Poca company says it was cut out of profits
Chris Dickerson Nov. 30, 2007, 2:10am
WINFIELD – A Poca-based company says it has lost hundreds of thousands of dollars after it was taken advantage of by a company whose products it distributes.
Kanawha Scales and Systems Inc. filed a lawsuit Nov. 20 in Putnam Circuit Court against Avery Weigh-Tronix LLC, a business based in Fairmont, Minn.
Weigh-Tronix is an international manufacturer of industrial weigh systems and equipment, and it distributes its products through a network of distributors called "Key Distributors," according to the complaint. Kanawha Scales is one such Key Distributor for Michigan, Ohio and West Virginia.
According to the complaint, Kanawha Scales began making calls and sales visits to Con-Way Transportation Services in Ann Arbor, Mich., in 2003.
"Kanawha Scales' sales and technical teams spent substantial time over several years cultivating a business relationship with Con-Way and, in particular, it designed and recommended a reweigh program for Con-Way which entailed the purchase of substantial Weigh-Tronix equipment from Kanawha Scales for Con-Way's use on a national basis," the complaint states. "Kanawha Scales did sell scale and weighing equipment to Con-Way using Weigh-Tronix products and introduced Weigh-Tronix personnel to Con-Way solely pursuant to the various Key Distributor Agreements between Kanawha Scales and Weigh-Tronix."
Kanawha Scales says that through February 2007, Con-Way bought more than $7 million from Kanawha Scales in Weigh-Tronix products, equipment and installation.
However, Kanawha Scales says Weigh-Tronix soon changed the rules.
"During and prior to October 2007, Weigh-Tronix conducted discussions with Con-Way without participation or knowledge by Kanawha Scales," the complaint states. "In October 2007, Weigh-Tronix announced that Con-Way would be a national account under the Key Distributor Agreement because, pursuant to such agreement, 'Those customers require direct relationship with the manufacturer.'"
Kanawha Scales says its personnel expended substantial time and effort to cultivate Con-Way as a customer for Weigh-Tronix products, design systems to help Weigh-Tronix and invite Weigh-Tronix personnel into the process "to benefit both Kanawha Scales and Weigh-Tronix."
"After taking advantage of the benefits offered by Kanawha Scales under the umbrella of the Key Distributor Agreement, Weigh-Tronix proceeded to seize, grab and take Con-Way, through various artifices and manipulations, into a 'national account' in order to cut out participation and profits for Kanawha Scales," the complaint, filed by Charleston attorneys James M. Sturgeon Jr. and Thomas H. Vanderford IV of Pauley, Currey, Stugeon & Vanderford, states.
As a result, Kanawha Scales says it has lost hundreds of thousands of dollars in sales and profits and will lose considerably more in the future.
Kanawha Scales also "asserts that the activities of Weigh-Tronix constitute a business plan and calculated method of taking advantage of its Key Distributors as reflected by the allegations of another Key Distributor, Indianapolis Scale Company Inc." that was filed in Indiana.
In the five-count complaint, Kanawha Scales says Weigh-Tronix breached its contract and its implied covenant of bad faith. It also alleges tortious interference with the contract, a violation of franchising law and unjust enrichment.
Kanawha Scales also makes a request for expedited discovery to determine if the suit could turn into a class action.
The Indiana suit "may represent a nationwide business plan of misusing Key Distributor relationships in order to unjustly enrich Weigh-Tronix," the complaint states. "Kanawha Scales requests expedited discovery for purposes of determining whether the actions of Weigh-Tronix constitute a nationwide business plan applicable to all or a substantial portion of the Key Distributors under the same or similar contracts with Weigh-Tronix in order to determine whether to request a class action certification for Kanawha Scales acting as class representative on behalf of all Key Distributors in the United States."
Kanawha Scales seeks compensatory and punitive damages as well as attorney fees and court costs. The case has been assigned to Circuit Judge O.C. "Hobby" Spaulding.
Putnam Circuit Court case number: 07-C-481