Rick's Steaks Leaving RTM?

[Holly Moore]

Last week I asked a merchant what was up. His answer, "They are still going to court as far as I know. The market is spending hundreds of thousands of dollars on this. That could be the new bathrooms we need."

I am still wondering how much of the market's funds is being spent/squandered by the Board on this personality conflict that easily could be resolved by offering a long term, solid tenant the same lease that is being offered to everyone else.

Edited February 15, 2008 by Holly Moore (log)

[Bluehensfan]

Last week I asked a merchant what was up.  His answer, "They are still going to court as far as I know.  The market is spending hundreds of thousands of dollars on this.  That could be the new bathrooms we need."

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Aha! No wonder there were no doors on the stalls in the men's room this week at the Market (seriously...look for yourself!)

[Tim Dolan]

In today's Daily News...

[Holly Moore]

Still wondering. How much money the Board of Directors has blown on this landlord tenant dispute, this personality conflict? Don't need the exact number. They can round off to the nearest hundred thousand dollars.

How much money?

Also, what is the return on this expenditure? The rents are pretty much set based on location and type of business. Replace Rick's with someone else. No additional rental income. From a business point of view there is absolutely no logic to Rick's eviction and the resulting law suit.

If it is not business, then why? Political favors? Egos? To scare the other merchants into blind obedience? Or reasons that must remain unspoken until proven?

I do know that the Rick's Steaks' location is one of the most valuable spaces in the market. If Rick Olivieri loses, someone will get that location without paying Rick a penny. You have to wonder how someone gets that lucky - getting a million dollar business for free.

Wish I had that sort of luck. Wonder what one has to do to have that sort of luck.

Edited February 29, 2008 by Holly Moore (log)

[Capaneus]

Still wondering.  How much money the Board of Directors has blown on this landlord tenant dispute, this personality conflict?  Don't need the exact number.  They can round off to the nearest hundred thousand dollars. 

How much money?

Also, what is the return on this expenditure?  The rents are pretty much set based on location and type of business.  Replace Rick's with someone else.  No additional rental income.  From a business point of view there is absolutely no logic to Rick's eviction and the resulting law suit. 

If it is not business, then why?  Political favors?  Egos?  To scare the other merchants into blind obedience?  Or reasons that must remain unspoken until proven?

I do know that the Rick's Steaks' location is one of the most valuable spaces in the market.  If Rick Olivieri loses, someone will get that location without paying Rick a penny.  You have to wonder how someone gets that lucky - getting a million dollar business for free. 

Wish I had that sort of luck.  Wonder what one has to do to have that sort of luck.

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Maybe that is an incidental result of the dispute. I am sure you are making no insinuation of anything else, since that would be far beneath you.

As to the legal fees, have you considered that Sprague and Sprague's representation may be covered by their retainer with City Hall? In which case it would cost the Market not a penny.

[Holly Moore]

Still wondering.  How much money the Board of Directors has blown on this landlord tenant dispute, this personality conflict?  Don't need the exact number.  They can round off to the nearest hundred thousand dollars. 

How much money?

Also, what is the return on this expenditure?  The rents are pretty much set based on location and type of business.  Replace Rick's with someone else.  No additional rental income.  From a business point of view there is absolutely no logic to Rick's eviction and the resulting law suit. 

If it is not business, then why?  Political favors?  Egos?  To scare the other merchants into blind obedience?  Or reasons that must remain unspoken until proven?

I do know that the Rick's Steaks' location is one of the most valuable spaces in the market.  If Rick Olivieri loses, someone will get that location without paying Rick a penny.  You have to wonder how someone gets that lucky - getting a million dollar business for free. 

Wish I had that sort of luck.  Wonder what one has to do to have that sort of luck.

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Maybe that is an incidental result of the dispute. I am sure you are making no insinuation of anything else, since that would be far beneath you.

As to the legal fees, have you considered that Sprague and Sprague's representation may be covered by their retainer with City Hall? In which case it would cost the Market not a penny.

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Re legal fees, I'm sure if that was the case the Board would have confirmed it long ago. They stated that they hired Attorney Sprague et al because of the potential tactics of Olivieri's attorney.

