Canadian Court Rules in Favor of TCG in Windshields.com Suit Filed by Belron; Trial to be Held in Coming Months
June 9, 2009

The Supreme Court of British Columbia recently ruled in favor of TCG International in a suit filed by Belron Canada involving TCG's website, www.windshields.com. In the case, in which a yet-to-be-scheduled trial will be held, Belron Canada was seeking an interlocutory injunction restraining TCG from operating the website in Canada until a trial court makes a ruling as to whether the site violates non-competition, non-solicitation and non-interference agreements made between the two companies in 2005 when Belron Canada purchased Autostock Inc. from TCG for $53 million. At press time, no trial date had been set, but the judge notes in the recent decision that it would be practical to hold it as soon as possible, as the non-compete agreements expire on November 4, 2012.

According to the opinion, through the agreement, Belron acquired TCG's remaining glass shops in all Canadian provinces other than Quebec; TCG's Novus master franchise business in Canada; TCG's insurance claims administration service nationwide, including Quebec; and the Canadian domain, www.speedyautoglass.ca. The judgment cites a non-compete agreement that was also signed, which says that TCG shall not "directly or indirectly, advise, manage, promote, operate, carry on, establish, acquire control of, or be engaged in a business that is substantially the same as or competes, in whole or in part, with the business anywhere within Canada or invest in or lend money to or guarantee the debts or obligations or [sic] any person that advises, manages, promotes, operates, carries on, establishes, acquires control of or is engaged in any business that is substantially the same as or competes in whole or in part with the Business anywhere within Canada."

The agreement also restricts TCG from "canvass[ing] or solicit[ing] the business of … any customer or retail influencer … in connection with activities which are substantially the same as or are, in whole or in part, in competition with the business or the buyer's Canadian business."

According to documents filed in the case, a TCG employee registered the domain www.windshields.com in November 1997, and it was transferred to TCG on January 11, 2002. Up until August 9, 2006, all hits were re-routed to www.tcgi.com, and after that, they were re-routed to www.speedyglass.com. In March 2007, the company began constructing the website, and in a summary of the case included in the judge's opinion, Belron Canada claims that TCG "repeatedly characterize[d] the website as a vehicle that provides 'communication services' to members of the public." Belron, however, alleges that the website is a "fee-based automotive glass repair and replacement referral enterprise."

In December 2007, TCG began promoting the website, and on December 7 David Meller of Belron sent an e-mail to Allan Skidmore of TCG "informing [him] that running the website in Canada constituted a breach of the Non-Competition Agreements," according to the recent opinion filed in the case. Court documents cite a reply from Skidmore sent the same day, noting that TCG intended for the website to provide information about Belron's auto glass businesses only.

The website became operational in Quebec on March 5, 2009, at which point Serge Laporte, vice president of sales and marketing for Belron Canada, visited the site and noted that it would accept Canadian postal codes, according to documents filed in the case. When he entered a Canadian postal code, he claims to have received the following message: "We are expanding into your area. Please complete the form and we will work to find you a local glass shop." While Skidmore alleges that this is a generic message, Belron claims that the website is intended to be phased into operation across Canada.

The suit was filed on March 24, following further correspondence from Meller asking that TCG cease operating the site in Canada and assurance that the company would not utilize the site in Canada until the seven years deadline cited in the non-compete agreements had passed.

The court notes that "the prevention of irreparable harm is the driving rationale behind the court employing the extraordinary measure of enjoining a party before there has been an adjudication of that party's rights at trial." The judge also says that Belron alleges that it will suffer a financial loss from business being diverted away from its various operations due to the website.

"[Belron] also argues that there will be a depreciation of its goodwill if a customer is introduced to a local competitor through the website," reads the document. "It claims that once that happens, barring poor service from that competitor, the customer will likely return to the competitor for any future automotive glass needs."

The court claims that this is a contradiction of sorts, as if current customers are unlikely to go elsewhere once they've used a particular auto glass company, then "there would be minimal risk of Belron losing its current customer base" due to the website.

The court also notes that Belron "has not demonstrated how such losses, were they to be incurred, would not be assessable as damages."

It is also noted that the injunction—preventing TCG from operating the website until a trial is held—could give others, who run similar sites in the United States, the opportunity "to establish a market presence ahead of TCG."

In closing, the judge writes, "In weighing the relevant factors, which include the merits of Belron's claim, the sufficiency of damages, the absence of irreparable harm, as well as others, I conclude that the balance of convenience favors withholding the injunctive relief." She adds that because the non-compete agreements expire on November 4, 2012, the trial should be heard "as well in advance of that date as is practicable."

The trial should be scheduled at an upcoming case management hearing, according to TCG in-house counsel Erica Seay. She advised glassBYTEs.com™/AGRR magazine that at this point, the company is optimistic.

"We certainly hope and believe that we will prevail, and will certainly do our best, but we're pleased with the outcome of this decision at the injunction stage," says Seay.

Claude Lalonde, president of Belron Canada Inc., declined to comment on specifics of the case.

CLICK HERE for full text of ruling.

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