Yahoo Finance How the Hamptons' iconic Sloppy Tuna got tangled in a messy Wall St. skirmish
The Sloppy Tuna — the notoriously rambunctious beachfront bar in Montauk, New York — has been embroiled in years-long litigation among its four original investment banker owners. It’s one of the nastiest feuds on Wall Street, and it got even uglier this summer.
The clash has pitted one partner — distressed-debt trading veteran Drew Doscher — against the other three: Seaport Global Securities’ Michael Meyer, Stephen Smith, and Michael Meagher.
Since February 2014, there have been at least 11 lawsuits filed in state and federal courts in New York and Georgia as well as a proceeding before the Trademark Trials and Appeals Board of the US Patent and Trademark Office.
The issues at dispute look fairly simple. They include the title to the property where the bar sits; the occupancy rights; and who’s the rightful owner of the “The Sloppy Tuna” trademark name and logo of a grinning tuna fish wearing sunglasses and hat. (Two of those issues have been decided — ownership of the land and occupancy rights — but are subject to appeals.)
The litigation, however, has been anything but simple, with more than 100,000 pages having been filed so far and a slew of allegations coming from both sides.
Doscher contends the litigation is a “smoke screen” and “retaliation” over events that took place at his former employer, Seaport Global. He said he was subject to a “wrongful” and “retaliatory termination” and that falling out has spilled over into The Sloppy Tuna.
“Their misdeeds [are] why they attacked the Tuna. That was my baby and something I loved and they thought it would deplete me of money to prosecute them to the fullest. Which has only made me turn up the heat,” Doscher wrote in an email to Yahoo Finance.
‘Sudden and unforeseen chaos’
This summer, Doscher was barred from entering the bar’s premises. In March, Judge Jerry Garguilo ordered him to immediately surrender control over and access to the daily operations and financial records to a court-appointed temporary receiver, Charles Russo.
In early 2015, the judge’s order gave the receiver “full authority to examine and inspect all financial records.” Doscher had remained in charge of the daily operations of the bar. After not complying with the receiver’s repeated requests, the court granted the receiver’s motion to take “immediate control.”
Doscher posted a status on the bar’s Facebook page addressed to “Sloppy Nation” on March 29. It noted that the Sloppy Tuna “will unfortunately not be opening at the same location in Montauk this summer – due to some sudden and unforeseen chaos and back room politics.” He added that he alone “took a small shack with a stripper pole on the beach in Montauk and made it into a great bar and day/nightclub ” He called the court’s decision “an act of malicious retaliation” by his “former business ‘partners.'”
The Sloppy Tuna did open this summer, but according to Doscher it wasn’t the same. He pointed to a new $40 cover charge, increased drink prices, and a new bottle service, which he called an “oxymoron.”
A photo posted by The Sloppy Tuna (@lisloppytuna) on May 27, 2016 at 2:05pm PDT
Russo, the court-appointed receiver, declined to comment due to the ongoing litigation.
Under the receivership, The Sloppy Tuna closed at 2 a.m. as opposed to 4 or 5 a.m., the music was brought inside starting at 9 p.m., and cover charges were implemented to curb large crowds. While The Sloppy Tuna didn’t have a single violation from The Town of East Hampton or the State Liquor Authority, revenues were down.
Revenue for the 7 months ended July 31, 2016 was about $1.73 million, down $500,256 or a 22% decrease from the same period a year prior, court documents said, noting that “the decrease is primarily attributable to the continued efforts to comply with the Town of East Hampton’s occupancy codes and ordinance’s for noise decibels.”
John Mike Blandon, a 31-year-old local who spent the past five summers as a DJ before was fired Labor Day Weekend, told Yahoo Finance the “summer was hell.” The court-appointed management “treated everyone like animals,” he said.
Meanwhile, Blandon described Doscher as “compassionate” and “caring.” Doscher helped the employees in their personal lives, paying the bail and legal fees for a bouncer, providing money for an employee to get a hernia operation, and helping Blandon get sober.
