The Dick’s Sporting Goods retail chain drew the ire of the pro-gun community earlier this year when the corporation decided it would no longer sell firearms to individuals younger than age 21 and would no longer sell AR-15-style semiautomatic rifles to the general public in the aftermath of the Parkland school shooting in Florida.
But now Dick’s is facing potential trouble in light of an unrelated incident that will nevertheless also enrage many within the pro-gun community, as the retail chain has been sued by an ammunition distributor and accused of both breach of contract and market manipulation in 2016.
Guns.com reported that Nevada-based ammunition distributor Battle Born Munitions has filed a lawsuit against Dick’s in federal court in Pennsylvania seeking to recoup more than $200,000 in various costs born by BBM as well as about $5 million in damages from a separate major contract for BBM that was lost due to Dick’s actions.
According to the facts as laid out in the motion demanding a jury trial and judgment for breach of contract and fraud, BBM entered into an agreement with Dick’s in January 2016 to provide the retail chain with special ammunition packaged and stamped with Dick’s house brand “Field and Stream,” ammunition that was to have been delivered by November 2016 and fully paid for no more than two months later.
BBM, a State Department-registered and licensed international broker of arms and ammunition, subsequently farmed out and prepaid the order for the “Field and Stream” packaged and stamped ammunition of various calibers to two foreign manufacturers: Ingman, which was paid nearly $2.3 million, and RUAG, which received nearly $2.2 million, for a total capital investment of nearly $4.5 million.
However, Dick’s refused to accept delivery of the house branded ammunition in November 2016, according to the lawsuit, and didn’t pay for it at that time either. That forced BBM to warehouse the stock of specially branded ammunition at its own cost as it couldn’t be sold to any third-party retailer due to the special brand and licensing issues.
Dick’s eventually took possession of the ammunition and paid most of the outstanding invoices in August 2017, though BBM alleged that Dick’s took a 2 percent discount on the total cost that only should’ve applied if the company paid for the order within 30 days. BBM also said Dick’s had improperly deducted various chargebacks on parts of the inventory that the retail chain claimed, without providing documented evidence, didn’t meet their specifications.
Adding together the improper discounts, chargebacks, warehousing fees, additional liability insurance for the warehoused ammo, BBM estimated that Dick’s owed the distributor roughly $200,000.
The motion also detailed a separate agreement entered into by BBM that would have netted the company $5 million in profit, only to have been canceled as a direct result of Dick’s failure to pay for the ammo order in a timely fashion.
In December 2016, BBM had arranged for the U.S. government-approved sale of 12 Bell helicopters to the government of Lebanon, a purchase order worth an estimated $48 million. BBM planned to purchase and transport the helicopters from Bell to Lebanon for a cost of $37.2 million but was required to make a 10 percent deposit of $3.72 million to get production started, the lawsuit said.
However, because of Dick’s failure to pay for the ammunition it had ordered and was supposed to have accepted one month earlier, BBM’s capital was still tied up with the foreign manufacturers, leaving the distributor incapable of making the deposit for the helicopters, BBM alleges. That resulted in Lebanon canceling the lucrative order in April 2017.
As if that weren’t bad enough, BBM also said in the motion that the reason for Dick’s refusal to accept the specially branded ammunition was the retail chain’s desire to manipulate the market on ammunition and drive up prices.
Being a retail store, the value of stock in Dick’s is heavily dependent upon the retail chain’s inventory. Dick’s refusal to accept the ammunition it had ordered from BBM made it appear as though Dick’s had low inventory — which is attractive to investors — while in reality it merely had the specially branded inventory stored off-site — which could not be sold to a third-party, and was stored at the vendor’s expense — until such time as Dick’s needed it, presumably when prices were higher.
Recall that this occurred in the lead-up to the 2016 election, in which gun control was a predominant issue and it was widely expected that, if Democratic nominee Hillary Clinton had emerged victorious, there would have been a run on firearms and ammunition, which undoubtedly would have caused prices to soar. Yet Clinton didn’t win, and there was no run on firearms and ammunition, which resulted in prices holding steady or dropping instead of rising as anticipated.
In the end, BBM alleged that Dick’s was in breach of contract, in that it ordered the house-branded ammunition and then refused to accept delivery or pay for the stock at the time or amount stipulated. BBM further alleged that Dick’s had fraudulently induced the distributor into entering into an agreement it had no intention of upholding, and charged the retail chain with negligent misrepresentation for misleading BBM into believing it would be paid on time.
Thus, BBM requested that the court grant it a jury trial and judgment that would compel Dick’s to pay BBM $200,938 in incidental damages and $5.2 million in consequential damages for lost profits, not to mention pre- and post-judgment interest on both awards as well as all court costs, litigation expenses and attorney’s fees as a result of the lawsuit.
It will be interesting to see how this legal battle out in the coming months, and whether Dick’s is held accountable for its alleged breach of contract and market manipulation that substantially damaged the profitability and reputation of a vendor.
Regardless, the allegations only serve to remind the pro-gun community that the retail chain is not a friend of the Second Amendment.
Truth and Accuracy
We are committed to truth and accuracy in all of our journalism. Read our editorial standards.