Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

G.L.M. Security & Sound, Inc v. Lojack Corp

September 28, 2012

G.L.M. SECURITY & SOUND, INC., PLAINTIFF,
v.
LOJACK CORP., DEFENDANT.



The opinion of the court was delivered by: Seybert, District Judge:

MEMORANDUM & ORDER

Plaintiff GLM Security & Sound, Inc. ("GLM") sued Defendant LoJack Corp. ("LoJack") alleging violations of New York, Massachusetts, and Federal law in relation to an agreement between the parties for GLM to distribute LoJack's automobile security systems. Pending before the Court are (1) GLM's motion to reconsider this Court's September 30, 2011 Order dismissing some of GLM's claims and allowing GLM to re-plead others, (2) GLM's First Amended Complaint ("FAC"), (3) LoJack's motion to strike certain portions of the FAC, and (4) LoJack's motion to dismiss the FAC in its entirety.

BACKGROUND

The following section discusses both this case's factual background and its procedural history.

I. Factual Background

The following facts are taken from GLM's FAC and are presumed to be true for the purposes of this decision.

GLM is a Lynbrook, New York corporation that sells after-market automobile products, including car security systems, to car dealers in New York City and the Long Island metropolitan area. (FAC ¶¶ 4-5.) LoJack is a Delaware corporation that manufactures and distributes car security systems. (FAC ¶¶ 6-7.)

GLM and LoJack's relationship began in June 2002 when George Wafer ("President" or "Wafer"), President of Vehicle Manufacturer's Services ("VMS"), introduced LoJack to GLM. Wafer is alleged to have been acting as LoJack's agent at all relevant times. (FAC ¶¶ 8-9.) After a few months of negotiations, GLM and LoJack entered into a written "Distributorship and Installation Agreement" (the "Distribution Agreement"). (FAC ¶¶ 11, 13.) In relevant part, the Distribution Agreement provided that (1) GLM would "purchase LoJack Stolen Vehicle Recovery Units ("SVRUs") from LoJack and resell and install" the SVRUs; (2) the initial price of the SVRUs would be fixed at $200 each; (3) GLM would pay any balance within 60 days; and (4) in the event that either party terminated the agreement, LoJack would credit GLM the price paid for any uninstalled SVRUs and would pay a fee of $50 for any unit sold by LoJack within 180 days of the termination of the agreement to a dealer in GLM's market who became a LoJack customer as a result of GLM's efforts. The Distribution Agreement was effective on September 15, 2002. (Ex. A, the Distribution Agreement.)

Shortly thereafter, on October 1, 2002, VMS formalized its agency relationship with LoJack by entering into an "Agency Agreement." The Agency Agreement provided that VMS would represent LoJack and help find distributors for the sale and installation of LoJack products. (FAC ¶ 15.) In furtherance of its duties under the Agency Agreement, VMS' President asked GLM for its help in recruiting other after-market sellers to become LoJack distributors, and GLM agreed. In exchange, Wafer--as LoJack's agent--promised that GLM would (1) always receive LoJack's best price for its security systems and (2) receive two dollars for each LoJack unit sold to any distributor that GLM helped recruit. (FAC ¶¶ 16-18.) GLM alleges that LoJack knew of and ratified Wafer's "best-price" promise but does not explain how. (FAC ¶¶ 19.)

GLM alleges that GLM and LoJack's responsibilities under the Distribution Agreement changed over time. (FAC ¶ 23.) For example, the parties had a practice of disregarding certain of the Distribution Agreement's performance requirements. GLM alleges that it never hit its performance goals but LoJack never complained. (FAC ¶¶ 30-32.) Also, GLM asserts that the parties agreed to extend the "net 60 day" payment term; LoJack's invoices were marked "Terms: Net 90 Days," and LoJack permitted GLM--who it characterized as its "valued partner" (see FAC ¶ 27) --up to 120 days as long as GLM "paid up to 90 days at the end of certain quarters." (FAC ¶¶ 24-29.)

As hinted at in the preceding paragraph, one thrust of GLM's case is that its relationship with LoJack was akin to a partnership. According to GLM, the idea that this was a partnership was evidenced by correspondence, marketing materials, and documents created by LoJack and sent to GLM, and, in a letter to approximately 120 car dealers in the New York area, in which LoJack introduced GLM as its "partner." (FAC ¶ 35.) LoJack's employees maintained a consistent presence on GLM's premises, and GLM employees wore LoJack clothing and carried badges that identified them as LoJack technicians. (FAC ¶ 38.) GLM also used the LoJack trademark on its business cards and invoices, its uniforms, its website, and on the exterior of its building. (FAC ¶ 45.)