“[Doscher] absolutely loved the Tuna,” Blandon said. “He appreciated everyone who did something for the place. No matter what your role was…he made you feel like you were part of the family.”
Blandon added: “He was along the lines of someone who would do anything for you. No other man has ever cared for me like Drew that wasn’t family.”
Four bankers open a bar …
In 2011, Doscher, Meyer, Smith, and Meagher were working together at Seaport Global Securities, a New York investment bank co-founded by Smith and Meagher.
That March, they formed two limited liability companies (LLCs) — 148 South Emerson Associates and 148 South Emerson Partners — and each put forth $800,000 and held an equal 25% stake. Partners was created for the purpose of purchasing property located at 148 South Emerson Avenue in Montauk and leasing it to Associates, which was created for the purpose of operating the restaurant/bar, documents show.
Partners purchased the property for $2.4 million and The Sloppy Tuna opened that May.
… and then came the violations
In the first year, The Sloppy Tuna had a myriad of violations brought against it by the Town of East Hampton. The bar also had proceedings involving the State Liquor Authority.
Two of the partners — Seaport’s co-founders Meagher and Smith — wanted out of the restaurant/bar as they were concerned about the potential impact the charges and adverse publicity could have on their business in the securities industry.
In July 2012, the two bankers transferred their interests in Associates to Doscher and Meyer.
After the transfer, both Doscher and Meyer became the sole managers of Associates, each with a 50% stake. On December 10, 2012, Associates made a payment of $230,000 each to Meagher and Smith and those checks were cashed.
A ‘significant dispute’ at Seaport
Sometime that December, Doscher claimed there was a “significant dispute” at Seaport “regarding certain activities by Smith that Doscher believed violated the applicable FINRA Front Running Policy at the time.” (FINRA is short for the Financial Regulatory Authority.)
He alleged that after he “discovered and exposed improper and/or illegal activities at Seaport” and “notified Seaport, Meagher and Smith that they had to ‘come clean,’ with the clients and fix the mess” he was “terminated” on January 11, 2013.
The others say that he quit.
“Not surprisingly, there was considerable rancor and unpleasantness following his departure from Seaport,” Meyer said in an affidavit.
‘Writing to confirm…’
Five months later, on May 23, 2013, Doscher’s attorney at the time, Kieran Conlon, sent a letter to Seaport’s outside counsel “to confirm” that Meagher and Smith had surrendered their membership interests in both LLCs.
On June 3, Seaport’s lawyer responded, disagreeing with Conlon’s assertion and pointing out that they discussed selling their interests, but it was never finalized in writing.
The agreement was that they would be bought out of Associates, which was the bar and restaurant. They wanted to keep their interest in Partners, which is a valuable waterfront property.
Summer 2013
By late June, Doscher commenced FINRA arbitration against Seaport and against Meyer, Meagher, and Smith.
“This so-called ‘falling out’ and subsequent arbitration against Seaport and its owners created tremendous tensions surrounding the Tuna. Doscher’s animosity toward Meagher, Smith, and me was obvious and he began to exclude me from all aspects of the business in 2013 after he left Seaport,” Meyer said in his affidavit.
In early October 2014, Meyer, the remaining business partner in Associates, filed a lawsuit against Doscher, alleging that he “unjustifiably and improperly” began to exclude him “from almost all decisions and matters related to the business.”
Doscher responded that 2013 season “went forward without problems” and that Meyer didn’t participate in the business “on his own accord.”
‘A cow caught in a barbwire’
Meyer claimed that Doscher tried to “freeze” him out of being informed of the finances. He said Doscher sent an email to the accountant, Sam Eltoukhy, on October 16, 2013 with the subject line “You are fired.”
