Go-Kart Distributor Favored

Our client was selected as a U.S. distributor of go-karting engines and related products for the kart racing industry by an Austrian company in 2008.

Shortly thereafter, the Austrian company made the decision to expand each distributor’s territory nationwide.  As would be expected, the distributorships competed aggressively with one another and opened up numerous dealers in each others’ areas.  Ultimately, our client was successful in this competition and the Austrian company decided not to renew the other distributors’ agreements when they came up for renewal.  The Austrian company claimed that the contracts were not renewed due to failed payments, a violation of their agreements.

Those distributors were less than pleased about losing their business and decided to sue our client. Eventually our client asserted that its conduct was protected by California’s competition privilege, that there was no evidence that any conduct by them interfered with the Plaintiff’s contractual rights or business relations, and that Austrian company had every right not to renew Plaintiff’s agreement due to the past due amounts owed.  Plaintiff argued that the real reason for the non-renewal was our client’s interference and not the payment issues. Fairfield and Woods was able to successfully defend our client against all claims.