January 10, 2024

Mlazgar's Legal Blitz: Legrand Faces Fresh Lawsuit

Lighting agent initiates its fourth lawsuit in three years, now accusing Legrand of unfair business interference

In fall 2020 Mlazgar Associates partnered with Cooper Lighting Solutions in Minnesota, the Dakotas, and Wisconsin, which led to an eventual divorce with longtime partner Hubbell Lighting*. At the time, we wrote "Midwest Agent Merger Sets Up Compelling Chain Reaction". However, we did not foresee that this chain reaction would include Mlazgar initiating multiple lawsuits against adversaries, including seven former employees, a rival lighting agency, and multiple former manufacturing partners, including Legrand.

Mlazgar Associates on Friday filed its fourth civil lawsuit in three years, this time against Legrand alleging misappropriation of trade secrets and tortious interference with its contracts and prospective economic advantages. This latest lawsuit is separate from another ongoing legal case against Legrand and Focal Point. In that case, Mlazgar is contesting what it deems an improper termination and is seeking compensation for unpaid commissions. Both Legrand and Focal Point have categorically denied Mlazgar's previous allegations.

Legrand's initial response:

In relation to the most recent lawsuit, a spokesperson from Legrand told Inside Lighting, "As in all our business arrangements, our employees conduct themselves in accordance with the agreed terms of the business relationship, as well as with the highest of integrity. We fundamentally disagree with the claims in these lawsuits and will address the allegations during the upcoming proceedings."

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Mlazgar’s latest accusations:

The new complaint, filed in the United States District Court for the District of Minnesota, accuses Legrand, parent company of lighting brands previously partnered with Mlazgar such as Focal Point, Kenall, OCL, Watt Stopper and Pinnacle, of conducting a deliberate campaign to sabotage Mlazgar's operations. This alleged campaign involved misappropriating confidential information and interfering with its contracts. According to Mlazgar, these actions transpired when Legrand collaborated with some Mlazgar employees who were departing to establish a new Wisconsin office with Minnesota lighting agent competitor, JTH Lighting Alliance.

Many themes and accusations leveled against Legrand in this new lawsuit echo similar claims Mlazgar made in a 2021 lawsuit against JTH and seven former Mlazgar employees. In the legal dispute that began in February 2021 and reached a confidential settlement about a year ago, Mlazgar Associates alleged that multiple ex-employees and its competitor, JTH Lighting Alliance, with conspiring to steal confidential Mlazgar business information. Furthermore, while still employed by Mlazgar, these employees allegedly tried to persuade various lighting brands to shift their Wisconsin representation from Mlazgar to JTH.

Court records indicate that Legrand has not yet been served with the summons. Once that occurs, they will have 21 days to file an answer or a motion in response to a complaint.

The new JTH Wisconsin office was seemingly a problem for Mlazgar

As part of its strategic business moves during the establishment of the new Cooper Lighting partnership, Mlazgar acquired the assets of Elan Lighting, the Cooper Lighting agent at the time. Mlazgar’s lawsuit describes the consolidation of these two major entities as transformative for the Wisconsin market: "When Mlazgar acquired Elan, only one other Wisconsin agent had the capacity to represent major manufacturers such as Focal Point, Watt Stopper, Pinnacle, and Kenall. That agent was Enterprise Lighting, LTD."

Related: Wisconsin market »

The core issue Mlazgar had with the new JTH Wisconsin office was that it was staffed, in part, by seven former Mlazgar employees. In previous lawsuits, Mlazgar presented evidence to the court showing that while some of these individuals were still on Mlazgar's payroll, they were planning to join JTH. During this time, they allegedly recruited product lines, including some from Legrand, for the new JTH Wisconsin office. Their actions reportedly entailed divulging confidential Mlazgar information to JTH and certain prospective manufacturing partners.

During the lawsuit between Mlazgar and JTH, along with the seven former Mlazgar employees, Mlazgar amassed a significant amount of discovery material. This included laptops and cell phones, which were handed over to an independent forensics firm for the extraction of electronic communications. Consequently, Mlazgar now possesses potentially dozens, or even hundreds, of emails and text messages exchanged between the seven former Mlazgar employees and various Legrand executives. While these executives are not individually named as defendants, they are referenced in the lawsuit.

