BETHLEHEM, Pa. (May 15, 2013) — Service Tire Truck Centers Inc. (STTC) is denying all claims and allegations of wrongdoing asserted in a lawsuit filed by Inter City Tire & Auto Center Inc. against the Bethlehem-based dealership and Michelin North America Inc.
Inter City's lawsuit, filed April 23 in the U.S. District Court for the District of New Jersey, alleges Michelin and/or Bethlehem, Pa.-based STTC violated the Racketeer Influenced and Corrupt Organizations (RICO) Act, among other commerce laws, in addition to fraud and breach of contract in connection with a scheme the dealership said it uncovered involving the sale of discounted Michelin tires to its competitors.
Inter City said it uncovered a scheme involving former Michelin sales executives who allegedly used shell corporations to divert tires intended for national fleet accounts and resell them at fleet-discounted prices to competitors of Inter City Tire, a Michelin-affiliated commercial tire dealer and Michelin Retread Technologies-licensed retreader. Inter City operates five commercial locations in New Jersey and New York.
The scheme allegedly involved current and/or former employees of Michelin, Inter City and other dealerships and dated back to at least 2006.
In a prepared statement, STTC said it "will vigorously defend itself against Inter City's groundless and unwarranted attacks against the company. We will not be deterred by Inter City's meritless claims and will continue to offer our customers the highest level of service 24 hours a day, 365 days a year as we have been doing since 1955."
A Michelin spokesman said the tire maker had "terminated two rogue employees who personally profited from a complicated scheme designed to enrich themselves."
However, settlement negotiations between Michelin and Inter City over the incident purportedly broke down April 19, with Michelin filing suit in the U.S. District Court for the District of South Carolina seeking to terminate Michelin's dealer agreement with Inter City because the dealership allegedly breached the agreement.
Michelin contends in its lawsuit against Inter City that it cannot be held liable for the actions of the terminated employees because the tire maker was harmed by and did not benefit from their actions.
The tire maker also claimed in its suit that Inter City breached the contract because it "failed to aggressively promote Michelin products."
For a previous Tire Business story on the lawsuit, click here.