“Despite you holding yourself out as a righteous man, you have chosen to pick a side. Meyer is a cow caught in a barbwire … You do not have the patience, health, tapes, emails, or mental fortitude to take me on. And if you think you do think about your three daughters. If you think you want to step up to the plate and challenge me let’s see what you got. My d— is hard thinking about having your deposition taking [sic] and watching you try to lie!!!! Not a threat, a promise that you WILL LOSE,” the email in part said.
In response to Eltoukhy’s termination, Doscher explained his now-wife found an “error” that the real property taxes for the building hadn’t been paid. He also said that Eltoukhy’s “close relationship” with Meyer “concerned” him.
“I spoke to Samy about whether he could and would remain a neutral bookkeeper as issues with The Seaport Group, LLC were ironed out. He repeatedly assured me, and others, he would. However, as the year progressed Samy started to change how things had been operating, not acting on my simple requests, which always had been handled in the same fashion, and withholding information. It became clear Samy’s conduct and errors were hampering the operations of the Sloppy Tuna and I fired him,” Doscher said in court documents.
In the complaint, Meyer claimed he “identified numerous questionable transactions” and funds were used for “unauthorized expenses.” He pointed out that Associates’ bank statements for the Chase account included payments to law firms and USPTO. Doscher responded that he has “never taken any money improperly from the business.”
Doscher also defended the expenses, pointing out that money was used for an employee appreciation trip to Las Vegas, health insurance, and a public relations opportunity. He added that the payment to his attorney Todd Merolla was because he “performed work in connection with the Trademark,’The Sloppy Tuna’ — pursuant to the license agreement between the holder of the Trademark, Montauk USA, LLC and Associates… Associates was liable for these fees.”
‘No bonus and you can all f—–g leave’
As part of his complaint, Meyer also published a profanity-laced email sent by Doscher to the Tuna’s managers.
In November 2013, then-manager Abby Monahan sent an email on behalf of the staff inquiring about a bonus. Doscher replied: “Here is my answer. No bonus and you can all f——g leave. That’s my offer. Good luck you ungrateful people.”
In another response involving the bonus inquiry, Doscher said that he was “insulted” by the request.
“First, I have done an excessive amount of homework on ‘perks.’ No place gives them to the staff. It’s taken by the owners or given to the clients. Second the numbers for a short season annualized are almost more than a Harvard MBA get paid. Third your approach was the wrong way with the wrong guy! Morale will be resolved shortly. You all should think hard before you do this again!”
Monahan was terminated shortly after. She declined to comment.
Doscher said in court documents that Monahan “failed to disclose pertinent information” about her past. He rehired three of the employees on that email thread.
“Based upon the information I had at the time, including her threat to negatively impact the Sloppy Tuna in the future, I terminated her as manager. Initially I terminated four other employees who appeared to be interested in organizing a walk out as well, however, three of those employees were re-hired, after further discussion revealed it was not their desire to have a walkout that idea was pushed by Abigail Monahan without their consent.”
Who are the ‘Partners’?
In the fall of 2013, Doscher made another transaction that Meyer didn’t agree with. On October 18, 2013 — two days after Eltoukhy the accountant was fired— Doscher sent checks to Meagher and Smith each in the amount of $240,000 from the Associates account. The checks included a letter from Doscher pointing out a “verbal agreement.” That letter was referring to Partners, the real estate LLC, in which Doscher contends Smith and Meagher also surrendered their interests. The checks were not cashed.
In February 2014, Meagher, Smith, and Meyer filed an action in Suffolk County, New York claiming they still had a stake in the real estate LLC. This was the first lawsuit in the whole ordeal.
“If this was a problem in 2012, 2013, why did they wait until February 2014? I brought my FINRA in June 2013. They read the tealeaves,” Doscher told Yahoo Finance.
The court ruled in early 2015 that Meagher and Smith continue to each own a 25% stake in Partners.
Doscher is appealing that decision. He’s also suing his now-former attorney and longtime friend, Kieran Conlon, for legal malpractice, claiming the lawyer failed to secure consent of Meagher and Smith.
