CAROLINA, Puerto Rico—Carolina-based tire distributor Gonzalez Tigera Warehouse Distributors Inc. is suing Ohtsu Tire & Rubber Co. Ltd. and T. Chatani & Co. Ltd. for allegedly breaching a 30-year-old exclusive distribution agreement. Gonzalez Tigera (GT), filed a complaint against Ohtsu and Chatani, a tire importer/exporter, in the U.S. District Court for Puerto Rico Nov. 22. The suit also alleges that Ohtsu's U.S. subsidiary, Falken Tire Corp., and a Miami-based wholesaler, STC Tires Inc., committed "tortious interference" with GT's exclusive contract with Ohtsu and Chatani by selling Falken- and Ohtsu-brand tires directly to GT customers in Puerto Rico.
The plaintiff contends that GT and Ohtsu agreed in 1969 that Ohtsu, through Chatani, would supply GT with Ohtsu-brand tires and tubes for cars, trucks and buses for sale in Puerto Rico on an exclusive basis.
The only exceptions, according to the complaint, were for tire "sales to governmental entities or `those necessitated by barter, repair, switch, Yen credit, business or original equipment dealings,' in Puerto Rico."
GT's suit contends that Osaka, Japan-based Chatani also began selling it Falken-brand tires in 1984 on a "regular and exclusive basis" as part of the contract.
In 1990 Rancho Cucamonga, Calif.-based Falken started selling tires to Western Auto Supply Co. Inc. in Puerto Rico, a customer of GT.
GT claims the business relationship between Falken and Western Auto is a violation of Ohtsu's and Chatani's obligations to GT under their distribution contract, which it contends is still in effect. GT claims it had protested to Chatani and Ohtsu about Falken's sales to Western Auto, but to no avail.
The suit stated that STC Tires has been selling Falken tires to GT's customers in Puerto Rico since early 1997, a practice GT also protested to Ohtsu and Chatani but found no relief. To date, STC and Falken continue to sell Ohtsu and Falken brands in Puerto Rico, GT said.
Both Ohtsu and Falken declined to comment on the suit. However, GT's attorney, Charles Cuprill-Hernandez, said Ohtsu has told GT it doesn't have exclusive rights to the Falken brand. But GT believes its contract with Ohtsu does apply to Falken, Mr. Cuprill-Hernandez said.
Puerto Rico's "Dealer's Contract Act" protects local distributors that establish a market for a manufacturer, Mr. Cuprill-Hernandez said.
Under this statute, manufacturers need to have "just cause" to terminate a distribution contract—usually because the distributor failed to perform its contractual obligations, he said, adding that a company can't cancel a contract with a distributor merely to switch to another distributor.
GT hasn't indicated how much it is seeking in damages, because the company still needs to determine how much it lost in potential sales because of Falken's and STC's business activities, GT Treasurer Herminia Agramonte said.
GT filed for Chapter 11 reorganization in March 1998. Two months later, the suit alleges, Ohtsu and Chatani placed two conditions on the further sale of Ohtsu-brand tires to the Puerto Rican company: that it agree its purchases of Falken-brand tires were on a non-exclusive basis; and that it repay a $420,000 debt to Chatani.
However, GT said it hasn't been able to buy tires from Ohtsu and Chatani since September 1997.
GT is owned by Herlan Gonzalez Morales and only operates in Puerto Rico. Besides Ohtsu and Falken, GT is an exclusive distributor in Puerto Rico for BFGoodrich, Pirelli and Fat tires, Mrs. Agramonte said. The firm also distributes Michelin tires, but not exclusively, she said.