Crown Equipment Corporation's litigation against dealer Florida Lift Systems Inc (FLS) is working its way through arbitration en route to a possible US District Court trial in Dayton.

Judge Walter Herbert Rice directed Crown and FLS to arbitrate their differences and jointly report on the status by June 25.

Crown is seeking to terminate FLS as a Crown dealer (Forkliftaction.com News #144), and FLS has sued Crown (Forkliftaction.com News #149). Earlier, Crown had declared unilaterally that it would terminate FLS on June 1. Judge Rice granted an FLS request for a temporary order against Crown implementing the termination.

"The court agreed with Crown's position and enforced the arbitration provision of the dealer agreement and compelled the parties to arbitrate their differences," said John Maxa, Crown vice-president and general counsel, in a letter to Crown dealers. The court directed that "Crown cannot effect a termination prior to June 25," Mr Maxa acknowledged.

FLS attorney Hugh Bode, of Reminger & Reminger Co LPA, in Cleveland, Ohio, had strong views.

"The court's decision requiring FLS and Crown to arbitrate their dispute recognised the inconsistency of the aggressive litigation strategy Crown has employed against FLS," he said. "The court chastised Crown for claiming the right to unilaterally terminate FLS after Crown had commenced litigation and requested arbitration to determine the 'lawfulness' of termination."

Mr Bode also represents Toyota Material Handling USA Inc (TMHU), of Irvine, California, in separate but related litigation in a Toledo, Ohio, federal court. Crown's lawsuit says TMHU caused FLS to breach its Crown dealer agreement.

In April, TMHU filed a counterclaim against Crown, alleging intentional interference with a contract, interference with a business relationship, abuse of process and anti-trust violations.

On the Crown versus FLS case, Mr Bode said "fair, unbiased arbitration gives FLS the opportunity to be heard. The issues to be addressed in arbitration are the same as the issues that would be heard in a court of law. We are certain that a fair arbitration proceeding will reflect positively on FLS."

FLS has been a Crown distributor for 18 years and, for the past five years, says it has produced a 40%-plus market share for Crown in its territory. FLS has annual sales of more than USD40 million.

"Crown's behaviour is totally out of character from the Crown I thought I knew," Jeff Fischer, FLS chief executive officer, said. "With Crown's total sales of USD1 billion, I can't understand how our effort to become a stronger dealer in the IC classes that Crown does not make poses any threat to Crown."

FLS began representing TMHU in Orlando in September 2002 and became a TMHU dealer in Tampa in January 2004.