Food Service & Agriculture and Law

Foster Swift wins $5.15 million verdict for McCormick

July 5, 2013
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A trial team led by Foster Swift attorney John Inhulsen won a $5.15 million unanimous jury verdict June 21 in favor of McCormick International LLC, a former Ionia County farm equipment dealer.

The verdict was against Manitou North America Inc., a Texas-based distributor of farm equipment manufactured by France-based Manitou BF.

The trial focused on two Michigan laws: the Michigan Farm and Utility Equipment Act and the Michigan Antitrust Reform Act.

“Under the Michigan Farm and Utility Equipment Act, we claimed that Manitou’s business activities had substantially changed the competitive circumstances of McCormick International’s agreement,” said Inhulsen, who also enlisted the services of Foster Swift attorneys Andrew Vredenburg and Joshua Richardson.

He said after McCormick International signed an exclusive dealer agreement with Manitou that should have made it the only Manitou farm equipment dealer — in particular, of Manitou’s telescopic handlers — in Michigan and parts of northern Indiana and northwest Ohio, the company entered into business agreements to distribute these products through other retailers.

“What we had alleged and were able to successfully prove to the jury is that, right out of the gate in 2001 and 2002, Manitou had started distributing these telescopic handlers through McCormick’s retail competitors, taking away his ability to have the first retail sale in that trade area and thus eliminating, practically speaking, his exclusive trade area,” Inhulsen said.

Additionally, Foster Swift alleged that Manitou’s agreement had violated the Michigan Antitrust Reform Act.

“In 2004, they entered into this agreement with a competitor of theirs called Gehl, which at the time was a publicly traded company out of Wisconsin,” Inhulsen said. “This particular agreement called for Manitou to make these special agricultural telescopic handlers that they are known for … and distribute for Gehl their telescopic handlers. They’d make them in France on the same factory floor as the ones they would sell to Manitou dealers. As a result of that, they would just paint one red for Manitou and one blue for Gehl — the exact same machine.

“Ten of these dealers are located in McCormick’s exclusive trade area so he’s got 10 more competitors just as a result of them entering into this agreement.”

In addition, the deal included a non-solicitation agreement, which prevented Manitou dealers from purchasing products from Gehl and becoming a Gehl dealer. Manitou also began providing an incentive to Gehl of $1,200 per unit to help cover financing and sales commission costs.

“In essence, Manitou not only was pushing this product down to compete with their own dealers through other dealers, but also they were helping subsidize Gehl’s ability to sell it cheaper,” Inhulsen said. “They were not offering the same deal to McCormick or their other Manitou dealers.”

Inhulsen said the most interesting aspect of the case was that a settlement offer was not presented by Manitou, leading the case to a trial.

The jury unanimously delivered the $5.15 million verdict in favor of McCormick.

“This case was about Michigan businesses and jobs,” Inhulsen said. “Our legislature passed these laws, in part, to protect our agricultural equipment businesses from the potentially negative impact of mergers and acquisitions of multinational corporations, like Manitou and Gehl, at the wholesale and manufacturing levels, due to the industry’s continued globalization. The jury sent a strong message to these corporations that if you want to do business in Michigan, you must follow its laws.”

McCormick International is no longer in business. Attorneys for Manitou have the option of appealing the verdict.

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