MONTREAL - The founder of DavidsTea Inc. (DTEA.O) is being sued by company shareholders seeking to have Herschel Segal removed as executive chairman and the election of a new board of directors.

Three Highland Limited partnerships which together own 12.8 per cent of the Montreal-based beverage retailer's shares filed suit in Quebec Superior Court against Segal and his investment firm Rainy Day Investments.

Rainy Day Investments owns 46.4 per cent of DavidsTea shares.

DavidsTea says the lawsuit is without merit and contains old, baseless allegations.

Segal says in a statement that DavidsTea won't be distracted by efforts to turn around the struggling retailer.

The company, which is not named as a defendant, says it will defend against efforts that affect the election of directors or appointment of management.