AutoZone sues Pep Boys over liability tied to Puerto Rico deal
📋 AutoZone Puerto Rico Inc. has filed a breach of contract lawsuit against Pep Boys – Manny, Moe & Jack LLC in federal court in the District of Puerto Rico.
💰 The dispute stems from a December 14, 2023, purchase agreement under which AutoZone acquired assets but explicitly did not assume pre-closing liabilities.
⚖️ The contract requires Pep Boys to retain all liabilities for employees not hired by AutoZone and to indemnify the buyer against losses arising from those "Excluded Liabilities."
👤 The lawsuit centers on a separate case filed in Puerto Rico court by former employee Anamarie Ramírez-Berdecía, who originally sued Pep Boys in October 2022.
📅 Ramírez-Berdecía amended her complaint in April 2025 to add AutoZone as a co-defendant for actions alleged to have occurred while she worked for Pep Boys.
⚠️ AutoZone argues that the former employee was never hired by them and that all claims relate to events prior to the acquisition, placing liability on Pep Boys per the agreement.
📩 In June 2025, AutoZone sent written notice requesting indemnification from Pep Boys for costs and liabilities tied to the employee case.
❌ Pep Boys denied AutoZone's request for reimbursement of legal costs incurred while defending themselves in the ongoing litigation.
💸 AutoZone claims the denial forced them to pay approximately $50,000 in attorneys' fees so far, with potential costs exceeding $75,000 if the case proceeds to trial.
⚡ The employee's amended complaint seeks at least $350,000 in back pay and compensatory damages, plus penalties and severance totaling $29,245.74.
🏛️ Through this federal lawsuit, AutoZone is seeking an order for Pep Boys to reimburse all legal expenses and cover any judgment or settlement from the employee case.
💣 AutoZone describes Pep Boys' refusal to indemnify as a material breach of the purchase agreement that violates the agreed terms.
⚖️ The plaintiff in the original employment dispute alleged wrongful termination, retaliation, and disability discrimination against Pep Boys.
📝 The federal complaint emphasizes that the liability retention clause specifically covers employees not hired by the acquiring company (AutoZone).
📉 AutoZone faces financial exposure tied to a dispute that is entirely separate from its own operations or employment relationships.
🔍 The case highlights contractual risks in asset purchases where legacy liabilities can surface after years of separation between buyer and seller.
- AutoZone successfully closed the purchase of Pep Boys' Puerto Rico automotive parts operations on Dec. 14, 2023, acquiring valuable commercial and retail assets without assuming pre-closing liabilities.
- The breach of contract lawsuit strengthens AutoZone's legal position by holding Pep Boys responsible for all 'Excluded Liabilities' tied to former employees who were never hired by AutoZone.
- Pep Boys is contractually obligated under the purchase agreement to defend, indemnify, and hold harmless AutoZone from losses arising from these excluded liabilities.
- AutoZone has already sent written notice in June 2025 requesting full indemnification for costs and potential liability, signaling a clear path toward recovering legal expenses.
- The company expects Pep Boys to reimburse all legal expenses incurred so far (currently about $50,000) and cover any future judgments or settlements related to the employee case.
- AutoZone has incurred approximately $50,000 in attorneys' fees so far defending itself against a lawsuit filed by a former Pep Boys employee, with legal costs potentially exceeding $75,000 if the case proceeds to trial.
- The amended complaint seeks at least $350,000 in damages, penalties totaling $29,245.74, and severance pay, creating a direct financial liability for AutoZone.
- AutoZone's legal strategy requires it to defend itself while simultaneously seeking indemnification from Pep Boys, indicating uncertainty about the outcome of the underlying Puerto Rico court case.
- The dispute centers on a Dec. 14, 2023 purchase agreement where Pep Boys was contractually obligated to retain liabilities for pre-closing events, raising questions about the enforceability of such protections in the federal court system.
