Billionaire Chobani Inc. CEO Hamdi Ulukaya made no secret that he bribed his way into obtaining the wildly popular Greek yogurt’s formula from a former employee of rival Fage Dairy Industry SA, his ex-wife said Thursday in explosive court papers asserting her disputed majority stake in the company.
New York City physician Ayse Giray accused her ex-husband Ulukaya of boasting that he had obtained the yogurt recipe by traveling to Europe and bribing the unnamed ex-Fage worker with €30,000 ($41,000) as part of a larger pattern of alleged corporate malfeasance that she said supports her bid for a substantial stake in Chobani.
Giray has been locked in a battle with Chobani since 2012 over a handwritten note that allegedly gave her a 53 percent stake in Ulukaya’s upstart dairy business called Euphrates Inc. from which Chobani was eventually spun off in return for $500,000 in seed money.
The suit alleges that Ulukaya misappropriated assets from Euphrates, now a separate company that makes feta cheese, to launch a yogurt business dubbed Agro-Farma Inc. that ultimately became Chobani.
While Gray was privy to the spinoff and was at one point told she would have “the same ownership interest” in Chobani as in Euphrates, when years went by without compensation and she demanded a cut of the profits in 2011 Ulukaya threatened her and her family, according to the complaint.
She is now seeking an injunction prohibiting Ulukaya and Chobani from any transaction that impairs her 53 percent interest and providing her with a seat at the company table.
“The equities predominate in Dr. Giray’s favor,” the motion said. “She financed the formation of Euphrates and is merely claiming what was acknowledged to her in writing.”
Both Giray and Ulukaya are from Turkey; they met and married in New York in 1997, then divorced two years later but remained friends and business partners, according to court records. She initially made a $530 million claim that assumed a $1 billion valuation for Chobani and called for an accounting of the company to determine her stake’s true value.
New York Supreme Court Judge Barbara R. Kapnick paused the case in October 2012 to give the two sides time to conduct discovery into her purported ownership stake, which is only indicated in a letter written in a cafe but not on any stock certificates.
That’s because Ulukaya only issued stock certificates after Euphrates was around for 3 1/2 years and without telling Giray, according to Thursday’s motion.
Instead, the note suffices to prove her ownership of the closely held company, and under the doctrine of corporate diversion Ulukaya was forbidden from using its funds to purchase a Kraft Foods Inc. factory and creating Chobani “from the rib of Euphrates,” the motion said.
“Here, there is overwhelming evidence that, from the beginning, yogurt was to be a product of Euphrates and that he moved the yogurt business from Euphrates to Chobani,” it said.
The motion also attempted to rebut the defendants' anticipated equitable defenses by detailing Ulukaya’s alleged fraud in obtaining bank financing for the business and his efforts to evade tax and sewer bills in its infancy.
"The allegations are completely baseless and without merit," a Chobani representative told Law360. "Our fans all across America know that our products are unique in the way they are made and taste."
Judge Kapnick has bifurcated the issue of Giray’s status as a shareholder and the issue of whether the creation of Chobani was a corporate opportunity that rightfully belonged to Euphrates.
Giray is represented by Richard B. Feldman, Michael H. Smith and Stephen J. Sassoon of Rosenberg Feldman Smith LLP.
Chobani and Ulukaya are represented by Yosef J. Riemer, David S. Flugman and Robert A. Gretch of Kirkland & Ellis LLP and by Douglas A. Foss of Harris Beach PLLC.
Euphrates is represented by Scott L. Vernick and John A. Wait of Fox Rothschild LLP and by Gregory P. Williams and Catherine Dearlove of Richards Layton & Finger PA.
The case is Ayse Giray et al. v. Hamdi Ulukaya et al., case number 652838/2012, in the Supreme Court of the State of New York, County of New York.
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