As to luck. Who knows? The Market's position, over time has evolved from the opportunity of getting a Tony Luke's to claiming that Rick's Steaks is being evicted because Rick Olivieri keeps changing his lease negotiating position.

If the latter is indeed the reason, and considering the bad will the Market Board has generated in the eyes of many merchants and some of the public, prudent management of a public trust and a non-profit organization would have found a way to end this quickly once it got so out of hand. Rick's Steaks would have gotten a lease and it would all be over ten months ago.

That the Board is willing to spend so much money and do such damage to merchant relations and public opinion in order to evict a long term tenant who has run a good operation makes one wonder about the Board's true motives. I consider that a fair question about the managers of an Institution I love - not an insinuation.

Edited February 29, 2008 by Holly Moore (log)

[Capaneus]

Fair enough. I just don't see this as that mysterious, I guess: everything I've heard (none of it from the principals, I should add) has convinced me that management just views Rick as a royal pain in their fundamental nether regions, and want him to no longer be part of their lives. It seems that simple, from what I can tell. And if you grant that "run a good operation" ought to include having a constructive relationship with your landlord, they may have a point.

[Holly Moore]

One of the issues in this thread has been whether long term tenants of of a Philadelphia Institution like Reading Terminal Market are any different than long term tenants of a shopping mall like the Gallery.

I believe that Reading Terminal Market has an obligation to its tenants far above and beyond Mall Management 101 cut and dry leasing practices. It is the tenants who built the market tradition into what it is today. They have earned their place in the market and deserve the option to renew their lease as long as they are a credit to the market.

In Rick's Steaks case, Rick Olivieri has gone further, by serving the market as head of the merchant's organization for a number of years. He has also run a very popular and successful business. Rick's Steaks, over the past twenty-five years, has indeed brought credit to the market's image and its shoppers' experience.

There are going to be adversarial issues between the President of the Merchant's Association and RTM management. There are going to be adversarial issues between a long time tenant and RTM management. But capable management who respect the traditions of Reading Terminal Market should be able to deal with such issues without resorting to the ultimate act - taking away a merchant's livelihood.

By threatening eviction, the Board got Rick Oliveri's attention. He will sign the standard lease for his sort of operation. That should have ended it. The Board won.

Anything beyond that is vindictive. Vindictiveness is always small minded. It might be overlooked in a shopping mall environment. Those guys are supposed to be sharks, go for the jugular.

But Reading Terminal Market and its Board of Directors must be above such petty vindictiveness. If a long term tenant, a significant contributor to the market's tradition, does not bring discredit to the market and does pay his rent, he should be given the benefit of the doubt.

A Board of Directors that doesn't get this, that sees Reading Terminal Market as just another shopping mall, that is willing to squander hundreds of thousands of dollars of Market funds on a law suit that never had to happen, that doesn't respect the wishes of the majority of the merchants who support Rick's Steaks, that arrogantly evicts a long term tenant just because they don't like him - that Board must go. They do not serve the tradition or the future of Reading Terminal Market.

Edited February 29, 2008 by Holly Moore (log)

[mrbigjas]

Anything beyond that is vindictive.  Vindictiveness is always small minded.  It might be overlooked in a shopping mall environment.  Those guys are supposed to be sharks, go for the jugular. 

But Reading Terminal Market and its Board of Directors must be above such petty vindictiveness.  If a long term tenant, a significant contributor to the market's tradition, does not bring discredit to the market and does pay his rent, he should be given the benefit of the doubt. 

why do you hate philadelphia? small minded people wielding their power for vindictive purposes is a hallmark of our fair city.

[MarketStEl]

I think all of you know my connections and affiliations, especially my support for and fondness of the Market's current General Manager.

That said, I think Holly may have a point: The Market management has made its point, and even Rick understands now, or so I hope, so what is gained by continuing this?

As far as landlord-tenant law -- or what I understand of it -- is concerned, I see no way Rick could win his case in court. A landlord pretty much has the right to do as he pleases with his property. If a landlord decides not to renew a tenant's lease because he woke up and had a bad hair day, the tenant has little recourse unless he can prove that the landlord failed to provide those things the law says he must.

