St. Louis, Missouri — A St. Louis jury awarded businessman Scott Roy over $1.7 million in a protracted legal battle against his former employer, Bull Moose Tube Company (BMT), after a counterclaim was dismissed that accused him and other executives of extracting money through unauthorized severance agreements.
The conflict unfolded over four years of litigation associated with breach of contract claims by Roy and six other former executives of BMT. These executives sought enforcement of lucrative severance packages allegedly totaling $7.8 million. While six of the claims were settled out of court, Roy chose to take his case to trial, culminating in the recent jury verdict.
The court heard how BMT had alleged a conspiracy to secretly orchestrate these severance agreements without ownership’s knowledge, particularly pointing fingers at Roy and the then-president of the company. The allegations suggested these agreements were not only one-sided but also crafted to ensure loyalty from the executive management team, all unbeknownst to the company’s owners.
Counterarguments presented by Michael Daming, Roy’s attorney, painted a different picture. Daming argued that the company’s CEO had full authority to sign off on these contracts, contrary to BMT’s claim that any such agreements should have been passed by a compensation committee for approval. This contention hinged on internal policies on executive power and contractual agreements.
Significantly, the jury heard from the former president, ousted in 2020, who testified that the owner was indeed aware of the agreements, contradicting BMT’s assertions. The narrative of unawareness continued under the new leadership as both the incoming president and the owner reportedly denied any knowledge of these contracts when the executives sought their benefits.
The jury’s decision to side with Roy underscores a deliberation that weighed the testimonies and evidence favoring his unawareness of the overarching negotiation details around other executives’ severance packages, against the plea presented by BMT. The award of $1.77 million to Roy also implies a dismissal of all breach of fiduciary duty claims against him.
Representing BMT, attorneys Erik Solverud and Arthur Gregg from Spencer Fane have not commented on the verdict. The outcome potentially concludes a high-profile corporate governance and contractual disputes saga that has brought to light intricate legal interpretation issues concerning executive powers and corporate policy adherence.
Jurors in the St. Louis City Circuit Court, under Judge John Bird with the case number 2022-CC01194 as of Oct. 17, 2024, were exposed to expert testimony from both sides. Plaintiffs’ expert Dannae Delano of St. Louis focused on accounting implications, while Brian Berglund from Denver represented the defense’s accounting perspective.
The case, formally known as Scott Roy v. Bull Moose Tube Company, not only stresses the legal responsibilities tied to executive roles but also highlights the complexities surrounding secretive corporate agreements and their impact on company governance and trust.
The verdict serves as a crucial reference for corporate executives and legal practitioners focusing on employment and contract law, potentially setting precedents for how severance agreements and executive authority are interpreted in corporate settings.
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