point, Quinn Emanuel’s stated count of the two former executives’ post-firing property visits had risen to at least 26. The complaint includes several photos of Schmidt visiting the corporate office at around 6 p.m. last Thursday. A court hearing has been scheduled for this Thursday.
Wolkoff said he believes many of these actions are the precursor to a store walkout like the one that took place in 2014 after a cousin of Demoulas temporarily ousted him. Demoulas was later reinstated because he and his sisters were able to buy out their cousin’s side of the family.
Polito’s letter to the Market Basket board appeared to be the final straw for Wolkoff. He sent his note the day after Polito spoke about the letter to media outlets on Thursday.
“It’s clear to Market Basket that Ms. Polito’s letter was designed to be part of Arthur’s slash-and-burn media campaign,” Wolkoff said in an interview. “Mr. Demoulas is engaging and continuing to engage in the very conduct that has led to his suspension in the first place. Rather than do the responsible thing as a CEO, which would be to cooperate with the board and do the things that they’ve asked him to do, ... he thinks the best course is to stir up trouble.”
In her statement, Griffin said no one at her PR firm participated in the writing or editing of any of the documents Wolkoff cited.
“Market Basket has a longstanding policy of its associates being encouraged to speak their minds,” Griffin said. “The board is doing the exact opposite, silencing employees as their lawyers conduct their so-called ‘independent’ investigation.”
Griffin questioned that independence by noting that the investigation is being conducted by Wolkoff’s firm.
“The only people scorching the earth here are the attorneys” at Quinn Emanuel and the three board members who sidelined Demoulas, Griffin added.
Griffin noted that in Polito’s case, she went to the board to report “on alarming aspects of the current environment at headquarters,” and was informed that a board member would meet with her several weeks in the future, rather than looking into the issues immediately. She went public “in frustration and concern,” and was publicly criticized by a board member and by Wolkoff for doing so, Griffin said. Likewise, Griffin said four of her colleagues who stood by Polito at a press conference on Friday were also criticized by Wolkoff.
“Exactly how many Market Basket associates have to come forward to voice their concerns about real workplace experiences of harassment and a hostile work environment before the Board listens to them?” Griffin said.
Wolkoff said that the board and Demoulas’s sisters are committed to their employees and their customers. They plan to celebrate the opening of a new store in North Andover later this month, and then announce something to reward the company’s employees, of which there are more than 30,000.
In the interview, Wolkoff said it was important to get his side’s concerns in writing to Demoulas’s lawyer before the mediation session takes place in Delaware next month.
“If you want the board and the company’s majority shareholders to reach a resolution that’s favorable to everyone, including Arthur, probably the best course is not to have your people so sharply attack them,” Wolkoff said. “People can talk to the press all they want but if you’re going to sharply criticize, … don’t expect them to be in a good mood when we go into mediation."
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.