True Value sues Diablo
True Value Company, the Chicago-based distributor, said it filed litigation against Freud America and Orgill in the Circuit Court of Cook County, Illinois.
The issue revolves around a decision by Diablo, a brand of Freud America, to cease selling its products through True Value’s distribution system. And taking issue with a competitor’s alleged efforts to lean on the Diablo decision to solicit business from True Value customers, True Value said it named the Memphis-based Orgill in the lawsuit as well.
Orgill declined to comment, citing the litigation. Diablo shared with HBSDealer Wednesday night a statement that said in part: “After careful evaluation, Diablo made the decision to part ways with True Value because the relationship no longer fits our business model.”
In a letter to True Value dealers dated Jan. 31, True Value CEO Chris Kempa wrote. ”True Value filed suit for alleged claims such as, among other things, breach of contract, conspiracy to breach contract, and tortious interference with contract and prospective economic relations.”
Orgill’s involvement in the litigation is apparently linked to the alleged “tortious interference.” That legal term, according to several sources online, basically means a wrongful interference in a contractual or business relationship.
While competition among distributors and co-ops is increasingly robust, it rarely rises to the level of lawsuits. Orgill’s inclusion in the suit is an interesting twist to the competitive landscape, as visiting and courting potential customers outside of a distributor’s network is a relatively standard and ongoing activity.
According to a Jan. 26 letter to True Value customers, Kempa said “Freud/Diablo and a competitor of ours were telling you to buy their products somewhere else.” The subsequent letter to retailers made clear that he was referring to Orgill as the competitor.
More was revealed about True Value’s complaint against Freud/Diablo.
In the same Jan. 26 note to True Value retailers, Kempa described a Jan. 19 meeting in which representatives of Freud/Diablo announced the company’s intention of ceasing to do business with True Value. The announcement came as a shock to the distributor’s merchants, he said.
Diablo responds
Statement from Diablo/Freud Tools:
True Value ”recently held a line review that began in 2023 where they had many requests. After careful evaluation, Diablo made the decision to part ways with True Value because the relationship no longer fits our business model. This communication was given in advance of True Value’s line review deadline on Feb. 1, 2024. We remain engaged with our independent dealers and will continue to support them in growing their Diablo business. We thank True Value for its 20+ year partnership with Diablo and wish True Value much success in the future.”
“Some of you expressed an assumption that True Value must have done something for this to occur. But, that’s not what happened. Collectively, we have grown Freud/Diablo’s business, and our relationship is in great shape,” he wrote.
Early efforts to engage with Freud/Diablo, he said, were essentially ignored. That led True Value to take legal action.
“I didn’t want this situation that Freud/Diablo started to escalate to where it has, but unfortunately, I cannot stand by and allow you to be told how to run your business,” Kempa wrote. He added: ”We will do what it takes to put an end to this and will embrace any opportunity given for genuine resolution, which to date, we have not received.”
In his communication to customers, Kempa also drew a comparison to a similar situation in the spring of 2021, when a supplier announced a plan to cease shipments, a decision that was later reversed.
That supplier was Stanley Black & Decker. An April 19 article in HBSDealer reported: “An agreement to continue the relationship followed meetings and communications between True Value’s leadership, Stanley and also independent hardware retailers who were surprised by Stanley’s intentions.”
Kempa’s Jan. 26 letter also encouraged True Value customers to send their thoughts to Diablo CEO Russell Kohl and Mike Mansuetti of Bosch tools.
