Business Litigation And Counsel

Firm suing Carquest so it can hire

On Behalf of | Aug 17, 2012 | Hutchinson News

An Eagan-based auto parts distributor is adding jobs around the country, but its hiring efforts have taken a detour into court.

The company, Factory Motor Parts Co., is suing the owner of competitor Carquest, an auto parts seller that’s shedding jobs while threatening legal action against its former employees and companies that try to hire them.

In a new federal lawsuit, Factory Motor Parts (FMP) accuses Carquest owner General Parts International Inc. of unfair competition and asks a judge to keep Carquest’s lawyers at bay when FMP hires the auto parts retailer’s employees.

Carquest and FMP declined to discuss the dispute.

FMP’s website says it is the largest aftermarket distributor for Ford Motor Co. and General Motors Co., with more than 97 warehouses supplying auto parts to dealers, fleet owners and drivers, who are spending more to keep their cars on the road longer.

The average age of cars and light trucks on the road hit a record high of 10.8 years in 2011, according to an analysis of national vehicle registration data by R. L. Polk & Co. That figure was 8.4 years in 1995, and stayed under 10 years until 2008, the Southfield, Mich.-based automotive research firm reported.

Drivers are holding onto their cars longer partly due to the down economy, but also because modern cars are more reliable and durable than in previous decades, said Marty Van Reese, president of the Minneapolis-St. Paul Automobile Dealers Parts Association.

Now, owners are willing to spend more on parts and repairs to get the most miles out of their vehicles, which is good for the auto parts business.

Raleigh, N.C.-based General Parts had sales of $2.87 billion last year and a 14,000-person work force, down from 24,500 employees in 2006, according to the Triangle Business Journal, a sister publication of the Minneapolis/St. Paul Business Journal.

General Parts is considering auctioning 1,400 Carquest stores (franchisees operate another 2,000) in a deal that could fetch $2 billion, Reuters reported last month.
Carquest fires, FMP hires

While Carquest cuts, FMP is hiring in 18 states, according to the company’s website.

In its court filings, FMP stated that laid-off Carquest employees — or those who think they’re next — are qualified applicants with experience in automotive parts sales and distribution. More than 100 current and former Carquest employees have applied for FMP jobs in the past year.

But those employees come at a price.

Carquest has sued or threatened to sue at least two ex-employees, and indicated it would also sue FMP if the company kept them, court records show. Such legal threats are common when competitors hire executives or specialists with noncompete agreements, but FMP argues that’s not the case with most of the Carquest employees.

FMP said it hasn’t broken any laws, acted unfairly or interfered with contracts between Carquest and its former employees. FMP finds different jobs for ex-Carquest employees with noncompetes, but most aren’t subject to such agreements, the company said.

Still, FMP said it declined to hire at least one former Carquest employee “as a direct and proximate result of Carquest’s threats and conduct.”

So the company is pressing its own legal case.

“FMP is not going to wait around for Carquest to file baseless lawsuits against either it or its employees. … FMP seeks a declaration that it is free to hire former Carquest employees who are not subject to enforceable noncompete agreements,” FMP’s suit said.

FMP declined to discuss the suit through its attorneys, Troy Hutchinson and Kari Berman at Minneapolis law firm Briggs and Morgan, who said the company has a policy of not speaking with the press.

Carquest and General Parts also declined to comment.

“We’re a private company and any rumors that are out there, we consider them to be a distraction,” spokeswoman Dorothy Brown Smith said.

A search of federal court records shows Carquest has filed similar suits against ex-employees who joined at least three other competitors, including Springfield, Mo.-based O’Reilly Automotive Inc.

Advance Auto Parts, which has a regional office in Bloomington, does not appear to be among them. The Roanoke, Va.-based company declined to comment.

Carquest hasn’t identified any confidential business information that workers might bring to competitors, said Maslon Edelman Borman & Brand lawyer Bill Pentelovitch, a Minneapolis business litigator who is not involved in the dispute. He thinks a judge is likely to rule that Carquest goes too far by preventing former employees from working for competitors in any state where Carquest does business.

While FMP probably won’t win a blanket ruling saying it can hire any current or former Carquest employee it wants, Pentelovitch thinks the court will give FMP a “clear road map” on how to hire Carquest employees without exposing itself to more litigation.

FMP’s position is: “We’re hiring, here are qualified people, we want to put them to work,” he said. “Suing to get a declaratory judgment on this is the smart thing to do.”

Jim Hammerand