© 2018 The Texas Lawbook.
By Natalie Posgate
(June 21) – A Dallas County jury has awarded $2.4 million to two former executives of Glazer’s liquor distribution company, finding they were owed compensation when the company combined with Southern Wine & Spirits in 2016.
The 10-2 verdict, which jurors delivered Wednesday evening around 8 p.m., put roughly $1.6 million in the pocket of former Glazer’s president Jerry Cargill and $800,000 in the pocket of Cary Rossel, Glazer’s former chief financial officer. Cargill worked for the company for 45 years, while Rossel worked there for more than 30 years.
In 1997, Cargill and Rossel’s employment contracts were revised to say the two men were entitled to a “value payment,” or percentage of the company’s total value if Glazer’s had a change in control.
Dallas-based Glazer’s and Miami-based Southern agreed to combine in January 2016 and closed the deal nearly six months later. The combination created the largest North American wine and spirits distribution company. According to Forbes, Southern Glazer’s is estimated to log around $17 billion in annual sales.
Many media outlets characterized the deal as a merger, but because the combination between Glazer’s and Southern was technically a joint venture, leadership at Glazer’s argued Cargill and Rossel were not entitled to any percentage. Lawyers for Glazer argued the particular clause of the contract was related to a sale/purchase agreement, and because there was no sale/purchase transaction, the two gentlemen should get nothing.
Lawyers for the plaintiffs argued that there was a sale/purchase transaction and the transaction resulted from a change in control of the company.
Wednesday evening’s verdict marks a two-part win for the former executives’ lawyers, who scored a crucial pre-trial summary judgment from District Judge Dale Tillery last week. Judge Tillery ruled on June 11 that the contract was not ambiguous and that Glazer’s had breached the contract. Thus, the only issue presented to the jury was how much Cargill and Rossel are owed.
“From the employee’s perspective, I can’t help but say people looking at this case should look at their change of control provision because to the extent that there are ambiguities or ‘loopholes,’ a powerful, well-funded employer can use the judicial system to try to take advantage of those,” said John Palter, the lead trial attorney for Cargill and Rossel.
Lawyers for Southern Glazer’s did not immediately return a call seeking comment.
Some star-studded experts played roles in the summary judgment opinion. Palter said the defense obtained an opinion from former Texas Supreme Court Chief Justice Wallace B. Jefferson that said the transaction was not a purchase/sale, therefore Glazer’s owed the former executives nothing. In response, Palter said his team secured opinions from Bryan Garner and 80th U.S. Attorney General Alberto Gonzales that stated whether the deal was a merger, sale or joint venture purchase, the plaintiffs were entitled to a value payment.
On the verdict form, the jury determined that the purchasers paid roughly $177 million to the sellers. Palter argued that the amount should have included $450 million in assumed debt, which would have given his clients about $11 million in damages.
“I’m truly thrilled that the jury system was able to sift through the defendants’ attempts to create complexity and arrive at a verdict,” Palter said. “It’s not as much as we believed the evidence proved, yet in terms of validating Glazer’s breach and our damage, the jury system worked.”
The plaintiffs’ trial team also included Nathaniel Martinez and Nicole Karam, who practice with Palter at the Dallas firm Palter Stokley Sims.
Southern Glazer’s lawyers are David Myers, Chip Babcock and Mark Josephs of Jackson Walker.
Palter said the parties argued attorneys’ fees Thursday morning, which will be determined separately.
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