April 6, 2022
Mlazgar vs. JTH Legal Battle Reveals Eye-Opening Details
Text messages and emails emerge that seemingly bolster lighting agent’s allegations of improper conduct
MINNEAPOLIS, MN – A legal conflict between two rival lighting agents in Wisconsin is putting a spotlight on allegations that several Mlazgar Associates employees may have acted improperly when leaving the agency to join competitor, JTH Lighting Alliance. The dispute relates to activity in Wisconsin and the case is being litigated in Minnesota where each company is headquartered.
In the original complaint filed in early 2021, Mlazgar accused six ex-employees of unlawfully accessing and saving confidential, proprietary, and trade secret information after their employment with the agency was terminated. Since then, a seventh ex-Mlazgar employee has been added to the lawsuit and the allegations have expanded to include accusations that the defendants were working against Mlazgar and in collaboration with JTH while still employed by Mlazgar.
Throughout the proceedings the JTH defendants have denied all Mlazgar’s allegations of wrongdoing. In a statement shared with inside.lighting JTH President, Jon Kirkhoff, explained “After many months of discovery between the two parties I would like to reiterate our innocence in this matter and we look forward to our day in court.”
The case is still in the discovery phase, and some of the information that has already been exchanged among the parties is eye-opening. Here's what some of the discovery has revealed:
Text messages and emails
Mlazgar claims that it has yet to receive all the electronic files and communication it requested, but they have submitted into evidence over 350 pages of exhibits that include some very personal, detailed text messages and emails among the defendants. Mlazgar alleges that the defendants were planning ways to pull customer lists and other confidential files while setting the stage to shift manufacturer business partners from Mlazgar to JTH. Much of the correspondence allegedly transpired while the employees were still employed by Mlazgar.
Downloading 27 GB of files
An October exchange between Mlazgar employees reveals alleged improper file downloading
JH: Hey man what's the best way for me to back up my cloud? Just transfer to a HD?
NP: Ya that's honestly probably the easiest way unless you found another service that allowed like linking migration
...
JH: Don't report my increased activity
NP: Haha no sir.
NP: 
JH: Is that scouts honor?
NP: That or in solidarity
NP: Hahaha
JH: Hey man... do you know if we have our customer list anywhere besides hubspot?
JH: PS my transfer of 27gb says 8.5 hours
Price lists: Allegedly snagged and jacked
NP: That said, I should probably snag all those price lists
...
JH: Yeah jack that sh*t man. Or don't as it won't matter that much in the end. However I wouldn’t be mad at cha
Jockeying to pull Mlazgar lines to JTH. Manufacturer subpoenas:
Mlazgar alleges that during their final weeks of employment, the defendants were conspiring to convert numerous Mlazgar manufacturer partnerships to become JTH business partners. One such line is Hubbell Lighting which was expected to leave due to Mlazgar’s then-recent agreement to purchase the assets of another Wisconsin agent, Elan Lighting, and represent Cooper Lighting Solutions in Wisconsin and Minnesota.
Subpoenas were issued to multiple lighting manufacturers that ended partnerships with Mlazgar (or Elan) and signed on with JTH. Those manufacturers include BEGA North America, Meteor Lighting, Delta Light, Neri North America and Hubbell Lighting. Mlazgar demanded that the manufacturers produce all correspondence they had with the JTH defendants (dating back to May 2020) including all contracts and all sales documents shared between the parties. JTH filed an affadavit from Hubbell Lighting describing Hubbell's voluntary willingness to leave Mlazgar and partner with JTH.
The pursuit of OCL
Mlazgar attorneys allege that an employee – while still employed with Mlazgar – was collaborating with JTH President, Jon Kirkhoff, to steer architectural lighting line, OCL, from Mlazgar to JTH.
The attorneys outline “a particularly egregious example, on November 30, 2020, while still employed with Mlazgar, Defendant Justin Hendrickson texted Defendant Kirkhoff: ‘Oh boy I just saw Jimalee is the President at [lighting manufacturer] OCL how has Covid knocked me out of that loop. I’ll call her and run to get the line personally! She’s a good friend from back in the Visa days.’ Kirkhoff instructed Hendrickson to reach out to Ms. Beno directly.”
“Hendrickson confirmed: ‘I just text her I’ll set up a time in the AM to chat with her.’ Hendrickson then texted Kirkhoff a picture of confidential sales numbers he took from a Mlazgar meeting, noting: ‘Mlazgar numbers from OCL.’”
Mlazgar has continued to be the OCL representative in Wisconsin and Minnesota. Jimalee Beno is still an executive with OCL parent company, Legrand, and is currently the President of Focal Point – an important architectural line that is represented by JTH*. Neither Beno nor OCL are accused of any wrongdoing.
Above: Excerpts from a Mlazgar filing that alleges collaboration between a Mlazgar employee and a JTH principal
The appointment of a Special Master
Due to the time-consuming back-and-forth of discovery disputes, the court has appointed a Special Master – an independent legal professional who will be granted some authority by the court to move more swiftly through the discovery phase.
The Special Master will have the authority to hear motions and issue decisions regarding all discovery disputes between the parties. The Special Master will help meet deadlines and help avoid further delays to the trial dates. The current schedule calls for all discovery to be completed by July 14, 2022.
Inspecting the personal devices of the 7 ex-employees
One of the discovery disputes among the parties has been whether the defendants submitted all requested information from their personal phones, tablets and computers to Mlazgar. The court is mindful of the significant privacy issues raised by ordering production of personal electronic devices, so the judge ruled that instead of the ex-employees presenting their devices directly to Mlazgar's attorneys, they will allow inspection by the Special Master and any forensic vendor retained by the Special Master.
The Special Master will confidentially review the information and determine what, if any, information should be produced in this case.
Next steps
Once the Special Master and judge deem that the discovery phase is complete, the parties will engage in a court-ordered mediation aimed at negotiating a resolution without a trial. If mediation is unsuccessful, the parties will have a chance to file any remaining motions before entering the pre-trial settlement conference phase. A jury trial date is currently set for November 21, 2022 in Minneapolis.
*UPDATED 2:47pm EDT: A previous version of this article inaccurately stated that Mlazgar represents Focal Point. We regret the mistake.
