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Inno-Pacific ordered to compensate former Shakey's president

February 3, 2003

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SINGAPORE -- Inno-Pacific Holdings, parent company of the Garden Grove, Calif.-based Shakey's Pizza chain, has been ordered by a Singapore court to pay S$447,000 (U.S. $252,800) to Koh Knay Yew, a former temporary president of Shakey's, for alleged breach of his employment contract while he worked for the company.

According to a statement submitted by Inno-Pacific to the Singapore Exchange (SGX), Koh worked for Inno-Pacific until 1995, when he was fired for unspecified reasons.

Koh filed suit against Shakey's in a California court in 1996, stating the company owed him S$240,000 (U.S. $134,100) in compensation as spelled out in his contract with the company.

Koh won the case in March of 1998, and Inno-Pacific appealed it. It lost that appeal but has since refused to pay.

In May 2002 Koh sought enforcement of the judgment in Singapore, and in September the court ruled Inno-Pacific must pay the original settlement plus interest.

According to its SGX statement, Inno-Pacific said it asked to settle with Koh, but he refused. The company then appealed the September decision.

That appeal was dismissed in mid October, and Inno-Pacific was ordered once again to pay Koh an additional S$2,500 (U.S. $1,400) to cover the cost of the appeal.

In its statement to the SGX, Inno-Pacific said it may appeal the same ruling again.

John McNulty, president of the Shakey's Franchised Dealers Association and a one-store franchisee in El Monte, Calif., said Inno-Pacific's refusal to pay Koh is indicative of the company's history of not dealing fairly with its employees and Shakey's franchisees.

The SFDA currently is at odds with Inno-Pacific (See Shakey's franchisees to reject company's amended contract) over its attempts to renegotiate franchise contracts with individual franchisees rather than through the SFDA. Shakey's current franchise contract, authored in 1980, nine years before the chain was purchased by Inno-Pacific, makes the SFDA the sole representative body in all franchise contract negotiations.

"The problem with their company is the complete lack of acknowledgement of responsibility," said McNulty, who, along with another franchisee, settled a breach of contract lawsuit (See Lawsuit settled between Shakey's and two franchisees) against Shakey's in June. "If they had just paid this man what the court ordered four years ago, it would be over and done with -- and probably for less money than they have already spent pointing fingers and ducking responsibility."