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Marsh Supermarkets, former CEO spar over attorney fees

Scott Olson
September 12, 2013
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The years-long legal spat between Don Marsh and the company he once led appeared to have concluded this summer, but has now turned to attorney fees and who’s paying the million-dollar bills.

In court documents, attorneys for Marsh and Marsh Supermarkets Inc. each have submitted expenses totaling roughly $1.7 million and are seeking reimbursement from the other. The requests have drawn sharp rebukes from both sides.

“Neither the court nor the company can determine without discovery the extent to which Mr. Marsh’s request is over-inclusive,” lawyers for Marsh Supermarkets wrote in a Sept. 3 court document. “But the fact that it is over-inclusive is apparent on the face of the request.”

The argument over attorney fees marks the latest dispute in the four-year federal court battle in which Don Marsh won a partial victory.

In July, Judge Sarah Evans Barker issued an order allowing him to keep nearly $2.2 million in severance paid by Marsh Supermarkets, which had attempted to recover the payments from its former CEO.

However, Marsh ended up losing nearly the same amount on another issue. Barker's order followed a two-week civil trial in February after which a federal jury ordered Marsh to pay the local grocery chain $2.2 million, finding that he used company money to finance global travels to entertain mistresses and other unnecessary personal expenses.

Many of the arguments presented by both sides involved the Employee Retirement Income Security Act, or ERISA, a federal law governing pension plans. Marsh’s victory on his ERISA claim for his severance also is at the crux of the fight over attorney fees.

Barker found that Marsh can recover attorney fees relating to his ERISA claims. But she also determined that the company can recover fees relating to non-ERISA claims.

Lawyers for Don Marsh argue that because the ERISA- and non-ERISA-related issues flow from the same set of facts presented at trial, “all fees and expenses in this case are ERISA-related.”

Marsh Supermarkets strongly disagrees.

“It was not his prerogative to say, ‘Here is just about everything’ and then leave it to the court and the company to try to determine from his supporting records what was attributable to ERISA and what was not,” company lawyers wrote.

Conversely, Marsh Supermarkets is asking Marsh to pay its $1.7 million attorney bill for costs relating to only the non-ERISA claims that it succeeded in proving during the trial.

Marsh argues that there’s no legal basis to award the company attorney fees.

“The plain language of the ERISA plan leaves the court with a ‘straightforward’ task that is ‘not a matter of discretion’ when it grants Mr. Marsh his attorneys’ fees, litigation expenses, and costs but makes no provision for the company,” Don Marsh’s lawyers wrote in a Sept. 9 court filing.

Marsh Supermarkets is represented by David Herzog of Faegre Baker Daniels and Don Marsh by Andrew McNeil of Bose McKinney & Evans LLP. Both declined to comment on the fee dispute.

The fight between the two erupted in 2009, when Marsh Supermarkets sued Marsh in federal court. He countersued, asserting the company improperly withheld his post-retirement payouts in 2008 and still owed him about $2.1 million.

Marsh left the company he had led since the late 1960s 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.

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

Although the grocery chain asked for $1.6 million to cover expenses and penalties related to the IRS audit, the jury awarded the company half that amount on its fraud claim, saying it shared responsibility. The jury also awarded the company $1.4 million on its breach-of-contract claim.

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  1. So that none are misinformed by my posting wihtout a non de plume here, please allow me to state that I am NOT an Indiana licensed attorney, although I am an Indiana resident approved to practice law and represent clients in Indiana's fed court of Nth Dist and before the 7th circuit. I remain licensed in KS, since 1996, no discipline. This must be clarified since the IN court records will reveal that I did sit for and pass the Indiana bar last February. Yet be not confused by the fact that I was so allowed to be tested .... I am not, to be clear in the service of my duty to be absolutely candid about this, I AM NOT a member of the Indiana bar, and might never be so licensed given my unrepented from errors of thought documented in this opinion, at fn2, which likely supports Mr Smith's initial post in this thread: http://caselaw.findlaw.com/us-7th-circuit/1592921.html

  2. When I served the State of Kansas as Deputy AG over Consumer Protection & Antitrust for four years, supervising 20 special agents and assistant attorneys general (back before the IBLE denied me the right to practice law in Indiana for not having the right stuff and pretty much crushed my legal career) we had a saying around the office: Resist the lure of the ring!!! It was a take off on Tolkiem, the idea that absolute power (I signed investigative subpoenas as a judge would in many other contexts, no need to show probable cause)could corrupt absolutely. We feared that we would overreach constitutional limits if not reminded, over and over, to be mindful to not do so. Our approach in so challenging one another was Madisonian, as the following quotes from the Father of our Constitution reveal: The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse. We are right to take alarm at the first experiment upon our liberties. I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations. Liberty may be endangered by the abuse of liberty, but also by the abuse of power. All men having power ought to be mistrusted. -- James Madison, Federalist Papers and other sources: http://www.constitution.org/jm/jm_quotes.htm RESIST THE LURE OF THE RING ALL YE WITH POLITICAL OR JUDICIAL POWER!

  3. My dear Mr Smith, I respect your opinions and much enjoy your posts here. We do differ on our view of the benefits and viability of the American Experiment in Ordered Liberty. While I do agree that it could be better, and that your points in criticism are well taken, Utopia does indeed mean nowhere. I think Madison, Jefferson, Adams and company got it about as good as it gets in a fallen post-Enlightenment social order. That said, a constitution only protects the citizens if it is followed. We currently have a bevy of public officials and judicial agents who believe that their subjectivism, their personal ideology, their elitist fears and concerns and cause celebs trump the constitutions of our forefathers. This is most troubling. More to follow in the next post on that subject.

  4. Yep I am not Bryan Brown. Bryan you appear to be a bigger believer in the Constitution than I am. Were I still a big believer then I might be using my real name like you. Personally, I am no longer a fan of secularism. I favor the confessional state. In religious mattes, it seems to me that social diversity is chaos and conflict, while uniformity is order and peace.... secularism has been imposed by America on other nations now by force and that has not exactly worked out very well.... I think the American historical experiment with disestablishmentarianism is withering on the vine before our eyes..... Since I do not know if that is OK for an officially licensed lawyer to say, I keep the nom de plume.

  5. I am compelled to announce that I am not posting under any Smith monikers here. That said, the post below does have a certain ring to it that sounds familiar to me: http://www.catholicnewworld.com/cnwonline/2014/0907/cardinal.aspx

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