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Settlement talks set for Don Marsh severance dispute

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Lawyers for Marsh Supermarkets Inc. and its former CEO are set to meet Monday in hopes of finally ending their years-long court battle in which the company already has notched a partial victory.

Following a two-week civil trial last month, a federal jury ordered Don Marsh, 75, to pay the local grocery chain $2.2 million, finding that he used company money to finance global travels and other unnecessary expenses.

Judge Sarah Evans Barker now must rule separately on whether Marsh Supermarkets can recover roughly $2.1 million in severance it has paid to Don Marsh. The original severance agreement called for a $4.2 million payment.

But first the two sides will attempt to settle the severance dispute on their own. According to a recent court document, each side was set to file by noon Friday “a brief confidential settlement statement” outlining their positions.

The settlement conference is set for 8:30 a.m. Monday.

David Herzog, a partner at Faegre Baker Daniels LLP who is representing Marsh Supermarkets, told IBJ in an e-mail that “the company has always been eager to resolve its dispute with Mr. Marsh and looks forward to another opportunity to try.”

Marsh’s lawyer, Andrew McNeil, a partner at Bose McKinney & Evans LLP, declined to comment on the settlement proceedings.

A settlement could be critical for Don Marsh, who could end up owing his former company as much as $4.3 million if he is forced to pay the jury's $2.2 million judgment plus the $2.1 million in severance he’s already received.

After Marsh Supermarkets sued him in federal court in 2009, he countersued, asserting the company improperly halted his post-retirement payouts in 2008 and still owed him about $2.1 million. The jury denied his counterclaim.

Marsh left the company he had led since 1980 following its purchase in September 2006 by Sun Capital Partners, a Florida private equity firm.

Marsh Supermarkets stopped the severance payments after it said an Internal Revenue Service audit found “disallowed deductions” for personal expenses he racked up from April 2004 to September 2006. The company ultimately paid the IRS a $616,000 penalty.

Don Marsh's attorneys insisted his globe-trotting trips were business-related and within the bounds of his employment contract.

The nine-member jury last month found that Don Marsh committed breach of contract and fraud, but stopped short of delivering Marsh Supermarkets a total victory.

Although the grocery chain had asked for $1.6 million to cover expenses and penalties related to the IRS audit, the jury awarded the company half that amount, saying it shared responsibility.

Besides the $2.1 million in severance Marsh Supermarkets also is hoping to recover, the company believes it’s entitled to $1.8 million in life insurance policy premiums paid on Marsh's behalf.

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  • Marsh madness
    Don Marsh knew exactly what he was doing and had no regard for company policy, business ethics, not to mention personal morals. He spent millions on himself and his women and had his fun. It's time for paybacks to the Company he ruled like it was his personal spending account!
  • Good one JB Esq.
    After reading all the inane comments attached to the sequester article, which is just a recycling of spin from Fox or CNN, depending on the viewpoint...these are so much more fun...the commenter on commenter violence here is much more entertaining, and less mean spirited...much better to suggest someone is sheltered, or even suffering from some genetic flaw...
  • Paybacks are #&$%
    A breach of contract (i.e. using the Marsh checkbook for personal expenses) between Don Marsh and Sun Capital would allow for payments to be stopped. The sale of Marsh was a stock sale, not an asset sale, so any legal or tax issues Marsh had prior to the sale would transfer to the new owner (Sun Capital). That is why Sun had to pay the $600,000 IRS penalty and is now trying to recover as much as they can from Don Marsh, which makes complete sense to me.
  • Don't be so naive
    Good question JB. That's why lawyers are dealing with this and you're commenting on this from your Mom's basement.
  • Don and Sun.
    Why should Don not receive all of his severance pay. How is that related to the questionable expense reporting? Also don't understand the need to reimburse Sun. Didn't they buy the company "as is"?

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