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In-N-Out, former VP reach secretive settlement
[May 12, 2006]

In-N-Out, former VP reach secretive settlement


(Orange County Register, The (CA) (KRT) Via Thomson Dialog NewsEdge) May 11--The juicy details stemming from a lawsuit against Irvine's In-N-Out Burger just dried up after a secretive settlement was reached between the burger chain and a former executive.



The lawsuit by Richard Boyd, who was fired as vice president in January, shined a bright light on the closely held chain with allegations of a renegade heiress plotting to seize control of the $450 million dynasty.

Boyd's court filings portrayed Lynsi Martinez, 24, as the spoiled granddaughter of Esther Snyder who sought to break with the chain's regional strategy and bring the fast food eatery's "Double Double" to a national audience.


In-N-Out countersued with claims of embezzlement, corporate deceit and family betrayal on the part of Boyd, a longtime friend of the ailing Snyder.

Both sides denied the others' allegations and were set to face off in a fall trial. But late Wednesday, they suddenly announced an agreement that ended the dispute, and both sides agreed not to talk about it.

"Whether the allegations were true or not, will not be known," said Andra Greene, a litigation partner at Irell & Manella in Newport Beach.

Under the terms of the agreement, Boyd will no longer be involved with the company or the Snyder family trusts, where he served as a co-trustee. Neither side will comment further on the deal, leaving outsiders to speculate whether Boyd walked away in defeat or with a large chunk of money.

Ted Schmidt, who teaches law at the University of Arizona, said the confidentiality agreement could mean In-N-Out shelled out so much money that it didn't want the public to know the amount.

"Or, sometimes it's reverse, where the plaintiff doesn't want someone to know they caved in," he said.

Either way, one thing is clear: Boyd was prepared to air his grievances against In-N-Out, Martinez and other top executives.

In-N-Out failed in a recent hearing to block the videotaped deposition of Esther Snyder, whose testimony was imminent and considered critical to Boyd's Oct. 17 trial. Those events likely spurred this week's settlement, one expert said.

"A trial date has a sobering impact," said Greg Tenhoff, who specializes in corporate employment disputes at Cooley Godward in Palo Alto. "It really means you are now going to submit your dispute to 12 jurors. That tends to make people think long and hard if they want to go through that."

The feud started last fall when In-N-Out launched a probe of the financial activities of Boyd, who rose in the ranks from a company plasterer to a corporate vice president over 30 years.

After settlement talks failed in December, Boyd filed a lawsuit against the chain in January, claiming top leaders and Martinez were pushing for expansion beyond its core market, in direct defiance of President Esther Snyder's wishes.

"They had quite a mud fight going," Tenhoff said.

The suit put the much-guarded In-N-Out into the spotlight and forced leaders to talk openly about their growth strategies. In an exclusive interview with the Register in March, vice president Mark Taylor denied Boyd's accusations, saying the 200-unit chain plans to add about 10 to 12 new restaurants annually over the next five years.

He said new units will remain within the company's core market: California, Arizona and Nevada.

"It's been painful to read stories that In-N-Out will be at every corner," Taylor, who is also Martinez's brother-in-law and a co-trustee to the Snyder trusts, said in the March interview.

Under the settlement, Boyd will no longer serve as a co-trustee. In-N-Out declined to name Boyd's co-trustee replacement. Martinez, who turned 24 last Friday, stands to gain control of the trust when she turns 35. The trusts are valued at $450 million.

Industry experts say that regardless of the allegations, the chain hasn't shown signs of overexpansion.

"If they start to cannibalize their business, they'll quickly know that, and recalibrate," said Richard Martin, managing editor for the industry trade publication Nation's Restaurant News.

Martin said the chain will likely emerge from the Boyd scandal unscathed because consumers have a "cult-like" obsession with its old-fashioned menu of burgers, shakes and fries.

"They aren't just a contrived retro concept. They are right out of a time warp," said Martin. "This (the suit) was a front office intrigue that goes away.

"I see it as back to business, as usual."

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