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Jury selected in Marsh civil trial

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Don Marsh will have a lot of explaining to do about millions of dollars in expenses he charged to Marsh Supermarkets during a two-week civil trial that got underway Monday morning.

Court proceedings began in downtown Indianapolis with U.S. Judge Sarah Evans Barker giving court instructions to a pool of about 50 potential jurors. Attorneys selected five men and four women from the pool for the nine-person jury before breaking for lunch.

The locally based grocery chain alleges that Marsh tapped corporate coffers to pay more than $3 million in personal expenses from at least the late 1980s until new owners ousted him in 2006.

Among the examples cited in court records:

• $1,000 for two pairs of boots he gave to a hunting trip guide and the guide’s girlfriend.

• $5,960 for four Indianapolis Colts season tickets.

• Use of the corporate plane to fly to the Dominican Republic with three female employees, one of their sisters and his driver on a trip that included a $325 dinner and a $295 round of golf.

• Rent for a mistress’s New York apartment.

Attorneys for Don Marsh defend the expenses, saying they were within the boundaries of his employment contract. And they say his extensive travels were justified to promote his company and stay on top of the trends in food retailing.

Marsh, 74, was one of Indiana’s highest-profile executives for decades. He served as CEO for 38 years and frequently appeared in the company’s TV advertising.

His attorneys aim to persuade the jury it’s the company that did wrong. After Marsh Supermarkets sued him in federal court in 2009, he countersued, asserting the company improperly halted his post-retirement payouts in 2008 and owes him millions of dollars.

Attorneys for the two sides have lined up dozens of witnesses and hundreds of pieces of evidence. Among those expected to testify are executives and board members of the company before its 2006 sale to Sun Capital Partners. Sun, which paid $88 million in cash and assumed $237 million debt, slashed expenses and installed a new board after the deal closed.

David Herzog, a partner at Faegre Baker Daniels representing the company, declined to comment. But in briefs filed over the past three years, the company paints Don Marsh as a gallivanting, philandering businessman who liberally used corporate money at his leisure.

“Mr. Marsh had a fiduciary duty to deal with the Company fairly, openly, and honestly,” one recent filing says. “He breached that duty over and over. He committed deception by misrepresenting information regarding his expenses and use of the Company plane.”

In all, the company is seeking $7 million — $3.4 million in improper expenses, $2 million in payments he received after leaving the company, and $1.6 million for fees and reimbursement for an IRS penalty stemming from his questionable expenditures.

Don Marsh’s attorneys argue he legitimately spent corporate money as he traveled for business and promoted the company.

“First and foremost, Don didn’t commit fraud or breach his contract,” said Andrew McNeil, a partner at Bose McKinney & Evans.

In addition, McNeil argues the company violated federal labor law by dodging the severance pay mandated in the CEO’s employment contract.

He argues the company waived its right to cancel retirement payouts when it terminated him “without cause” in September 2006.

While the parties can argue the facts surrounding Don Marsh’s expenses, it’s beyond debate that the company must honor the employment agreement, McNeil said.

“No matter what the facts are, we still win because of these legal issues,” he said.

Spending spree

Company documents filed in court show that, as Marsh prepped itself for sale in 2005, board members began questioning the CEO’s expenses and launched an internal investigation.

After they started to learn the extent of reimbursements, “I went ballistic,” board member Steve Huse said in a deposition filed in court.

The company estimates in its lawsuit that Marsh took 115 trips from 2000 to 2006 and his wife went on at least 100. Grocery vendors, such as Coca-Cola and Tyson, often covered part of the bill for trips, which included sojourns to the Olympics, Wimbledon and Alaska for hunting.

Marsh justified the expenses by noting his involvement with groups such as the Paris-based Centre for Food Trade and Industry, where he served as president.

Marsh Supermarkets says it initially didn’t fire Don Marsh because its investigation was in progress when the sale to Sun closed. The company argues it wasn’t until later that it concluded he had breached his employment agreement, triggering the halt to severance payments.

What to expect

The jury is expected to hear testimony from almost 40 witnesses. They range from company administrative assistants and board members to Don Marsh and Don’s son David, who worked under his father as president.

