Reliable Tire Distributors, Inc. v. Kelly Springfield Tire Co. (607 F. Supp. 361, 1985)

FINDINGS OF FACT and CONCLUSIONS OF LAW ON DAMAGES

SHAPIRO, District Judge.

This action arises out of an agreement, dated April 20, 1972, between plaintiff Reliable Tire Distributors, Inc. (“Reliable”), a corporation engaged in wholesale tire distribution, and Sports Headliners (“Headliners”), agent of defendant Bobby Unser (“Unser”), internationally-known race car driver, and a second agreement, dated May 23, 1972, between Reliable and defendant Kelly Springfield Tire Company (“Kelly”), a manufacturer and distributor of tires. The court held separate trials on liability and damages. On March 9, 1984, 592 F.Supp. 127, this court’s Findings of Fact and Conclusions of Law determined the following:

The earlier Reliable-Headliners agreement provided for the registration of the “Bobby Unser” trademark and granted plaintiff an exclusive license to make or have made tires bearing this trademark and thereafter to use or sell them. Reliable agreed to pay royalties to Unser for each tire sold and Unser agreed to use his best efforts to promote and sell the tires. Defendants Unser and Kelly ratified the provisions of the agreement regarding their respective duties.

The later agreement, between plaintiff, using its registered trade name “Speedway Products,” and defendant Kelly provided that Kelly would manufacture and supply Reliable with “Bobby Unser” tires and specified certain terms and conditions for delivery, payment, warranties, etc. Kelly was to supply the tire molds used in the manufacture of the tires to be paid for by Reliable over a three-year period. The original term of the agreement extended only to December 31, 1972 but the agreement was renewable from year-to-year if no action to terminate was taken by either party. Each party had the right to terminate by three months’ notice prior to the end of the calendar year. Together the two contracts constituted the “Bobby Un-ser” program; Reliable had the exclusive right to use Unser’s name to market tires manufactured by Kelly in accordance with Reliable’s requirements.

But instead of producing tires to fill orders obtained by Reliable, in accordance with the Kelly-Reliable agreement, Kelly manufactured quantities of “Bobby Unser” tires in varied sizes and held them in inventory for future sale to Reliable. As a result, by 1974 Kelly had acquired a substantial excess inventory of “Bobby Unser” tires, particularly in uncommon or less popular sizes. In February, 1974, Kelly requested Reliable’s permission to dispose of the surplus “Bobby Unser” tires. By letter dated February 6, 1974, Samuel Vill, Reliable’s General Sales Manager, authorized Kelly to dispose of the surplus “Bobby Unser” tires subject to certain restrictions: the parties had to agree mutually which tires were excess; Kelly had to maintain an adequate inventory for estimated future sales and remove the “Bobby Unser” name from the excess tires or pay a fifteen-cent (15