In-N-Out Burger (27 page)

Perhaps Keller's greatest valentine to In-N-Out was his announcement in 2006 that he was opening up his own burger joint across the street from his French Laundry in Napa Valley to be called Burgers and Half-Bottles and selling just that—hamburgers and wine. “A really good hamburger is part of American culture,” he explained. “It will be a high-quality hamburger, much the way In-N-Out does it. What better way to express the true meaning of simplicity?”

 

Indeed, as the industry worked to claw its way back from an abyss of lawsuits, health scares, quarterly losses, and a revolving door of executives and business strategies, In-N-Out's cult status was being solidified in ways both great and small. That in-the-know feeling elicited by the chain was gaining traction with a wider audience. West Coast rappers made reference to the chain in their songs. “Did just that at In-N-Out Burger/No pickles, no onions, no playin',” rapped Andre Nickatina in “Cadillac Girl.” In 1998, a wry In-N-Out reference found its way in the Coen brothers' cult hit
The Big Lebowski
. The dialogue between Walter Sobchak, Donny, and the character simply known as the Dude goes as follows:

Then in 2001, Graydon Carter, the editor of
Vanity Fair
, began hiring one of In-N-Out's cookout trailers for the glossy magazine's annual Oscar party. It began almost as an afterthought. “We started serving In-N-Out burgers late in the evening of the Oscar party,” explained Carter, who said that he ate his first In-N-Out sometime during the 1970s. “The restaurants have a point to them, and they have stayed consistently on message. Plus, they make a mean hamburger,” he said. Soon, gossamer-draped and tuxedoed stars were photographed tucking into cheeseburgers. Moreover, celebrities talked about the chain to the media even as they discussed their designer attire. On the red carpet at the awards show in 2004, actress Jennifer Garner told comedian Joan Rivers that after the ceremony she was heading straight to an In-N-Out Burger. The little burger chain became a part of the evening, like the glamorous after-parties. With little prodding or formal arrangement, In-N-Out had developed a broad base of very influential, adoring, and devoted fans.

 

One of the most extreme (if not bizarre) instances of adoration began in 1999 when a sixty-two-year-old Texas businessman named James Van Blaricum hatched a secret plan to own a piece of In-N-Out Burger in the Fort Worth area (reportedly after the chain refused to entertain his earlier offers to either invest in or franchise the business). In-N-Out was hardly amused by the venture. It was not merely an homage, they contended, but a complete copycat. Van Blaricum apparently went to such incredible lengths to duplicate In-N-Out Burger that he eventually landed in court, accused of conducting an “elaborate industrial espionage scheme.” After opening the first of his planned one thousand Lightning Burgers stores at the Six Flags Mall in Arlington, Texas, in October 2001, In-N-Out Burger slapped him with a pair of lawsuits in Dallas and Los Angeles federal courts alleging trademark violation.

The plan, eventually laid out in court documents and news reports, resembled the plot of a dime-store potboiler, complete with moles and secret laboratory samples. Van Blaricum allegedly set
out to reproduce In-N-Out's extraordinary success by copying everything from the diameter of the chain's hamburger buns to the blueprint of its kitchens. A group of eight employees (some of whom were former In-N-Out associates) headed by Jason Newling, his vice president of operations (later turned whistle-blower), worked for various In-N-Outs while on Van Blaricum's payroll. Samples of the hamburgers were frozen in sealed kyro-vac containers and sent to a lab for analysis (which would allow them to be duplicated). While undercover, the group reportedly was instructed to steal everything that wasn't nailed down and digitally photograph the rest.

The suit was settled on February 14, 2002. Van Blaricum was required to cease operations, transfer all assets of Lightning Burgers to In-N-Out, pay $250,000, and was prohibited from selling hamburgers for ten years. The seven defendants/moles (not including whistle-blower Newling) agreed to pay $250 each and were barred from working for any business associated with Lightning Burgers.

Van Blaricum, however, remained defiant. In April 2002, he denied any wrongdoing to the
Fort Worth Star-Telegram
, saying that In-N-Out “couldn't prove anything. I personally froze some meat and brought it back [to Texas]. And I did ask a company if they could evaluate it,” he explained. “But I told them we do not want to duplicate anything.” Clearly embittered by the whole experience, he fumed to the paper that he had spent “hundreds of thousands of dollars to make sure we didn't copy anything,” only to have “nothing to show for it.” Suffering from heart disease, Van Blaricum proclaimed that he was through with the burger business and announced that he had even become a vegetarian. “I'm not even going to eat hamburgers,” he declared.

