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September/October 2002

AGRReports
        breaking news

LEGAL

Ground Rules Set For Diamond Triumph v. Safelite Suit

                                                    The Plaintiff’s Evidence

Diamond Triumph plans to submit the following documents for use in the case against Safelite Glass Corp.:

• Contracts between Diamond Triumph and Safelite, including amendments to the agreements and documents that refer or relate to the agreements;

• Steering/incident reports received from Diamond Triumph locations that refer or relate to jobs lost or which Safelite attempted to divert the work away from Diamond Triumph to Safelite;

• Work orders, referral documents, dispatch documents, invoices that refer or relate to jobs lost or which Safelite attempted to divert the work away from Diamond Triumph to Safelite;

• Transcripts of telephone calls;

• Transcript of conference call held between Doug Herron and various lenders and other creditors relating to Safelite;

• Job loss incident reports received from glass shops;

• Materials disseminated by Safelite publicly concerning its network;

• Sales trend information showing sales to consumers insured by companies for whom Safelite takes first-notice-of-loss calls and companies for whom Safelite does not take first-notice-of-loss calls;

• Financial analyses of the costs incurred by Diamond Triumph to obtain jobs lost to Safelite; and

• Documents relating to costs associated with the increased time spent by Diamond Triumph to prevent the loss of jobs to Safelite.

In the ongoing anti-steering suit between Kingston, Pa.-based Diamond Triumph Auto Glass and Columbus, Ohio-based Safelite Glass Corp. several deadlines have been set and the judge has filed a Joint Case Management Plan explaining how the case will proceed. (See May/June 2002 AGRR, page 20). The plan was filed on June 27.

The judge also issued a standing order on June 3 “to allow counsel greater freedom in the preparation of their cases.” In addition, the order specifies that 120 days from the day of the filing be allowed for discovery (a formal investigation conducted before the trial). 

In addition, U.S. District Judge James M. Munley has set several deadlines for the rest of the case, as follows:

    • March 7, 2003: Plaintiff Expert Witness Report;

    • April 7, 2003: Defendant Expert Witness Report;

    • June 6, 2003: Discovery Deadline;

    • July 1, 2003: Depositive Motions Deadline; 

    •August 5, 2003: Deadline for completion of Alternative Dispute Resolution, in which parties agree to submit to mediation with a private mediator to agreed upon by the parties.

    •August 2003: suggested date for the pre-trial conference; and

    •September 8, 2003: approximate trial date (about 520 days from the filing of the action).

Diamond Triumph says it does not yet have a precise calculation of the damages that it has allegedly incurred, but that it’s in a range of $5 million to $15 million. The categories of damage include: lost revenue, wasted in costs rendered ineffective by the conduct alleged in the complaint and increased and incremental expenses incurred to maintain jobs that would have gone to Diamond Triumph but for the conduct alleged in the complaint. However, “it does not include loss of future business due to damage to reputation and/or good will to the company. Other areas of damage may also be discovered that are not included in the present calculation,” according to the Joint Case Management Plan filed by the judge.

As witnesses, Diamond Triumph lists 59 customer service representatives, 87 customers, 31 insurance agents and six glass shops.

                                                The Defendant’s Evidence

Safelite Glass Corp. plans to submit the following documents for use in the suit filed by Diamond Triumph:

• Contract between Safelite and Diamond and all correspondence concerning the insurance companies for which Diamond opted into, or out of, Safelite’s network;

• Correspondence between the parties about renewal and/or cancellation of the Contract or about Safelite’s alleged misrepresentations of information;

• Transcripts and/or sound recordings of calls that Safelite made or received from its call centers and that involve insureds mentioned in the amended complaint; 

• Contracts with Safelite’s insurance clients whose insureds who are mentioned in the amended complaint;

• Scripts from Safelite’s insurance clients whose insureds are mentioned in the amended complaint when used by Safelite’s call center for first-notice-of-loss calls;

• Safelite call center training manuals;

• Safelite criteria for evaluation and compensation of its call center employees;

• Safelite’s warranties for auto glass replacements that it performs; and

• Referral records of first-notice-of-loss claims mentioned in the amended complaint by referral number and documenting schedule of job and what party performed the job.