Most landlords, of course, don't behave so capriciously. Something obviously led the management to conclude that the Market would run better without Rick there than with him. But even though it would have been more honest for them to have said this, what sort of public reaction do you think a Market spokesman would have gotten by saying "We're getting rid of a royal PITA so this Market we all love can run more harmoniously in the future"? (I know that some months ago, I said that this is exactly what RTM management should have said. It still is. But can you deny that it would have also played out negatively?)

And so we come to this untenable pass for both parties. The problem with the simple solution is that in a power struggle, it can be read as a sign of weakness -- a troublesome person can still get what he wants by holding out until the other side caves. And I will wager that some on the Market board see things exactly this way, though I cannot prove that anyone does. But until that person can be persuaded that holding firm will do more long-term damage to the Market than giving in, things will remain headed on their current course, and the Market management may well win the battle and lose the war.

[rlibkind]

Rick's Trial Begins Monday

Summary Judgments, Pre-trial Orders Back Market On All Major Issues

The Whiz might be flying when the dispute between Rick's Steaks and the Reading Terminal Market finally goes to trial Monday, but as far as the legal issues are concerned, it's all over but the shouting, of which there may be a lot.

A review of the report of docket entries on the Court of Common Pleas web site (you can read them here and here) leads one to the conclusion that the Reading Terminal Market has won on each major point of contention through a series of summary judgments and rulings on pre-trial motions from Judge Mark I. Bernstein.

Last summer, each side sued the other in this mess: Rick's Steaks proprietor Rick Olivieri sued the market alleging various misdeeds relating to the non-renewal of his lease; the RTM went to court seeking an order forcing his eviction.

Back in February Judge Mark I. Bernstein dismissed all save one of Rick Olivieri's original complaints against the market, its board chair Ricardo Dunston, and its general manager Paul Steinke.

Earlier this month, Judge Bernstein entered a partial summary judgment into the record on the RTM's eviction suit, finding in favor of the market on three counts: ejectment, breach of contract, and trespass. The judge also dismissed five counterclaims filed by Olivieri, including one charging conspiracy.

In February Judge Bernstein said Olivieri's attorneys can try to make the case that the RTM owes him any money he spent on renovation in anticipation of his lease being renewed, according to earlier press reports. However, the judge concluded the cheese steak scion could not seek punitive damages.

Bernstein ruled Rick's Steaks failed to offer any evidence of wrong-doing by the market, including claims of breach of oral contract, fraud, and failure to negotiate in good faith. He also dismissed Olivieri's complaints against Tony Luke, the market's prospective tenant to take over the prime space on the 12th Street side of the market, the main drag used by convention goers between their hotel rooms and the convention center.

Of course, after the trial is over and the judge issues his final decisions, Olivieri might be able to extend his tenancy until any appeal process is concluded.

No matter your views on the righteousness of Rick's cause, or the market's, things look bleak for Olivieri.

It's hard to imagine it is mere coincidence that a rumor just reached the surface in the last couple of weeks, a rumor that's been fed to reporters as well as merchants: Tony Luke's wasn't going to operate at Rick's, but someone else would under his name. In other words, it would in essence be a franchise, even if it wasn't called that.

Why is that rumor a big deal? Because if true it would be a clear violation of the intent of the market's "operating policy guidelines". The relevant portion of the guidelines reads:

Leases shall require the owners to be actively involved in the management and operation of their businesses within the Market.

I put the question directly to RTM General Manager Steinke this week, and he stated flatly: "We do not lease to franchises."

Yet before talks ended when Olivieri filed his suit late last July, the RTM had never held discussions directly with Tony Luke Jr., but with parties the market believed represented him, according to Steinke. "We always felt we were dealing with him." That may be the case, but Steinke's response has as much fudge in it as the display cases at Mueller's Chocolates and Pennsylvania General Store.

Steinke said "All discussions were shut down before they got very far by Luke himself. I know he had interest in becoming a tenant here, but once the lawsuit was filed those discussions were terminated and, by his own decree, won't restart until the legal issues are resolved. We haven't had any discussions with Tony Luke's since last July." Any rumor, he said, "is speculation at best."

