Miller v. U.S. Foodservice, Inc.

James Miller (plaintiff), President, Chairman, and CEO of U.S. Foodservice, Inc. (USF) (defendant) and a director of parent company Royal Ahold (defendant), received a 2000 letter from USF's outside auditor flagging problems with its internal accounting controls, and in 2003 was forced to resign amid an accounting scandal that led Royal Ahold to restate a prior year's earnings after an internal investigation uncovered irregularities. Miller sued USF and Royal Ahold for post-termination benefits under his employment contract, and the companies countersued, alleging he breached his duties of care, good faith, and loyalty by ignoring warning signs and intentionally misleading USF's audit committee for three years; Miller, claiming he was being scapegoated, moved to dismiss the counterclaims as protected by the business judgment rule.