MERGERS & ACQUISITIONS
Donnelly Becomes Magna Donnelly
Holland, Mich.-based Magna International recently announced that it plans to buy the Donnelly Corp. and merge it into its own mirror group to make Magna the biggest automotive mirror manufacturer in the world, according to a story in the July 1, 2002, issue of Plastics News. Officials from Donnelly told Plastics News that the $415 million deal will allow it grow further as it becomes the Magna Donnelly Group.

Dwane Baumgardner, Donnelly’s chairman and chief executive officer, will manage the $1.2 billion subsidiary company. The new business will also continue Donnelly’s non-mirror operations, such as glass and plastic window systems. The deal was announced June 25 and was still subject to regulator approval at press time. The purchase was expected to be complete in September. However, many of the company’s shareholders are against the merger, and have filed a class action suit to keep the action from being completed.

The complaint, filed in the Oakland County, Mich., circuit court, alleges that Donnelly’s board of directors violated their fiduciary duties to Donnelly shareholders by entering into such an agreement with Magna. Likewise, the complaint alleges that the draft prospectus/proxy statement filed with the Securities and Exchange Commission in connection with the proposed merger fails to provide all the material information concerning the proposed transaction. The complaint requests injunctive relief enjoinging the consummation of the merge and attorney’s fees.

A statement released by Donnelly says it intends to defend its actions vigorously and believes the claims are completely without merit.

In other news at Donnelly, the company recently sued Johnson Controls Inc. in federal court. According to an article in the Grand Rapids Business Journal, the company asked the judge to declare six patents issued to Johnson between 1985 and 1999 for digital compasses integrated into rearview mirrors invalid and unenforceable. According to the article, Johnson is its largest shareholder and the rearview mirrors are made by one of the company’s competitors, so the suit may have been filed to prevent a patent infringement suit by the competitor. 

STANDARDS
AGRSS Chooses Registration Agent; Nears Certification of Shops

The Auto Glass Replacement Safety Standards (AGRSS) committee is still busy, even now that the standard has been finalized. (See May/June 2002 AGRR, page 32, for the complete text of the standard.) First, the council has chosen a registration agent, CMS Services, which is also acting as the AGRSS administrator. Utilizing the registration agent, auto glass shops that meet the ANSI standard for safe auto glass installation will register with AGRSS. Glass shops will be able to go online to the AGRSS website at www.agrss.glass.com (or they can contact AGRSS directly) to request a packet of information, including a copy of the standard, to see how their companies fare against the standard. The shops that meet the standard can then apply to become registered with AGRSS and can use the logo, certificate and patches for technicians to wear on uniforms. A fee has not yet been established for certification.

The council eventually hopes to develop an audit program to confirm a company’s qualifications for AGRSS certification.


COMPANIES
Safelite Moves Further into Mobile Work; Away from Stand-Alone Stores

Columbus, Ohio-based Safelite Glass Corp. is changing its market strategy slightly, with a shift from focusing on full-service shops to renting space from bay partners, according to president and chief executive officer John Barlow. Among these partners are Pep Boys, Jiffy Lube, Sears and Midas, which allow Safelite employees to operate from their locations, working both as mobile technicans and in-house. In return these companies are able to offer their own customers glass repair and replacement, in addition to their primary services. Safelite is also allowing some of its employees to work from home as so-called mobile pros.

However, Barlow said a strategic number of Safelite locations will remain open, despite the focus shift.

“A reasonable number of shops will be open in certain areas,” he told AGRR in an exclusive interview.

The company views the shift not as a downsizing, but as a way to extend coverage of its markets.

Visteon Creates “Visteon Village”
Dearborn, Mich.-based Visteon, which used to be a part of Ford Motor Co., is moving its headquarters into a former gravel quarry, which it will call “Visteon Village.” The $300 million restoration is an attempt to break more formally from its parent company in location now, in addition to its earlier name change. The “Village” will cover 265 acres in Van Buren Township, Mich., approximately 16 miles from its current location, which is adjacent to Ford’s headquarters.
Visteon Village will house approximately 4,000 employees and will feature a series of buildings with a town center at the heart of the complex.

“The new headquarters will enhance collaborative efforts within Visteon and make it easier to share best practices to better meet our customers’ needs,” said Mike Johnston, president and chief operating officer.

