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Partial win for Hooters founder

The mixed ruling requires a third party to set a payment.

By KEVIN GRAHAM, Times Staff Writer
Published November 16, 2007

TAMPA - A federal judge on Thursday agreed with Hooters founder Lynn "L.D." Stewart that the company that bought his business breached a contract to pay him a certain percentage of gross annual sales.

In the same opinion, U.S. District Judge Elizabeth Kovachevich also ruled in favor of a Hooters of America Inc. counterclaim that the company paid Stewart more money than he was entitled to receive.

"Everybody right now is in the middle of digesting the order," said Michael Keane, attorney for Hooters of America. "There are parts of it that will need further review."

Richard Fee, Stewart's attorney, said his side disagrees with the judge that Hooters of America overpaid Stewart.

"We're looking into it," Fee said. "That, from our vantage point, is not a major issue. It's a major issue for Hooters of America."

The judge ordered Stewart and Hooters of America to meet with a special master, or accountant, to review the claims and decide how much money Stewart should receive because of the contract breach.

Stewart filed his lawsuit in January 2004. He alleged that Hooters of America cheated him out of more than $1-million. Fee wouldn't say Thursday how much he thinks Stewart is due.

"That's for the special master to determine," Fee said. "It will be a significant sum."

Stewart was in line to receive about $2.2-million of the company's first $300-million in annual gross sales and a larger percentage of the annual gross sales in excess of $300-million for the years 1995-2000.

During a nonjury trial in July, Fee said Hooters of America violated the contract because the company excluded nonrestaurant revenue from its gross sales calculation, including money generated by Hooters Racing, Hooters magazine and other ventures.

Stewart claimed he did not get paid during the last six months of the five-year contract.

He also accused Hooters of America of improperly deducting fees charged by credit card companies.

Kevin Graham can be reached at kgraham@sptimes.com or (813) 226-3433.

[Last modified November 15, 2007, 23:05:20]