A $5.15 million verdict upheld in equipment case
By Sheila Pursglove
Legal News
For almost 26 years, Denis McCormick ran a farm equipment dealership in Ionia, between Lansing and Grand Rapids. As CEO, he owned and managed three farm equipment dealerships over the years, marketing several brands including Manitou North America Inc., a Texas-based distributor of farm equipment manufactured by its parent company, Manitou BF, headquartered in France.
At one point the largest Manitou Ag dealer in the United States, McCormick achieved a 75 percent market share in the firm’s Ag Telehandlers, telescopic machinery used for such tasks as handling bales of hay, feeding livestock, or doing building maintenance,
Beginning in 2005, things went south, when Manitou changed the competitive circumstances of its agreement — leaving McCormick to face at least 10 competitive dealerships in his “exclusive” trade area in Michigan, parts of northern Indiana and northwest Ohio. His business folded by the end of 2008.
A Foster Swift trial team led by John Inhulsen, including Andrew Vredenburg and Joshua Richardson, took the case, which went to trial when Manitou failed to make a settlement offer.
The Foster Swift trio claimed Manitou violated the Michigan Farm and Utility Equipment Act (MFUEA) by substantially changing the competitive circumstances for McCormick under the exclusive agreement. The team proved to the jury that Manitou’s violations began as early as 2001 and 2002, when it started distributing its products through other retailers, eliminating McCormick’s exclusive trade area.
Foster Swift also alleged that Manitou violated the Michigan Antitrust Reform Act (MARA), when, in 2004, it entered into an agreement for its French-based parent company, Manitou BF, to make agricultural telescopic handlers for Wisconsin-based Gehl Company, Inc., as well as provide a $1,200 per unit incentive to help cover financing costs and sales commissions through its dealer network. A non-solicitation agreement blocked Manitou dealers, like McCormick, from purchasing products from Gehl and becoming a Gehl dealer.
“In essence, Manitou sought to flood the American market with tele-handlers through the Gehl dealer network — not only pushing its product down to compete with their own dealer network, but also by strategically subsidizing Gehl’s ability to sell these telescopic handlers,” Inhulsen says. “They were not offering the same incentives to McCormick or other Manitou dealers.”
Inhulsen and his colleagues triumphed in June 2013, when the jury — agreeing that sales Manitou made to other dealers in McCormick’s “exclusive” trade area badly dinged sales from 2001 to 2006 — returned a unanimous verdict awarding $5.15 million to McCormick.
But Manitou wasn’t done — the case continued with 15 months of post-judgment motions, in which Manitou argued it was the victim of “trial by surprise,” or ambush, when Inhulsen presented evidence as to damages through the testimony of Denis McCormick as opposed to its named expert — and that the jury based its award on business valuation as opposed to lost profits.
According to Inhulsen, the court concluded that Denis McCormick, as owner and operator, was on the witness list, was identified as having knowledge about damages; and that as a matter of trial strategy, it was well within McCormick’s right to elect not to call its expert at trial. The Foster Swift team also argued that the 2008 profit and loss statements from Mr. and Mrs. McCormick’s federal tax returns were an appropriate basis for the jury’s verdict.
On September 22, Ionia County Circuit Judge Suzanne Hoseth Kreeger denied Manitou’s motions for new trial, judgment notwithstanding the verdict, and remittitur.
Not only was the $5.15 million verdict upheld, but also Manitou now faces a judgment amount of more than $6 million, including interests, costs and attorney fees awarded in favor of McCormick.
“Our clients are thrilled by the outcome following an extensive post-judgment process, and look forward to the day when this matter finally comes to a rest and they can move on with their lives. In fact, they would very much like to re-enter the farm equipment industry as Michigan small business owners again in the near future,” says Inhulsen, adding that McCormick, who moved on to other jobs after the demise of his company, now works as a manager for another dealer within the farm equipment industry.
“In my opinion, every Manitou dealer in the country who suffered a loss of profits because of the distribution network through Gehl suffered an injustice,” Inhulsen says. “Now Manitou wants to appeal. McCormick has the support of the North American Equipment Dealers Association moving forward. Their national board has approved it and is helping fund the appeal defense. So this has taken on a much larger scope.”
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