The FAC also describes how GLM and LoJack had intertwined relationships vis-a-vis other car dealers in the New York area. LoJack had appointed GLM as the exclusive seller of its security systems to approximately 120 automobile dealers (the "GLM Dealers") in Queens, Suffolk, Nassau, and Bronx counties, while LoJack sold its product directly to other dealers. (FAC ¶¶ 39-40.)*fn1 Over the years GLM and LoJack swapped auto dealers back and forth in the New York City and Long Island areas, with either GLM or LoJack taking over a dealer account depending on the ability of either to sell or service that dealer. (FAC ¶ 42.) Also, LoJack sales representatives regularly assisted GLM in its sales to the GLM dealers; thus LoJack knew what prices it and GLM were charging for the same items. (FAC ¶ 42.)

In furtherance of these overlapping relationships, LoJack assured GLM that dealers would pay the same price for the security systems regardless of whether they bought them from GLM or directly from LoJack. (FAC ¶ 44.) As described above, the Distribution Agreement provided that LoJack would sell to GLM security systems at $200 each. (FAC ¶ 49.) Although the parties discussed a possible price reduction in September 2005 in the context of LoJack's potentially reducing its cost of production, the reduction never happened. (See FAC ¶¶ 59-60.) At all times LoJack represented to GLM that its price to GLM for its product was its best price. (FAC ¶ 57.)

However, as early as 2005, LoJack was offering better prices to its direct dealers in markets outside of the New York City and Long Island areas, and despite GLM's asking for a lower price LoJack never even informed GLM that it had reduced its price in other markets. (FAC ¶¶ 60-61.) In March 2008, LoJack reduced its price to GLM to $180 per unit uninstalled. GLM believed that this reduction resulted from cost savings to LoJack from moving its production overseas and that it represented LoJack's new "best price." (FAC ¶¶ 66-67.) However, in 2008 GLM began to hear from both automobile dealers and a LoJack sales representative that LoJack was offering dealers in its market installed LoJack security systems for prices substantially lower than LoJack's price to GLM for uninstalled product. (FAC ¶ 68.) When GLM asked LoJack about what it had heard, LoJack employees in Massachusetts and elsewhere assured GLM that it was not true; that LoJack's price to GLM was its best price, and that LoJack was not selling to LoJack direct dealers in the New York and Long Island areas at a lower price than it was selling to GLM. (FAC ¶ 69.)

Based on LoJack's reassurances, GLM in turn assured its dealers that they were paying the same price for LoJack units bought from GLM as dealers buying directly from LoJack. (FAC ¶ 71.) However, the GLM dealers did not believe GLM because they knew other dealers in the same market, sometimes on the same street, who were buying installed LoJack products directly from LoJack at much lower prices than the prices at which LoJack was selling uninstalled product to GLM for resale. GLM's customers stopped or reduced their purchases from GLM because they believed GLM was overcharging them, and lying about doing so. (FAC ¶ 74.)

GLM later learned that despite its agreement to give GLM its best price, LoJack began selling security systems to its direct dealers for $150 installed--thirty dollars less than what it was charging GLM for the uninstalled product. (FAC ¶¶ 70, 75-76.) In GLM's view, the price reduction was designed to knock GLM out of the market so that LoJack could take over GLM's customer relationships. (FAC ¶¶ 83-84.) As evidence of that strategy, GLM alleges that when a LoJack salesman expressed concern to Joe Melso, LoJack's sales director for New York and New Jersey, that LoJack's conduct might harm GLM, Melso replied: "F*ck GLM." (FAC ¶ 89.)

LoJack's alleged strategy continued with its 2008 rollout of its "Lease Pilot Program" to dealers in GLM's market. As part of this program--which was not offered to GLM--LoJack's Direct Dealers were offered a reduced price for the security systems. (FAC ¶¶ 92-93.)

In March 2009, in response to pressure and complaints from GLM, LoJack lowered its pricing to GLM to $175 uninstalled. It continued to sell its security systems to other dealers in GLM's market for $150 installed, however. (FAC ¶ 94.)

In 2010, GLM again complained about LoJack's pricing, this time directly to Melso. Melso denied that LoJack was selling its security systems to its direct customer for $150, and he told GLM that LoJack was only offering special pricing to certain large national car dealership chains. That same day, however, Melso visited a local dealer (that was not part of a national chain) and offered to sell it LoJack security systems for $150 installed. (FAC ¶¶ 98-99.)

Eventually, GLM demanded that LoJack compensate it for the price difference between what LoJack charged GLM and what it charged its direct dealers, plus the price of installation. LoJack refused, and it told GLM that it would no longer provide its security systems except on a pre-paid basis, and then only if GLM paid in full its account (which had previously been payable on 120 day terms, according to the parties' practice). (FAC ¶¶ 100-103.) Believing that LoJack had breached several aspects of the Distribution Agreement, as well as the Agency Agreement, GLM notified LoJack on October 12, 2010 that it was terminating the agreement. (FAC ¶ 103-106.)

GLM further alleges that LoJack breached its post-termination obligations under the Distribution Agreement to credit GLM for any returned SVRUs and to pay the fifty-dollar fee for any unit sold to a dealer in GLM's exclusive market for six months after termination. (FAC ΒΆ 108.) GLM also alleges that LoJack wrongfully refused to reimburse ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.