 

Through the years, as In-N-Out's success continued, its reputation spread as well, further and wider than the chain itself. The scarcity of In-N-Out stores seemed to invite a host of imitators, making it especially vulnerable in the forty-seven states where it was not located. It was a situation that did not go unnoticed on the top floors of the University Tower in Irvine. Led by the company's longtime general
counsel Arnold Wensinger, In-N-Out embarked on a fierce policing strategy to protect what it viewed as its most important asset: its reputation. In particular, In-N-Out went after any and all entities that appeared to infringe upon its trademarks, hiring private investigators to monitor and gather evidence, firing off letters pressing violators to change their names, and eventually filing lawsuits. Frequently, their targets were businesses that had nothing to do with burgers such as Chinese restaurants, auto parts shops, and video game stores in areas where the chain wasn't even located.

A year before In-N-Out battled Van Blaricum, it was involved in a legal dispute with Texas-based Whataburger. In December 2000, In-N-Out Burger filed a federal lawsuit against the five-hundred-unit chain (located in ten southern states), accusing it of violating the Federal Trademark Act by using the words “Double-Double.” Alleging that Whataburger's use “diminished and devalued the worth of the Double-Double mark and In-N-Out's business reputation and goodwill with the public,” the Irvine chain asked for $75,000 in damages as well as reimbursement of legal fees and other costs. The two parties reached a settlement, and Whataburger (founded in 1950) stopped calling its sandwiches “Double-Doubles.”

In-N-Out took its trademarks very seriously. The chain claimed to have used the “Double-Double” phrase since 1963 and registered it with the U.S. Patent and Trademark Office in 1981 (in 1997, it registered the Spanish translation
Doble-Doble
). Although “Animal Style,” “Protein Burger,” “3x3 Burger,” and “4x4 Burger” had long been part of the secret menu, it was no secret that In-N-Out viewed the terms as proprietary, and the chain federally registered those trademarks too. In-N-Out meant business.

Jerry and Margie Rizza, a Eugene, Oregon, couple, found that out the hard way after In-N-Out sued them in September 2003, days after the Rizzas opened an In & Go Burger with a white, red, and yellow color scheme. The lawsuit, which claimed that the Rizzas had purposefully “appropriat[ed] and trade[d] upon In-N-Out's extensive goodwill,” demanded that the Rizzas cease using the In & Go name, and required that they turn over any profits they made while using
it. Rather than fight it out in court, the Rizzas settled with In-N-Out. They agreed to modify their color scheme and remove the words “In” and “Go,” leaving the restaurant with the name & Burger.

Then, in May 2007, a new burger drive-through called Chadder's opened up near the local Applebee's in American Fork, Utah (population 22,387). Until Chadder's opened for business, American Fork had been known mostly for its marching band. Undefeated as state champions since 1990, the band had done American Fork proud, having performed at the Rose Bowl as well as the Macy's Thanksgiving Day Parade. But shortly after Chadder's opened, In-N-Out began receiving inquiries from customers asking whether the burger place was In-N-Out's new Utah chain. After all, Chadder's building exterior, color scheme, signage, menu, and employee outfits were all deceptively similar to In-N-Out's.

Perhaps adding to the confusion, for the past couple of years, news had spread that an In-N-Out was going to open sometime in 2007 in Washington, Utah; it was to be the first In-N-Out in Utah and the first outside of the chain's established three-state radius. With the Las Vegas distribution center already in operation, it made economic sense to move as far as possible while remaining able to deliver its fresh meat and ingredients daily. A location had been chosen on Telegraph Street, according to the city's mayor Terril Clove, and a pair of crossed palms had even been planted. “Thousands of people can't wait until they get here,” Clove exclaimed in February, three months before Chadder's had opened. “The most common question I get as mayor is, ‘When is In-N-Out coming?'”

Piqued by the reports of similarities between the two restaurants, in June, Arnold Wensinger was dispatched to American Fork. Once there, In-N-Out's attorney stood in line and ordered an “Animal Style Double-Double with Animal fries” and was served his meal In-N-Out style, the burger partially wrapped in paper and served in a cardboard box. Not long after Wensinger's visit, In-N-Out filed a thirty-page trademark infringement suit against the restaurant and owner Chad Stubbs in Salt Lake City and sought to shut down Chadder's as well as recover monetary damages.

