Top Pot agreed to pay an undisclosed amount to Jan Johnson, owner of the Panama Hotel and one of the initial investors, last month. A second suit, filed by early investors Robert and Virginia Dickson is headed for mediation.
Johnson filed suit against the company and its founders, Mark and Michael Klebeck and Joel Radin, last February. She claimed that, in order to reduce her share of the business, they used a new company when adding new stores, like the one downtown, rather than expanding under the original Capitol Hill store. They then merged the whole operation together, greatly diluting her stake in the business, now known as Doughnut Corporation of America. As a result, they dodged having to share a large percentage of their profits from bigger deals like their current one to sell the donuts in Top Pot stores nationwide.
Top Pot attorney Josh Brower declined to discuss the details of the settlement, saying only that "from Top Pot's perspective, it settled the lawsuit to get rid of a nuisance claim and to allow a shareholder to exit the company."
Johnson's case in King County Superior Court closed on Aug. 25.As to Top Pot's other pending suit--filed last April--the Dicksons' attorney Derek Linke says there's an agreement between the parties but he's not at liberty to discuss it. Brower says that the parties agreed to a mediation session with an outside attorney.
"Again from the company's perspective, the Dickson's claims are meritless, but it's easier to resolve nuisance claims through mediation than litigation," Brower says, adding "I should say more efficient and less expensive, instead of easier."
Again, Brower declined to discuss any of the specifics of the mediation, but notes: "You can eat the donuts in good conscience."