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 Business News | March 2005 
Mexican Court Orders Levi to Pay $45M
 Michael Liedtke - AP
 San Francisco - A federal court in Mexico has ordered jeans maker Levi Strauss & Co. to pay $45 million to a former contractor wrongly targeted in a police raid seeking to crack down on clothing counterfeiters.
The judgment announced Monday by San Francisco-based Levi's vindicates Mexico City contractor Comexma, which sued the company for the fallout from a June 2001 incident at its plant.
Accompanied by local media, Mexican police raided Comexma looking for evidence of bogus Levi's brands based on information provided by a company attorney. The brand-protection attorney set up the raid without getting the required company approvals, Levi's said.
Police backed off after Levi's confirmed Comexma as an authorized manufacturer, but it came too late to prevent significant damages, the contractor alleged in a lawsuit filed in March 2002.
On Thursday, the court decided Levi's actions caused $24.5 million in direct damages to Comexma and awarded another $20.5 million to pay for the contractor's tarnished reputation.
Levi's is appealing the ruling because it believes the damages are excessive, company spokesman Jeff Beckman said. He declined to elaborate.
Levi's believes Comexma already was planning to close the Mexico City plant before the raid occurred. Just before the police action, Levi's said it notified Comexma of its plans to cut their business ties.
Despite possible costs raised by the legal setback, Levi's said Monday that its profit for its just-completed first quarter is expected to be higher than the same period last year. Preliminary figures for the period ending Feb. 27 also indicate the company's sales rose.
Levi's fortunes have been sagging for nearly a decade, but the company showed signs of improvement during the final half of last year — a trend that management has promised will continue this year.
Levi's expects to announce its first-quarter results next month. The company is privately held but discloses its profits because some of its debt is publicly traded. |
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