A Florida tire distributor who believes he was on the receiving end of unfair competition practices by his supplier may have his day in court.
James McCrory, owner of Tires Inc. of Broward, based in Pompano Beach, is suing Goodyear for allegedly selling the same tires to his competitors for 15-40 percent lower per-unit prices. Included as defendants are various nearby tire distributors plus Wal-Mart Stores Inc. and Sears, Roebuck and Co., for allegedly ``inducing and knowingly receiving'' those discounts. Mr. McCrory is seeking more than $5 million in damages from each defendant.
A U.S. district judge in the Southern District of Florida in September denied the defendants' motion for dismissal, meaning the case eventually could go to trial. Filed in March 2002, the case was amended by Mr. McCrory's attorney in July 2002 in response to a motion to dismiss. A judge later decided to dismiss the case, though Mr. McCrory could amend the complaint again, which he did in October 2003. It was this second amended complaint that was the basis for the recent decision.
Mr. McCrory told Tire Business Goodyear recently contacted him about discussing the matter with a mediator. He said those talks are scheduled for early November. A Goodyear spokesman was not aware of any possible talks.
In a statement, Goodyear said the case is ``incorrect and without merit.'' The Akron-based tire maker also has its own suit pending against Mr. McCrory, claiming he intentionally failed to pay for about $500,000 of tires in late 2001 and early 2002. Among other alleged discrepancies in Mr. McCrory's filings, Goodyear claimed the tires in question are different from those Tires Inc. was buying. In addition, the tire maker notes that Tires Inc. is a distributor, not a retailer like Wal-Mart, so the two aren't even competitors.
Mr. McCrory acknowledged Goodyear's case against him and said that dispute is primarily about the exact figure owed.
``There is some owing there, I freely admit it,'' he said.
Mr. McCrory said he had noticed in 2001 disparities between the price Goodyear charged him and what Wal-Mart was charging for tires on its shelves. For example, he said a tire that cost him $17.95 was marked $5.95 at the discount retailer. He claims the tires-sold to him as a Kelly brand and sold at Wal-Mart under the Douglas label-have the same UTQG ratings and other identifiers.
``You can't justify this,'' he said of the price difference. Goodyear said the tires are in fact different.
Wal-Mart noted the judge's decision did not uphold the claims as true. ``The plaintiff still has to prove these allegations, and Wal-Mart denies them,'' a spokesman said. ``...Wal-Mart believes that the prices it pays for tires and other products are lawful.''
Mr. McCrory is charging the defendants with various violations of the Robinson-Patman Act, a 1936 law also dubbed the ``Anti-Chain-Store Act.'' It prohibits a company from discriminating in price to different purchasers of the same commodity if the effect would lessen competition or create a monopoly. Still, the law includes several exceptions, such as volume discounts.
For Mr. McCrory, this case will mark his last hurrah in the tire industry. A 38-year veteran who has owned Tires Inc. for the last 18 years, he has a buyer lined up for the business. The sale will be finalized once the lawsuit is settled, for better or worse.
``Once I can bring this to a head, I'm going off into the sunset,'' he said.
Mr. McCrory, a former Goodyear employee, doesn't hide his emotions about the case. His mother worked for the tire maker for 40 years, and he said he feels he made significant investments promoting the Kelly name in the market. Now he feels betrayed and ``kicked in the teeth,'' he said.
Filing a lawsuit also has hurt his business. Since his relationship with Goodyear was terminated, he sells tires from Sumitomo Rubber Industries Ltd. and TBC Corp. He admitted he has been close to bankruptcy and finds it hard to establish ties with other tire makers, adding: ``I just basically had to start over three years ago.''
Asked why he decided to file the suit in the first place, Mr. McCrory said it was the principle.
``I did it to teach them a lesson,'' he said. ``It had nothing to do with money in the first place.''