Crown wins arbitration, opens two Florida branches

Feature Article
- 9 Dec 2004 ( #187 ) - DAYTON, OH, United States
3 min read
An arbitrator has found that Florida Lift Systems Inc (FLS) violated its dealership agreement with Crown Equipment Corporation in representing Toyota's competing line of forklifts.

Effective from November 1, Crown ended its authorisation for FLS to sell or service Crown products and opened two Crown-owned central Florida branches in Orlando and Tampa.

Crown's Andre Lauber manages the two new branch locations. Each is about four miles from existing Orlando and Tampa sites where FLS continues to represent Toyota Material Handling USA (TMHU). Crown transferred Lauber back to central Florida from an assignment in Dallas, Texas.

Both Crown and Toyota have major forklift dealership networks in the USA; Crown with 180 facilities, and Toyota with 186.

FLS, a long-time Crown dealer, agreed to also represent TMHU in Tampa in January 2004. Previously, FLS started representing Irvine, California-based THMU in Orlando in September 2002.

To recap:
* Crown moved in January to terminate FLS as a Crown dealer ( News #144);
* FLS counter-sued ( News #149);
* Judge Walter Rice ordered arbitration ( News #160); and
* Crown announced plans for direct factory representation in FLS territory ( News #171). In filings in separate US District Courts, Crown sued FLS on January 13 in Dayton and TMHU on February 4 in Toledo, Ohio.

"The arbitrator ruled in Crown's favour on all issues, including that the termination was lawful," said John Maxa, vice-president and general counsel with New Bremen, Ohio-based Crown.

Robert Stachler, an arbitrator whom Crown and FLS attorneys mutually selected, heard five days of testimony in Dayton in October. Jeff Fischer, Rolf Thompson and expert damages witness Robert Brlas testified for FLS, and Jim Moran, Greg Meyer, Dave Moran, Kent Spille and James F Dicke III appeared on Crown's behalf. Stachler issued his decision November 22 from his office in Cincinnati, Ohio.

"Significantly, [the arbitrator's] decision was that Florida Lift breached its dealer agreement with Crown by deciding to add a competitive product line, Toyota, without obtaining Crown's written approval," Maxa said. "He found Florida Lift was not entitled to any damages."

In a related legal setback to FLS, a federal appeals court in Cincinnati denied a FLS motion to stay Crown's termination of the dealer agreement on November 9. FLS withdrew the appeal on November 16.

On December 3, Crown asked Judge Rice in Dayton to confirm the arbitration award and, with the arbitration ended, to reconsider his decision to seal his July 9 oral decision.

Next, Crown will ask Judge Rice to dismiss antitrust, wrongful interference and other claims that FLS refused to arbitrate, Maxa said.

FLS has trimmed operations, reflecting its loss of the Crown business. FLS had been recording annual sales of about USD40 million.

In earlier comments, FLS counsel had characterised the dealership as being a small struggling David versus Crown's billion-dollar manufacturing Goliath.

The federal lawsuit remaining in Toledo is Crown's claim against TMHU for wrongful interference with Crown's former agreement with FLS, Maxa said. Since the arbitration ended, Judge David Katz in the Toledo court has ordered Crown and TMHU to complete the discovery process by May 31 and begin the trial on October 11.

Both sides appear confident.

"A new round of pleadings has been allowed by the court, and the issues are still under development," said Hugh Bode, a Cleveland, Ohio, attorney representing TMHU. "I remain very confident that Crown's claims against TMHU are both legally and factually unsupportable."

Maxa said: "In each of these legal proceedings, Crown's position has been validated. We feel the Toledo case similarly has substantial merit."

On a separate legal front at state level, FLS has challenged Crown's right to hire former FLS employees, and claims Crown's actions violated a non-competition agreement, Maxa said.

Both parties testified on November 18 and November 19 in Hillsborough County Circuit Court in Tampa and, on November 23, Judge Gregory Holder denied the FLS request for a temporary injunction.

In addition to the Orlando and Tampa FLS locations, TMHU sells in the region through another FLS site in Winter Haven, Florida, and Gulf Coast Lift Truck Company's ToyotaLift of Tampa Bay dealership.

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