News Column

Minority shareholders sue Capital Brewery majority owners over alleged misconduct

July 30, 2014

By Karen Rivedal, The Wisconsin State Journal



July 30--Minority shareholders led by Capital Brewery's former brewmaster, Kirby Nelson, are alleging the company's majority owners trampled on their rights and froze them out of important decisions, including a credible offer to purchase the 30-year-old Middleton company in 2011 by Nelson's current brewing partner, Carl Nolen.

The 12-page suit, filed Tuesday in Dane County Circuit Court, names Capital Brewery president Scott Weiner, company director Richard King and the brewery itself as defendants. It alleges misconduct by Weiner and King -- the majority shareholders who until recently made up the entirety of the company's board -- including allegedly ignoring minority owners' input, violating company bylaws and wasting company assets.

The suit also claims Weiner and King have been running Capital Brewery for their "personal gain" at the expense of minority owners' interests, and that they have "imminent plans to move the brewery out of Middleton" through a "multi-million ground-breaking allegedly to occur any day" -- an apparent reference to Capital Brewery's announced expansion plans in Sauk City.

Weiner on Tuesday called the lawsuit "totally unexpected" and said he knew of "no basis" for the allegations as repeated to him by a reporter familiar with the lawsuit, which Weiner said Tuesday he hadn't seen.

"It's unfortunate news to me," he said. "We know of no basis for the filing of any lawsuit against us."

As company leaders have said before, Weiner on Tuesday reiterated that the planned $11 millionSauk City brewery would not replace the Middleton brewery and its beer garden, which he said was seeing record sales. He said he expected the groundbreaking for the Sauk City brewery to happen yet this summer.

The lawsuit, titled a Petition for Judicial Dissolution, asks the court to dissolve the company, with a forced buyout distributing company assets, as well as unspecified compensatory and punitive damages.

Plaintiff Kirby Nelson now is brewmaster at Wisconsin Brewing Company, a Verona brewery opened in November 2013 by Nelson and Carl Nolen, the former president of Capital Brewery who left that company in July 2011. Nolen made an unsuccessful offer to buy Capital Brewery a few weeks after his departure.

Nolen is not part of the lawsuit, Nelson said Tuesday. But Nolen's offer to buy Capital Brewery with his brother, Mark Nolen, appears to be a key part of the lawsuit. Among its allegation, the suit cites a "bona fide offer" in 2011 to buy the brewery from a "serious group of investors with experience in the brewery business" that was rejected by the majority owners. And it calls that rejection a prime example of how Weiner and King made decisions without consulting minority shareholders -- referring to it as the "depth of the freeze-out."

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(c)2014 The Wisconsin State Journal (Madison, Wis.)

Visit The Wisconsin State Journal (Madison, Wis.) at www.wisconsinstatejournal.com

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Source: Wisconsin State Journal (Madison, WI)


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