The board of directors at Market Basket has filed a detailed complaint against its former CEO, Arthur T. Demoulas, following his controversial dismissal. The 35-page complaint, submitted to the Chancery Court in Delaware, outlines allegations of misconduct, bullying, and a refusal to cooperate with board directives. This legal action coincided with a mediation session that took place last week, aimed at resolving ongoing disputes within the company.
The complaint, filed by Demoulas Supermarkets Inc. alongside board members Steven Collins, Michael Keyes, and Chair Jay Hachigian, claims that Demoulas had a longstanding pattern of ignoring board oversight. It states that he exercised “unfettered discretion” over significant company decisions while actively resisting board efforts to maintain proper governance.
According to the board, Demoulas’s approach was marked by a history of what they describe as “bullying tactics.” The complaint noted, “After joining the Board, the Plaintiff Directors decided to depart from the path of the prior Board members, who either had capitulated to Mr. Demoulas’s bullying tactics or, like the recently removed fourth Board Member Bill Shea, willingly did Mr. Demoulas’s bidding.” This indicates a shift in leadership dynamics and a commitment to enforce accountability.
The board highlighted specific incidents of Demoulas’s defiance. The complaint asserts that he failed to provide an annual budget, did not seek board input on significant capital expenditures, and even barred board members from entering the Market Basket headquarters in Tewksbury, Massachusetts. Board members were forced to hold meetings at a local hotel, a situation that underscores the tension between Demoulas and the board.
Demoulas’s alleged refusal to cooperate extended to succession planning. The complaint claims he “hijacked the process” by insisting on appointing his children as successors without allowing the board to evaluate their qualifications. This unilateral decision-making was framed by the board as a disregard for their fiduciary responsibilities.
Tensions escalated significantly after Demoulas and several of his allies were suspended on May 28, 2025. The board accused him of leading a “scorched-earth campaign” to undermine company operations and threaten employees into loyalty. The complaint alleges that Demoulas orchestrated a media campaign through former executives who had been dismissed for misconduct, including Joseph Schmidt and Tom Gordon. Their actions included unauthorized visits to Market Basket stores to rally support against the board.
Additionally, the complaint cited a Boston Globe op-ed advocating for a boycott of the company, which it claims was influenced by Demoulas. The board noted, “Lest there be any doubt about Mr. Demoulas’s role in these activities, he could have intervened to halt the media attacks. Instead, he supported his lieutenants and sought to vilify the board.”
Demoulas has a history of contentious leadership at Market Basket. In 2014, he was ousted, leading to widespread employee walkouts and customer boycotts. He was reinstated after a $1.6 billion buyout from family members. The complaint indicates that the board had previously attempted to professionalize its operations and ensure independent oversight of the company, a goal that has faced significant challenges under Demoulas’s leadership.
The board’s complaint concludes with a request for a declaration that Demoulas’s termination was valid, emphasizing that his behavior was contrary to the best interests of Market Basket and its stakeholders. The future of this legal battle remains uncertain, as it is unclear whether Demoulas will file a countersuit.
As the situation develops, Market Basket’s leadership transition and the company’s operational integrity hang in the balance, with both the board and Demoulas poised for a significant legal showdown.