A federal court judge this week awarded US Foods a $15 million default judgment in its lawsuit against Boston Market, citing the company’s “bad faith,” “delay tactics” and “willful disregard” for the litigation.
U.S. District Court Judge Manish Shah cited Boston Market’s multiple failures to meet court deadlines to respond to the lawsuit. Shah called the chain’s more recent cooperation with the court “too little, too late” and granted US Foods’ request to rule in its favor and grant it $11.9 million in unpaid bills, late charges, interest, attorneys’ fees and other costs.
“The amount sought in damages is a large sum, but for a company with a national brand identity, it is not disproportionate to the willful disregard defendants have shown for this litigation,” Shah said in an order filed with the court on Monday. “True, since November defendants have complied with the court’s scheduling orders, but that is too little, too late.”
Shah also dismissed Boston Market’s response to US Foods’ lawsuit as well as the counterclaim it filed with the court.
Boston Market owner Jay Pandya said in a text that the company intends to file an appeal. “Boston Market strongly disagrees with the decision of the judge to grant the motion for judgment by default,” he said. “We filed our answer, new matter and counter claim … and have been participating in discovery. We have uploaded a little under 32,000 documents, which appear to be invoices from 2022. Boston Market intends to file an appeal at the appropriate time.”
US Foods sued Boston Market in July, saying that the restaurant chain owed it nearly $11 million in unpaid bills dating back two years. The lawsuit said that the company and agreed to pay $11.6 million in January of last year. But it stopped making payments one month later, ultimately leading the distributor to file its lawsuit.
That action helped shed light on Boston Market’s serious challenges in recent years. The company has been sued more than 140 times, mostly by landlords, vendors, employees and others who say they haven’t been paid for products or services. Unpaid rent led to numerous evictions from locations that has led to numerous closures. As many as 200 of the 300 restaurants Boston Market started with at the beginning of 2023 have closed since then.
(For more on the Boston Market situation, check out The Demise of Boston Market.)
Shortly after that lawsuit was filed, Pandya in an interview blamed the issue on US Foods’ overcharges and said he had no choice but to agree to make payments in January. “If a supplier holds you hostage, you have no choice but to sign an agreement to resolve it,” he said at the time.
Boston Market took months to respond to the lawsuit, however. When it finally did so in December, it echoed the complaints about overcharges but also said that he hadn’t heard of the lawsuit until he received a call “some time in late August or early September.”
The judge in the ruling said that Pandya “intentionally evaded service” of the lawsuit and called his failure to attend to the litigation “purposeful, with no valid excuse for delay.”
“Defendants acted in bad faith to avoid this case,” Shah wrote.
When Boston Market filed its response last month, along with a counterclaim alleging the overcharges, Pandya and his wife filed for personal bankruptcy, including the $10 million US Foods charge as a liability. That case was ultimately dismissed earlier this month after Pandya didn’t provide insurance information on a pair of rental properties.
Shah called that a “delay tactic.” “Pandya’s short-lived detour through bankruptcy court looks to be another delay tactic and a sign that he has no interest in genuinely participating in this litigation,” the judge wrote.
It’s not certain what kind of impact the judgment will have on Boston Market—US Foods have yet to respond to requests for comment. US Foods filed a lawsuit under PACA Trust provisions, federal rules that give sellers of fruits and vegetables priority status in bankruptcies, insolvencies and bill disputes.
The award in the case was initially for $11.9 million but later raised to $15 million.
UPDATE: This story has been updated to include a comment from Boston Market and Jay Pandya. It has also been updated to reflect a change in the award amount.
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