Kehoe Component Sales Inc. v. Best Lighting Products, Inc.
933 F. Supp. 2d 974
S.D. Ohio2013Background
- Consolidated diversity cases arise from a contract dispute between Pace entities and Best Lighting.
- Supply Agreement (Jan 10, 2007) governed non-compete, tooling/ownership, and warranty terms.
- Disputes over 2007 shipments to non-approved North American customers and price increases during the term.
- Ownership and use of tooling and designs, including the big wash of tooling and alleged copying.
- Plaintiffs moved for summary judgment; Best’s counterclaims include breach of contract, warranty, misappropriation, Lanham Act, and tort claims; court addresses voluntary dismissal and evidentiary rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Interpretation of non-compete timing | Best’s shipments to non-approved customers violated the non-compete. | Non-compete targets new sales; pre-existing orders may fall outside it. | Ambiguous terms; genuine issue of fact as to intent; neither side entitled to summary judgment on non-compete. |
| Enforceability of the $500,000 penalty | Liquidated damages were reasonable estimates of harm. | Clause is a punitive penalty not a true pre-estimate of damages. | Penalty clause unenforceable as penalty; plaintiffs not entitled to it. |
| Use of tooling and assignment of designs | Pace used Best’s tooling/designs for Pace products in breach of assignment. | Ownership of tooling and timing of use are disputed; possible licenses/permissions. | Genuine disputes of fact remain; summary judgment denied on tooling/design assignment. |
| Effect of price increases/excuse for nonperformance | Pace demanded price increases; Best allegedly repudiated min. purchase. | Price changes may reflect material costs; potential duress or modification; factual disputes. | Material breach or repudiation unresolved; issues of fact preclude summary judgment on payment/minimums. |
Key Cases Cited
- Samson Sales, Inc. v. Honeywell, Inc., 12 Ohio St.3d 27 (Ohio 1984) (liquidated damages framework under Samson Sales test)
- Lake Ridge Academy v. Carney, 66 Ohio St.3d 376 (Ohio 1993) (validity of liquidated damages vs penalty under Ohio law)
- Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216 (Ohio 2003) (interpretation of contract terms; extrinsic evidence when ambiguous)
- Covington v. Lucia, 151 Ohio App.3d 409 (Ohio Ct. App. 2003) (parol evidence; ambiguity and interpretation of contract terms)
- Abercrombie & Fitch Stores, Inc. v. American Eagle Outfitters, Inc., 280 F.3d 619 (6th Cir. 2002) (trade dress/functional analysis in trademark context)