R.L. Mlazgar Associates and HLI Solutions Battle Over Exclusive Sales Agreement
The legal dispute has been unfolding since December 2022, when R.L. Mlazgar Associates, Inc. (Mlazgar) filed a lawsuit against HLI Solutions, Inc., Litecontrol Corporation, Progress Lighting, and Hubbell Inc., alleging multiple contract violations. The case pending in the District of South Carolina under Judge Jacquelyn Austin has grown to include eighteen causes of action. In response, HLI filed a counterclaim asserting breach of contract and financial damages. On 23 January 2025, HLI served a subpoena on Cooper Lighting seeking critical documents related to Mlazgar’s agreements. This led to Mlazgar filing a motion to quash in the Northern District of Georgia, further intensifying the legal battle. With ongoing discovery disputes and multiple pending motions, the case could shape future manufacturer-representative agreements in the lighting industry.
Background of the Case
HLI Solutions had an Exclusive Sales Representative Agreement (ESRA) with Mlazgar, granting it the rights to sell HLI products in specific U.S. territories, including parts of Minnesota, Wisconsin, Michigan, and the Dakotas. In exchange, Mlazgar was expected to prioritize HLI products and obtain consent before selling competing products.
However, according to HLI, Mlazgar breached this agreement by entering into a competing arrangement with Cooper Lighting, a direct competitor in the industry. HLI alleges that Mlazgar’s decision to sell Cooper Lighting products violated the terms of the ESRA and forced HLI to find new representation for those territories.
Litigation Developments
Mlazgar initiated the lawsuit in December 2022, filing sixteen causes of action against HLI and Progress Lighting. The claims were later expanded to eighteen. In response, HLI countersued, asserting that Mlazgar breached the ESRA and caused significant financial damages.
Judge Jacquelyn Austin of the District of South Carolina has been actively managing the discovery process due to what HLI describes as aggressive litigation tactics from Mlazgar. HLI claims that Mlazgar has served hundreds of discovery requests, issued an extensive list of deposition topics, and filed multiple discovery motions. Several of these motions have been denied or limited by the court.
The Subpoena to Cooper Lighting
A key element of the ongoing litigation is HLI’s subpoena to Cooper Lighting, requesting documents related to Mlazgar’s agreement with Cooper. The subpoena seeks:
- Records of Mlazgar’s acquisition of Elan Lighting Systems.
- Contracts between Cooper Lighting and Mlazgar.
- Documents related to Mlazgar’s contractual obligations to HLI.
- Any information about incentives, that Cooper Lighting provided to Mlazgar.
HLI contends that these documents are critical to demonstrating the timeline and extent of Mlazgar’s alleged contract violations. Your humble editor finds the fourth bullet point intriguing. Incentives are not discussed much publicly in our industry, and we have no idea if Cooper offered incentives. And if they did, what would be the ramifications?
Mlazgar’s Motion to Quash
Mlazgar filed a motion to quash in the Northern District of Georgia in an attempt to block the subpoena. However, HLI argues that Mlazgar lacks standing to object to a subpoena issued to Cooper Lighting, a third party. HLI also points out that Cooper Lighting did not object to the subpoena in a timely manner, effectively waiving any opposition to document production.
Furthermore, HLI asserts that the requested documents are relevant to its counterclaim, as they could provide evidence of when Mlazgar began engaging with Cooper Lighting and whether any financial incentives encouraged the alleged breach.
Developing…
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