Marsh Supermarkets launched a legal assault on David in 2006 after he sued the company, alleging it shorted him $102,000 on his $2.1 million severance package. The company shot back that he had used the company “as his personal checkbook,” had expensed family trips to Africa and New Zealand, and must repay more than $750,000. The parties reached a confidential settlement in 2007.

David Marsh has gone to great lengths — to no avail — to avoid assisting the company with its case against Don Marsh.

David’s attorney, Linda Cooley, a partner at Krieg DeVault, persuaded a federal magistrate in 2011 that the company should not be allowed to depose David because it had an “inside advantage.” However, the magistrate reversed himself later that year.

Then, in late 2012, Marsh left the continental United States.

Attorneys tried to deliver a subpoena for his trial appearance to his Fishers home 19 times starting in November but learned he was in Hawaii and did not plan to return until at least March.

Herzog, of Faegre Baker Daniels, claimed Marsh was trying to avoid the subpoena, and sought a bench warrant that would have brought him back to the mainland.

A warrant proved not to be necessary because the day after attorneys applied for one, Marsh agreed to come back to Indiana to testify in person under the condition the company paid for his air fare.

Cooley said in an email to IBJ her client still intends to appear during the trial.

She denied Herzog’s claim that David Marsh was trying to avoid a subpoena.

“David and his family have been, and still are, in Hawaii on a trip and his absence from Indiana had nothing to do with the Marsh Supermarkets v. Don Marsh trial,” she said.•
 

The IBJ is a sister publication of Indiana Lawyer.

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  1. Ah yes... Echoes of 1963 as a ghostly George Wallace makes his stand at the Schoolhouse door. We now know about the stand of personal belief over service to all constituents at the Carter County Clerk door. The results are the same, bigotry unable to follow the directions of the courts and the courts win. Interesting to watch the personal belief take a back seat rather than resign from a perception of local power to make the statement.

  2. An oath of office, does it override the conscience? That is the defense of overall soldier who violates higher laws, isnt it? "I was just following orders" and "I swore an oath of loyalty to der Fuhrer" etc. So this is an interesting case of swearing a false oath and then knowing that it was wrong and doing the right thing. Maybe they should chop her head off too like the "king's good servant-- but God's first" like St Thomas More. ...... We wont hold our breath waiting for the aclu or other "civil liberterians" to come to her defense since they are all arrayed on the gay side, to a man or should I say to a man and womyn?

  3. Perhaps we should also convene a panel of independent anthropological experts to study the issues surrounding this little-known branch of human sacrifice?

  4. I'm going to court the beginning of Oct. 2015 to establish visitation and request my daughters visits while she is in jail. I raised my grandchild for the first two and half years. She was born out of wedlock and the father and his adopted mother wantwd her aborted, they went as far as sueing my daughter for abortion money back 5mo. After my grandchild was born. Now because of depression and drug abuse my daughter lost custody 2 and a half years ago. Everyting went wrong in court when i went for custody my lawyer was thrown out and a replacment could only stay 45 min. The judge would not allow a postponement. So the father won. Now he is aleinating me and my daughter. No matter the amount of time spent getting help for my daughter and her doing better he runs her in the ground to the point of suicide because he wants her to be in a relationship with him. It is a sick game of using my grandchild as a pawn to make my daughter suffer for not wanting to be with him. I became the intervener in the case when my daughter first got into trouble. Because of this they gave me her visitation. Im hoping to get it again there is questions of abuse on his part and I want to make sure my grandchild is doing alright. I really dont understand how the parents have rights to walk in and do whatever they want when the refuse to stand up and raise the child at first . Why should it take two and a half years to decide you want to raise your child.The father used me so he could finish college get a job and stop paying support by getting custody. Support he was paying my daughter that I never saw.

  5. Pence said when he ordered the investigation that Indiana residents should be troubled by the allegations after the video went viral. Planned Parenthood has asked the government s top health scientists at the National Institutes of Health to convene a panel of independent experts to study the issues surrounding the little-known branch of medicine.

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