INDEPENDENTS’ CORNER
Iowa IGA Meets with Better Business Bureau

The Iowa Chapter of the Independent Glass Association (IIGA) held a meeting May 30, during which it welcomed a speaker from the Iowa Better Business Bureau (IBBB), adopted its bylaws and unveiled its new website. IBBB president Mary Kruger-Eiler discussed her organization’s work and told about some of the things the Minnesota Better Business Bureau has done with the auto glass industry (see July/August 2002 AGRR, page 35, for related story) and how the IBBB and Iowa’s auto glass shops can help one another.

In addition, the IIGA adopted chapter bylaws and decided to structure its dues system the same way as the national Independent Glass Association’s is structured. Donovan Trana sent a report on the association chapter’s website also, which he is building, and said more information on it will be available soon.

LEGAL
Chinese Windshield Manufacturers Vindicated; Fujian Fuyao Glass Charged with Anti-Dumping Duty

Four Chinese windshield manufacturers have triumphed against the dumping charges brought against them by PPG Canada Inc. (See July/August 2002 AGRR, page 21, for related story.) On July 31, the Canada Customs and Revenue Agency (CCTA) ruled that since the replacement windshield industry in China was operating under market economy conditions, the calculation of dumping margins will be based on the price of the goods on the Chinese market.

According to the verdict, CCTA will levy no weighted average tariffs to the three Guangdong-basd companies, Shenzhen Benxun Automotive Glass Co. Ltd., Xinyi Automotive Glass (Shenzhen) Co. of Henggang Town and Dongguan Kongwan Automobile Glass Ltd. of Dongguan.

CCTA will impose a weighted average tariff rate of 24.09 percent on the Fujian Fuyao Glass Industry Group Ltd., though.

IN THE PAPERS
Windshields as a New Kind of Crime Deterrent 

A thief being taken to jail recently by California police officers had his escape thwarted by the unusual effects of going through the police cruiser’s van. The thief smashed out the car’s rear window and leapt onto the freeway on-ramp at 40 mph. In the process, the windshield ripped off his pants—and he wasn’t wearing underwear. 

Trying to make a clean getaway, he stopped a catering truck driven by two ladies and demanded they drive him to a store to buy clothes. Once he was in the store, the ladies called the police.


KUDOS
Sika Automotive Awarded

Sika Automotive of Madison Heights, Mich., has been presented the Quality Performance Achievement for 2001 from Toyota Motor Manufacturing North America Inc. The award is presented to suppliers who meet or exceed Toyota’s target of defective parts per million for the year. Sika Automotive was recognized for parts and components out of the Grandview, Mo., facility and raw materials/bulk products from the Marion, Ohio, faculty.

Sika Automotive has been supplying acoustic, bonding and sealing products to Toyota since 1987. The parts and components are manufactured at the Grandview facility and bulk material is produced in Marion.

CONSOLIDATIONS
Glass Specialty Moves into One Location
Glass Specialty Co., an auto glass repair and replacement business based in Bloomington, Minn., is consolidating its numerous locations into one, which will be based in Bloomington. Mark McAllister, marketing and sales manager, said the decision was made to simplify the multi-location business. “Essentially we will be consolidating the corporate offices, call center and service center,” he said. “It will be easier for us to manage.”

RESEARCH
Future Looks Bright for Windshield Replacements
Apogee Enterprises, the parent company of Harmon Auto Glass, has reported that it expects U.S. auto glass replacement sales to increase 4 percent annually for the next four years, arriving at $1.38 billion in 2006, according to a study completed by Frost & Sullivan. However, according to the study, windshield repairs are expected to grow at about three times the rate of replacements.

CRIME
Former Owner of Empire Glass Found Murdered
Rick Chance, the former owner of Empire Glass Cos., an auto glass repair and replacement chain in the Phoenix area, was found dead in a motel room in Tempe, Ariz., on Friday, August 9. Chance, 44, was found by a hotel maid. His car was parked outside in the parking lot.

Chance, who had left the auto glass industry to enter the jewelry industry, had a large amount of jewelry with him at the time of his disappearance. According to Chance’s housekeeper, who saw him leave Thursday night, he was carrying a briefcase filled with more than $1 million worth of jewelry, which is now unaccounted for.

Chance was shot in the throat, according to the medical examiner’s report. However, the police have no suspects and are conducting interviews and investigations to locate some leads. According to an article in the Arizona Republic, Chance was meeting with a woman he had met through an Internet dating service. 

AGRR

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