February 9, 2023
Counterpunch: HLI Accuses Mlazgar of Contract Breach
Current's HLI files countersuit in Agent vs. Manufacturer court battle
In 2019, Mlazgar Associates signed a 5-year contract to represent Hubbell Lighting (HLI) in Wisconsin, Minnesota and the Dakotas. In late 2020, Mlazgar partnered with Cooper Lighting throughout the territory, but rather than proactively terminate the contract with HLI, the agency chose to keep the HLI contract active – which inevitably led to HLI initiating the manufacturer-agent divorce. Hubbell Lighting (HLI) was acquired by Current in 2022.
Fast forward to January 2023 when Mlazgar filed a breach of contract lawsuit in HLI’s home state of South Carolina alleging numerous claims against HLI – including being wrongfully terminated by HLI and being owed unpaid commissions. On Monday, HLI responded to Mlazgar’s allegations and punched back with a counterclaim that it was Mlazgar who initially and wrongfully breached the contract.
Shortly after the Cooper Lighting and Mlazgar partnership news became public, HLI reportedly challenged Mlazgar on its new representation of Cooper Lighting and accused the agent of violating the contract provision that required Mlazgar to get HLI's written permission before representing another competing manufacturer. Mlazgar allegedly responded to HLI with a vague reply citing that it would not “do anything to jeopardize this relationship or engage in any activity that would breach the contract between the parties.”
In the counterclaim filed on Monday, HLI alleges that not only did Mlazgar bail on a long-term partnership with HLI, but the agency also received special funding and financial incentives to help fund growth and a long-term partnership with the agency – all for naught. Most notably, Mlazgar allegedly received $200,000 per year, above and beyond traditional agent commissions, to help fund two Mlazgar employees. And that was just one of the special conditions contained in the 2019 exclusive sales representative agreement and subsequent 2020 amendment:
Employee funding:
$200,000 per year for three years to fund two Mlazgar employees.
Guaranteed commissions:
Certain guaranteed commissions to Mlazgar for sales of HLI products in Wisconsin
Incentive bonus:
Mlazgar would earn an incentive bonus if Mlazgar meets or exceeds certain sales growth targets on various product categories:
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Commercial Sales: Beacon, Columbia Lighting, Compass, Dual-Lite, Hubbell Industrial Lighting, and Hubbell Outdoor Lighting.
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Architectural Sales: Alera Lighting, Architectural Area Lighting (AAL), Kim Lighting, Kurt Versen, Prescolite, and Litecontrol.
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Hubbell Controls Solutions
The court filing included the sales representative agreements, but sales targets and commission percentages were redacted from the documents.
Marketing funds:
Mlazgar would receive up to $25,000 per year as part of a marketing fund allowance in calendar years 2019 through 2023 for agreed upon activities.
Overage:
The sales revenue calculations for the incentive bonus did not include overage, although the HLI contract already pays 90% of overage to Mlazgar.
Is Mlazgar overly litigious…
…or does Mlazgar have a zero-tolerance policy for what it believes are unpaid commissions?
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In April 2022, Mlazgar sued Focal Point for breach of contract and unpaid commissions. The case is still being litigated, but based on court documents, it seems that Mlazgar didn’t accept Focal Point’s termination – believing it was noncompliant with the contract and Minnesota law – and continued to believe that it was the agent of record for Focal Point and entitled to the commissions paid in the territory after Focal Point moved to rival agent JTH.
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In a 2021 lawsuit, Mlazgar Associates accused multiple ex-employees and an archrival agent, JTH Lighting Alliance, of conspiring to steal confidential Mlazgar business information and also, while still employed by Mlazgar, the employees allegedly attempted to cause certain lighting brands to switch Wisconsin representation from Mlazgar to JTH. A notice of settlement has been filed, but the case is not yet closed.
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In 2021, Mlazgar sued Pennsylvania based Spring City Electrical Manufacturing Co. alleging $60,806 in unpaid commissions. The parties seemingly settled the case and jointly agreed to dismiss the case in 2022.
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In 2019, Mlazgar sued Signtex Lighting for breach of contract and unpaid commissions. The case was seemingly settled out of court and dismissed one month later.
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In 2018, Mlazgar sued Missouri-based LED2 Solutions for breach of contract and $37,002 of unpaid commissions. Court filings indicate that LED2 Solutions was properly served with the lawsuit, but because they never responded to it, the court ruled in favor of Mlazgar.
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In 2017, Mlazgar sued Crenshaw Lighting for commissions reported to be in the $300,000 - $500,000 range related to the Minnesota State Capitol project. That suit ended with an out-of-court settlement.
RELATED: In late 2022, HLI sued Georgia-based Lighting Associates for breach of contract relating to the agency’s move to Acuity Brands and termination of the HLI partnership.
We reached out to both HLI and Mlazgar and each declined to comment on open litigation.