Some of Mlazgar’s claims against Legrand:

Aiding and Abetting Breaches of Fiduciary Duties: Legrand is accused of aiding and abetting the Seven Mlazgar Employees in breaching their fiduciary duties by misappropriating Mlazgar’s confidential information

Plans to Establish JTH’s Presence in Wisconsin: Legrand is accused of engaging in discussions and planning to establish JTH's presence in Wisconsin, using misappropriated confidential and trade secret information

Misuse of Sales Order Information: The complaint includes claims that sales orders submitted by Mlazgar to Focal Point were forwarded to JTH, with the confidential information contained therein used to benefit JTH

Possible Legrand responses to the allegations:

We anticipate that Legrand will contend that Mlazgar's grievances have already been addressed in previous litigation and that Mlazgar's real dispute is with its former employees and JTH, rather than Legrand. This perspective is likely to be emphasized by the frequent use of the term "Seven Mlazgar Employees," which appeared 46 times in the 33-page complaint.

Mlazgar claims that Legrand collaborated with JTH to attract manufacturers other than Legrand’s brands to appoint JTH as their exclusive sales representative in Wisconsin. These manufacturers may have included Amerlux, B-K Lighting, BEGA North America, Carl Stahl, Delta Light, Evenlite, Kelvix, Luminii, Lightglass, Meteor Lighting, NERI North America, Structura and Vode Lighting.

Perhaps Mlazgar has smoking gun evidence of Legrand executives actively recruiting competing manufacturers to JTH, but such actions would be highly unusual.

It's also possible that Legrand will argue that the merger between Mlazgar and Elan itself prompted numerous brands to seek alternative representation. This reaction is common in the industry when two major agents merge, as this case involved a formidable Cooper Lighting agent (Elan) and large Hubbell Lighting agent (Mlazgar). Brands often prefer not to be part of a line card that becomes overly congested as a result of such mergers.

Inside Lighting noted at the time of the merger that the newly combined agency would represent over 230 brands. Additionally, a review of the 2020 sales representative contract between Mlazgar and Cooper Lighting might possibly reveal that certain Legrand brands are specified as ones that Mlazgar is not permitted to represent simultaneously with Cooper Lighting.

Lastly, Mlazgar maintains that its representative agreement with Focal Point was not legally terminated. This contention is a principal matter in a separate Mlazgar lawsuit against Focal Point. This ongoing dispute may underlie Mlazgar's claim that its sales orders were inappropriately redirected to JTH, who, according to Focal Point, is currently Focal Point's agent.

Mlazgar is seeking significant actions and damages:

Permanent Injunctive Relief: They seek a permanent injunction to prevent Legrand from using and disclosing Mlazgar’s confidential information and to mandate the return of all such information in Legrand's possession. Mlazgar also requests that an independent third party ensure the removal of all electronic versions of this information from Legrand's devices.
Monetary Damages: Mlazgar is seeking actual damages, damages for unjust enrichment, and reasonable attorney fees, as allowed under the Minnesota Uniform Trade Secrets Act and the Federal Defend Trade Secrets Act.
Exemplary Damages: Due to the alleged willful and malicious nature of the misappropriation, Mlazgar is requesting the award of exemplary damages.
Disgorgement of Profits: Mlazgar is asking for reimbursement of all profits that Legrand unjustly obtained at its expense.

Related Mlazgar Lawsuits:

2022: Mlazgar vs. Focal Point & Legrand (open litigation)

2022: Mlazgar vs. Current (open litigation)

2021: Mlazgar vs. JTH & former Mlazgar employees (Case closed. Confidential settlement.)

Other Mlazgar lawsuits in recent years:

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.
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.
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.
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.

We reached to out Mlazgar for comments and they opted not to comment on open litigation.

[UPDATE: January 10, 2024, 3:25 p.m. CST]

*An earlier version of this article began by stating, "In fall 2020, when lighting agent Mlazgar Associates terminated its longstanding relationship with Hubbell Lighting to partner with Cooper Lighting Solutions in Minnesota, the Dakotas, and Wisconsin, we wrote 'Midwest Agent Merger Sets Up Compelling Chain Reaction.'"

We incorrectly characterized Mlazgar as the terminating party, which was not the case. We regret the mistake.