Wal-Mart, subsidiary ordered to pay $624 million in damages

Mexican distributor sued companies that broke deal

May 17, 1999|By SAN ANTONIO EXPRESS-NEWS

SAN ANTONIO -- A jury here has awarded a Mexican company more than $624 million after finding that Wal-Mart and a Wal-Mart subsidiary acted with malice when it broke a partnership deal to distribute groceries throughout Mexico.

Jurors will return to court today to decide how much Wal-Mart and its subsidiary should pay in punitive damages.

The jury verdict on Friday concluded a case that began in 1993 when Valores Corp. of Monterrey, Mexico -- Mexico's second-largest wholesale grocery distributor -- filed a breach-of-contract lawsuit accusing Wal-Mart and its subsidiary McLane Co. Inc. of reneging on a deal to be its partner in a wholesale grocery distribution operation in Mexico.

McLane, based in Temple, Texas, is the nation's largest wholesale grocery distributor to convenience stores, and has annual sales of more than $8 billion.

Valores does much of its business with mom-and-pop stores and in home delivery.

The jury found that McLane had failed to live up to the agreement and breached its fiduciary duty to Valores.

The panel concluded that Wal-Mart knowingly participated in McLane's breach, intentionally and willfully interfered with the McLane-Valores deal, and that McLane and Wal-Mart acted with malice.

The damages -- the exact sum Valores had sought -- were based on future earnings Valores said it would have achieved had the partnership held together for 25 years.

The day after the McLane-Valores deal was announced, Wal-Mart received a complaint from another major Mexican company, CIFRA, Mexico's largest retailer.

CIFRA had its own joint venture with Wal-Mart to create a chain of Sam's Club warehouse stores, and CIFRA President Henry Davis expressed concern about the McLane project to Robson Walton, Wal-Mart's chief executive and the son and heir of the late Sam Walton, according to documents filed in the case.

From that point, Cedillo argued, Wal-Mart executives were telling officers at McLane to "slow the documentation -- don't go forward."

Pub Date: 5/17/99

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