Scott Duggan, former general counsel and senior vice president of The Fresh Market Inc., has failed to convince a judge to dismiss a breach of fiduciary duty claim he faces for his role in the publicly traded grocery chain's $1.36 billion buyout.

Delaware's Chancery Court found in a Dec. 31 decision that the allegations in a shareholder lawsuit could "conceivably support" a claim that Duggan was grossly negligent when he drafted and certified a filing with the U.S. Securities and Exchange Commission in connection with Fresh Market's sale to private equity firm Apollo Global Management. 

According to the court, the schedule 14D-9 filing in question—Fresh Market's response to Apollo's takeover bid—omitted the following key pieces of information: 

  • Fresh Market former chairman and CEO Ray Berry lied to the company's board about having reached a behind-the-scenes agreement with Apollo before the 2016 merger.
  • Berry had expressed a "clear preference" for Apollo and was unwilling to consider offers from other firms.
  • Berry indicated he might sell his shares in the company if it did not pursue the sale with Apollo. 
  • The "depth and breadth" of shareholder pressure to sell. 

Vice chancellor Sam Glasscock noted in the opinion that the Delaware Supreme Court already held that the SEC filing "presents a distorted narrative." He wrote that based on Duggan's "role as general counsel, and given the sales process as pled, I can infer that the omitted facts were omitted with his knowledge.