So, why did the TL franchise rumor appear just a week or so before the trial? It's mere speculation at best on my part, but Olivieri's only hope is for politics to save his bacon . . . I mean, cheese steak.

Where do the merchants stand on all of this? I've yet to find a merchant who supports the market's decision to oust Olivieri, but every one I've spoken with thinks it should never have reached the litigation stage. At least a couple are puzzled why Olivieri continues to spend big bucks fighting a losing battle (he's complained to many, including me, about his legal bills).

All the merchants I've spoken with support the general direction and management of the market under its current leadership (board and manager), even though they remain critical of Rick's ouster. What confidence the merchants do have in market management would be undermined should it try to bring in a franchise or any business that smells of franchise, even if it isn't a franchise in legal form.

Unless there's a weekend surprise settlement (never an impossibility as a trial date nears), it's come down to Crushing Your Enemies on both sides come Monday's court date.

[Holly Moore]

It would be interesting to know exactly who that prospective franchisee was.

I'm also curious as to how he knew that the Rick's Steaks space was to become available. Evidently the prospective (wannabe perhaps) Tony Luke's franchisee approached the market board rather than as I think was previously communicated - that the board/management initiated contact with Tony Luke.

If nothing else, said franchisee had a wondrous, psychic-like, view of the future. Amazing, at least, for those who believe that a stage psychic does it all on his own, without the help of a hidden ally.

Edited to add -

From an Iquirer article cited earlier in this thread:

That e-mail - which Dunston did not provide a copy of - triggered a conversation among board members about whether to keep Rick's Steaks. Dunston said Olivieri was aware of his position, but made no overtures to the board and instead raised the same concerns to a board member in May.

Shortly after that, the board contacted Tony Luke's, Dunston said. In June the board told Olivieri that he had to be out July 31.

If the board initiated the contact, as Chairman Dunston is quoted as stating, how could they not be talking to Tony Luke?

Yet before talks ended when Olivieri filed his suit late last July, the RTM had never held discussions directly with Tony Luke Jr., but with parties the market believed represented him, according to Steinke. "We always felt we were dealing with him."

So how does one initiate contact with the Tony Luke organization and end up talking with a franchisee and not someone representing Tony Luke Jr.?

Just one more of the contradictory statements on behalf of the RTM board/management.

It is going to be a very informative trial.

Edited May 31, 2008 by Holly Moore (log)

[Bluehensfan]

It would be interesting to know exactly who that prospective franchisee was.

I'm also curious as to how he knew that the Rick's Steaks space was to become available.  Evidently the prospective (wannabe perhaps) Tony Luke's franchisee approached the market board rather than as I think was previously communicated - that the board/management initiated contact with Tony Luke. 

If nothing else, said franchise had a wondrous, psychic-like, view of the future.  Amazing, at least, for those who believe that a stage psychic does it all on his own, without the help of a hidden ally.

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Regardless of which party is at fault on this issue, I get the sick feeling that RTM has probably in essence funded another full-time butler for Dick Sprague's mansion because of how much they probably spent in legal fees. And I'm sure that Rick's legal representation was not exactly pro-bono either.

[rlibkind]

Rick's Steaks Exits Market Oct. 31

Rick Olivieri has until Oct. 31 -- Halloween -- to serve cheese steaks at the Reading Terminal Market.

Under the terms of a settlement announced in court before trial was to begin this morning, Olivieri will avoid being on the hook for nearly $700,000 in the RTM's legal fees if he vacates the market peaceably. (Olivieri's own legal fees are understood to be in the six-figure range, also.) The settlement also frees him from nearly $27,000 in rent penalty fees he held back.

The sole issue that would have come to trial if the settlement had not been reached was Olivieri's claim for restitution for improvements to the Rick's Steaks stand in anticipation of his lease being renewed. Under the settlement, Olivieri receives $1,500 for those improvements without any admission of guilt by the market.

