California Jobber Suing BMW North America Over Paint Line Dispute - BodyShop Business
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California Jobber Suing BMW North America Over Paint Line Dispute

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A lawsuit was filed earlier this year by Nicolosi
Distributing Inc. (NDI), a paint jobber in San Francisco, Calif., against BMW
North America for intentionally interfering, NDI claims, with a contract it
holds with a BMW-certified shop.

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NDI says it has a multi-year paint supplies contract with
BMW-certified German Motor Collision Center that it claims BMW knew about.
Despite that, NDI says BMW decided to create its own paint line and require
collision repair facilities painting BMW vehicles to use that line. NDI claims BMW then forced
German Motors Collision to enter into a written agreement that mandates that
the shop use BMW paint on any BMW car it paints.

NDI owner Tony Nicolosi claims that BMW told German
Motors that it had to purchase BMW paint from them regardless of what other
contracts it had or else it would lose its certification.

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"It’s the same brand of paint as what I sell
them," said NDI owner Tony Nicolosi. "[BMW] is also telling
non-certified shops that want to be BMW-certified that they have to buy paint
supplies from them. Insurers want to see shops certified, so this means a lot
to shops. One shop told me, ‘I had no choice – I had to do it.’ I’m pretty sure
a lot of jobbers lost a lot of business because of this, but nobody is saying
anything."

Asked why NDI didn’t sue the body shop with which he had
a contract and not BMW, Nicolosi’s son, Danny, said it crossed their minds
until they learned the specifics relating to the case.

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"When [my dad] brought it up to the owner [of German
Motors], he claimed he didn’t know anything about it," Danny Nicolosi
said. "But once they were informed, they stopped using the system and kept
their obligation with us and continued to buy from us. There were a couple
months when sales dropped, but [my dad] gave the shop the benefit of the doubt
and again, they said they would fulfill the contract."

NDI is alleging that BMW violated California’s
Anti-Competition Act, Business and Professions Code Section 17200, and also
Business and Professions Code Section 16727 that prohibits a business from
reducing competition and creating a monopoly.

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NDI is seeking $75,000 and other miscellaneous damages.

On Feb. 7, 2011, BMW of North America filed a motion to
dismiss, but U.S. District Judge Susan Illston ruled that the interference with
a contract, interference with a prospective economic advantage and unfair
competition complaints would go ahead and be heard in court. The unlawful tying
agreement claim, however, was dismissed with leave to refile, which Nicolosi
did on Feb. 25.

"If they get away with this, other automakers wil
follow suit and jobbers will be put out of business," Tony Nicolosi says.

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Added Danny Nicolosi, "We’re telling shops that if
you don’t put your foot down, you’ll see more of this stuff. Shops are getting
scared that if they don’t buy from them, they won’t be certified. But we’re
saying, is it really worth it if the price of this stuff doubles?"

The trial date is set for Oct. 24, 2011.

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