Thompson Hine has a nationally recognized practice in counseling clients on distribution matters and litigating distribution disputes. We have been listed in Chambers USA as a leading national firm in franchising and distribution, and Tom Zych, the group’s leader, is listed as a leading national lawyer in his practice area. The firm brings deep and broad experience to counseling clients. In the United States, this means taking into account both state law limiting termination of distributors and sales agents and antitrust laws governing vertical restraints and pricing. In foreign countries, we focus on the details of distribution arrangements to make sure distributor and sales agent agreements both accomplish the client’s business objectives and can be enforced in the event of underperformance by the local distributor or agent. We also advise clients on compliance with the requirements of the Foreign Corrupt Practices Act and related laws as they select foreign agents and distributors and prepare agreements for them.
We counsel many manufacturers on distribution issues, not only advising on distributor, dealer and sales agent appointments, realignments and terminations, but also drafting agreements. We have prepared standard form dealer, distributor and agency agreements for domestic and international use. For clients’ foreign distribution of products using distributors or sales agents, we select and work closely with trusted local counsel to customize agreements to the specific jurisdiction.
Four of our lawyers devote a significant part of their practice to distribution counseling or litigation:
Counseling Manufacturers on U.S. Distribution
Many state statutes limit manufacturers’ exercise of contract rights and, depending upon the jurisdiction and the nature of the business, may require good cause for termination of a distribution relationship, impose inventory repurchase requirements following termination or restrict a manufacturer in negotiating other terms with dealers or distributors. We have counseled clients on termination and realignment of distribution relationships in all 50 states, as well as Puerto Rico, the U.S. Virgin Islands and the District of Columbia, and we have litigated dealer termination cases in state and federal courts throughout the United States.
Antitrust issues regularly arise in the course of product distribution, and we counsel clients on compliance with the federal antitrust laws, including Sections 1 and 2 of the Sherman Act, Section 3 of the Clayton Act and Sections 2(a)-2(e) of the Robinson-Patman Act, and with state antitrust laws. We pay close attention to differences between federal and state antitrust laws and advise clients on policy and enforcement conflicts, including, for example, inconsistent treatment of resale price maintenance under federal and state law. Our lawyers have been active in the American Bar Association’s Section of Antitrust Law and have edited ABA publications on antitrust and distribution law, including Antitrust Law and Economics of Product Distribution (2006) and Antitrust Handbook for Franchise and Distribution Practitioners (2008).
Counseling Manufacturers on International Distribution
We have significant experience managing and coordinating foreign counsel to provide country-specific guidance on distributor and agency relationships. When advising manufacturing clients on the terms of distribution and sales agency agreements and the appointment or termination of distributors and sales agents, we select qualified counsel in each affected country, instruct them on specific issues requiring local input, and supervise their work or introduce them to in-house counsel who work directly with them. Our experience in this area includes analyzing one client’s legal issues affecting distributors or sales agents in Mexico, Brazil, Guatemala, Dominican Republic, El Salvador, Jamaica, Barbados, and Trinidad and Tobago. For another client, the work involved analyzing legal issues and preparing agreements for some 65 countries. In another instance, we advised a client on termination of agency and distribution agreements in Europe, South America, the Middle East and Asia and assisted in preparing a standard form of sales agency agreement.
Our distribution work spans the globe. In just the past five years, we have worked on distribution matters either directly or with local counsel in the following countries:
Africa & the Middle East
Representing Clients in Litigation & Arbitration
In addition to counseling and drafting agreements, we have deep and broad experience litigating and arbitrating disputes between manufacturers and their distributors, dealers and sales agents, including breach of contract claims and claims based on state franchise and dealer protection statutes. The following is a sample of our work in this area:
- An action against the state of New Hampshire seeking a declaratory judgment that 2013 amendments to its motor vehicle dealer law violate the Contracts Clause of the New Hampshire and U.S. Constitutions, along with the Equal Protection and dormant Commerce Clauses of the U.S. Constitution, when applied retroactively to our manufacturing client’s dealer agreements, Husqvarna Professional Products, Inc. v. State of New Hampshire, No. 217-2014-cv-00166 (Super. Ct., Merrimack County, N.H.).
