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August 11, 2014

Patrick: Market Basket situation ‘out of hand’

As the battle continues between the factions of the family that own Market Basket, a published report said the supermarket chain has lost tens of millions of dollars following a walkout by employees loyal to fired CEO Arthur T. Demoulas.

On Friday, Gov. Deval Patrick, who had been reluctant to insert himself into the corporate power struggle, took the unexpected step of writing to the board of directors urging them to resolve the dispute that has caused thousands of workers to walk off the job.

Describing the situation as "out of hand," Patrick offered to help mediate a resolution, but said he would not choose between Arthur T. and Arthur S. Demoulas, the feuding cousins at the center of the dispute.

"By any measure, the disruption that followed your recent change in CEO has gotten out of hand, and I am writing to urge you to find a prompt resolution," Patrick wrote to the seven directors, including Arthur S.

Market Basket has 71 stores, seven of them in Central Massachusetts.
The company has lost tens of millions of dollars in the past six weeks, and Arthur T. Demoulas said Sunday that negotiations on his offer to buy the chain from rival family members are continuing, but he accused those relatives of countering his proposal with “onerous” terms that are blocking completion of a deal, according to a report posted today on BostonGlobe.com.
Demoulas made that claim in the latest of what has become a battle of press statements waged by either side of the family, the report said. Through a spokeswoman, Arthur T. Demoulas said he has not lowered the amount of his initial bid to buy the shares of his family members, the report said.


Hundreds of workers continue to refuse to show up to work until Arthur T. is reinstated as CEO. During the worker action, shelves in the supermarket's stores have gone empty with deliveries of perishable products occurring sporadically, if at all, and loyal customers attracted to the supermarket's low prices have been forced to shop elsewhere.

Last week, many part-time employees had their hours cut back or eliminated in response to the low customer volume and Attorney General Martha Coakley opened a hotline to respond to a high volume of questions from workers about their rights.

"I do not express a view about who the CEO of Market Basket should be. I do not believe that is the appropriate role of government or a governor, although I have been criticized by some for that view. However, I also believe that your failure to resolve this matter is not only hurting the company's brand and business, but also many innocent and relatively powerless workers whose livelihoods depend on you," Patrick wrote to the  board.

While the governor has assiduously sought to avoid choosing sides in the dispute, he recently wrote to a constituent who had contacted his office about the situation expressing "great respect" for Arthur T. Demoulas.

"I have great respect for the former CEO and am awed by the relationship he has built with his colleagues. Surely, the board must see, through the actions of Market Basket workers, that his presence adds value. But, like it or not, government has no power to declare that a private company should choose one CEO over another," Patrick wrote.

The constituent response letter was provided to State House News Service in response to a question about First Lady Diane Patrick's law firm Ropes & Gray and its involvement with the Market Basket ownership fight.

In the letter, the governor addresses the question of whether he has been reluctant to become involved because of a conflict of interest with his wife's law firm, where Diane Patrick is a co-managing partner and labor attorney.

"Frankly, until someone raised that claim, I didn't even know my wife's firm had any involvement with the company. Her firm's clients have no bearing on my decisions and never have," Patrick wrote.

The governor goes on to say that Ropes & Gray does not represent the company, but has done work for a board committee.

A spokesman for Ropes & Gray did not respond to a call from State House News Service seeking clarification on the firm's business relationship with Market Basket.

The governor, in the constituent letter, also rebutted claims he said he has heard that his restraint over Market Basket was a political calculation. "I am not running for anything, and have a strong track record that demonstrates political considerations have never restrained me from my conviction," he said.

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