EA DICKINSON, ETC. v. Simpson Elec. Co., Civ. A. No. 80-C-991.
| Decision Date | 24 March 1981 |
| Docket Number | Civ. A. No. 80-C-991. |
| Citation | 509 F. Supp. 1241 |
| Court | U.S. District Court — Eastern District of Wisconsin |
| Parties | E. A. DICKINSON & ASSOCIATES, INC., Plaintiff, v. SIMPSON ELECTRIC COMPANY, Defendant. |
Albert C. Elser, II, Prieve, Meyer & Elser, S. C., Milwaukee, Wis., for plaintiff.
Andrew O. Riteris, Milwaukee, Wis., for defendant; Michael, Best & Friedrich, Milwaukee, Wis., and Quinn, Jacobs & Barry, Chicago, Ill., of counsel.
DECISION AND ORDER
This is an action for damages and injunctive relief brought pursuant to the Wisconsin Fair Dealership Law, Ch. 135, Wis.Stats.
The plaintiff E. A. Dickinson & Associates, Inc. ("Dickinson") is a Wisconsin corporation which is a manufacturer's representative for manufacturers of electrical equipment. The defendant Simpson Electric Company ("Simpson") is an Illinois corporation engaged in the manufacture of electronic panel meters and test equipment for sale to original equipment manufacturers ("OEM's") and distributors. Effective July 1, 1980, Simpson terminated its relationship with Dickinson. On October 27, 1980, Dickinson filed suit under Ch. 135, Wis.Stats., seeking injunctive relief to prohibit the termination and damages. The defendant has answered denying that plaintiff is a dealership within the meaning of Ch. 135 and alleging that even if plaintiff is deemed to be a dealership, Ch. 135 cannot be applied retroactively to govern the agreement between the parties. There is no dispute that if the plaintiff is entitled to the protection of Ch. 135, the procedural prerequisites to termination of a dealership were not followed by the defendant.
The plaintiff's motion for preliminary injunctive relief was heard on November 26, 1980, and was denied for the reasons stated at that time. This decision sets forth in greater detail the basis for the Court's ruling on the plaintiff's motion.
The plaintiff and its president Mr. E. A. Dickinson have been engaged in the business of sales representation of manufacturers of electrical equipment since 1948. As a manufacturer's representative, the plaintiff promotes the sale of electrical equipment by finding potential customers and encouraging existing customers to place orders with the manufacturers whom plaintiff represents. Plaintiff's president is a graduate engineer and thus is able to, and does, render application engineering services to potential customers who are contemplating the use of a manufacturer's products.
In 1956 the plaintiff and the defendant entered into an oral agreement that the plaintiff would serve as the exclusive manufacturer's representative of the defendant in the geographical area consisting of most of the State of Wisconsin. The plaintiff paid no franchise fee and it made no equipment investment in undertaking that representation.
During the time of the plaintiff's representation of the defendant, which lasted from 1956 through June 1980, the counties in the State of Wisconsin that were within the plaintiff's area of representation varied slightly from time to time but plaintiff's territory at all times covered most of the state. The plaintiff was compensated by payment from the defendant of a commission on defendant's sales of its equipment to original equipment manufacturers and to distributors within plaintiff's territory. The rate of commission varied from time to time during the course of the parties' relationship, and it also varied depending upon whether a sale was to an OEM or to a distributor.
The plaintiff was the defendant's first factory representative in Wisconsin. In 1956 the defendant had a few customer accounts but virtually no sales volume in Wisconsin. As of June 1980, the defendant had a sales volume of approximately $350,000 per year in Wisconsin. The plaintiff was in large part responsible for building up the defendant's sales volume in Wisconsin during the period from 1956 through June 1980. As of June 1980, the plaintiff, in addition to representing the defendant, also represented six other manufacturers of electrical equipment. Commissions from the defendant accounted for approximately 11 to 15% of the plaintiff's income.
Approximately 60% of the defendant's sales in the plaintiff's territory are direct sales from a distributor to a customer. In those cases the distributor buys products from the defendant, takes title to them, sells from inventory, and is responsible for collection of the purchase price. Of the other 40% of sales, which are to OEM's, in about half the sales the orders are placed directly by the OEM with the defendant and in the other half the orders are relayed through the plaintiff to the defendant. In no case does the plaintiff take title to the manufactured product or undertake collection of the purchase price. Price quotations are also prepared by the defendant, although occasionally the plaintiff may relay a quotation to an OEM and occasionally it may review a quotation. All invoicing is done from the defendant's home office.
In order to promote the products which it represents, the plaintiff from time to time attends trade shows at its own expense and maintains a booth or display area under its own name at which it displays samples and promotional material from all of the manufacturers whom it represents. The manufacturers provide plaintiff with promotional material for that purpose and for use in dealing with potential customers.
The plaintiff's stationery and business cards bear its own name and not the defendant's name. Plaintiff's sales literature shows all of the manufacturers' lines which it carries. Plaintiff maintains a listing under its own name in the Milwaukee yellow pages. It is also listed under the defendant's name under the designation of factory representative. Also listed under the defendant's name are several other firms which are designated as distributors.
The plaintiff does not perform servicing or other warranty work on the defendant's products, but it does on occasion refer customers who bring complaints to its attention either to Simpson's home office or to E-M Instruments, a Milwaukee company which does do warranty work for Simpson.
The plaintiff does not purchase goods from Simpson for primary use in resale to customers and does not maintain an inventory in the sense of a stock of goods for resale. Plaintiff does keep a small supply of defendant's products on hand for promotional and demonstration purposes. Under an arrangement which it had with defendant, plaintiff would purchase the products outright at a discount of 50% off list price, and subsequently it would either return the products to Simpson within sixty days for a full refund or credit or it would sell the products at a discount to promote good relations with a present or potential customer. As of June 1980, plaintiff's "inventory" of defendant's products had a value of approximately $500 to $1,000.
In a letter dated June 4, 1974, the defendant's director of sales, Mr. Mel Buehring, wrote to plaintiff's president, stating as follows:
The SIP line was a line of specialized equipment for laboratory use. It did not constitute a substantial addition to the plaintiff's line of Simpson products. The line never sold well and was eventually in part discontinued and in part merged into Simpson's regular line of products. Defendant's product line which plaintiff carried had varied on other occasions, and the addition of the SIP line was not an uncommon type of event in the history of the relationship between the parties.
On May 27, 1980, Mr. Buehring again wrote to Mr. Dickinson to notify him that effective July 1, 1980, Simpson was discontinuing Dickinson as its Wisconsin representative, allegedly because of dissatisfaction with the growth rate of sales in Wisconsin during the several preceding years. Mr. Dickinson protested the termination by telephone on May 28, 1980, but his protest was to no avail and Dickinson was terminated as of July 1, 1980, with commissions to be paid on orders placed through September 1980.
Simpson manufactures a high quality product which it will be difficult, if not impossible, for Dickinson to replace. The Simpson line is a prestige line in the electrical industry, and its loss will therefore result not only in monetary damage to the plaintiff in terms of commissions lost but also in damage to the plaintiff's reputation as a promoter of high quality electrical products.
The Wisconsin Fair Dealership Law prohibits the termination of dealerships without good cause. A dealership is...
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