The Boston business litigation that the Upper Crust pizza chain has become embroiled in appears to have more layers than a supreme.
Boston business lawyers have been closely following the case, which involves not only deep contention and division among owners, but also a federal investigation for possible violation of labor practices.
This dispute is a clear example of why the process of small business formation in Boston requires an experienced attorney. When everyone’s roles and responsibilities are clearly spelled out in corporate contracts, there is less of an issue later if those rules are violated.
This suit and counterclaim, both filed in the Suffolk Superior Court, pits the founder of the upscale pizza chain on one side and two co-owners on the other.
According to The Boston Globe, the two co-owners filed suit against the founder back in April. Those accusations included racking up some $750,000 worth of personal charges to the company’s account. One of those purchases included small airplane. They also say that he improperly used corporate checks to make a down payment on his personal home and falsely claimed that vacations to Nantucket and the Cayman Islands were business ventures. Additionally, they claim the founder’s wife was placed on the payroll, despite the fact that she was in no way employed at the company.
They contend that the founder’s spending was reckless and endangered the company’s chances at viability at a time when it could least afford it – as it was being investigated for violation of federal labor laws.
The co-owners are requesting that the court leverage its power to force the founder to give up his stake in the business, which is roughly 45 percent, as well as all the related businesses. The co-owners currently hold 40 percent and 15 percent stake, respectively.
Also named in the suit are the founder’s wife, who the co-owners claim wrongfully accepted nearly $30,000 in paychecks from the company that she did not earn, and the former chief financial officer at the company, who is accused of illegally transferring funds to the founder.
While the founder has been placed on leave from the company, he has filed a counterclaim saying the two co-owners illegally seized control of the company and have harmed it, possibly irreparably, with their own lavish trips to casinos and island resorts.
Both sides say the other is lying.
Amid all of this is the ongoing investigation by the U.S. Department of Labor, following civil litigation that has been filed by several former employees who allege wage violations and mistreatment.
What’s more, the company owes roughly $150,000 in meals taxes that weren’t paid for 10 of its locations.
The company is reportedly looking for a settlement agreement with regard to the civil cases, though nothing has been formally announced.
The co-owners say that while the founder ripped off approximately $1 million, they each had to pour their own money – as well as some borrowed from relatives – to save the company from being forced to shutter its doors. It’s already had to close the location near Boston University just recently.
A Boston business law firm, The Brown Law Firm, LLC, has offices in Belmont and Boston. For a free and confidential consultation, call 617-489-0817 or contact us through this website.
Deep split at Upper Crust, By Jenn Abelson, The Boston Globe