A second motion to dismiss filed by BMW North America in
a lawsuit brought by California paint jobber Nicolosi Distributing Inc. earlier
this year has been denied.
Nicolosi Distributing alleged that BMW NA intentionally
interfered with a contract it holds with BMW-certified German Motors Collision
Center by forcing it to switch to its own branded line of paint.
On Feb. 7, 2011, BMW NA filed its first motion
to dismiss, but U.S. District Judge Susan Illston ruled that three of the four
causes of action alleged by Nicolosi would go ahead and be heard in court.
Those were:
• interference with a contract;
• interference with a prospective
economic advantage; and
• unfair competition.
A fourth allegation of creating an unlawful tying agreement that violated Section 16724 of the California Business and Professions Code,
however, was dismissed with leave to refile, which Nicolosi did on Feb. 25.
Nicolosi had alleged that BMW "forced" German Motors to use BMW-branded
paint, but according to the court did not explain the coercion and failed to
explain how two products were tied and therefore failed to allege the existence
of a tying agreement. The two products were the BMW-branded paint made by
DuPont, and Nicolosi’s Spies Hecker-branded paint it sold to German Motors,
which Nicolosi claims was basically the same.
In its amended complaint, Nicolosi alleged the following:
• BMW requires any body shop or refinisher to buy
BMW-branded paint in order to become a Certified Collision Repair Center (CCRC)
• BMW forced German Motors to enter into a written
agreement that requires German Motors to use BMW paint on any BMW car
• BMW requires purchase of BMW paint as a condition to
obtain CCRC status
• Although participation in the CCRC program is voluntary,
the practical consequences of not being certified are so dire that a German
Motors rep and the rep of another company stated in deposition that it is not
an option
• BMW-branded paint is made by DuPont and is basically the
same as the paint Nicolosi had been selling to German Motors
• BMW has no evidence that its paint is substantively
different or better than Spies Hecker-branded paint, and that there are no
quality of service, quality of product or other quality justifications for its
requirement
"My attorney and obviously the judge, seeing all the
evidence, thinks we have a really strong case," said Tony Nicolosi, owner
of Nicolosi Distributing. "We also believe the court will find in our favor and will rule that BMW’s color system program will be deemed illegal."
"The product is exactly the same, just labeled
differently," he added. "[BMW] tries to make dealerships that have
body shops buy it from them. They claim 30 percent market share, but to me
that’s like 100 percent because 70 percent of dealers don’t have body
shops."
More information:
California Jobber Suing BMW North America Over Paint Line Dispute
