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Turning a Misfortune into Fortune

My Lawsuit with Bandag

Many times in our personal or entrepreneurial lives, we will be presented with a situation that leaves us hard-pressed to feel optimistic or stay professional.

In these situations, we are presented with different paths.

On one path, we can become upset and wallow over the situation. On the other, we can try to find an optimal means of getting through it.

These pathways aren’t always clear.

Founding Sound Tire LLC

Back in 1979, I started a company called Sound Tire LLC.

We started as a small company that eventually grew into a brand with over 250 employees, 13 locations, four manufacturing facilities in Washington and Alaska. Ultimately, I sold the company, which is now owned by Bridgestone.

But in 1981, when the company was a mere two years old, I arrived to work one day to receive notice of a Federal lawsuit being filed by our Fortune 500 competitor Bandag.

Reacting to the News

My heart sank. No business school or professional mentor can prepare you psychologically for how it will feel to be served a lawsuit one day.

I was shocked. My head became filled with concern for my employees, fear of failure, and anxiety about the unknown road that was now before us.

Not to mention that this was a Federal lawsuit from a Fortune 500 company! At this time, we were still a young company with a small market share and little cash. Why were they suing us?

Bandag’s Claims

The basis of Bandag’s suit was that we had committed patent infringement. They claimed that we had been informing our customers that we were a Bandag franchised dealer, which was simply not true.

Bandag also conducted interviews with our largest customers, creating anxiety and uncertainty. Our customers began to fear that we would fail, and some even ended their relationships with us at that time.

Despite Bandag’s claims, their primary witness claimed during his deposition that he was never informed that Sound Tire was a Bandag dealer.

They had served us with an injunction to shut down our production plant in 1981, although this ultimately failed. When this failed, Bandag even filed ANOTHER emergency injunction to shut us down. This also did not go through.

Even though we were a victim of this suit, it cost the company substantial cash in attorney fees to fight back and make our case.

Settling Up

After a battle that lasted over a year, we settled the lawsuit on October 19 of 1982, just a few hours after our third son was born.

This was a memorable day that will stay with me for the rest of my life.

The sky opened up again, hope had been restored, and we felt confident that there was a bright future ahead for the company!

At the time of the settlement, we believed that we had a solid defense, which was prevailing. However, we did not learn the real reason behind the suit being dropped until several years later.

Why Did Bandag Settle the Suit?

At the time of the settlement on October 19 1982, Bandag had been going through an internal leadership change.

The founder had died two years prior in 1980, and the company’s attorneys had assumed a significant portion of Bandag’s operations. All the while, the founding family was struggling to find a new leadership team to lead Bandag forward into the future.

The founding family convinced the founders’ son Martin Carver to leave his successful Wall Street career and take over all leadership operations.

One of Martin’s (Marty’s) first orders of business was to advise the attorneys. He asked them to cease all litigation against people and companies (to include us), prompting a real change in the company’s direction.

At the time of our settlement, we had not been aware of this development.

A Positive Outcome to a Negative Situation

Our fledgling little company continued its growth long after the lawsuit was settled, and accumulated an increasing market share.

Marty Carver also received an award as one of the top 10 CEOs in the Fortune 500 ranking for helping bring success to Bandag after taking the reigns!

Six years after the suit had been settled, we received the call from Bandag. They informed us that we were the type of dealer they wished to have as a franchise.

At the time, we were dominating the markets that we were in, so the decision to team up with Bandag was mutually beneficial.

In Conclusion

Although things had seemed quite grim when being served this Federal suit, the real positivity outcome came from patience, hard work, and always being professional (even when it was challenging to do so).

As a result, we ultimately became the largest dealer for Bandag in the Pacific Northwest (including Alaska) and still are to this day, even after Bandag was purchased by Bridgestone!

The lessons that I learned during this part of my life will stay with me forever.

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