May 16, 2024
Elite Lighting Ordered to Pay Agent $453,929
Court decries “willful and egregious misconduct” by California-based lighting maker
In a seemingly conclusive turn within the ongoing legal saga between Pittsburgh lighting agent, REPCO II, and California lighting maker, Elite Lighting, the United States District Court for the Western District of Pennsylvania has issued a default judgment against Elite Lighting. The judgment, amounting to $453,929, comes after Elite's repeated failures to meet discovery obligations and included judicial reprimand for what the court described as "willful and egregious misconduct."
The case's roots extend back to disputes over unpaid agent commissions, with REPCO II alleging that over $280,000 had been owed by Elite Lighting. However, the core of the judicial discontent stems from Elite's persistent neglect of court orders regarding the discovery process. The court meticulously noted Elite Lighting’s several months of avoidance, which included failing to produce critical business documents such as purchase orders and emails pertinent to REPCO’s claims.
Despite multiple court reminders and imposed sanctions aimed at compelling compliance—initially set at $1,000 per day — Elite's cooperation remained absent. This continual defiance led to escalated judicial measures. Judge William S. Stickman IV, presiding over the matter, expressed significant frustration, highlighting the company's disregard for legal processes and the integrity of court mandates.
According to the judge, Elite Lighting failed to produce any purchase orders and only partially complied with the production of invoices, providing just some of the documents. Additionally, only three emails and no materials related to the Elite Lighting's orders in Western Pennsylvania and West Virginia were submitted.
In stark contrast to REPCO II's allegations and the judge's strong remarks, Hamid Rashidi, a corporate officer of Elite Lighting, stated to Inside Lighting on Thursday that an accounting error linked to an ownership change at the agency is the cause of the dispute. He also characterizes the relationship between REPCO II and Elite Lighting as very positive.
"Elite Lighting and Rep Co have a very good outstanding relationship, unfortunately with the change of ownership at RepCo there has been an accounting error and we are both trying to work through it."
— Hamid Rashidi, Elite Lighting
Elite Lighting originally accused of shorting agent commissions
Central to the original legal dispute are a Sales Representative Contract and an Addendum, drawn up on November 20, 2014, and April 15, 2022, respectively. According to allegations by REPCO II, they agreed to promote Elite's lighting products in Western Pennsylvania and West Virginia in exchange for commissions. However, the relationship deteriorated when Elite reportedly failed to fulfill its obligations.
The 2022 contract addendum altered the standard commission levels for stock orders from 5-10% to a 1.5% base commission, with performance kickers that could increase stock order commissions up to 5%. This shift in commission structure may be a major aspect of the dispute.
As the lawsuit progressed through the discovery phase, REPCO II sought numerous documents from Elite Lighting that related to orders in Western Pennsylvania and West Virginia. Many instances of Elite Lighting’s “egregious misconduct” and non-compliance during the discovery process were detailed by the judge. Here are the three notable examples:
Incomplete Discovery Production:
The judgment highlighted Elite Lighting's failure to produce critical business documents necessary for the case. Despite the court's orders, Elite did not provide any purchase orders, and their submission of invoices and emails was woefully incomplete.
As stated in the judgment, "Defendant's discovery production remains incomplete. No purchase orders have been produced. While some invoices have been produced, not all responsive invoices have. Only three emails have been produced." This lack of compliance impeded REPCO II's ability to substantiate their claims and calculate damages accurately, severely undermining the legal process.
Defiance of Court Orders and Sanctions:
Despite repeated judicial instructions and imposed sanctions, Elite Lighting continued to show a blatant disregard for the court's directives. The judgment documents a series of court orders that were ignored by Elite, leading to a stern response from the judge. "After four notices were filed by Plaintiff alerting the Court to Defendant's continued refusal to participate in discovery and obey orders of court, a show cause hearing was scheduled...and five more notices of continued refusal to fulfill discovery obligations and obey the Court's order followed."
Above: Excerpt from judge's default judgment
Culpable and Contemptuous Conduct:
The court found that Elite's actions during the discovery process were not just negligent but deliberately obstructive. The judgment noted, "Defendant's conduct in undertaking the review and production of its documents constitutes culpable and contemptuous conduct." It was particularly pointed out that only two individuals at Elite undertook the review of the documents, and they failed to dedicate the necessary time to comply with the discovery obligations. Mr. Hamid Rashidi’s testimony that he was "busy running his company" and that the time needed to comply with discovery obligations would be "gruesome" seemingly illustrated a dismissive attitude toward legal responsibilities and court orders.
Judicial Findings and Consequences
In his ruling, Judge Stickman emphasized the culpability of Elite Lighting’s actions, which he classified as contemptuous. The judge pointed out the insufficient efforts by Elite's personnel in document review and production, which he argued demonstrated a deliberate disregard for the company’s discovery obligations.
These events culminated in the May 6 show cause hearing where the court, having reviewed the arguments and available evidence, found no alternative but to impose the harshest of sanctions—a default judgment.
The $453,929 default judgment against Elite Lighting did not indicate the timing requirement of the payment but it may be specified by the court in other orders. Should Elite Lighting fail to pay, REPCO II can enforce the judgment through measures like asset seizure or garnishment, with interest accruing from the judgment date as per applicable laws.
