Wednesday, April 2, 2008

Fight between founders of Ledo Pizza rages on

Pizza chain dispute over contract, trademark may go to trial

E-mail this article \ Print this article

Gazette file photo
A federal judge has dismissed some of the claims made by Ledo Pizza System Inc. of Annapolis against the owners of Ledo Restaurant in Adelphi.
A lawsuit involving pizza crust, tomato paste and alleged trademark violations has been partially resolved, but the food fight may continue in federal court.

The two founding families of the popular Ledo Pizza chain have been battling for more than a year in U.S. District Court in Maryland over these and other issues that surfaced in a 2006 lawsuit.

Ledo Pizza System Inc. of Annapolis, owned by the Beall family, sued Thomas E. Marcos Sr., Thomas E. Marcos Jr. and James L. Marcos, alleging breach of contract, trademark infringement and unfair competition.

Under a 1994 agreement, the Marcos family sold their Ledo Pizza shares to the Bealls but were allowed to continue using the pizza recipes and certain Ledo trademarks at their Adelphi restaurant and their businesses in the Bowie area.

Thomas Marcos Jr. and James Marcos own Ledo Restaurant in Adelphi, which was the first Ledo location. It was opened in 1955 by Thomas Marcos Sr. and Robert L. Beall. Beall’s son Robert M. Beall now heads the Ledo Pizza business.

Last week, federal Judge Deborah K. Chasanow dismissed some of the parties’ claims for summary judgment. Thomas Marcos Sr. was dropped from the suit, as the court found he is no longer an agent of the Adelphi restaurant, even though the Bealls cited his own statement that he ‘‘still goes to the restaurant almost daily, has lunch there on Wednesdays and Fridays, and eats at least one piece of pizza to make sure it is right.”

‘‘About 90 percent of the case against the sons has been dismissed, as well,” said Cary J. Hansel, an attorney for the Marcos family.

Among the dismissed claims was the Bealls’ contention that the Marcoses changed the pizza recipe, in violation of the 1994 agreement. The Bealls alleged that the Marcoses occasionally roll out the crust before an order is placed and vary the amount of tomato paste in the sauce. Chasanow cited Thomas Marcos Jr.’s statement said that he has ‘‘been making the sauce the same way for 30 years” and ‘‘always adjusted the paste.”

‘‘The Agreement does not restrict Defendants to preparing their pizzas in the exact same manner on every occasion ...,” Chasanow ruled in rejecting the Bealls’ request for summary judgment.

Attempts to reach Ledo Pizza and the Bealls’ attorney, Brent M. Ahalt, were unsuccessful.

Hansel said he expects the issues still in dispute to go to trial. They include claims that the Marcoses made disparaging statements about the Bealls’ pizza chain on their Web site by posting restaurant reviews that praised the Ledo Restaurant pizza over the franchised version. Another unresolved claim is that Expressions Catering in Owings, partially owned by Thomas Marcos Jr. and James Marcos, resold 17 Ledo pizzas — some which came from Ledo Restaurant and others from Ledo Pizza franchises — in violation of the agreement.

‘‘The Marcoses and I are very much looking to go to trial on these remaining issues, and are confident that we’ll succeed at trial,” Hansel said. No date has been set, but he said he expects a trial in six months to a year.

Chasanow did rule in the Bealls’ favor on their motion to seal some of the exhibits to protect their recipes as trade secrets. She rejected the Marcoses’ motion to seal the entire case. Unless the Marcoses renew their motion, all the documents — except those involving trade secrets — are to be unsealed next month.

Ledo Pizza began franchising in 1989, and has 80 locations along the East Coast, according to its Web site. The square pizza made with provolone cheese got a nationwide shout out on ‘‘The Oprah Winfrey Show” in the fall of 2006 when Winfrey’s friend Gayle King listed it among America’s best pizzas. The Bealls filed their lawsuit a month later.