A local forklift dealership brings Mitsubishi and Caterpillar to court and wins a decision that may roil the franchising world
By 2000, James Picarillo could read the writing on the wall. Maintainco, the Hackensack (N.J.) forklift dealership he’d owned for nearly 20 years, appeared to be under attack by its largest supplier, Mitsubishi Cat Forklift America (MCFA). That year, another forklift dealership, Mid-Atlantic Handling Systems, moved into Picarillo’s exclusive 12-county territory—armed with a list of Maintainco’s customers, an advertising budget 13 times larger, and leniency on debt that would top $2 million, all provided by MCFA—and began to dig into the market. So Picarillo went to court.
On May 2, 2007, New Jersey Superior Court determined that MCFA, a joint venture of Japanese Mitsubishi Heavy Industries and Peoria (Ill.) Caterpillar Industrial (CAT), had breached its contract and the state Franchise Act by deploying the rival dealer within an exclusive territory arranged in a 1985 agreement.
After a costly seven-year trial, Picarillo was awarded damages of $734,000 and reimbursement of legal fees, thereby defending his territorial rights and forcing his franchisor to back down. In his decision, Judge William Meehan portrayed former and current MCFA executives as bent on destroying Maintainco’s business to serve their expansion plans.
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