News story

Crown plans Florida branch as FLS arbitration nears

Thursday, 19 August 2004 ( #171 ) - DAYTON, OH, United States
Crown Equipment Corporation has announced plans to open a central Florida factory branch by November, as part of its efforts to dislodge incumbent dealer Florida Lift Systems (FLS).
When Crown sought to terminate FLS as a Crown dealer (Forkliftaction.com News #144), FLS counter-sued (Forkliftaction.com News #149) and Judge Walter Herbert Rice ordered arbitration (Forkliftaction.com News #160).
"The arbitration process, based on the dealer agreement and ordered by Judge Rice, has begun," said John Maxa, vice president and general counsel with New Bremen, Ohio-based Crown.
"The arbitration is scheduled for October."
Crown could be forced to pay at least USD10 million if the arbitrator decides in favour of FLS, said Hugh Bode, a Cleveland, Ohio, attorney representing FLS.
Maxa said Crown and FLS were in discussions "about the terms of the transition or wind-down process, and hopefully we will come to an agreement on those shortly.
"Our current plan is to open a Crown branch operation on November 1, 2004."
FLS does not want a transition and characterises itself as a "David" in competition with a "Goliath".
Bode described the situation as: "Crown, a billion-dollar manufacturer, versus a small local dealer.
"We believe FLS has a right to grow their business and be successful, as long as their performance for Crown ... does not suffer," he said.
"Florida Lift has demonstrated their loyalty and commitment to Crown by achieving over 40% market share five of the last six years and surpassing virtually all of Crown's parts and performance goals."
FLS has been a Crown dealer for 18 years and added representation of Toyota Material Handling USA (TMHU) in Orlando in September, 2002 and Tampa in January, 2004.
Crown claims FLS breached the dealership agreement and that THMU caused the breach. The suits are on hold awaiting the outcome of the arbitration.
In early July, the judge held a three-day hearing in the US District Court in Dayton on an FLS motion for an injunction to prevent termination of its Crown dealer agreement.
Crown objected to an injunction, saying FLS could not establish that the termination violated either the Ohio Motor Vehicle Dealer Act or Crown's dealer agreement.
Further, "FLS knew that it was required to obtain Crown's approval before taking on the Toyota line in Tampa, yet went ahead and did it anyway", Crown's Maxa argued.
The two sides cannot agree on the outcome of the hearing, and an FLS appeal was pending before the US Court of Appeals in Cincinnati, Ohio.
"After hearing testimony from several witnesses, including Jeff Fischer (of FLS) and Ron Roensch (of TMHU), Judge Rice denied the motion," Maxa said.
TMHU has another perspective: "Crown's self-proclaimed 'victory' was in reality a victory for FLS," said Roensch, an attorney with Irvine, California-based TMHU.
"FLS had requested a preliminary injunction for 120 days pending the outcome of arbitration, in response to Crown's stated threat to terminate FLS immediately.
"Following the presentation of FLS's evidence in court, Crown changed their position, indicating that they would not terminate FLS pending the outcome of arbitration."
Mr Roensch said Crown agreed to the 120-day injunction voluntarily.
"As a result of this concession, the court found no injunction could be granted, as FLS would not suffer irreparable harm during that 120-day period," he said.
"If Crown had taken that position prior to the injunction hearing, (it) would have never taken place."
If the arbitration occurs in late October, a decision is likely toward the end of the year.
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