Holley Ordered to Pay $2M in Carburetor Profits to Specialty Auto Parts - Engine Builder Magazine

Holley Ordered to Pay $2M in Carburetor Profits to Specialty Auto Parts

This judgment followed various legal disputes between Holley and Specialty (Proform) that started 24 years ago.

On March 27, 2024, the United States District Court in the Western District of Kentucky (Bowling Green) issued a judgment stating that Holley Performance Products, Inc. shall disgorge to Specialty Auto Parts U.S.A., Inc. the $2,028,264.19 in net profit it derived from its sales of Aluminum Ultra HP carburetors.

This judgment followed various legal disputes between Holley and Specialty (a.k.a. Proform) that started 24 years ago when Holley filed suit against Specialty, alleging that Specialty had misappropriated the “trade dress” of Holley’s carburetor main bodies. In 2001, that suit was resolved by a Settlement Agreement stating, among other things, that, going forward, Holley would “manufacture all of its HP line of main bodies with six identification surfaces cast into the main body” and “cast or stamp the word ‘Holley’ on one of the six flat surfaces on all HP main bodies manufactured for it.”

After honoring the agreement for more than a decade, Holley started selling Aluminum Ultra HP carburetors in 2011 without the previously agreed-upon main body features. In 2012, Specialty filed a summary enforcement motion suit claiming that Holley was failing to comply with the settlement agreement.

Holley continued selling its Aluminum Ultra HP carburetors until 2014 when the court entered an order enjoining Holley from manufacturing, distributing, or selling its HP line of main bodies in violation of the settlement agreement. Holley then changed the name of these main bodies to Ultra XP.

In 2017, Specialty filed its breach of contract lawsuit against Holley for violating the agreement, arguing that it was entitled to disgorgement of Holley’s $2,028,264.19 in net profit.

Specialty prevailed in this lawsuit, and the court entered summary judgment in favor of Specialty and against Holley. In explaining its judgment, the court pointed out that disgorgement of profits may be imposed for the intentional or reckless violation of a settlement agreement, and when a profitable breach of contract is a source of unjust enrichment at the other party’s expense.

In that regard, the court determined that “Holley freely chose to brand the Aluminum Ultra HP carburetor as an ‘HP’ carburetor, as opposed to including it in some other line or coming up with a new name for it,” and that “Holley thus at least recklessly violated the settlement agreement, which would support a disgorgement award.”

The court went on to say, “The unjust enrichment of a conscious wrongdoer…is the net profit attributable to the underlying wrong,” and that “approximately $2 million in profits…were ill-gotten.”

You May Also Like

Sick Week Wins USA Today’s Readers’ Choice for Best Motorsports Race

The week-long event held throughout Florida, plays host to over 350 street cars.

Sick the Magazine, which runs and promotes an annual drag-and-drive event known as Sick Week, recently was named USA Today's Readers' Choice for its Best Motorsports Race of 2024. Sick Week started three years ago, and has since become a staple of the drag-and-drive race scene for numerous reasons.

NHRA Names New South Central Division Director

Johnson will oversee NHRA member tracks in Texas, Oklahoma, New Mexico, Louisiana, Arkansas and Mississippi.

McLaren Racing’s Zak Brown to Receive IMRRC’s Cameron R. Argetsinger Award

Zak Brown, CEO of McLaren Racing, will receive the 10th annual IMRRC Cameron R. Argetsinger Award at a gala presented by Sahlen’s, NASCAR, Watkins Glen International and IMSA, on Thursday, September 12, 2024. The dinner and presentation will be held prior to the running of the NASCAR Go Bowling at The Glen event, September 11-15,

Schaeffler to Support Automotive Transmission Service Group Education

Schaeffler to provide ATSG members with ongoing education and technical resources.

Bryan LaFlam Secures Ownership Stake in BigStuff Total Power Management

LaFlam will work alongside Ben Davidow, who acquired the company in 2021, as co-owner and director of operations.

Other Posts

SEMA Announces 2024 Hall of Fame Inductees

SEMA’s newest Hall of Fame members are Chris Kersting, Jack Priegel, Les Rudd, and Jon Wyly.

Schaeffler Recognized as General Motors 2023 Top Global Supplier

Schaeffler was presented its Top Supplier Award during the recent General Motors Supplier of the Year Event in Miami.

Pikes Peak Poster Art Contest Winner

The winning design was submitted by Rachel Aweida, a Colorado native who works in marketing for a commercial real estate firm.

American Powertrain Adds GearStar Automatic Transmissions

American Powertrain has now added GearStar automatic transmissions for Ford, Chevy and Mopar to its product lineup.