A five-day trial baring a bitter divide in the Lund supermarket family ended Monday with a judge peeling off philosophical pearls, quoting from the Bible and American theologian Reinhold Niebuhr.
Hennepin County Chief Judge Ivy Bernhardson said she wanted “to leave Ms. [Kim] Lund and Mr. [Tres] Lund and the whole Lund family with some words from the gospel lesson” she heard at church on Sunday. Those words came from Jesus’ Sermon on the Mount in the Book of Matthew: “But I tell you that anyone who is angry with a brother or sister will be subject to judgment,” as the New International Version puts it.
She followed that with a dollop of Niebuhr: “Family life is too intimate to be preserved by the spirit of justice. It can be sustained by a spirit of love that goes beyond justice.”
“While they only are words, there are profound thoughts behind these words. I wish the parties peace,” she said.
Kim Lund, the oldest of four siblings who own Lunds & Byerlys supermarkets, sued Lunds Inc. and her brother Russell “Tres” Lund III, the company’s CEO, to release the 25 percent stake she owns in the company. Bernhardson already has ruled that Lunds must buy out Kim Lund. Now, she must decide how much the 25 percent is worth.
Kim Lund’s financial experts value her stake at about $80 million. Lunds Inc. says it is worth just over $21 million.
The lawsuit came after years of Kim Lund, 57, trying to free her equity. She said she wants the money for charitable giving. Tres Lund said the debt needed to buy out Kim at $80 million would cripple the company, particularly while competition is getting hotter in the Twin Cities grocery market.
Meanwhile, the two other Lunds siblings — Shauna Lund McFeeley and Robert Lund — have testified that Kim’s deal would unfairly place her interests above theirs, including endangering the full amount of their dividend payouts. The siblings receive annual pretax distributions, the latest being $2.7 million to each of them, although taxes ate a lot of the amount, court proceedings on Monday indicated.
Attorneys from both Lund camps must file post-trial briefs by early March. Then Bernhardson has 90 days to comb the voluminous court record and decide on the price. Whatever it is, the buyout payments will likely be spread over several years.
Lunds was created when Russell Lund Sr., the siblings’ grandfather, opened a store on Lake Street in Minneapolis in 1939. Lund Sr. and the siblings’ father, Russell Lund Jr., both died in 1992, and ownership of the company was effectively passed to the four Lund siblings. Tres Lund by that time was already CEO, and in 1997 led a buyout of Byerly’s, combining that chain’s 11 stores with Lunds’ own eight outlets.
Today, the chain with 26 stores goes by Lunds & Byerlys. Lunds Inc. has about $660 million in annual sales and about 3,700 employees. Serving a more upscale grocery niche, the company has a Twin Cities market share of up to 10 percent, court proceedings showed.
Aside from Tres, none of the Lunds’ siblings have had significant jobs in the family business.
Kim, a teacher for 30 years, said in court last week that philanthropy has long been a “part-time job” and now she wants to make it a full-time vocation. She testified that since she filed the suit, her family has “shunned” her, excluding her and her two children from all family events.
The ownership stake of Kim’s siblings would rise from 25 percent to one-third after a buyout. But Shauna and Robert both testified last week about the extra risk they would bear due to debt that Lunds would raise to fund the buyout.
Kim’s attorneys have argued that the company has rejected other ways to finance the buyout, including selling Kim’s stake to an outside party or to an employee stock ownership plan. Those solutions would mean ceding some family control, a condition Tres, Shauna and Rob have opposed.