8/30/2010 12:31:00 AM
NEWS BRIEFS
Judge Denies Fastenal Motion to Dismiss Multi-Million Dollar Lawsuit

A U.S. district judge denied Fastenal’s motion to dismiss B&B Hardware’s lawsuit accusing Fastenal of violating an April 1999 contract that made B&B Fastenal’s exclusive supplier for self-sealing fasteners, the Winona Daily News reports. 
 

The lawsuit claims Fastenal broke that agreement by marketing and selling competing products at a lower cost.
 

Fastenal unsuccessfully argued that the contract expired shortly after it was signed, pointing to a provision in the contract automatically terminates the agreement “upon any change of more than 25% ownership in (Fastenal),” which the company argued occurred in May 1999.
 

B&B claimed the provision meant a single transaction of 25% of company ownership, not cumulative stock sales.
 

B&B’s lawsuit claims that in April 1999, B&B and Fastenal signed an agreement making B&B the exclusive supplier and manufacturer of self-sealing fasteners sold by Fastenal.

 

“During relevant times, Fastenal marketed and sold lower quality and lower cost self-sealing fasteners, not manufactured or provided by B&B.” The suit charges “Fastenal is itself, or in connection with other companies, manufacturing and selling self-sealing fasteners, using B&B technology, trade secrets and other proprietary information, in direct competition with the Sealtight line of self-sealing fasteners.”

 

B&B’s patented self-sealing patent allows screws, rivets and other fasteners to form fluid and gas-tight seals.

 

B&B’s suit charges Fastenal also “diverted customer leads for self-sealing fasteners generated by B&B to other self-sealing fastener manufacturers”; failed to provide sales reports to B&B as required; placed the name of B&B’s primary competitor – APM Hexseal – on the Fastenal website as a “Diamond Marketing Partner.”

 

“We contend Fastenal agreed to be B&B’s exclusive partner in marketing self-sealing fasteners and then later ignored the partnership agreement,” B&B attorney Barry Snyder wrote.

 

While Judge William Wilson didn’t rule on the argument itself, he found B&B presented a plausible claim and the case can continue. 

 

A proposed trial date for the case has been set for Aug. 30, 2011.  ©2010 GlobalFastenerNews.com

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