Financing

US Foods is accusing Boston Market of delay tactics

The distributor, which has sued the fast-casual chain for unpaid bills, says it was not informed of its owner’s bankruptcy filing until it heard from media reports.
Boston Market
US Foods is accusing Boston Market of deliberately delaying legal proceedings. | Photo by Jonathan Maze.

US Foods accused Boston Market of delay tactics in a new court filing this week, arguing that the fast-casual chain’s counterclaim to the distributor is “rife with problems, including inappropriate responses to allegations and insufficiently pled affirmative defenses.”

“The deficient nature of these responses suggests that the corporate defendants are merely employing the next phase of their delay strategy designed to avoid payment to US Foods,” the distributor said in a filing. “It is public knowledge that Boston Market is facing significant financial distress.”

In addition, US Foods said that it hadn’t heard about Boston Market owner Jay Pandya’s personal bankruptcy filing until Tuesday, when it heard of it through a news alert. Restaurant Business was first to report the bankruptcy filing this week.

On Wednesday, Pandya filed a notice in the US Foods lawsuit that he filed for bankruptcy last week, noting that it “requires an automatic stay of all proceedings against” him.

US Foods sued Boston Market in July, saying that the company had not paid its bills for distribution. The fast-casual chain did not respond to the lawsuit until last week, prompting the distributor to ask a court for a default judgment and an award of $11.9 million.

Pandya, in his bankruptcy filing, lists US Foods as a creditor, saying the company is owed $10 million. The filing is a personal filing, and not one for Boston Market itself. Boston Market’s ownership is a complex tangle of businesses, with ownership divided into more than two dozen separate LLCs, all of which tie back to Pandya and his family.

Boston Market responded to the US Foods lawsuit last week, four months after the lawsuit was filed. Boston Market’s counterclaim in its response accuses the distributor of overcharging the company for food and for not keeping enough product on hand, which it blames on its closures earlier this year.

(Read here for more on the Boston Market saga.)

Boston Market also said that the delay in the company’s response was minor by legal standards, seven weeks, and blamed a lack of knowledge of the lawsuit and an inability to find a lawyer in the Chicago area. US Foods does not buy that argument.

“The corporate defendants’ contention that they were unable to hire local counsel for more than seven weeks in the Chicago legal market—one of the largest in the country—is simply not credible,” the company said in its filing.

The distributor said that Boston Market “forced US Foods to make extraordinary efforts” to serve Pandya with the lawsuit and “make multiple unnecessary court filings.” Only then did Boston Market “choose to participate in this litigation.”

Boston Market has been sued more than 140 times in federal and various state courts in the more than three years it has been owned by Pandya. Most of those lawsuits are for unpaid bills, filed by everyone from landscapers to landlords. US Foods, as Boston Market’s distributor, is one of the largest such lawsuits.

The company has been evicted from dozens of its locations, including Connecticut and South Florida more recently.

The chain is also under investigation by the U.S. Department of Labor for unpaid wages, overtime and other issues.

Additional lawsuits continue to be filed regularly in various courts by other companies for unpaid bills, including recent lawsuits by a produce company, an employee in Florida and multiple landlords.

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