In-N-Out Burger (28 page)

 

By the fall of 2005, the atmosphere within the company's executive ranks had grown perceptively tense. The company initiated an internal investigation—as a result of the inquiry, In-N-Out claimed that Boyd, with twenty years of company service under his belt, had allowed construction costs for new stores to escalate. It also maintained that he favored one contractor, Michael Anthony Companies, with uncompetitive bids. On September 16, 2005, Boyd was given a notice of non-renewal of his employment, signed by Esther Snyder. When Boyd showed Esther the notice, according to court filings, she said that she didn't recognize it. She did, however, recall that Taylor had brought a document to her house for her to sign a day earlier without explaining what it was. The incident seemed to upset Esther, who Boyd insisted said that she didn't want him to leave the company. Shortly after he left her house, Boyd claimed that Taylor telephoned him, angrily shouting, “How dare [you] upset an old lady?”

Following this episode, Boyd contended that his contact with Esther became less frequent and his ability to get in touch with her was increasingly limited.

After being marginalized for some time, Boyd asserted that by September 2005, Esther was essentially a prisoner in her own home. Guards supplied by In-N-Out were posted on the property, and only pre-approved visitors were allowed inside. Her phone calls and correspondence were screened, and at one point, Boyd alleged, Esther's telephone line was disconnected and Boyd's own telephone numbers were blocked, preventing any incoming calls to Esther from going through. (Others contended that her number was changed to prevent solicitation calls.) A grainy, blurry picture that Boyd said showed guards in position outside of Esther's Oak Tree Terrace home was submitted to the growing volume of court filings.

About six months later, in February 2006, after Esther's old friend Wolf Kahles read an article about the ongoing legal battle between Boyd and In-N-Out Burger in the
Los Angeles Times
, he became concerned and telephoned Esther from his home in Germany. The pair had talked frequently; however, when he attempted to call her private home line, he found that the number had been changed and was un-listed. “I was upset,” he recalled. “They changed her telephone number and didn't tell anybody.” Kahles called In-N-Out's headquarters only to be rebuffed. “I asked for her number and they said no. Then I left her a message with them and told her to call me. They never gave her any of my messages.”

 

On November 5, 2005, In-N-Out Burger retained Grant Thornton, a large tax firm, to perform a forensic accounting analysis on Boyd; specifically, the firm was tasked with looking into allegations of inappropriate transactions. The firm was given access to Boyd's department offices and files. They interviewed Boyd's staffers and a number of the contractors and subcontractors, including Michael Madrid, owner of Michael Anthony Companies. The contents of Boyd's desk and those of the associates from his department were examined and copied. In addition, they reviewed the information stored in his computer and retrieved the laptops of Boyd's staff. The accounting firm also undertook a public record search of Boyd, his wife, son, daughter, and sister. Five days later, In-N-Out notified Boyd that it would hold a hearing on December 13 to determine whether he would be terminated as a result of “misconduct.”

A month later, Lawrence A. Rosipajla, Grant Thornton's director, delivered a thick seventy-eight-page report to In-N-Out complete with copies of invoices and photographs of Boyd's second home in Arizona dated December 5, 2005. Among the findings, the report alleged that Boyd used his favored contractor, Michael Anthony Companies, to perform construction work on his personal residence but charged the cost of the work to In-N-Out. The investigation also turned up what it claimed was evidence that Boyd had allegedly embezzled company
funds to build a wall costing more than $5,000 on his property in Arizona and a patio and cabana at his home in California. To cover his tracks, the report claimed that Boyd shredded documents. Boyd's attorney Philip Heller described the investigation as a charade, tantamount to character assassination. It was, he said, “nothing more than a witch hunt”; and Boyd's team soon delivered a counter investigation by Discovery Economics, refuting Grant Thornton's findings.

