Noble Roman’s faces investor lawsuit in ongoing proxy war

Noble Roman’s has 12 Craft Pizza & Pub locations in Indiana, including this one in Fishers. (IBJ photos/Eric Learned)

Indianapolis-based Noble Roman’s Inc., which is battling one of its biggest shareholders over whether to replace CEO Scott Mobley on the restaurant company’s board of directors, is now facing a lawsuit from that shareholder over the same issue.

West Fargo, North Dakota-based restaurant company BT Brands and its CEO, Gary Copperud, filed the federal lawsuit Wednesday in Indianapolis against Noble Roman’s and all five of the company’s board members: Scott Mobley and executive board chairman and Chief Financial Officer Paul Mobley; and independent board members Marcel Herbst, Douglas H. Coape-Arnold and William Wildman. Paul Mobley is Scott Mobley’s father.

The proxy war between Noble Roman’s and BT Brands officially began June 1, when BT Brands filed a proxy statement asking Noble Roman’s 210 or so shareholders to vote for Copperud rather than reelect Scott Mobley to the company’s board of directors.

BT Brands has argued that “a fresh perspective” is needed to turn around things at Noble Roman’s, which has seen its share price and shareholder equity decline and its long-term debt increase under Scott Mobley’s leadership.

For its part, Noble Roman’s has characterized BT Brands’ actions as an attempt to force Noble Roman’s into accepting an offer of financing from BT Brands that would be “demonstrably not in the best interests” of the company and its shareholders.

In late June, Noble Roman’s said it had determined that BT Brands was not qualified to nominate Copperud because the company had not been a shareholder of record at the time it made the nomination. Noble Roman’s also said it would disregard all votes cast in favor of Copperud.

Noble Roman’s had originally scheduled its shareholders meeting for July 6, but it rescheduled the meeting for Aug. 10, saying at the time that it needed more time to collect and tally shareholders’ votes.

But in its lawsuit, BT Brands alleges that the real reason the meeting was delayed was that Copperud has received more shareholder votes than Scott Mobley. According to the suit, this means that if Noble Roman’s disregards the votes for Copperud, it will not have enough votes to constitute the quorum required to convene the meeting.

BT Brands says that its tally shows 10,194,885 proxy votes for Copperud, and 2,851,046 votes for Scott Mobley, as of Aug. 1. Noble Roman’s has 22,215,512 total shares outstanding.

In its complaint, BT Brands says it believes the Aug. 10 meeting will also be postponed because the pro-Mobley votes don’t constitute a quorum, and without a quorum the meeting can’t take place.

“In that case, the Company can take advantage of a clause in its Bylaws allowing a director to remain in office until ‘the successor to such director shall be elected and qualified,’” BT Brands says in its complaint. “That is, the Company will simply leave Mr. Mobley in place and ignore the expressed will of its shareholders.”

When contacted for comment, Scott Mobley directed IBJ to a prepared statement from Noble Roman’s in which the company says it “strongly believes this litigation to be without merit and will vigorously defend its rights.”

In the statement, Noble Roman’s also reiterates its position that Scott Mobley “is the only valid nominee for election at the annual meeting,” and describes BT Brands’ actions as a “campaign of harassment” against Noble Roman’s.

Reached by phone Wednesday afternoon, Coape-Arnold declined to comment, saying all information needed to come from Noble Roman’s. Herbst and Wildman did not return phone messages.

In its lawsuit, BT Brands is asking the court to, among other things, order Noble Roman’s to convene its annual shareholders meeting, hold an election at that meeting and permit BT Brands to vote in the election, and “permit Mr. Copperud to take the [board] seat to which he will have been duly elected.”

Noble Roman’s was founded in Bloomington in 1972 and at one time had as many as 75 locations. The company currently has 12 Noble Roman’s Craft Pizza & Pub locations around Indiana, nine of which are company-owned and three of which are franchised. It also has just over 2,800 franchised non-traditional locations in convenience stores, universities, hospitals and other sites.