DCC rejects $24m claim and sues two founders of company it bought in 2018

DCC Technology Holdings has also filed a counterclaim against the former owners of Stampede Global Holdings, alleging that they reneged on an agreement with DCC connected to a major contract Stampede secured after it was bought by the Irish group.

Stampede founders Kevin Kelly and Mark Wilkins claimed in a lawsuit filed in 2022 that they are owed more than $24m by DCC in respect of earn-out payments under the terms of the acquisition.

Last month, DCC failed to have the case dismissed or to compel arbitration and stay further proceedings.

DCC claims that the proposed contract was ‘atypical’, for a number of reasons

The former Stampede directors have alleged that DCC executives took a “systematic approach” to reducing the earn-out payments due to them in order to reduce the ultimate price paid for Stampede, a distributor of professional audio- visual equipment.

DCC has rejected their claims in a newly-filed defence document and also made counterclaims against the pair.

The group’s subsidiary alleges that in 2019 the Stampede founders wanted the firm – now owned by DCC – to expand an existing supplier relationship with technology client Furrion.

Until then, the agreement had been limited to Stampede handling Furrion’s consumer electronics product line.

Under a proposed agreement, Stampede would become Furrion’s exclusive distributor for recreational vehicle electronics to manufacturers of those vehicles for five years. But Furrion also had an option to terminate the contract early.

DCC claims that the proposed contract was “atypical”, for a number of reasons including that it was effectively a fulfilment-like arrangement.

It also required DCC, on behalf of Stampede, to make significant upfront investments and commitments, including buying more than $50m of inventory, buying warehouses, fitting out warehouses, hiring staff and operating a fleet of trucks.

DCC said it viewed the investment as “highly risky”.

The group therefore altered an earn-out agreement with the Stampede founders that deducted $1m from the potential year-three earn-out period and tied the earn-out entitlements to the performance and longevity of the Furrion contract.

Further negotiations with the Stampede founders resulted in a final memorandum of understanding, DCC claims.

It further alleges that just two months later, the Stampede founders “refused to sign the draft amendment, and attempted to use the unsigned amendment as a bargaining chip in other disputes over the earn-out calculations.”