FLEMING SUIT VS. DAVID'S LAWYER REJECTED

GREG GATTUSO

LUBBOCK, Texas -- In the latest chapter of a bitter legal dispute between Fleming Cos., Oklahoma City, and David's Supermarkets, Grandview, Texas, a federal judge here threw out Fleming's defamation case against David's lead attorney.

In January, Fleming filed defamation, slander and fraud charges against the attorney, William D. Sims Jr., the chain and its founder, David Waldrip. Fleming's lawsuit accused the defendants of making defamatory statements about the wholesaler after David's won a $211.2 million judgment against Fleming for overcharges and fraud.

In March, Fleming agreed to settle the earlier case for $19.9 million in exchange for mutual releases between the parties. A payment of an undisclosed sum was also made to David's by the insurer of one of Fleming's former officers, who was also a defendant in the earlier case. Under that same settlement, Fleming agreed to drop its defamation claims against the chain and its founder. However, Fleming said it would pursue the defamation claim against Sims, who acted as David's lead counsel in the earlier case.

A spokesman for Fleming told SN the company is disappointed by the judge's decision not to hear the case.

"We are reviewing our options at this time," said the spokesman, Andy Oden.

"We resolved our dispute with David's in March," he added. "This has nothing to do with David's. Sims is a separate issue. We believe Sims' comments were defamatory towards Fleming."

U.S. District Judge Sam R. Cummings entered summary judgment here in favor of Sims,, resolving all issues in favor of Sims against Fleming.

Sims declined to comment on the specifics of the defamation case, citing a judge's order. However, he told SN last week that the litigation would not deter him "from representing customers who are dissatisfied with Fleming."

Sims, a partner at the Houston-based law firm Vinson & Elkins, is currently representing Randalls Food Markets, Houston, in a case against Fleming in which Randalls has alleged breach of contract, fraud and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO). The two parties are scheduled to go into arbitration over a 10-day period beginning in early April, Sims said.

"We are talking to a number of customers of Fleming's and their attorneys in other areas of the country about litigation," Sims said. "It is possible and perhaps probable that these cases will involve RICO claims."

Fleming's spokesman Oden said the wholesaler has complied with the terms of its contract with Randalls -- a pact that was signed in 1993 and expires in 2001.

That contract requires disputes to go to binding arbitration and prohibits consequential or punitive damages.

"Fleming has complied with the all of its contractual obligations," Oden said. "Randalls is attempting to use arbitration to get out of that contract."

Oden said Fleming was prepared to go to arbitration this fall, however the proceedings were delayed until April 1998 at Randalls request.