Lawsuit Trouble on the In-n-Out Horizon
Sat, 01/7/06 5:53 PM
cut and paste from the LA Times website...
In-N-Out Lawsuit Exposes Family Rift
By Ronald D. White, Times Staff Writer
In-N-Out Burger Inc., the Irvine company known for its Double-Double and its customers' intense devotion, is embroiled in a family feud, according to a lawsuit.
Richard Boyd, In-N-Out's vice president and a board member, has accused 23-year-old heir Lynsi Martinez and others of trying to accelerate her takeover of the popular family-owned burger chain.
Boyd contends that Martinez and allied corporate executives have attempted to force out Esther L. Snyder, the family matriarch, company president and a board member, who is 86 and in poor health, according to a lawsuit filed Thursday in Los Angeles County Superior Court. Martinez is the only grandchild of Snyder, who opened the first drive-through In-N-Out stand in 1948 with husband Harry Snyder.
The lawsuit reads like a corporate soap opera in which Boyd, a longtime employee and co-trustee of nearly two-thirds of the privately held company's stock, is the lone impediment to an alleged attempt by Martinez to engineer a coup and install top management that would expand the chain too quickly. Boyd also accused Martinez, In-N-Out Vice President Mark Taylor and others of attempting to wrongly fire Boyd from In-N-Out and his trustee positions.
Taylor, described as the husband of Martinez's half sister, is accused in the suit of aggressively pushing the company into new markets "without regard to INO's ability to serve those markets."
In-N-Out General Counsel Arnold Wensinger said in a statement that the lawsuit "contains numerous false allegations and inaccuracies." Company executives are disappointed because "we believed we were working toward a mutually agreeable parting of the ways," he said.
Boyd, vice president of real estate and development, filed a similar lawsuit early last month. It was dismissed a few days later amid settlement talks. Although the two sides are actively involved in settlement negotiations, Boyd's attorney Philip Heller said, the lawsuit was refiled.
Martinez and Taylor couldn't be reached for comment.
In-N-Out has grown from a single drive-through in Baldwin Park to 202 restaurants in California, Arizona and Nevada. Harry Snyder died in 1976, and his son Richard took over. He died in a plane crash in 1993 and his older brother, Guy, became president. Guy died in 1999 from a painkiller overdose.
Through it all, Esther Snyder, a onetime bookkeeper, remained deeply involved in day-to-day operations. But in recent years company executives have "marginalized" Snyder, who told Boyd that they "only want me dead," according to the lawsuit.
In-N-Out's burgers, fries and milkshakes attract a cult-like following. When the company's first outlet in northern Nevada opened in 2004, customers waited 90 minutes to order from the simple 1950s-era menu.
Its celebrity customers include actress Mischa Barton, a star of Fox's "The OC," and Vince Young, quarterback of the NCAA champion University of Texas Longhorns. Young has claimed that many of his 233 pounds could be traced to In-N-Out, despite the fact that there are no In-N-Out restaurants anywhere near his native Houston.
Martinez, who owns almost 25% of the company's stock, would inherit about one-third of the remaining shares on her 25th birthday, according to the court papers. She would receive the rest in two blocks on her 30th and 35th birthdays.
Boyd's lawsuit portrays Martinez as unwilling to wait. In the alleged effort to force Boyd out, the court papers claim that In-N-Out employees were threatened "with adverse employment actions and criminal penalties if they refused to state that Boyd had engaged in criminal acts as the INO vice president of real estate and development."
The lawsuit also claims that vendors, suppliers and employees are forced "to perform work and improvements on the properties of Martinez, Taylor and their family members … at reduced compensation, without any compensation, or by having [In-N-Out] pay for the services and products used."
The lawsuit seeks unspecified monetary damages and to preserve the intent of the trusts.