Caterpillar Hit With $100M Jury Verdict in Lengthy ICP Legal Battle

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A jury has ordered Caterpillar to pay $100 million to International Construction Products over a terminated agreement for direct online sales of Chinese construction equipment in the U.S.

ICP sued Caterpillar in 2015 after IronPlanet terminated its agreement to set up a designated “storefront” on its website for sale of construction equipment at lower prices imported by ICP from China-based Lonking.

ICP, based in North Carolina, claimed Caterpillar and some of its dealers pressured IronPlanet to kill the deal a month after the site went live in March 2014.

Volvo Construction Equipment, Komatsu and Cat Auction Services were also named in the suit but were later dismissed. Three Cat dealers – Ring Power Corp., Ziegler Inc. and Thompson Tractor Co. – were also sued by ICP, but ICP lost that case in a U.S. District Court in Florida. That decision was upheld on appeal in October 2023.

That left Caterpillar as the only defendant remaining in the case, which went to trial starting April 5 and ended April 16 with the jury awarding ICP $100 million.

The jury rejected ICP’s antitrust claims but sided with the importer on its claim of wrongful interference with the contract and the loss of business it suffered.

Bill Isaacson, attorney for ICP and a partner with Paul, Weiss law firm in Washington, D.C., issued the following statement after the verdict:

“We are incredibly proud of the jury verdict we secured for our client ICP and its founder Tim Frank. Over a decade ago, his business was devastated by a competitor and this victory not only vindicates our client's perseverance but also sets a precedent for resilience and justice in the face of adversity.”

ICP had estimated damages of up to $1 billion in revenue within five years.

Caterpillar denied any interference with the agreement and disputed ICP’s damage estimates.

After the jury’s decision, Caterpillar issued the following statement:

“We respect the jury's verdict and will review our legal options.”

A 10-Year Battle

ICP formed in 2013 and struck a deal to set up a dedicated online storefront on IronPlanet in 2014.

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Meanwhile, IronPlanet was in merger negotiations with Cat Auction Services (CAS), which auctions used equipment. Two of the Cat dealers named in the lawsuit had ownership interests in the two businesses. Ring Power was a minority shareholder of IronPlanet. Ziegler was a minority shareholder in CAS, and its CEO, Bill Hoeft, was a founding member and board chairman of CAS. Caterpillar also had a 9.45% share in IronPlanet.

A month after the IronPlanet-ICP deal was announced, IronPlanet terminated the deal abruptly. The CAS-IronPlanet merger was approved. IronPlanet was later purchased by Ritchie Bros. auction services in 2017.

IronPlanet said it terminated the ICP deal because it would require extensive technological resources, distracted from its top priority of the CAS merger and would not be as profitable as first thought, according to court records.

After its IronPlanet agreement was terminated, ICP sued Caterpillar, CAS, Komatsu and Volvo CE in 2015 in federal district court in Delaware alleging that they illegally conspired to pressure and boycott IronPlanet if it allowed the ICP relationship to continue. That pressure violated federal antitrust and other state laws, ICP said. Komatsu owned a 7.27% stake in IronPlanet, and Volvo CE owned 3.64%.

ICP later added the three dealers to the suit. The dealer case was then shifted from Delaware federal district court to Northern Florida.  

All of the defendants in the cases denied ICP’s claims. They said their conduct was lawful and justified and did not prevent competition.

A news release from the Paul, Weis law firm said ICP’s damage award partly hinged on an industry expert’s testimony that “ICP’s business model was more likely than not to succeed, and more likely than not to meet its economic projections.”