The Dwarves of Erebor and the Northrons refused to acknowledge the overlordship and alliance of Sauron. While his southern armies menaced Gondor, he sent an army north to extend his dominion to prevent the armies of his enemies joining together under one banner, which could have proved disastrous for Mordor.
On March 17th of the year 3019 in the Third Age, Sauron sent a large contingent of Easterlings to attack Dale and Erebor. Under the command of Rurzaur, a powereful Easterling Emperor, the Easterlings battled the combined forces of the Northrons under King Brand and the Dwarves of the Lonely Mountain under King Dáin Ironfoot that marched out to meet their enemies in battle. Sauron's forces were probably more numerous, though the army of Dale would have possessed an advantage due to their superior Dwarven-made weaponry. After three days of heavy close-quarters fighting, they were forced to retreat to the Lonely Mountain.
A few sturdy warriors led by Brand and Dáin fought bravely before the Gate of Erebor, which was not taken. In the end, Dáin was killed as he stood defending the body of his ally Brand. Meanwhile, the defenders of the Mountain were able to withstand the siege.
However, the forces of Gondor and Rohan defeated the main power of Sauron in the Morannon theatre on March 25th, causing the northern army to lose hope. Seeing the morale of their foes being sapped by news of victory in the south, the Army of Dale under the new Kings—Bard II and Thorin III Stonehelm—managed to lift the siege on March 27th and managed to drive the Easterlings out of Dale with the help of the Elves of Mirkwood and Great Eagles of the Misty Mountains.