- An action by our client’s North American sales representative alleging termination of the representation agreement in violation of Ohio law and raising issues under Italian law, which was specified in the agreement, Enquip Technologies Group Inc. v. Tycon Technoglass S.r.l., No. 2008-cv-1276 (Court of Common Pleas, Greene County, Ohio). The case was tried to a verdict in April 2011, and all claims against our client, a manufacturer of reactor vessels and related products used in pharmaceutical and chemical manufacturing, were dismissed on appeal in an opinion reported at 986 N.E.2d 469 (Ohio Ct. App. 2012).
- An action by a wallpaper and wallcoverings manufacturer against our client, a distributor in Houston, Texas, alleging breach of contract, unfair competition and other wrongful conduct in connection with termination of the distributor agreement, RJF International Corp. v. Wallcoverings International, Inc., No. 12-cv-1348 (N.D. Ohio). The case was settled in 2012.
- An action alleging termination of a dealership in violation of the Minnesota Heavy and Utility Equipment Manufacturers and Dealers Act and the Wisconsin Fair Dealership Law in which we defended a material handling equipment manufacturer, Minnesota Supply Co. v. Mitsubishi Caterpillar Forklift America Inc., No. 10-CV-4311(SRN/TNL) (D. Minn.). The court dismissed the claims against our client in a decision reported at 822 F.Supp. 2d 896 (D. Minn. 2011).
- An action alleging termination of a sales agency agreement in violation of the Texas equipment dealer statute (formerly Tex. Bus. & Com. Code §§ 55.001 et seq.) in which we defended an outdoor power and lawn and garden equipment manufacturer, Relco Military Sales, Inc. v. Husqvarna Outdoor Products, Inc., No. 3:09-cv-1350 (N.D. Tex.). The case was settled in 2010.
- An action alleging wrongful termination of a distributor agreement and price discrimination in violation of ch. 93A of the Massachusetts General Laws in which we defended a manufacturer of high pressure laminates, Prime Plywood & Panel, Inc. v. Formica Corp., No. 1:09-cv-30212 (D. Mass.). The case was settled in 2010.
- An action alleging termination of a distributor agreement in violation of the Arizona Equipment Dealer Statute in which we represented an industrial pump manufacturer, Phoenix Pumps, Inc. v. Moyno, Inc., No. CV 09-01158-PHX-MHM (D. Ariz.). The court dismissed the case on venue grounds in a decision reported at 2010 U.S. Dist. LEXIS 14591 (D. Ariz. 2010).
- An action against our client, a manufacturer of aircraft engine test stands, by its former sales representative in Turkey for unpaid commissions, Aydin Company Exchange, Inc. v. Avtron Manufacturing, Inc., No. CV 09 700081 (Ct. of Common Pleas, Cuyahoga County, Ohio). The case was settled in 2009.
- An action alleging constructive termination of a dealership in violation of the New Jersey Franchise Practices Act in which we defended a material handling equipment manufacturer, Maintainco, Inc. v. Mitsubishi Caterpillar Forklift America Inc., No. C-300-00 (Superior Court, Chancery Div., Bergen County, N.J.). The New Jersey Appellate Division’s opinion affirming judgment for the dealer is reported at 975 A.2d 510 (N.J. Super. Ct. App. Div. 2009).
- An action filed on behalf of our client, a power transmission parts distributor, alleging termination in violation of the Wisconsin Fair Dealership Law and pursuant to a resale price maintenance conspiracy between the manufacturer and a competing distributor in violation of Section 1 of the Sherman Act, Bearing Distributors, Inc. v. Rockwell Automation, Inc., No. 06-CV-831 (N.D. Ohio). The case was settled after the district court denied the defendants’ motion to dismiss; the court’s opinion is reported at 2006 WL 2709779 (N.D. Ohio Sept. 20, 2006).