News of the lawsuit spread quickly. The local media descended upon Chadder's, which actually boosted business for a time. Once the lawsuit had been filed, Chadder's, which had denied the allegations, began changing its look. Employees' aprons and hats went from red to blue, the background color of its menu board went from white to yellow, and the font on its menu board was changed. In July, a month after the lawsuit had been filed, U.S. District Judge Ted Stewart ruled that Chadder's could stay open but that it could not sell, advertise, or fill any orders using In-N-Out Burger's trademarked names. Should a customer ask for an Animal Style, Protein Style, a 3x3, a 4x4, or a Double-Double, all Chadder's employees must “say that the restaurant doesn't offer those items and refer them to Chadder's menu.”

While In-N-Out was not able to put Chadder's out of business, the court's decision did put other imitators on notice. As far back as 1998, the year that In-N-Out went after five small businesses, Arnold Wensinger told the
Los Angeles Times
, “We don't want to be known as a bully, especially in the legal field. We're just trying to protect the rights to our name.” However, he added, “They think they can ride on the coattails of an existing company. Why should somebody be able to use the name at our expense?” In-N-Out had proved to be a small chain with a big legal bite.

Although Lynsi had remained out of the spotlight for most of her life and had only nominally participated in In-N-Out's business decisions, gradually the twenty-three-year-old heiress began making more of her presence known in the company. She was present when on December 30, 2005, In-N-Out Burger reached yet another milestone: the opening of its store number two hundred in the rural town of Temecula in Riverside County, near Camp Pendleton. On that dry winter morning, there seemed to be a sense of history coming full circle. Among those gathered at the pre-opening party was Harry Snyder's nephew Bob Meserve. He had started out picking up trash at In-N-Out Burger; some forty years later, he was the chain's director of new stores. Jack Williams, who had spent many hours horseback riding with Rich Snyder on his own Temecula ranch twenty years earlier, arrived astride his horse to celebrate. Among locals, the occasion elicited a sense of collective achievement as well as excitement. City councilman Michael Naggar showed up dressed in a shirt decorated with stars and stripes.

In fact, In-N-Out Burger had a lot to celebrate. At the time of the Temecula ribbon cutting, the chain was generating an estimated $350 million in sales annually, up a healthy 6.7 percent from the previous year. In 2005, according to the food industry consulting and research firm Technomic Inc., In-N-Out stores were raking in an estimated
$1.79 million, making the chain one of the top earners among the nation's fast-food joints and placing it second behind McDonald's, whose store sales were $1.98 million.
^*
With plans under way to move further into new territory with the proposed Washington City, Utah, store, there were quiet rumblings that In-N-Out might be switching gears and planning a push into the southwest too, possibly even moving farther north and east.

 

On the top floors of University Tower in Irvine and in the second-floor executive offices in Baldwin Park, the picture was not nearly so sanguine. Several weeks before the Temecula opening, longtime In-N-Out executive and Snyder family friend Richard Boyd filed a lawsuit in Los Angeles Superior Court against the company, Lynsi Martinez, Mark Taylor, and several other executives. Boyd, a vice president at the burger chain, a board member, and cotrustee of the Snyder family trusts, charged that the company's top management was involved in a conspiracy to expel him from the company. The plot, he alleged, was actually part of a broader scheme intended to wrest control of the company from the ailing Esther Snyder in order to speed the succession of her granddaughter Lynsi. With Boyd out of the way, Lynsi would have free rein to ramp up the chain's expansion outside of its core market—or possibly, his suit suggested, even take the company public.

At the time, Lynsi was already a significant shareholder. She owned 23.59 percent of the corporation's stock independent of the trusts (Esther's share, per the agreement, was reduced to 3 percent). In two years, Lynsi would begin receiving the first installment of the family trusts, valued at $450 million. It would be another twelve years before she owned the company outright. According to the lawsuit, Lynsi was not alone in the bid to accelerate her inheritance; Boyd contended that she was colluding with Mark Taylor and various
members of In-N-Out's top executive team. Those officers, he claimed, “were fearful of losing their jobs and benefits.” Their machinations, he charged, undermined not only the expressed wishes of Esther Snyder but also were in contradiction to the terms spelled out in the set of irrevocable trusts.

Not surprisingly, the explosive allegations were deeply troubling to the burger chain that had long viewed itself as a large extended and happy family. Ostensibly to quell any sense of internal strife, the family broadcast a video message to their associates on
Burger TV
; it showed Lynsi sitting with her grandmother while Taylor rallied the troops. “We're in good shape,” he said. “Don't believe everything you hear.”

