Vending machine company sues over lucrative pact

Grace Leong

Tuesday, Aug. 3, 1999 | 11 a.m.

A Las Vegas business is learning that getting rid of unwanted vending machines from employee breakrooms is easier said than done.

Sick of machines that were dirty, chronically empty or dispensed stale food, MGC Communications ordered the vending machine company to remove the machines and gave it two weeks to do so.

Not so fast, said vending machine owner CTS Enterprises Inc.

Claiming it faced financial ruin, CTS called a lawyer in and hauled MGC into court with a July 23 lawsuit.

That was when MGC learned its contract with CTS required 30 days' notice to evict the machines.

Presumably more concerned about running its growing telephone business than worrying about vending machines, MGC agreed to settle the litigation by giving CTS another chance.

The original agreement allowed CTS to install and operate four vending machines on MGC's premises at 3301 N. Buffalo Drive, where MGC has about 400 employees.

CTS typically pays to the owner or lessee a percentage of gross revenues generated by its vending machines in return for being authorized to place its machines on the owner's premises. CTS said the machines at MGC generate net proceeds of about $6,000-$7,000 a month and net profits of about $1,600.

"MGC has now agreed to leave the vending machines in place and CTS agreed not to require an injunction to resolve the matter," Michael Pontini, CTS' attorney, said.

"As long as CTS keeps the machines clean and properly maintained, then they can keep the machines on the premises," Rick Heatter, MGC's assistant vice president and legal counsel, said.

"We had to try to terminate the agreement because the products were nasty and crushed. The machines were half-empty. The cakes and cookies were stale and there was dirt and bugs in there," he said.

CTS had claimed in its lawsuit that cancellation of the contract would have left it facing financial ruin and exposure to a multitude of lawsuits from more than 20 business customers whose goods are dispensed through the machines.

The suit said CTS leases $1 million worth of vending machines from Allstate Leasing and that payment of its $22,500 monthly lease to Allstate would have been jeopardized without the MGC contract.