“Lawyers are not magicians, they cannot force other parties to agree to a deal or to sign contracts or agree to terms when they choose not to do so…” Conlon’s attorney responded in court documents.
Conlon didn’t respond to requests for comment.
FINRA hearings
The FINRA hearings took place in the fall of 2014.
In Doscher’s initial statement to FINRA, he alleged breach of contract, retaliatory discharge, and unjust enrichment, among other causes for action. In an amended statement on September 20, he added fraud as a cause for action.
Seaport and its leadership denied the allegations, but acknowledged that Doscher was entitled to commission for trades he executed on or before January 11, 2013. In its counterclaim, Seaport also requested that FINRA make Doscher reimburse $821,707.26 charged on the corporate American Express. That counterclaim was denied.
Doscher was asked to join Seaport by Meagher and Smith to head its global distressed trading desk in 2009. He previously worked at Lehman Brothers and UBS. He said that he requested that Seaport hire Meyer. They helped grow Seaport from “roughly 40 employees in June 2009 to 220 employees.” Doscher said he was the “number one producer” and viewed as the “face of the firm.” By his second year, he was made partner and had an equity interest in Seaport, which he said Meagher, Smith, and Meyer claim he “forfeited” upon his departure, according to court documents.
On October 22, 2014, the FINRA arbitral panel ultimately awarded Doscher $2,289,774. Doscher sought just over $15.5 million in damages, the documents show.
That November, Doscher sent Meagher and Smith each another check from Associates, again pointing to the “verbal agreement” that they had surrendered their stakes in Partners. Those checks weren’t cashed either.
In February 2015, Doscher filed a lawsuit against Seaport’s lawyers in the FINRA arbitration. The case was dismissed in November and Judge Charles Ramos told Doscher’s attorney they’re “lucky” they’re not going to get “sanctions.”
Doscher filed a petition in July 2015 to vacate and modify part of FINRA’s award in the Southern District under the Federal Arbitration Act. He alleged “fraud and deceit” from Seaport’s attorneys.
The district court dismissed the petition for lack of subject matter jurisdiction. In August, the Second Circuit Court of Appeals overturned that decision, ruling that a federal court may “look through” petitions when determining jurisdiction.
Doscher told Yahoo Finance it was a “hugely favorable” ruling.
Who owns the Tuna’s trademark?
One huge issue that hasn’t been decided is who is the rightful owner of “The Sloppy Tuna” trademark.
Doscher said that Meyer, Meagher, and Smith had “absolutely nothing” to do with the creation of the name, “The Sloppy Tuna.”
Meyer alleged that Doscher “secretly” filed two trademark applications in June 2011.
A photo posted by The Sloppy Tuna (@lisloppytuna) on May 16, 2016 at 3:41pm PDT
In court documents, Doscher pointed to an email from June 1, 2011 that CC’d the four partners regarding Montauk USA LLC owning the trademark. The email didn’t say who owned Montauk USA LLC. Meyer said in court documents that he had “no recollection” of reading the email or that he “forgot” about it.
Doscher claims that he along with his friend Mark Horowitz, who works at an investment bank, invented the name “The Sloppy Tuna” back in 2010. Doscher then created Montauk USA, LLC, which “held and owned the rights to the name ‘The Sloppy Tuna.’”
Montauk USA LLC was registered in Georgia on August 6, 2010 with the principal office address located in Towaco, New Jersey — the home address to Horowitz who lists himself as the “manager” of Montauk USA LLC on his FINRA BrokerCheck.
Part of Doscher’s plan was to build The Sloppy Tuna into a franchise that would extend to markets beyond Montauk. Forming Montauk USA LLC in Georgia was a way to take advantage of that state’s franchising laws.
Doscher said in court documents he asked Horowitz to invest in purchasing the property, but he couldn’t do it. That’s when he said he sought out Meagher, Smith, and Meyer.
