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Goodyear Sues Sears for Breach of Contract in Weatherhandler Tires Deal

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Goodyear Tire & Rubber Co. has filed a federal lawsuit against Sears Roebuck & Co. seeking $19.5 million in a dispute over the companies’ agreement to produce co-branded tires for Sears.

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According to a report in the (Cleveland) Plain Dealer, Goodyear accused Sears of backing out of a deal struck in 2009 to produce Weatherhandler tires for Sears, leaving the Akron-based manufacturer with more than 200,000 tires worth $18.9 million.

Goodyear agreed in 2009 to begin manufacturing tires exclusively for Sears to sell that included both of the companies’ trademarks – Goodyear’s Fuel Max and Sears’ Weatherhandler marks.

As part of the arrangement, Sears submitted Goodyear annual forecasts indicating how many tires Sears would need to purchase for the upcoming year. In January, Sears submitted a forecast indicating the company would purchase 330,000 co-branded tires over the next 12 months, the lawsuit said.

In April, Sears put its tire business out for bid. According to an article on law360.com, Goodyear claims that, “during the bidding process, ‘Sears continued to submit 12-month rolling forecasts indicating a demand for a large quantity of co-branded tires.’ The lawsuit says Sears and Goodyear both expected Goodyear to win the bid to continue the business.”

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In June, Sears informed Goodyear that it had gone with another tire manufacturer and in the weeks that followed said it would not pay for the 219,994 co-branded tires Goodyear had manufactured. The business agreement prohibits Goodyear from selling the tires to anyone other than Sears or one of the retailers’ affiliates, the lawsuit states.

Goodyear claims the breach in the purchase agreement has caused it $18.9 million in damages, plus interest. The lawsuit also accuses Sears of taking $600,000 in improper discounts for tires that the retailer bought and received, according to the Plain Dealer report.

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