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Wednesday, 23 February 2011 23:03

CA Paint Jobber Sues After BMW Implemented Its Own Paint Line

Nicolosi Distributing Inc. (NDI), a paint jobber in the San Francisco bay area, filed a lawsuit against BMW of North America earlier this year alleging intentional interference with a contract with a BMW-certified shop.

NDI accuses BMW of North America of interfering with a contract the jobber had with a BMW-certified shop for paint supplies. The suit pertains to a contract signed between NDI and German Motor Collision Center, a BMW-certified collision center connected to the BMW of San Francisco dealership in May of 2005. The contract was a multi-year agreement that BMW of North America was aware of before German Motors Collision Center signed it.

NDI contends that “BMW intentionally interfered with NDI’s contractual relationship with German Motors Collision Center... by the following conduct: BMW has decided to product its own paint line ... BMW requires auto body shops painting a BMW automobile to only use BMW paint. BMW forced German Motors Collision Center to enter into a written agreement ... which requires German Motors to use BMW paint on any BMW car painted at German Motors.”

“BMW North America told German Motors that they had to buy from them under this new program, no matter what other contracts they had, or else they would lose their certification” said NDI’s owner, Tony Nicolosi. 

German Motors Collision Center’s contract with NDI stated: “All paint materials, DPC products and supplies will be purchased exclusively through Nicolosi Distributing Inc. Materials purchased by BMW of San Francisco will not be bought through any other vendor.”

Under this new program BMW North America does not allow any of their certified body shops or dealerships to paint BMW vehicles with any other paints, blocking jobbers across the country out of the market of selling paint supplies to these places.

Nicolosi said that NDI sells DuPont paints, and the BMW paint is also made by DuPont.

“A lot of jobbers across the country lost a lot of business because of this,” said Nicolosi.

NDI is also accusing BMW North America of interfering with a prospective economic advantage, violation of California’s Anti-Competition Act, Business and Professions Code Section 17200 and violation of Business and Professions Code Section 16727 in which a business’s actions lessen competition and create a monopoly on a trade or line of commerce.

Nicolosi is asking for damages of $75,000 for the first and second claim, exemplary damages from Federal Court, injunctive relief from the third and fourth claims, attorneys fees, other relief from the Business and Professions Code violations, court costs and other relief as judged by the court.

On February 7, 2011, BMW of North America filed a motion for judgment on the pleadings, which sought to dismiss the entire action. The Court Denied the motion in part, and granted the motion in part. US District Judge Susan Illston ruled that the intentional interference with a contract, interference with a prospective economic advantage and unfair competition complaints would go ahead to court, while the claim for an unlawful tying agreement was dismissed with leave to refile, which Nicolosi will do on February 25, according to NDI’s lawyer Herman Franck.

According to Franck, NDI will amend the complaint to describe the particulars of an illegal tying arrangement whereby BMW of North America coerces body shops into purchasing BMW branded pain products by withdrawing BMW certification unless they purchase BMW branded paint products. This issue applies only to BMW automobiles, and does not apply to non-BMW automobiles.

Franck went on to say that the coercion in the industry is that it is “unthinkable not to have that (BMW) certification” according to German Motors Collision Center, so the BMW certification is really tied to using BMW-certified paint.

When asked about the litigation by Autobody News, BMW North America’s legal representative Stephen Bledsoe said, “It is BMW’s policy not to comment on any pending litigation.”

The trial date is set for October 24, 2011 at 8:30 a.m.

Nicolosi is expecting other jobbers who feel they have lost business because of this program to come forward and join the lawsuit.

Nicolosi Distributing Inc.
San Jose location: (408) 573-7146
San Carlos location: (650) 413-0150

Stephen Bledsoe- representing BMW
(816) 561-7007

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