As the fall turned to winter and 2005 turned into 2006, the situation between Boyd and In-N-Out Burger grew nastier still. In January, the board of directors called a special meeting, the purpose of which was to discuss Boyd's termination. At the time, In-N-Out's board was composed of Boyd, Taylor, and Esther. (Boyd and Taylor were named to the board following Guy's death.) It was an odd situation to say the least. Boyd countered that he should be present and Esther included and attempted to hold the confab on January 27, later failing to get a temporary restraining order enjoining the board meeting scheduled by In-N-Out for January 30, 2006, at Esther's home. Boyd claimed he was prevented from entering the house by guards. He was not allowed to speak with Esther and was told that she didn't wish to see him.

 

The battle moved to the chambers of the Superior Court in downtown Los Angeles. In March, Boyd's complaints grew to include a defamation suit against the accounting firm Grant Thornton, allegedly for making “intimidating and misleading statements to In-N-Out employees.” During the course of the Thornton investigation into Boyd, the firm (his attorneys charged) branded Boyd a “thief” and labeled him “unethical” during interviews with In-N-Out employees. Further, Thornton's director Rosipajla “intimidated and terrorized employees by threatening them with criminal prosecution, civil penalties, and adverse employment action if they refused to state that Boyd had engaged in criminal acts.” It was hard to reconcile the behavior listed in the court documents with In-N-Out's squeaky-clean reputation.

In-N-Out extended its lawsuit to include Michael Anthony Madrid, the contractor accused of receiving preferential bids and doing work on Boyd's personal property (work that the chain's attorneys claimed was invoiced to In-N-Out). In a lengthy declaration signed and dated on October 31, 2005, Madrid explained that he had worked on over one hundred construction projects for the chain since submitting his first proposal to build the Thousand Palms store about twenty years earlier. In-N-Out, he explained, made up roughly 25 to 30 percent of his firm's business. “In-N-Out is a very important customer,” he stated. “I would not do anything to jeopardize that relationship.”

According to the declaration, in late 2003, Boyd told Madrid that he wanted to build a wall on his Arizona property, which happened to be twenty minutes from Laughlin, Nevada, where In-N-Out was building a store. Boyd, Madrid said, had asked whether it might be possible for Madrid's crew to work on the wall while it was working on the nearby store. According to Madrid his firm didn't create a job number for the wall because it was such a small project. Furthermore, he said, he never sent Boyd an invoice for the job, nor did he ask him to pay for it.

Then, sometime between August and September of 2005, two men appeared at the Michael Anthony Companies headquarters in Bloomington, California. The gentlemen said they were from In-N-Out and were conducting an audit. They questioned the firm's employees about its pricing process and explained that they were looking into the burger chain's projects in four cities. They probed at length about the Laughlin store, asking “pointed questions” about Boyd's wall project. After being questioned for nearly an hour, Madrid asked the men to produce their business cards and explain who they were. One identified himself as an attorney. The other man said that he was In-N-Out's controller. After another thirty minutes, Madrid became concerned about the line of questioning. “It appeared to me that this was not just about an audit, as I had been led to believe,” he stated. “It really is none of their business how we use funds paid to us.” Then Madrid escorted the men to the door, telling them, “I am not sure what it is you're digging for, and maybe I should have counsel to help me determine that.”

 

A trial date was set for October 17, 2006. Before that time, a series of hearings were held to settle the score regarding Boyd's dismissal and his continued role as cotrustee. The bitter fight went on for several rounds. On March 30, Judge Mitchell Beckloff suspended Boyd as cotrustee of the family trusts, given the conflict between Boyd and Lynsi, and appointed Northern Trust Bank of California to serve as cotrustee with Taylor pending a hearing to settle the matter on a permanent basis. Round one went to In-N-Out. Then, on April 5, the burger chain suffered a setback when Judge Aurelio Munoz threw out two of its lawsuits against Boyd—breach of contract and breach of fiduciary duty—saying that they violated Boyd's free speech rights. (In-N-Out had contended that Boyd's suits revealed trade secrets and breached his confidentiality agreement.) For Boyd, the court's decision was like a moral vindication.

It was only a partial victory, however; on April 28, Boyd lost his fight to remain employed with In-N-Out. Judge Munoz ruled that Boyd could not force the company to reinstate him. “This is an action for a wrongful discharge,” the judge stated, “not an action to restore a prince or a king to a throne.” This time, the legal round went to In-N-Out.

