14 DAY TRIAL // Amazon.com has settled a 5-year-old lawsuit with Toys “R” Us for $51 million last week. In 2004 the latter sued the former for breach of contract in a deal dating back to 2000. In the settlement the toy company will dismiss all claims and counterclaims.
“On June 11, 2009, Amazon.com entered into a settlement agreement in its lawsuit with Toys “R” Us, Inc., and its affiliates, with terms that include, among other things, (i) a one-time payment from Amazon.com of $51 million in the third quarter 2009, substantially all of which was unanticipated and will be charged to “Other operating expense” in the second quarter, (ii) dismissal of all claims and counterclaims, and (iii) mutual releases,” Amazon stated in a SEC filing.
Back in 2000 the two companies signed a ten-year exclusive partnership, in which the toy maker paid $200 million to be the exclusive supplier of toys and baby products for the online retailer, and which would make the latter the former’s only online storefront. As part of the deal Amazon would be in charge of the online business while Toys “R” Us would handle the toy buying and inventory management.
While Amazon remained the exclusive online retailer for Toys “R” Us it also started selling products from other companies, claiming that the toy maker couldn't handle the demand, a move that prompted a breach of contract suit by Toys “R” Us in 2004. Amazon then filed its own counterclaim asking for $750 million in damages and made an official request to end the partnership. A New Jersey court ruled for the termination of the contract in 2006 but also in favor of Toys “R” Us, although it didn't issue any penalties for any party.
Toys “R” Us issued its own SEC filing. “Toys “R” Us, Inc. and its affiliates (“Toys “R” Us”) entered into a settlement agreement (the “Settlement Agreement”) with Amazon.com, Inc. and its affiliates (“Amazon.com”) to settle all disputes related to a lawsuit Toys “R” Us filed against Amazon.com on May 21, 2004, in the Superior Court of New Jersey, in order to terminate the strategic alliance agreement between the parties, and a related lawsuit that Amazon.com filed on June 2, 2006 in the Superior Court of Washington, King County. The lawsuits will be dismissed with prejudice and, pursuant to the terms of the Settlement Agreement, Amazon.com will pay Toys “R” Us $51,000,000 within forty five days of the date of the Settlement Agreement,” the toy company stated.