Vermont-based Milne Travel Agency has filed a lawsuit against Internova Travel Group (No. 11 on Travel Weekly's Power List) accusing Internova of "attempting to hijack the business" by firing manager Scott Milne and buying his shares at a discount.
The lawsuit, filed Aug. 26 in the Supreme Court of the State of New York, asks for monetary relief to be determined by the court. It estimated damages at around $20 million.
Internova has denied the claims.
According to the lawsuit, Milne Travel Agency has been operating in the Northeast since 1975. In March 2016, the agency and Altour formed a joint venture, selling 51% of its assets to Altour and forming Altour Milne. As part of the joint venture, Milne would stay on as the agency's manager.
The agreement also included a "tag-along" right for Altour Milne, the lawsuit details. Under that provision, if Altour sold "all or substantially all of its equity and/or assets" to a third party, Milne Travel Agency could tag along and require that third party to buy its interest in Altour Milne for the same terms of an Altour sale.
Additionally, the agreement stipulated that if Altour acquired any travel agencies with a physical location in the Northeast, Milne Travel Agency could participate by having Altour Milne acquire the agency, the lawsuit said.
The next year, 2017, Internova acquired Altour.
In the lawsuit, Milne Travel Agency asserted it was not informed about the sale. The lawsuit alleges Altour "went so far as to fraudulently mislead [Milne Travel Agency] about the transaction." Milne asked about the sale at the time, but was told it would not qualify as a transaction that would trigger Milne Travel Agency's tag-along right.
He would again ask about the sale after the announcement that Altour CEO Alexandre Chemla was leaving the company at the end of 2023. According to the lawsuit, Milne believed that meant the business had been fully sold to Internova and he could exercise the tag-along right. But in a December 2023 virtual meeting, the lawsuit states, Milne was told by Internova leadership that Altour was, in fact, sold to the company in 2017 and the transaction would have triggered Milne Travel Agency's tag-along rights at the time.
Milne was told during that meeting that he couldn't exercise tag-along rights in December 2023 because he would have had to do so at the time of the 2017 sale, "even though when [Milne Travel Agency] attempted to do so in 2017," leadership blocked the chance with its "misrepresentation," the lawsuit said.
"To add insult to injury, in the face of this lawsuit, defendants have now recently flip-flopped yet again, reverting to their 2017 position that the Internova sale in 2017 did not trigger [Milne Travel Agency's] tag-along right at the time because a different Altour entity was sold then set forth in the operating agreement," the lawsuit states.
The lawsuit makes several other allegations, including that Internova must have participated in acquisitions in the New England area, including the signing of any independent contractors. The lawsuit states that Milne Travel Agency should have had the option to participate in those per its agreement with Altour.
However, Internova has been "claiming that no such acquisitions occurred," according to the lawsuit.
"In light of defendants' ongoing fraudulent behavior, including their misrepresentations concerning the Internova sale, as well as their accounting improprieties over the past eight years, it defies logic that 'one of the largest travel services companies in the world' did not participate in any New England acquisitions over the past eight years," the lawsuit states.
Milne Travel Agency also accused Internova of concealing revenue and reducing profit distributions to the agency, and failing to pay overrides and incentives in a timely manner.
The lawsuit also alleges that Internova has threatened to fire Milne, force him to sell Milne Travel Agency's ownership "at a significant discount," and "disparage him to his longtime employees."
In a statement, Internova denied the claims in the lawsuit and said it will "vigorously defend ourselves against these allegations."
"We had been working in good faith to resolve our differences amicably with Mr. Milne prior to the filing of the suit, but, unfortunately, we were not able to reach an agreement," the statement continued. "We regret Mr. Milne decided to resort to litigation, but we are confident we will be vindicated."