Courtwatch: Investor Sues Alpha Omega's "Robin" and Michelle Baggett for Alleged Breach of Fiduciary Duty
January 24, 2019
An investor in a Napa Valley wine company has filed a complaint against his two main business partners and affiliated entities, according to court records.
Investor Rob McKay is suing Kenneth “Robin” and Michelle Baggett for alleged breach of fiduciary duty and other allegations in connection with their management of Alpha Omega LLC, according to the complaint filed in Napa County Superior Court on Jan. 18. The wineries operate under Alpha Omega Collective. Robin Baggett has managed the winery for more than four years, according to the court document.
McKay makes a number of allegations against the Baggetts, including that they acted like they were the sole owners of Alpha Omega; managing the company like it was a sole proprietorship; ignoring McKay’s and other members’ wishes to sell the company; and “failing to take advantage to sell opportunities to sell that company because it was not in their personal interest to do so,” according to the complaint. McKay and the Baggetts are among the more than 70 members who own Alpha Omega LLC. McKay owns about 10 percent membership interest in Alpha Omega; the Baggetts have never owned all or a majority interest in Alpha Omega, according to the complaint.
McKay also alleges the Baggetts ignored approved budgets and other financial controls “at the same time that the financial value and profitability of Alpha Omega have declined” and that they failed “to operate Alpha Omega in a business-like manner, including terminating key employees without good cause, creating grounds for claims by employees, causing key employees to resign, failing to report accurate financial information to members, failing to ensure that distribution are made to members, and failing to maintain the market value of Alpha Omega,” according to the court filing.
Also named in the lawsuit are Alpha Omega Collective, the umbrella entity for Alpha Omega and two affiliated wineries– Tolosa in Edna Valley south of San Luis Obispo, and Perinet in Spain. The winery Alpha Omega – or Alpha Omega LLC - is not named as a defendant.
McKay seeks unspecified compensatory and punitive damages as well as restitution and attorney fees, according to the complaint.
Vintner Robin Baggett on Wednesday countered that Alpha Omega’s business is growing.
“It’s shocking any investor would complain. Alpha Omega is coming off a record year financially in terms of gross sales and profitability,” Baggett said, referring to the winery near St. Helena. “The business is at an all-time high. McKay’s investment in Alpha Omega has more than tripled in value,” Baggett said. “In fact, I recently arranged a transaction where McKay sold part of his interest and tripled the return on his investment. Alpha Omega’s business continues to grow at a significant pace.”