Montauk USA LLC filed a trademark application for The Sloppy Tuna with the USPTO on June 1, 2011. It was officially registered on October 9, 2012. The address for Montauk USA is listed as the same address as Seaport Global — 360 Madison Avenue 22nd Floor New York, New York.
Meyer claims Associates is the rightful owner to The Sloppy Tuna trademarks. Specifically, Meyer alleged that Doscher used money from Associates to pay the legal fees associated with securing the trademarks.
On November 20, 2014, Meyer, on behalf of Associates, asked the USPTO to cancel the trademarks owned by Montauk USA LLC.
Soon after, on December 23, 2014, Montauk USA LLC filed an action in Georgia against Associates, Meyer, Meager, and Smith seeking a judgment that the trademarks belong to Montauk USA. In this case, Doscher revealed that he’s “the member and owner” of Montauk USA LLC.
A week later, he texted Meyer: “You get Montauk USA LLC yet B—–?!?!”… “I’m coming you blue collared b—–. Get you (sic) attorneys I’ll get mine. I’m going win inside court since I trademarked it in 2010.”
Doscher’s lawsuit points to a license agreement dated October 18, 2013 that required Associates to a minimum royalty payment of $20,000 per month beginning in February 2014. That agreement was signed by Doscher on behalf of Associates and by Mark Horowitz on behalf of Montauk USA.
Meyer, however, claims the license agreement is not valid, citing no evidence of any oral agreement. He added the license agreement was prepared and signed without his knowledge or permission. It was also signed on October 18, 2013, just two days after Doscher fired The Sloppy Tuna’s accountant. Doscher is a 50% owner of Associates and the “sole owner” of Montauk USA LLC.
Tuna gets a receiver and an eviction vote
In early 2015, the court appointed the temporary receiver to exam the financial records, while Doscher remained in charge of daily operations. Doscher was permitted to go ahead with a scheduled job fair that spring, but he was asked by the court to run any hires by Meyer. The court said he only paid “lip service” and engaged in a form of “civil anarchy” in the operation of the business. Doscher was found in contempt and sanctioned for $45,962.50.
In April 2015, a special meeting was held where Meagher, Smith, and Meyer — 75% owners of Partners — voted to evict The Sloppy Tuna. Doscher opposed the vote.
In the spring of 2016, the court ruled that there’s no leasehold between Partners and Associates. The Tuna hasn’t been officially evicted while the court’s decision that four people own Partners is up on appeal.
More recently, Doscher and his now-former attorney, Michael Devereaux, were hit with a $50,000 sanction in July over a “frivolous lawsuit.”
During a status conference on February 22, 2016, Meyer’s attorney Michael Burrows made a comment about Doscher “cooking the books.” The following day, Doscher filed an action against his former business partners, Burrows, and his law firm for slander. In July, a judge dismissed the case and sanctioned both Doscher and his attorney for bringing a “frivolous” and “blatantly meritless” lawsuit. Shortly after, Doscher filed a summons for complaint against Devereaux for legal malpractice. He has yet to file a complaint. Devereaux did not respond to a request for comment.
After the receiver took control and Doscher was barred from the premises, his friend Horowitz filed an action in Georgia on March 24, 2016 alleging breach of contract and requesting a temporary restraining order against Associates using the trademark. The lawsuit also sought royalty fees of $727,623.96. A month later, the complaint was withdrawn.
In late May, Horowitz and Montauk USA LLC filed an action over the trademarks in New York’s Eastern District. On July 1, the Friday before the July 4th holiday weekend, they tried to file for a temporary restraining order against Associates using “The Sloppy Tuna” trademark. Their request was denied that same day.
Doscher, who now has a new attorney, told Yahoo Finance that he’d eventually like a “real trial” with a “real jury.”
The Sloppy Tuna remained open for the entire summer. The season has yet to wrap up. For now though it appears the litigation will go into another season.
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Julia La Roche is a finance reporter at Yahoo Finance.
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