Family Feud at New England Grocery Chain Plays Out at Trial Over CEO Ouster

A long-running family feud for control of the $8 billion-a-year Market Basket grocery chain in New England is about to take center stage at a trial to determine whether the former chief executive officer was improperly ousted by his three sisters.

Arthur T. Demoulas, the CEO for 17 years, claims he was dumped in a corporate coup orchestrated by his sisters, while board members accused him of bully tactics and keeping them in the dark about decisions. The Tewksbury, Massachusetts-based chain is incorporated in Delaware, where a trial is slated to start Tuesday. It’s the latest in generations of infighting at a company that’s operated stores for more than a century.

Demoulas, known around the Boston area as “Artie T,” owns 28% of Market Basket and is beloved by many workers for offering robust health-care benefits and profit-sharing. In the past, some of his employees have lauded him as “The People’s CEO.” The three sisters aren’t on the board but own 60% of the shares and are critical of their brother’s management style.

A key legal question at trial will be whether board members — all of whom are loyal to the sisters, according to Demoulas — acted in bad faith in May when they put Demoulas and some managers on paid leave, after mediation failed. In September, the board filed a lawsuit in Delaware Chancery Court, claiming Demoulas refused to keep them informed about moves at its 90 stores and sought to stir up a work stoppage over his ouster. In October, Demoulas counter-sued, seeking reinstatement.

“Bad faith can be very hard to prove,” said Charles Elson, a retired University of Delaware professor who founded the school’s Weinberg Center for Corporate Governance. “The case will come down to whether Mr. Demoulas was sent packing because of some personal grudge or whether the board had legitimate reason to remove him in the best interests of the company.”

A spokesperson for Demoulas declined to comment on the trial in Delaware Chancery Court, where cases are decided by a judge rather than a jury. Board members, in a joint statement, said they’re confident the case will show their actions were justified.

“No matter how successful the company is, a CEO cannot operate as a one-man show and keep vital information from the board of directors, who have the job, under Delaware law, of overseeing and managing the affairs of the company,” the board said in its statement. “Mr. Demoulas ran Market Basket like it was his and his alone, even though he was only a minority shareholder, and he kept the other shareholders and the board from any meaningful participation.”

Market Basket stores throughout Massachusetts, New Hampshire and Maine are praised by some patrons for their low prices and happy employees. But the Demoulas family has been mired in dysfunction for generations, starting with the two sons of Athanasios Demoulas, who emigrated from Greece in 1908 and founded the first store in Lowell, Massachusetts, in 1917.

Family members have clashed repeatedly in court over the direction of the company, reportedly prompting fistfights, secret tape recordings and continued bad blood.

“The whole situation is very sad,” Sara Berman, an 89-year-old customer in Cambridge, said in a telephone interview. She says she’s supporting Artie T in the current legal fight.

In 2014, one of Artie T’s cousins, Arthur S Demoulas, sought to push him out of the top job. But a six-week work stoppage by employees in support of the CEO prompted a settlement. As part of the deal, Arthur S agreed to sell his controlling shares to Artie T and his three sisters for more than $1.5 billion. The sisters’ controlling share includes stock owned by other family members held in a trust.

But the peace didn’t last.

The sisters, unhappy with what they claimed was their brother’s dictatorial management style, backed three independent directors and forced out board members who supported him. In its lawsuit, the board contends Demoulas kept them in the dark about budgeting, capital expenses and the search for his successor.

In court filings, the board pointed to Demoulas claiming that “there’s only one boss in the company. There’s not two. There’s not three. There’s not five.” The board also questioned why Demoulas used so-called “burner phones” to communicate with supporters during the current flap.

Demoulas counters the process leading up to his termination “was riddled with conflicts, trickery, deceit,” adding that his sisters had spent years packing the board with loyalists to do their bidding. He added in court filings the board’s probe of his alleged misdeeds was intended “to justify his improper termination, which was preordained by the sisters.”

The case is DMS Hold Co. v. Arthur T. Demoulas, 2025-1020, Delaware Chancery Court (Wilmington)