February 2001

CASE TYPE: breach of contract, tortious interference

CASE: COC Services Ltd. v. CompUSA Inc., No. 00-8358-F (Dist. Ct., Dallas Co., Texas)

PLAINTIFF'S ATTORNEYS: Mark S. Werbner of Dallas' ; Scott A. Scher of Dallas' Brown McCarroll & Oaks Hartline; and J. David Brown of Dallas' Winstead Sechrest & Minick

DEFENSE ATTORNEYS: Mark T. Josephs and Alan N. Greenspan of Dallas' Jackson Walker; Edwin B. Mishkin and Deborah M. Buell of New York's Cleary, Gottlieb, Steen & Hamilton; and Theodore W. Daniel, John A. Gilliam and Elizabeth Kellow of Dallas' Jenkens & Gilchrist

JURY VERDICT: $454.5 million

IN 1997, THE chief executive officer of COC Services Ltd., Lawrence McBride, and the president of CompUSA Inc., James Halpin, began talking about a deal wherein COC would acquire the exclusive franchise rights for CompUSA in Mexico, said plaintiff's attorney Mark S. Werbner. In January 1999, both parties signed a letter of intent titled "master franchise agreement," which gave COC the franchise rights and the ability to bring in a partner, with the proviso that COC maintain at least 20% of the resulting partnership, Mr. Werbner added.

COC came to Carlos Slim Helu, considered the richest man in Latin America, who owns a controlling interest in Telmex, the Mexican phone company, as well as in the Sears chain stores in Mexico, through his companies, Grupo Carso S.A. de C.V. and Grupo Sanborns S.A. de C.V. "COC came to Mr. Slim to be a partner, but after he got the financial information about CompUSA, Mr. Slim bought CompUSA," said Mr. Werbner. At this point, he said, CompUSA, Mr. Halpin and Mr. Slim "cut COC out of the deal." No CompUSA stores were ever opened in Mexico, he added.

COC sued Mr. Slim, his companies, Mr. Halpin and CompUSA, charging breach of contract, tortious interference with contract and tortious interference with prospective contract. The plaintiff contended that Mr. Slim and his companies had cut COC out of the deal because they did not want to share the Mexico franchise with COC. Under the terms of the acquisition of CompUSA, he said, Mr. Halprin "received a $21 million golden parachute agreement."

Mr. Slim and his companies countered that "COC never had a final franchise deal with CompUSA," said defense counsel Mark Josephs. "We did not agree to partner with COC in Mexico and in fact rejected that notion." Mr. Slim's acquisition of CompUSA was unrelated to COC's attempts to acquire a franchise. The CompUSA defendants also denied that an agreement had been reached with COC.

But on Feb. 8, a Dallas jury awarded COC $454.5 million, including $364.5 million in punitives. The punitive judgements included $175.5 million against Mr. Halpin, $67.5 million against Mr. Slim and $94.5 million against CompUSA. The defendants will be filing motions for JNOV and new trial; if these fail, there will be an appeal, said Mr. Josephs.