On December 9, 2005, two days after Boyd first filed, he withdrew his suit. There was a brief period of calm as the two parties and their teams of lawyers began settlement discussions. These broke down quickly. On January 5, 2006, Boyd returned to court and re-filed his original suit. A week later, In-N-Out countersued, accusing Boyd of fraud, embezzlement, and the misuse of company funds as well as breach of contract and fiduciary duty. On January 30, In-N-Out fired Boyd from his position as vice president and removed him from the board. The legal fight consumed much of the next year and a half. Before it was over, the famously private burger chain had been mercilessly scrutinized, its future growth strategy was threatened with exposure, and a pitched internal power struggle had erupted into an ugly exchange of allegations, mudslinging, and assertions of deceit and betrayal.

At the crux of the fight seemed to be the classic contest over power and money, pitting the past against the future and longtime managers against blood descendants. The portrait that emerged in court filings placed In-N-Out at the proverbial crossroads. Virtually unchanged since 1948, would the regional chain continue its slow, steady growth or rapidly evolve into a national brand? Boyd represented the past; he was part of the founding generation of the In-N-Out dynasty, safeguarding the principles that Harry and Esther Snyder established and that their sons, Guy and Rich, maintained. Lynsi was the restless heiress, part of the third generation who wanted the
riches without having to work for the rewards, while Taylor, a hapless and ambitious parvenu, lucked into the company by marrying into the weakest branch of the family tree.

At stake was the very future of In-N-Out Burger. The clash was of the sort that had fascinated social critics and observers throughout time: the fight among generations to seize control of the family fortune. Of course, it was exactly the kind of struggle that had poisoned relations and ripped apart numerous venerable family coffers. In recent times, such bitter infighting and legal wrangling had left the fortunes of the Haft family of Washington, D.C.'s estimated $500 million to $1 billion retail empire, the Chicago-based Pritzker family's $15 billion real estate holdings, and the Mondavi family's $1 billion Napa Valley winery fortune in tatters, with as much bad blood shed as ink spilled by the press chronicling their denouements.

Of course, there were two bitterly contested versions of the In-N-Out rift. Not long after the initial slew of filings, Lynsi released a statement. Boyd's lawsuit, she declared, “contains outright lies and awful inaccuracies to try and cover his errors. By far, the most upsetting is his fabrication about the relationship between me and my gramma.” She took particular umbrage at his claim that she was attempting a coup against Esther, who she said should be able to “continue to serve as president as long as she desires.” Boyd's attorney, Philip Heller, scoffed at the charges leveled against his client. “We sued,” explained Heller, “and then they brought this ridiculous claim that was demonstrably false and vicious.”

 

The feud began around 2003. It was then, according to court documents, that Lynsi—who had minimal involvement in company matters—began “attempting to exert control over [the chain] as well as [its] directors, officers, and employees.” According to Boyd's suit, he had thwarted Lynsi's attempt to print up In-N-Out business cards that identified her as the chain's “owner.” She held a minority stake in the company, as did Esther, who also happened to be the company's president, and Boyd thought the move both disrespectful and inap
propriate. On several occasions before he died, Boyd claimed that Guy Snyder had told him that he didn't want his daughter to receive her inheritance before she was mature enough to handle it; he wanted her to understand the responsibility and receive an education first. However, Boyd's efforts to encourage Lynsi to “actively learn every aspect of In-N-Out operations and to attend the meetings of the In-N-Out vice presidents” in preparation for her eventual control of the company, he contended, seemed to create a further rift between the two.

It was around this time that Lynsi's religious life was said to overlap with her business affairs. The chain, previously closed only on Christmas Day and New Year's Day, was now closed on Easter Sunday as well, reportedly on Lynsi's instructions (she was also said to have asked for the antique bar to be removed from the Liberty Room in Baldwin Park). According to the filings, Lynsi held weekly prayer meetings for associates in her home that featured prerecorded sermons by Steven A. Radich, the Successful Christian Living church's Apostle. Her husband, Richard Martinez, asked In-N-Out associates to pray with him during the workday. Boyd took issue with what he considered the couple's “attempt to foist [their] religious beliefs on [their] employees.” Boyd contended that Lynsi “did not believe [him] to be a man of God and worked to have him removed from the company.”

