A jury has found in favor of a Southern California-based manufacturer’s representative in its breach-of-contract case against a maker of swimming pool cleaners.
After a five-day trial in Orange County (Calif.) Superior Court, jurors on Sept. 20 decided SWIM Inc. was entitled to damages resulting from manufacturer Water Tech’s failure to fulfill terms of a contract both had signed.
Water Tech, which is based in East Brunswick, N.J., plans to appeal the judgment.
“It’s a significant decision,” said Adam Glazer, the Chicago-based attorney who represented SWIM at trial. “In the end, the jury validated our contract and … showed manufacturer’s representatives that their contracts mean something.”
Water Tech had hired SWIM in October 2007 to help it secure business with Leslie’s Poolmart, as well as additional retailers in the western part of the country, according to Water Tech officials.
For two years, the manufacturer had been trying to get its products — including battery-powered, robotic, handheld and commercial pool cleaners — into Leslie’s network of approximately 640 stores, company officials said.
Leslie’s began carrying Water Tech’s products around fall 2008.
The dispute centered on whether SWIM was, in fact, responsible for the Leslie’s account, and whether it procured enough other accounts throughout the region to satisfy its end of the deal.
“They said we did not get the Leslie’s business, even though they’d been trying to get it for years and hadn’t been able to do it,” said Gene Fields, SWIM founder. “So they said we violated the contract.”
In June 2009, Water Tech sought to terminate the agreement between the two parties. It contends SWIM had no influence with Leslie’s, and did not help it procure the account.
SWIM subsequently sued the manufacturer in August 2009 over its refusal to pay full commission for nearly two years’ worth of representation, Fields said.
“Our suit claimed they breached the contract because they didn’t pay us properly,” he added. “They also didn’t provide us with the proper sales records to determine what commissions were due to us.”
SWIM further accused Water Tech of hiring two of its sales associates while they were still under contract with the firm, and of willful withholding of earned commissions.
Water Tech itself filed a countersuit alleging breach of contract by SWIM over the Leslie’s business, as well as the contention that SWIM did not sufficiently build Water Tech’s dealer base throughout the West.
It also maintained that the sales associates in question were to be terminated by SWIM, and said it agreed to hire them on the condition they left the manufacturer’s rep firm first, said Richard Cacioppo, Water Tech’s director of sales and marketing/administrative counsel.
Jurors, however, rejected the countersuit and returned verdicts in favor of the plaintiffs on the breach-of-contract segment of trial, Cacioppo said.
A judgment on the exact amount of damages to be awarded has not yet been handed down. SWIM had asked for $157,000, and jurors agreed with that figure. Circumstances of the case further allow for damages to be trebled, which means a monetary award can be tripled, if a judge so decides. Jurors also awarded interest, attorney’s fees and additional fees, which, if upheld, could result in a total of more than $1 million to SWIM, Fields said.
But Cacioppo said the matter is far from resolved. In addition to planning an appeal, he has asked the Orange County district attorney’s office to investigate a number of criminal issues related to the case, including whether a witness for the plaintiff may have committed perjury. “Some of the incongruities were incredible,” he said.
Nonetheless, Fields hopes the decision will serve as a bellwether in future cases where conflicts arise between manufacturers and their representatives.