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March 01, 2004 01:00 AM

Dealer settles suit vs. Maxxis

Vera Fedchenko
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    A Georgia tire dealer who sued Cheng Shin Rubber USA Inc. for alleged price discrimination, breach of contract and fraud has settled with the tire company.

    Joey Roland, owner of Jasper-based Discount Tire and Parts Inc., had filed a $5 million suit against Cheng Shin in 2002. He claimed the company had promised him sole distribution rights for its Maxxis brand in northern Georgia, then awarded those rights in a written contract to Tri-State Tire of Doraville, Ga.

    The lawsuit also alleged Cheng Shin had discounted prices to Tri-State and other large distributors but not to Discount Tire. In so doing, Mr. Roland charged that Cheng Shin had violated the Robinson-Patman Act, a federal statute that sets rules on pricing for different purchasers of the same commodity.

    Terms of the settlement, signed Feb. 11, were undisclosed, though Mr. Roland said the matter ``was settled to the satisfaction of both parties.'' Maxxis International, Cheng Shin's North American unit in Suwanee, Ga., declined to comment on the settlement.

    Ed Marger, an attorney representing Discount Tire, declined to comment about the settlement because of a gag order, but said both parties determined it ``was in their mutual interest to come to a satisfactory settlement rather than pay all the monies to the lawyers.''

    Since the suit's filing, Mr. Marger said Discount Tire dropped the Robinson-Patman charges because it had no written contract with Cheng Shin and would have had a difficult time proving those allegations.

    Mr. Roland, who operates a single retail/commercial outlet, had continued buying Maxxis tires from Tri-State even though Maxxis had cut off supply to Discount Tire after the lawsuit's filing. He said he dropped his wholesale business after Maxxis cut off its supply relationship with his dealership.

    ``The only reason I even attempted to go into the wholesale business is because Maxxis offered me a unique situation....It was an opportunity for me to have a niche,'' Mr. Roland said.

    ``With this Maxxis deal, I had some leverage against the big guys because I had a unique tire that was above average quality, and I wanted the guaranteed territory to get out here and work it,'' he added. ``Without that, it's hard for a small guy to compete against a Heafner-ITCO, Carroll Tire and Kauffman's.''

    He also told Tire Business he doesn't know how long he will carry Maxxis now that the suit is settled.

    ``We had a tremendous amount of inventory when we went into the wholesale business, and I had to stay with them because I was killed with inventory,'' Mr. Roland said.

    ``It was one of my biggest problems. We've had to stay with them and supplement some of these sizes because we had so many different sizes. I don't know what we're going to do from here. We're getting our inventory down now.''

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