Ezell's Food Fight

The legal battle over Oprah's favorite fried-chicken empire.

It's the crispy fried chicken Oprah Winfrey called "the best." But it has brought out the worst among the friends and relatives who started Ezell's Famous Chicken (EFC) a quarter-century ago near Garfield High. They're fighting over the choicest pieces—assets and trade secrets—of today's six-store chicken-to-go chain, with namesake founder Ezell Stephens accused by his corporate board of going rogue and misappropriating his own recipes. Launched with a Small Business Administration loan in 1984 by Stephens, his then-wife Faye Rudd, her brother Lewis Rudd, and Stephens' brother Sam, Ezell's grew from one store to a dozen in the 1980s and '90s. Yet dissension has been quietly stewing for more than a decade; Ezell's has been in an ownership and trademark dispute going back to 1998, according to court records and interviews. The current dispute, laid out in a U.S. District Court case in Seattle, seems in large part a clash of boyhood friends who became devoted relatives and business partners—Stephens, 58, and Rudd, 55, who is EFC's president. Their business was especially successful in its early years, and got a big boost from Oprah when she praised Ezell's on her TV show in 1990. (Stephens and Rudd also later flew to Chicago to cook for Winfrey's birthday party.) But EFC wound up carrying heavy debt in the 1990s, related mostly to its first expansion, to the U District, a store shuttered in 1994 after six years. The original store was also hit by a fire in 1999, suffering a long closure. In recent years, Ezell has branched out on his own with two Ezell's stores in Lake City and Lynnwood that EFC also lays claim to. Ezell has told the board to stop using his name and intellectual properties at the other stores because, he says, Ezell's directors "cannot be trusted." He came to that conclusion after they ousted him as vice-president of the board and filed a lawsuit for breach of contract. In effect, the board says, Ezell is no longer Ezell's. In court papers, Stephens says he is the founder of the company, and his family recipes, which spawned the original and spicy chicken dishes, are his alone; he doesn't need agreements to use them. He claims he has never approved a transfer of his rights to the recipes and other intellectual property. He still holds a 25-percent interest in the EFC corporation. Because of the legal action, Stephens can't comment further, says his attorney, Lish Whitson. "We just think that he's been treated poorly and we hope that justice will prevail," he says. In a statement, EFC board members say they "conducted extensive, repeated negotiations and informal mediations over several years to try to resolve these issues," to no avail. Rudd says his brother-in-law first branched out without board approval in 1998. He claims Stephens wrongly used corporate funds and assets to open the Lynn-wood store, which Stephens denies. Stephens allegedly first asked ex-wife Faye and Rudd to partner with him, then backed out and decided he and new wife Thistle Stephens would operate the biz, says Rudd. (Stephens and Faye were divorced in 1992. She remains part owner and secretary/treasurer of EFC.) The two sides eventually worked out an agreement, but Stephens currently operates that store, and the Lake City store he opened in 2009, without a license to use the EFC brand, says Rudd. Stephens, in turn, accuses Rudd of losing $180,000 in a real-estate deal and a Tacoma expansion in which five stores failed. (The expansion was part of a plan to take the operation nationwide to compete against KFC and Popeyes.) The corporation still operates Ezell's franchises in Renton, Skyway, and Woodinville, and an employee eatery at Microsoft. EFC claims an interest in the Lynnwood and Lake City stores run by Stephens under his separate company, Take It Home, Inc., which he operates with Thistle. It was apparently the Lake City operation that brought the dispute to a head last year. Stephens allegedly threatened to "bust up" the board if it didn't approve his solo venture (he denies that). But Rudd and other EFC board members wouldn't go along unless EFC was a partner. Stephens finally agreed, then went ahead and opened without signing a promised EFC operating agreement, the board claims. The corporation filed a lawsuit for breach of contract last July, and in August removed Stephens from Ezell's board. Attorney Whitson says the federal court is currently entertaining a motion to dismiss the lawsuit. Failing that, it could go to trial later this year.

 
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