A vice president and board member at Irvine-based In-N-Out Burgers Inc. claims that the hamburger chain’s top management conspired to oust him as part of a broader plan to take control of the company from cofounder Esther Snyder.
The executive, Richard Boyd, claimed in a lawsuit that he is co-trustee of two trusts holding the majority of the company’s shares.
The trusts will shift control during the next 12 years to Snyder’s sole heir, her 23-year-old granddaughter, Lynsi Martinez.
Boyd alleged that Martinez is trying to move up the succession.
The suit was dismissed at Boyd’s request on Dec. 9, two days after being filed in Los Angeles Superior Court. Settlement talks were ongoing, said Boyd’s attorney, Philip Heller of Fagelbaum & Heller LLP, in a statement.
But Heller left open the possibility that the suit might be refiled at a later date. He declined further comment.
Court papers reveal an internal struggle within In-N-Out Burgers, a 57-year-old private company known for its simple menu and cult following.
In-N-Out has been managed in recent years by a group of longtime senior executives and Snyder, now 86.
“(The defendants) believe that inaccurate statements and accusations have been made and are regrettable,” said Arnold Wensinger, the company’s general counsel, in a statement on behalf of In-N-Out and its senior executives who were defendants in the suit. “We are pleased that the lawsuit was dismissed.”
Founded in 1948 by Harry and Esther Snyder, In-N-Out opened its first restaurant in Baldwin Park, which is home to its museum, university and some executive offices.
Since then, In-N-Out has steadily added restaurants and now has 202, according to its Web site. The company has about $400 million in yearly sales.
In 1976, Harry Snyder died of cancer. Management fell to the couple’s younger son, then-24-year-old Richard Snyder, who expanded In-N-Out to 93 stores. He was killed in a plane crash near John Wayne Airport in 1993.
The eldest son, H. Guy Snyder, took over and further expanded the number of units, including locations in Arizona and Nevada. He died in 1999 from an overdose of painkillers.
After his death, Esther Snyder became president of the company. Martinez is the only child of the Snyder brothers.
In the suit, Boyd claimed that around the time of H. Guy Snyder’s death he became co-trustee to two trusts created in 1989 that held the majority of company stock. In that role, Boyd had voting control over half the shares. He also is trustee of a third trust established under H. Guy Snyder’s name.
The first two trusts outline a plan of succession under which control of the company would be passed gradually to Martinez.
Now a minority shareholder, Martinez would get one-third of the shares of both trusts when she reached the age of 25, one half at 30 and the rest by 35, the suit said.
If Martinez died before reaching those ages, control of the company would go to Esther Snyder’s siblings, nieces and nephews, but not to Martinez’s family, which includes her husband, mother and two half-sisters.
In the suit, Boyd claimed that Martinez and several top executives at In-N-Out have tried to effectively take control,against the Snyder family’s wishes,by forcing him to resign as co-trustee.
Boyd said that if Martinez were successful, he would be replaced as co-trustee by her brother-in-law, Shawn Prince, who was not a defendant in the case. The other co-trustee is Mark Taylor, another brother-in-law of Martinez.
According to the suit, Taylor has said he wants to become chief executive of In-N-Out and that Esther Snyder, who is “elderly and in poor health,” should be placed in a retirement home.
Last year, Taylor and Roger Kotch, vice president of finance, asked Boyd to resign as co-trustee, but remain as vice president of real estate and development, according to the suit. He refused.
When Taylor relayed Boyd’s refusal to Martinez, she is said to have replied, “Doesn’t that green-eyed monster know what the Snyder family wants?” according to the suit.
Calls to Martinez and Taylor, both individual defendants in the suit, were not returned. Kotch is not a defendant in the suit.
Afterward, Taylor and Kotch excluded him from management meetings and told other employees that Boyd was a “thief and unethical,” according to the suit. They hired an outside forensic accountant to investigate the finances of his department.
By September, Taylor, Kotch and a human resources executive gave Boyd written notice that the company would not renew his employment contract, the suit said. The next month, Taylor gave Boyd a notice about an upcoming board meeting to end his employment contract.
Boyd since has been unable to obtain company documents, keys, access codes and security clearances, according to court papers. He had been seeking an undisclosed amount of damages, renewal of his employment agreement, corporate documents and security clearances.
Bronstad is a staff reporter with the Los Angeles Business Journal.
