Jury Sides With Big Cheese in Mozzarella Family Feud
The global kingpin of mozzarella cheese fended off a lawsuit from two of his nieces— seeking nearly $1 billion in damages—after a jury decided that James Leprino and other major shareholders had not financially “oppressed” them as alleged.
The decision, handed down on Friday, put to rest a two-year battle that cast a rare spotlight on the reclusive billionaire whose namesake company sells cheese to fast-food giants like Papa John’s and Domino’s.
In the original complaint, filed in Denver District Court in July 2020, Mary and Nancy Leprino alleged that their uncle, his daughters, and his son-in-law had operated the company “for their own financial reward while depriving the minority shareholders of their legal rights and financial interests.”
The nieces own about 17 percent of Leprino Foods between them; their sister, Laura, did not participate in the litigation, though she owns a small stake.
In their complaint, the plaintiffs sought to depict their uncle as greedy and cold. They were especially piqued about financial maneuvering that followed a $400 million distribution from the company to Leprino, his kids, and related parties in 2017. (The plaintiffs were separately paid $90 million.)
After the disbursement, James Leprino and his co-defendants loaned their payouts back to the company. The nieces said the arrangement would generate more than $28 million in annual payments to the defendants—a windfall that wasn’t extended their way.
“It wasn’t fair,” Nancy Leprino declared during the trial, according to testimony reported by The Denver Post. Her uncle’s team, meanwhile, maintained that the nieces had the opportunity to earn greater returns by putting their money to work in other wayselsewhere, since the loans were issued at a modest interest rate.
Managers at Leprino Foods test the cheese consistency and stretch in their cheese at their headquarters in Denver.
The trial included a secret recording of James Leprino from 2019, in which allegedly declared that his nieces’ holdings should be considered worthless for tax purposes, since their minority stakes would be exceedingly difficult to sell on the open market.
His attorneys sought to spin the recording in their favor: Leprino hadn’t admitted to screwing over his relatives; instead, he was simply trying to act in their best interest.
After just a few hours of deliberation on Friday, a jury sided with the 85-year-old tycoon, who attended court proceedings in a wheelchair.
“We were pleased that the truth came out in the trial and really supported what we've known all along, that the… majority shareholders always did things in the best interest of the company and all the shareholders,” Cliff Stricklin, an attorney for the cheese king, told The Daily Beast.
He added that his clients are tallying costs of the litigation, which they will submit to the court for reimbursement from the nieces and their co-plaintiffs.
“We viewed this all along as a business dispute, not a family dispute. And I think that there's no doubt that the plaintiffs and the defendants were trying two different cases,” Stricklin added. “The plaintiff seemed to be trying more of a family dispute they wished to air, and we tried a business case where we were explaining to the jury the business reasons behind our decisions.”
The judge, Stephanie Scoville, had previously struck down plaintiffs’ request to dissolve the family business entirely. Representatives for the nieces did not respond to requests for comment.
Leprino Foods, which today has over 5,000 employees and is worth billions of dollars, began humbly in the 1950s, when Susie and Michael A. Leprino sold handmade mozzarella and ricotta to Denver groceries.
They formally incorporated the operation in 1962 and steadily ramped up production, according to a corporate history included in the 2020 complaint. Of the couple’s five kids, the two youngest, Michael Jr. and James, took on roles at the company.
James rose to become CEO and amassed the lion’s share of the equity (75 percent). Michael—Mary and Nancy’s father—owned the remainder and served on the board until late 2014, “when he was involuntarily removed…by the other members of the Board and majority shareholders,” the complaint said.
His ouster sparked dramatic testimony during the trial. “I was making room for more productive board members,” James Leprino reportedly said in defending the decision. “He spent a lot of his time on his own ranch and olive oil business and very little time in his office in Denver.”
Around the same time, the nieces were also barred from headquarters, though James Leprino claimed they were only kept away for “maybe a couple weeks or a week even.”
Michael died in 2018, by which point he had already handed off his stock to his daughters, according to The Denver Post.
Stricklin noted that the sisters remain shareholders in the company, and he insisted that his clients “will continue to work with them,” at least “until something changes.”
But if they do show up at headquarters, they are surely in for an awkward visit.
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