Jury Awards El Pollo Loco Mexico $22 Million

U.S. Franchisor Responds: Award Not Supported by Facts

IRVINE, Calif. (Blue MauMau) - A jury has awarded $22 million to the original El Pollo Loco company in Mexico in a lawsuit against the U.S. franchisor, El Pollo Loco, Inc. The lawsuit filed in the U.S. District Court in the Southern District of Texas alleges breach of contract and failure to develop new restaurants, after the Mexican company had assigned it the rights in 1996 to develop the concept and use the trademarks. After the jury made its award on July 26, 2007, the court ordered post-trial briefs from both sides, which are due tomorrow . The lawsuit had been filed in March of 2004.

(Photo of first El Pollo Loco. Created in Guasave, Mexico.)

Edward C. Snyder, III, Castillo Snyder P.C. in San Antonio, who represents El Pollo Loco in Mexico, said, "In our view it is a pretty straight forward case. We gave them the rights to develop Mexico and we assumed that that was what they were going to do." He said that's what they had hoped they were going to do and that’s what they told them they were going to do. But he said, "They ended up doing nothing in Mexico." As a result of that,  Snyder said for seven years the El Pollo Loco brand deteriorated and competitors took over the market. He feels it was sad because his client, the original founder of the entire concept, suffered when copycat imitators came in with copies of El Pollo Loco formula and concept. Because of the inactivity of El Pollo Loco USA, the imitators have now managed to dominate and take over the entire Mexican market for grilled chicken that his client invented.

Snyder also thinks the jury verdict award will help El Pollo Loco to retake some of the territory and market share that it has lost. He said, "The jury must have understood that in making their decision. In answer to why it took so long for the Mexico company to file its lawsuit, Snyder said, "The U.S. Pollo Loco had a change of presidents during that time, probably four over that period. Each one vowed to complete the ten-year agreement, so we gave them time to do it." He explained, "This was a relationship of trust and confidence that had been ongoing for years and years. This was not an arms length relationship at all. These two companies were sharing trade secrets, confidential information, basically like partners. You trust your partner to tell you the truth and to be straight with you." But he said, "The jury found that they weren’t straight with my client and instead they were continuing to fraudulently trick us in not filing suit or doing anything."

Julie Weeks, El Pollo Loco's Vice President of Communications, said she could only give this statement at this time: "We are disappointed with the jury verdict. We believe it is excessive and not supported by the facts in this case as a matter of law. We plan to appeal the verdict and and are confident that the 5th Circuit Court of Appeals will be receptive to our arguments and that the ultimate outcome will be favorable to El Pollo Loco.

In the actual Jury Interrogatories (legal questions) obtained through the court, the jury foreperson answered yes to the first question: "Did Pollo Loco USA materially breach the 1996 Agreement?" In answer to what sum of money should be paid, she stated $1,087,500.00. In the fourth question, "Did Pollo Loco USA engage in "illicit acts" against Pollo Loco Mexico", the answer given was yes and the sum given was $10,125,500.00. On the eighth one, "Did Pollo Loco USA commit an act or fail to act in an intentional manner or by imprudence, negligence, lack or prevision or lack of care that resulted in damages to Pollo Loco Mexico's decorum, honor, reputation, image or public perception in the opinion of others," again the answer was yes. The sum given was $10,125,500.00.

Snyder said they are asking the court in their post-trial motion to enter judgment for the full amount awarded by the jury. The outside counsel for El Pollo Loco USA, Ileana M. Blanco, Bracewell and Giuliani LLP in Houston, said they were filing their motion tomorrow and at that time would provide a copy to Blue MauMau.