Johnson Controls, Inc. today confirmed that it filed a complaint against Exide Corporation and three of its former highest-ranking officers, Arthur Hawkins, Alan Gauthier and Douglas Pearson. The complaint alleges that the commercial bribery of a former Sears, Roebuck and Co. battery buyer was a cause of Johnson Controls losing its battery supply contract with Sears in 1994.
As of that date, Johnson Controls had been the principal supplier of batteries to Sears for approximately 40 years.
The records of a Florida Attorney General’s investigation of Exide were made available to Johnson Controls attorneys for review beginning in February 2000. These records revealed evidence of commercial bribery by Exide. Johnson Controls attorneys independently reviewed the evidence of Exide’s conduct. The records included sworn testimony of numerous former Exide employees. Exide admitted in December 1999 court filings that its former officers had paid certain bribes.
The investigation yielded evidence that during the period leading up to the award of the 1994 contract, Exide’s former chief executive officer promised to make payments to the buyer if Exide received the contract. After the contract was awarded, Exide began making the payments described in the complaint. These findings led to the conclusion that Johnson Controls should file a lawsuit for violation of the federal Robinson-Patman Act arising from Exide’s commercial bribery.
As a matter of courtesy, Johnson Controls gave Exide advance notice of the lawsuit earlier this month, and even offered Exide the opportunity to discuss settlement. Several days after an initial June 8, 2000 settlement discussion, Exide’s current chief executive officer, Robert A. Lutz, rejected the offer to continue these discussions, implausibly claiming it was unethical for Johnson Controls to offer to settle the lawsuit.
Six days later Exide cancelled a second settlement conference that had been scheduled for June 30, 2000. After Exide’s decision to discontinue settlement discussions, Johnson Controls filed the bribery lawsuit.
The complaint, which was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, seeks compensatory damages and punitive damages to be determined at trial.
Johnson Controls began supplying batteries to Sears again in 1997.