DALLAS-Like their California ``brothers'' had done six months earlier, 17 Goodyear dealers in Texas have filed suit against the tire maker, alleging Goodyear unfairly diminished their ability to operate profitable businesses. The suit, filed Jan. 13 in state district court in Dallas, alleges-nearly word for word-the same charges of unfair business practices four California dealers filed against Goodyear in July.
The Texas suit, which seeks more than $230 million in damages, claims Goodyear committed fraud, breached its fiduciary and contractual duties in its dealings with the dealerships, thereby violating Texas law.
A Goodyear spokeswoman said the company has not yet received a copy of the suit and, therefore, could not comment.
Both cases stem from Goodyear's decision to begin distributing replacement tires through mass merchandisers and discounters, including Sears, Roebuck and Co. in 1992 and, in 1993, Scottsdale, Ariz.-based Discount Tire Co. and Wal-Mart Stores Inc.
Despite their similarities, both suits are separate legal issues, according to Gaylan Gregory, owner of Hurst, Texas-based Gregory Tire & Auto Service Centers Inc., a plaintiff in the Texas suit.
``I believe I can safely say we're following the California group and their action,'' Mr. Gregory said, acting as spokesman for the Texas dealers party to the suit.
``...We have contacted our brothers out in California and saw what they were doing and followed it closely,'' he said.
The 17 Texas dealers, all of whom operate independent Goodyear franchise or G-110 contract dealerships, allege Goodyear failed to disclose its intentions to distribute through mass merchandisers and discount stores in close proximity to their operations.
``We believe they even forecasted the demise of the small, independent dealer without telling us,'' Mr. Gregory added.
The dealers currently are ``studying the feasibility of converting the suit to class action (status)'' he said.
The Texas case, like the one filed in California, alleges Goodyear ``brought economic and other pressure on many of the plaintiff franchisees to enter into modified and substantially less favorable franchise agreements'' in 1992, just prior to distributing replacement tires through mass merchandisers and discounters.
Those agreements, known by Goodyear as G-110 contracts, eliminated price protections afforded franchised dealers, shortened the contract's term from 10 to two or five years and gave the tire maker the right to terminate a dealer without cause on 30 days' notice, the suit alleges.
The suit also alleges Goodyear:
Failed to fairly disclose to dealers its negotiations to begin distributing tires through discount stores and mass merchandisers;
Provided mass merchandisers with advantages in pricing and inventory access that were not available to franchise and contract dealers;
Unfairly pressured dealers to participate in ineffective cooperative advertising programs that could not compete with advertising from other Goodyear distribution channels;
Breached its fiduciary duty by making rent fees in dealership leases and subleases contingent upon sales quotas as part of the Goodyear Productivity Program;
Established company-owned outlets to compete with franchise and contract dealers; and
Along with Goodyear employees Kelly Pickett and Bob Pratt, also named as defendants in the case, knowingly misrepresented the value of a Goodyear franchise and the relationship between the tire maker and its dealers;
``I think it's fair to say the 17 (dealers) felt if things stayed the way they were, they couldn't see a future for their businesses and their families,'' Mr. Gregory said.
``We feel certain that the average dealer around the country, and for sure in the Southwest, simply can't sell a Goodyear tire for the cost a Discount Tire does,'' he continued.
Mr. Gregory left Goodyear as a district manager in 1979 to open a franchised dealership, which he expanded to four outlets by 1986. But he was forced to scale back to a single location by the end of 1988, because he could not compete in the marketplace, he said.
That location also may close if the nature of Goodyear's relationship with its franchised dealers remains the same, he said.
The California case, filed in July by four dealerships on behalf of all similar Goodyear dealerships in that state, is currently seeking class action status from a U.S. District Court judge.
A number of dealers in Arizona earlier told TIRE BUSINESS they, too, are investigating the possibility of filing a similar lawsuit against Goodyear in that state.
Along with Gregory Tire, the following dealerships are party to the Texas suit: McKinney Tire & Appliance Co., McKinney; Harwood Tire Bedford Inc., Bedford; Harwood Tire Irving Inc., Irving; Quality Tire & Service Inc., Lancaster; Denton Tire & Service Inc., Denton; The Tire House Inc., Cleveland; Miles Tire & Auto Service Center Inc., Austin; Ferguson Tire Service Inc., San Antonio; Wedgewood Tire Center Inc., Fort Worth and River Oaks Tire & Service Center Inc., both of Fort Worth; Arlington Tire Inc. and Mid Cities Inc., both of Arlington; and Tires Plus Inc., Montalbano Tire Co. Inc., Montalbano Tire Co. Southwest Inc., Bay Area Tire & Auto Inc., KDE Inc. and Howard & Sorenson Inc., all of Houston.