Combatants in grocery feud are finally making peace

July 12, 2014

It’s been eight long years since the private equity firm Sun Capital Partners closed on the purchase of Marsh Supermarkets Inc. and dismissed the company’s CEO of 38 years, Don Marsh.

The dumping via a terse letter—ironically on Marsh letterhead bearing the company’s slogan at the time, “We value you”—was the first salvo in a falling-out between Sun and the Marsh family that triggered years of litigation over what the company contends were outrageous C-suite expense-account abuses.

Finally, the legal fireworks are coming to an end, for once without brickbats.

Attorneys for the grocery chain and Don Marsh have quietly reached a settlement on the final issue: how much each side owes the other for legal fees on claims on which they prevailed. Each had argued since last fall the other owed $1.7 million.

Terms of the deal weren’t disclosed.

Each side, of course, wanted to categorize fees in as favorable a way as possible, blunting the tab of litigation they’d been waging ferociously since 2009. Marsh Supermarkets said its total legal tab had surpassed $2.7 million.

When all was said and done, the grocery chain scored a clear victory if one of its goals was to embarrass Don Marsh, now 76, who for decades was one of central Indiana’s highest-profile executives.

In a two-week trial early last year, the company’s attorney, David Herzog of Faegre Baker Daniels, painstakingly quizzed Don Marsh about company-paid trips to innumerable destinations—from France, England and Ireland to New Orleans and Los Angeles—and about trips, gifts and payments to a string of mistresses.

From a legal standpoint, though, the outcome was closer to a wash. A jury in February 2013 found Don Marsh guilty of breach of contract and fraud and ordered him to pay $2.2 million.

But in July, Judge Sarah Evans Barker dealt Marsh Supermarkets a setback, ruling that Don Marsh was entitled to keep nearly $2.2 million in severance the company contended must be repaid.

Many of the arguments presented by both sides involved implications of the Employee Retirement Income Security Act, or ERISA, a federal law governing pension plans.

marsh-don-mug Marsh

Barker concluded that ERISA provisions made the $2.2 million in severance paid to Marsh “vested and nonforfeitable”—a reality she said the company has to live with even though Don Marsh “behaved in a manner unbecoming of a CEO.”

State in IPO lull

The IPO market is rocking, but Indiana so far is missing out.

In the first half of 2014, 209 companies worldwide staged initial public offerings, raising $90.6 billion, according to the research firm Renaissance Capital. In the same period a year earlier, 115 companies raised $58.9 billion.

Renaissance predicts that IPO issuance will remain active through the end of this year.

The window of opportunity is significant because “frankly, over time, the IPO window is closed more than it is open,” said David Millard, a partner at Barnes & Thornburg.

The last two Indiana firms to go public were Indianapolis-based Stonegate Mortgage Corp. and Evansville-based lender Springleaf Holdings last October.

Warsaw-based prosthetics-maker Biomet Inc. filed this March to go public, but weeks later ditched that plan in favor of a $13.4 billion sale to cross-town rival Zimmer Holdings Inc.

The number of IPOs in a region can be an indicator of economic vitality. Going public typically infuses firms with tens of millions of dollars in capital they can deploy to bulk up their work forces and accelerate growth.

Indiana tends to have fewer IPO candidates than some parts of the country, so timing is difficult to predict. But the state has numerous firms funded by venture capitalists, who eventually will cash out, and IPOs often are their preferred method.

“I would be surprised if we don’t see more IPOs,” Millard said. “There are companies positioning for that.”

Ad news saps HHGregg

It certainly didn’t calm investors’ nerves to learn that struggling HHGregg Inc. is abruptly ditching its advertising team after barely a year and returning to Fort Lauderdale, Fla.-based Zimmerman Advertising.

The decision to depart Leo Burnett and Spark, both based in Chicago, was announced July 8. Over the next two trading days, HHGregg shares drooped from $9.89 to $9.01, a 9-percent decline.

HHGregg is recasting its product mix to offset plunging sales of consumer electronics, an effort that has dragged on for years.

To no surprise, Zimmerman believes it’s part of the solution.

“HHGregg’s best years are still to come,” Chairman Jordan Zimmerman said in a prepared statement.•


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