Throughout the morning in Judge Mark I. Bernstein's courtroom, Olivieri appeared confident and smiling, with his family by his side and more than a half-dozen fellow merchants seated behind him. In speaking with reporters after the settlement was announced in open court, however, he needed to take several brief breaks to compose himself.

Olivieri said he considered market management's actions toward him "despicable," repeating his charge that he was singled out because he had aggressively represented merchants as president of their association during lease negotiations. RTM spokesman Kevin Feeley denied those charges, saying Olivieri had sought lease terms for his own business that were different than those he negotiated for other merchants.

Olivieri became most emotional when speaking of his five full-time and four part-time employees. "I've got employees who've been with me for 20 years. It's like a family," he said.

The cheese steak scion is looking at potential locations for when he leaves the market, but admits "you'll never find a location like the market. But I've got a good customer base, and people will seek me out." He also will continue his license agreement for the Rick's Steak stall operated by Aramark at Citizens Bank Park, at least through the end of this season.

When asked why RTM agreed to the settlement, Feeley, the market's spokesman, said management "wanted to do this as humanley as possible. The judge was ready to evict him today." He added that as part of the lease, tenants are responsible for legal fees the market faces when tenants sue them over lease and related issues. Of the nearly $700,000 in the market's legal fees, about $250,000 were for the market's suit against Olivieri seeking his eviction, and $445,000 for the market's defense of Olivieri's suit against the market.

Feeley and RTM Board Chairman Ricardo Dunston made a point of stating that the legal fees incurred by the market will have no impact on the rents charged to merchants or market capital improvement programs. Those fees which are not reimbursed by the market's insurers would come from the non-profit corporation's contingency reserves, they said.

As for who will be a new cheese steak vendor at the market (Spataro's in center court also serves cheese steaks), Feeley said that since the market now knows it will have the Rick's Steaks space available after Oct. 31, it can seek a new tenant. He noted that all discussions with Tony Luke's ended when Olivieri filed suit last July, and that Luke had said he would not entertain opening in the RTM until Oliveiri's dispute was resolved.

Dunston and Feeley emphasized that the market's by-laws preclude any leases to franchises.

Edited June 2, 2008 by rlibkind (log)

[Holly Moore]

$700,000 in legal fees?

$700,000 in legal fees!!!

Just to change tenants? The new tenant will not be paying any more than what Rick's Steaks would have paid for the same space.

Forget what I said about merely ousting the Reading Terminal Market Board of Directors. They should be tarred, feathered and ridden out of town on a rail. Have they no shame? Have they no fiscal responsibility?

Something ain't right here. I'm real curious about the person taking over the space and how he/she jumped to the head of the line.

Even more curious about who was supposed to have taken over the space had everything gone as initially intended by the RTM Board when they made the decision not to renew the Rick's Steaks lease.

Edited June 2, 2008 by Holly Moore (log)

[mrbigjas]

$700,000 in legal fees?

$700,000 in legal fees!!!

Just to change tenants?  The new tenant will not be paying any more than what Rick's Steaks would have paid for the same space.

Forget what I said about merely ousting the Reading Terminal Market Board of Directors.  They should be tarred, feathered and ridden out of town on a rail.  Have they no shame?  Have they no fiscal responsibility?

this part:

He added that as part of the lease, tenants are responsible for legal fees the market faces when tenants sue them over lease and related issues.

if you're pretty much sure that you're going to win, and that if you do rick's will pay the fees, why not go ahead and blow as much as you want to make sure that you win?

[Holly Moore]

From Bob's excellent summary

Under the terms of a settlement announced in court before trial was to begin this morning, Olivieri will avoid being on the hook for nearly $700,000 in the RTM's legal fees if he vacates the market peaceably.

The RTM Board is swallowing the legal fees.

Edited June 2, 2008 by Holly Moore (log)

[mrbigjas]

i.... don't know how to read. it's my secret shame.

[Bluehensfan]

From Bob's excellent summary

Under the terms of a settlement announced in court before trial was to begin this morning, Olivieri will avoid being on the hook for nearly $700,000 in the RTM's legal fees if he vacates the market peaceably.

The RTM Board is swallowing the legal fees.

