Wednesday, July 7, 1999 | 11:36 a.m.
Sheldon Adelson has won a legal victory over GES Exposition Services Inc., which will find itself locked out of one of the world's largest exposition centers for the foreseeable future.
Ruling in a suit filed by Adelson's Interface Group, State District Judge Gary Redmon ordered GES to pay Interface $126,000 in disputed commissions from work performed at COMDEX '95 in Adelson's Sands Expo & Convention Center, which is adjacent to his Venetian resort on the Las Vegas Strip.
Redmon also ordered GES to pay interest on the debt since 1994, pushing damages past $250,000.
Perhaps as significant for Interface, Redmon ruled that Interface had acted properly when it terminated GES's exclusive contract to provide electrical services to exhibitors at the center in 1996.
GES had filed a countersuit against Interface in 1996, and claimed $3.13 million in damages from lost work on the contract, which was supposed to run through 2004. It also asked the court to force Interface to honor the remainder of the contract.
But GES does not appear ready to give up the fight. Just before Redmon's ruling, GES filed another lawsuit against Interface in state court, again disputing Interface's decision to kill the Sands contract. But GES took a different approach with this suit, claiming instead that Interface had violated its right of first refusal on work at the Sands by hiring other companies to provide the same work.
GES is the largest provider of exposition services in North America. Based in Las Vegas, the company is a subsidiary of Phoenix-based Viad Corp.
GES will suffer from a "loss of industry prestige and reputation" if it does not prevail in the dispute, the company claims in its most recent litigation.
In July 1994, GES and Interface signed a contract that made GES the exclusive provider of electrical and plumbing services to exhibitors at the Sands. Interface was to receive a commission on all work performed under the contract. The contract contained a clause that stated Interface could only terminate the 10-year deal if it began providing the services in house. The agreement came simultaneously with a national joint venture agreement between the companies involving the COMDEX show, and GES claims it paid $8 million up front to cement the deal.
The first dispute between the companies -- which triggered Interface's lawsuit in 1996 -- arose over a dispute on commissions Interface said it was owed from the 1995 COMDEX show. Prior to that show, Interface had sold the rights for COMDEX to Softbank.
GES paid Interface $73,500 in commissions, representing 15 percent of its sales -- the amount called for in the contract for work performed at an Interface-owned show. Interface claimed it was owed more than $200,000 -- a 33 percent cut, the amount required for non-Interface shows. GES countered that it had paid those commissions to Softbank. Redmon ordered GES to pay Interface the disputed balance.
In March 1996, Interface sent GES a letter informing the company that its contract at the Sands was being terminated, effective in May. GES claimed the COMDEX joint venture overruled the Sands contract, and thus Interface couldn't terminate the contract. Redmon disagreed, saying that Interface was free to terminate the Sands agreement after 1995.
In its second lawsuit, GES claims that Interface hired Service Plumbing Co. to provide plumbing services, and Convention Technical Services to provide electrical services in April 1996.
GES argued that those contracts violate its right of first refusal, since no other company was permitted by that clause to offer electrical or plumbing services at the center through 2004. GES noted that it was impossible for Interface to offer those services itself, since the Nevada State Contractors Board suspended Interface's electrical services license in March.
But Interface attorney Paul Roberts insisted electrical and plumbing services are still being offered through his company.
"GES apparently believes they've uncovered information that indicates Interface is subcontracting out those services, not doing them themselves," Roberts said. "All they've found is that in doing it ourselves, we've used contract labor."
GES attorneys declined to comment.
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