This week, a significant legal decision was reached as a jury awarded nearly $31 million in damages to Jerry Stockton, a former employee of the Dallas-based Sun Holdings, which operates numerous Popeyes restaurants. Stockton’s victory comes after a lawsuit against Sun Holdings and its owner, Guillermo Perales, over a dispute regarding profit shares from the operation of 150 Popeyes locations.
The case revolved around Stockton’s claim for a promised share of the restaurants’ operating profits, a matter that escalated to a high-stakes legal battle culminating in this week’s jury decision. The court awarded Stockton $15.6 million in compensatory damages, followed by an additional $15.1 million in punitive damages, affirming Stockton’s allegations of being defrauded.
Stockton, who served as the director of operations and then vice president of operations until his retirement in 2018, initiated the lawsuit a year after stepping down. He contended that his significant role in the company’s success as the “key operator” entitled him to 5% of the operating profits, an agreement he claimed was encouraged to be deferred until his retirement.
Despite repeated denials of this claim by Perales, who insists that Stockton was remunerated with a salary and bonuses without any promise of profit shares, the jury sided with Stockton. Perales attributed the confusion and subsequent lawsuit to a misinterpretation of the Popeyes franchise agreement, specifying that a “key operator” could claim a share of the profits. However, Perales argued that this provision did not apply to Sun Holdings, being a privately-owned entity, not an investor-owned franchise.
The disagreement over the calculation of the $31 million award, which Perales claimed was based on an inflated profit margin that overlooked significant costs such as interest and rent, indicates a complex legal and financial dispute. Perales has announced plans to appeal the decision, suggesting that the legal battle may continue as both parties seek resolution.