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Vince Fumo's gonna open a casino in center court to recoup the costs. Oh wait, he and Sprague had that falling out. Maybe not. Either way, that's a lotta toilet tissue.

[rlibkind]

From Bob's excellent summary

Under the terms of a settlement announced in court before trial was to begin this morning, Olivieri will avoid being on the hook for nearly $700,000 in the RTM's legal fees if he vacates the market peaceably.

The RTM Board is swallowing the legal fees.

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RTM expects to get at least some of that money back from its insurers (read down in my report on the settlement). How much is an unanswered question.

Keep in mind that of the approximately $700,000, about two-thirds was spent by the RTM in defending itself against Rick's suit; about one-third was to press RTM's suit seeking an eviction order when Rick refused to vacate after his lease expired. As noted in my report, the judge would have signed that order today had there not been a settlement.

FWIW, the market could have resorted to "self-help", i.e., turning off his gas, etc., the day after his legal tenancy expired. But it didn't.

[Holly Moore]

I saw the part about the insurance company covering some of the $700,000 lawyers' fees. Didn't make much sense. Kind of like me going to my insurance company and saying, "Sure that guy rear-ended me, but I don't want to complicate his life. Even though we could make him cover the damage, would you mind paying instead?"

And the insurance company agreed. What a nice insurance company. Wonder what that will do to next year's insurance cost.

Speaking of not making sense:

When asked why RTM agreed to the settlement, Feeley, the market's spokesman, said management "wanted to do this as humanley as possible.

Picking up $700,000 in lawyers fees sure is humane. What a nice Board of Directors. Of course it doesn't say much for their fiduciary responsibilities. Blowing off $700,000 of the market's funds.

Might there be some other reason the Board of Directors was so darn generous? Maybe so the case would not go to trial where there are all those pesky swear-to-tell-the-truth requirements. Wonder if the subject of the mysterious Tony Luke Jr. franchisee would have come up?

If only a year ago the RTM Board had been so kindhearted. Would have saved everyone a lot of money.

Edited June 3, 2008 by Holly Moore (log)

[Capaneus]

I'm sure the insurance company wasn't precisely sandbagged by the terms of the settlement. Keep in mind that it avoids further litigation. It seems pretty obvious that the voluntary assumption of the fees was used as a carrot to get Olivieri to go along peaceably.

Anyway, it's done. I'll miss this thread terribly, but somehow we'll soldier on...

What's for lunch?

[rlibkind]

FWIW, here's what Laban said on his chat board a couple of weeks ago:

As for Rick's steaks? They were so incredibly ordinary, actually subpar (tasteless, unseasoned meat topped with rubbery provolone and canned mushrooms and over-pickled peppers that I was so unwise to order - why oh why did I get the "works"?), you have to wonder how he stayed in business so long. Of course, I know - it's the first place every tourist sees when they walk into the Market, and the line is pretty much automatic. I've always thought to be a shame, sort of bad publicity for a Philly icon (the steak). Then again, I've also always said that there should be enough room for more than one cheesesteak place in the Reading Terminal Market.

As info, there is another cheesesteak vendor. Spataro's has been making them since they moved to their new center court location. Anyone tried them yet?

[Holly Moore]

FWIW

Not much. Mostly just the cowardly act of kicking a man when he's down.

Rick's Steaks aren't the best in the city, but they are no way near the inferior sandwich Laban claims them to be. Rick's cheesesteak is as representative of a basic cheesesteak as Pat's.

Amusingly Laban orders a cheesesteak like a tourist and then, again inaccurately, suggests that Rick's Steaks customer base is mostly tourists.

One hopes Laban's restaurant reviews are more accurate.

Edited June 28, 2008 by Holly Moore (log)

[Mummer]

Down was where Rick a year ago when he lost his lease.

Since then -

. He wasn't stuck with his landlord's legal cost despite the judge ruling that he didn't have a leg to stand on,

. He added 16 additional months operating a thriving cash business while

. Not paying penalties for violating his lease.

We'll never know the "real" lease story, but I nominate Rick as savvy businessman of the year for all the juice he managed to squeeze from those lemons.

Not much.  Mostly just the cowardly act of kicking a man when he's down.

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