By early 2004, the discord between Lynsi and Boyd seemed to have reached its apex. Boyd charged that she used Taylor to convey her wishes, instructing her brother-in-law to “fire, demote, or transfer to other departments those she believed to have slighted her.” Boyd was apparently one of these. According to court documents, Mark Taylor and Roger Kotch, the chain's chief executive officer and vice president for administration and finance, approached Boyd and asked him to resign from his position as cotrustee of the Snyder family trusts. Although the two men indicated that Boyd could remain as vice president for real estate and development, they claimed to be acting on behalf of Lynsi, who wanted to remove Boyd and install Shawn Prince (the husband of her half-sister Terri) as cotrustee. Angered by the request, Boyd refused to consider the suggestion until Lynsi explained to him personally why she wanted him to resign.

On April 8, 2004, Boyd asked to meet with Lynsi, Taylor, and a complement of lawyers to discuss matters surrounding taxes owed on Guy Snyder's estate. After Guy died, his estate posed a huge tax burden that had the potential to financially wipe out the company. In order to reduce about $47 million in taxes from his estate and pay off the outstanding federal and state taxes owed, Boyd and Taylor, as cotrustees of the family trusts and co-executors of Guy's estate, along with their lawyers worked out a plan for the trusts to borrow about $60 million from the company to pay it off; the result was an agreement whereby the trust would be required to pay back about $147 million to the company, including interest, in 2015. However, Boyd claimed that Lynsi refused to attend the meeting. Taylor and Kotch explained to Boyd, according to the filings, that Lynsi had told them that if Boyd intended to be present, she would not “be in the same room with that son of a bitch.”

According to the suit, a week later, on April 14, Taylor informed Boyd that Lynsi was asking whether he had reconsidered resigning as cotrustee. He was asked to take an early retirement and pressed again to resign from the trust in order to allow Shawn Prince to be installed in his place. Boyd remained defiant. Adding Prince, he countered, directly violated the terms of the trust, which did not permit the naming of successor trustees. Furthermore, Boyd asserted that Prince was “unqualified to administer a multimillion dollar trust.” After Boyd flatly refused, he was told that Lynsi exclaimed, “Doesn't that green-eyed monster know what the Snyder family wants?”

From that point on, Boyd contended that he was left out of vice presidents' meetings and not consulted on a spectrum of management issues. Boyd asserted that he found out the reason from other vice presidents, who were performing a delicate balancing act; Lynsi now refused to be in the same room with him. Beginning in June, Boyd was no longer asked to take documents to Esther's home for her to approve and sign. Since Esther had been largely homebound after breaking her hip, Boyd had regularly brought corporate papers and snapshots of new store openings for Esther to review. During this time, Boyd contended, he was routinely denied information and
documents that he needed to perform his duties as cotrustee. Eventually, he claimed, Taylor replaced the long-standing counsel of the Snyder family trusts without notifying Boyd.

Increasingly, Taylor was exercising his ambitions within the highest ranks of the company. During this time, Boyd asserted that Taylor was transparent in his desire to become chief executive of In-N-Out. He seemed bent on making his mark on the chain to which in reality he had only a tenuous claim, given the trusts' mandate to ensure that the company be passed on to direct blood heirs. Taylor, Boyd charged, was aggressively pushing to transform In-N-Out into a national and later international company, “without regard to In-N-Out's ability to service those markets” or “ensure In-N-Out's traditional superior quality and service.”

In a company that had long made decisions by consensus, Boyd asserted that Taylor took to launching his own initiatives without consulting other vice presidents. At one point, Boyd claimed that Taylor had tried to differentiate the egalitarian uniforms of managers from associates—a move, he contended, which would have “substantially changed In-N-Out's corporate culture.”

Sometime during 2004, Taylor reportedly attempted to have Esther put in a home. The effort was thwarted only after her nephew Joe Stannard (who had power of attorney over Esther's medical care) interceded. The episode did not exactly endear Mark to Esther, who Boyd alleged had become “extremely angry and hostile to Taylor.”

A campaign of isolating Esther, Boyd charged, began in earnest. Taylor and other executives neglected to inform or consult her concerning business decisions and developments at the chain including price increases and company growth, while at the same time conducting management meetings without her knowledge or presence. During this time, Boyd insisted that he continued to consult and advise Esther regularly about business developments, visiting her at her home or discussing matters over the telephone.

Although she lived less than two miles from Esther, several intimates said that Lynsi saw little of her grandmother. During a meeting concerning Esther's health care, Joe Stannard urged Lynsi
to visit. “She said, ‘I don't know how to talk to an old lady,'” he recalled. “‘And she bugs me about college and working at In-N-Out all the time.'”