As the fall trial date loomed, the ugly and recalcitrant claims spurred on for several months and filled thousands of pages of legal filings. Lynsi, Taylor, and In-N-Out filed a motion in February to have several descriptions that they called “irrelevant, sensationalized, and unfounded allegations” removed from the lawsuits. On April 28, Judge Munoz ruled to strike several of them from the legal record.

However, his decision came after what the company deemed “dirty laundry” had already aired publicly. What emerged was a family drama filled with jealousy, scheming, splintering loyalties, money, and tragedy. Boyd claimed that Lynsi did very little work at the company but expected In-N-Out employees to perform errands for her such as cleaning up after her dogs on the company's dime. Lynsi's
personal life came under particular scrutiny; she was called “reckless, impetuous, irresponsible,” among other personal shortcomings.

Boyd's assessment of Lynsi's business acumen and work ethic was no less damning. He complained that the girl who had all the world laid out before her if only she would lift her fingers to grab it did not take her work seriously. “She is often late for work and meetings or does not show up at all.” Calling her the “Hamburger Princess,” a sobriquet that most likely needled the young woman, he claimed that “despite her financial resources, Lynsi chose not to pursue a college education.” Boyd also asserted that Lynsi “lacks sufficient personal maturity, experience, and skill necessary to successfully run In-N-Out.” Her main qualification for running the company, he charged, was simply that she was the granddaughter of its founders.

Like a man expelling air after holding his breath for years, Boyd's descriptions spared few. Lynsi's mother, Lynda Snyder Kelbaugh (now married for the third time), was portrayed as a combination of Lady Macbeth and Cruella de Ville who had long sought to control the company, first through her son-in-law Taylor and now, as she was coming into her inheritance, through Lynsi. He charged, among other things, that “Lynda exerted her influence to push Guy Snyder to name Mark Taylor as cotrustee of the family trusts.”

Boyd himself reportedly became ensnared in Lynda's wrath when he insisted several years earlier that Esther, recovering from her hip surgeries, should be removed from the hospital in Redding where she had been for nearly a year. Fearing that she would languish up north, or worse, he pushed to bring her home to Glendora, where he said she would receive better individual care and be more comfortable. A combative Lynda phoned him, he claimed, arguing that Esther should be left to mend where she was, not far from Lynda's ranch in Shingletown.

Mark Taylor appeared to be a slightly more complicated fellow. Stocky with a compact frame, his bald head gave him something of the look of a character in a 1940s gangster movie. Depending on the view one took, he was either a simpering sycophant tethered to the skirts of his mother-in-law (who fanned his ambitions for her personal gain) or was nakedly determined in his own right, short on
intellect but long on cunning and street smarts. Then again, he may have just been a hardworking guy who got incredibly lucky.

Married to Traci Perkins, Taylor considered himself Guy's son-in-law and “virtually an apprentice” to Rich Snyder. Indeed, Rich was said to have respected him as a manager. In court filings, Taylor detailed his own lengthy association with the Snyder family and his rise to the top at In-N-Out from his start in 1984, to becoming a store manager, to being made manager of operations in 1998. In 1999, he was named successor cotrustee to the family trusts, and in 2001 he was named to the board of directors. As he was working his way up through the ranks to become a vice president, Taylor asserted that he had become intimately familiar with the company's culture and traditions and a variety of roles in operations as well as the family trusts.

Upon his ascent, Taylor moved into Guy Snyder's five-bedroom, six-bathroom Glendora house. Apparently, Taylor purchased the Mediterranean-style property under market price after Guy's death and set about implementing an extensive remodel. Even among the neighborhood's other outsized homes, the remodeled Taylor estate was impressive. High in the foothills of the San Gabriel Mountains, the house occupied an entire corner lot. The property, dotted by palm trees, had a large, circular brick driveway with a stone, Spanish-style fountain similar to the one in front of the San Gabriel Mission. The enormous entryway looked like the portico of an old Spanish hacienda; there were wrought iron lanterns and perfectly clipped lawns. The renovation and landscaping were so all-encompassing that they required entitlement approval from the city.