Dealers Association files suit against Sears

June 29, 2005

Hood River Sears has joined a lawsuit by the Dealer Store Owners Association against Sears, Roebuck and Co., in federal court in Minneapolis.

The suit claims that Sears is misappropriating their market with unfair internal competition by selling Sears products through Kmart stores and other channels; Kmart acquired Sears in March 2005.

“Most dealers invested their life savings and 401K plans in these stores, said Steve Granger, president of the Association. “Now they risk losing it all — and Sears will get a windfall — because dealers trusted what Sears told them.”

The lawsuit charges that Sears has breached its contracts with the dealers and has violated the laws of 18 states by selling the same products through Kmarts and terminating dealers’ contracts without cause.

For Hood River store owners Daryn and Sue Fogle, “It will be business as usual,” despite the pending suit.

“We’ll see nothing directly in this market any time soon,” Daryn said. “Even though we are not immediately and directly affected I felt I needed to belong (to the asociation lawsuit.)”

Fogle said he has lost customers who could go to a Kmart in The Dalles or other locations to purchase appliances, tools and other Sears brand merchandise Sears had not provided to his store or the Fogles could only offer via on line orders.

The Dealer Association stores, which are owned and operated by families or individuals, sell Sears appliance, electronics and tools in markets that are too small for a Sears department store — typically small towns and rural areas. The suit charges that Sears induced the owners to invest in their stores and build up markets through promises that Sears would maintain long-term relationships with the stores.

The Fogles opened their Sears store nine years ago, first in a Tucker Road location now occupied by Murray Furniture. Two years ago they moved to their current location, in the Hood River Shopping Center at 12th and Pacific.

“We signed a contract in good faith and we should have been informed about what’s happened,” Fogle said, referring to the marketing effects of the merger with Kmart.

“We built up this market for ourselves and for our kids, as well as for Sears. It would be wrong to take it away without fair compensation.”

He said Sears has “come back to the table” when faced with past contract disputes, and that as a dealer he bears no adversarial feelings for Sears.

“We just don’t want what we have worked hard for to be taken away,” Fogle said.

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