February 28, 2022

Force Partners vs. KSA: Multiple Counts Dismissed

2022 02 Force Partners vs ksa lighting acuity brands.jpg

A small victory for KSA and Acuity Brands, but the Chicago legal battle is still in early stages

In late 2019, a legal battle among Chicago lighting competitors was initiated when Force Partners, a lighting agency that started in 2017 and is best known locally for being the Cooper Lighting Solutions agent, filed a remarkable lawsuit against four rivals – KSA Lighting & Controls, Acuity Brands and two KSA executives, individually.

The lawsuit made bold claims of a conspiracy among the defendants that allegedly forced Chicago-area lighting and controls distributors to boycott Force Partners. The lawsuit cites the federal Sherman Anti-Trust Act of 1890, the federal Clayton Antitrust Act of 1914 and other Illinois legislation, claiming that the defendants aimed to unlawfully reduce consumer choice and raise prices on Acuity Brands products and the other brands that KSA represents.

After moving at a snail’s pace due to Covid-related court slowdowns and a judge reassignment that stalled the case for many months, the case recently had a significant ruling that may cause KSA and Acuity Brands to claim a small victory.

On Friday, United States District Judge, Franklin U. Valderrama, filed his ruling on KSA’s and Acuity Brands’ motions to dismiss all seven counts of the lawsuit. KSA and Acuity Brands filed separate motions to dismiss but raised some overlapping arguments in support of dismissal. Judge Valderrama granted the defendants’ motions to dismiss two of the counts and part of a third but determined to move forward with the remaining counts.

The decision to move forward with the remaining counts is not an indication of defendants' wrongdoing. Despite being filed in 2019, the case is still in the early stages. Discovery hasn’t even begun yet, which means no evidence has been shared among the parties; no subpoenas have been issued. KSA and Acuity Brands are now left to defend themselves against fewer of Force Partners' accusations.

Force Partners moves forward by focusing on the 4 ½ counts that are still active and setting their sights on building their case with more evidence once the discovery process begins.

The following claims were dismissed with prejudice, which means that Force Partners cannot refile the same claims again in that court.

Count II (Sherman Act Section 1 horizontal conspiracy)

This count alleged a horizontal hub-and-spoke conspiracy.
The court found Counts I and II to be legally indistinguishable and dismissed Count II.

Count V (the Illinois Antitrust Act claim premised on 740 ILCS 10/3(1))

The Judge dismissed part of this count finding that Force Partners failed to allege a horizontal agreement – which is an agreement between competitors.
In his written opinion, the Judge also noted an important case law precedent, "Unlike horizontal agreements between competitors, vertical exclusive distributorships ... are presumptively legal."
As the case evolves, that statement by the judge may be repeated by KSA and Acuity as it seems to cut to the essence of Force Partners' overarching claims.

Count VI (Illinois Uniform Deceptive Trade Practices Act)

According to the Judge, a violation of this act requires disparagement against Force Partners’ goods or services.
The judge stated that the only related allegation submitted by Force Partners is that "KSA claimed that Force Partners was bypassing distributors to make sales directly to end-users and contractors, thereby denying sales and profits to distributors."
The court determined that the statement, even if false, does not disparage Force Partners’ goods or services, which is required.

The case proceeds with the following counts.

Count I (Sherman Act Section 1 vertical conspiracy),
Count III (Sherman Act Section 2),
Count IV (Clayton Act Section 3),
Count V (the Illinois Antitrust Act claims premised on 740 ILCS 10/3(2)–(4)), and
Count VII (tortious interference with prospective business relations).

Next steps:

The case is being reassigned to Magistrate Judge Jeffrey T. Gilbert, who will be the third judge to preside over this case since it was filed.
With the Motion to Dismiss now addressed, KSA and Acuity Brands are now on the clock to answer Force Partners’ Amended Complaint that was filed in May 2020.