Force Partners, LLC v. KSA Lighting & Controls, Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

FORCE PARTNERS, LLC,

Plaintiff,

v. No. 19-cv-07776

Judge Franklin U. Valderrama

KSA LIGHTING & CONTROLS, INC.;

ACUITY BRANDS, INC.; JIM

WILLIAMS; and ASHLEY WILLIAMS,

Defendants.

MEMORANDUM OPINION AND ORDER

Plaintiff Force Partners, LLC (Force Partners), a sales agent in the lighting

and controls business, filed this antitrust lawsuit1 against four defendants: Force

Partners’ competitor, KSA Lighting & Controls, Inc. (KSA); KSA’s President, Jim

Williams (Jim); KSA’s then-Vice President of Distributor Solutions, Ashley Williams

(Ashley) (together with KSA and Jim, the KSA Defendants); and Acuity Brands, Inc.

(Acuity) (collectively, with the KSA Defendants, Defendants), a lighting

manufacturer, asserting violations of Sections 1 and 2 of the Sherman Act, Section 3

of the Clayton Act, the Illinois Antitrust Act (740 ILCS 10/1), the Illinois Uniform

Deceptive Trade Practices Act (815 ILCS 510/2) (the IUDTPA), and tortious

interference with prospective business relations. R. 41, FAC.2 Before the Court are

1The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331 and 28 U.S.C.

§ 1137.

2Citations to the docket are indicated by “R.” followed by the docket number or filing name,

and where necessary, a page or paragraph citation.

Defendants’ motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).

R. 45, Acuity Mot. Dismiss; R. 47, KSA Mot. Dismiss.3 For the reasons discussed

below, the Court grants in part and denies in part Defendants’ motions to dismiss.

Background

I. Lighting and Control Business

Force Partners and KSA are sales representatives who compete in the lighting

and control business. FAC ¶¶ 26–27.4 Force Partners and KSA each act as the

exclusive sales representative for particular lighting and controls manufacturers in

the greater Chicagoland area. Id. ¶ 26. KSA is an exclusive sales representative for

Acuity, the largest manufacturer of lighting products in North America. Id. ¶ 32.

Force Partners’ and KSA’s customers are distributors who purchase lighting and

control products for both commercial and industrial projects and for their own shelves

to sell to end users. Id. ¶ 2. In order to best meet the needs of customers, lighting

3The KSA Defendants and Acuity filed separate motions to dismiss, but raise some

overlapping arguments in support of dismissal. Acuity Mot. Dismiss; KSA Mot. Dismiss. To

the extent Defendants raise similar arguments, the Court addresses those arguments—and

Force Partners’ responses—together. If only one motion to dismiss raises a certain argument,

the Court so notes in the Opinion.

The Court notes that a significant portion of Acuity’s motion to dismiss and reply briefs is

contained in footnotes. Arguments in footnotes are typically waived. See Sanders v. JGWPT

Holdings, Inc., 2016 WL 4009941, at *10 (N.D. Ill. July 26, 2016). Moreover, the Court’s

Standing Order, under “Memorandum of Law Requirements,” states that “[g]enerally, the

Court will not consider substantive arguments contained in footnotes.” However, Acuity filed

its briefs before this case was reassigned to this Court, so the Court will consider the

arguments raised in footnotes in Acuity’s briefs. And yes, the Court recognizes the irony of

including this admonishment in a footnote, but given that it is merely a reminder to the

parties for future briefs filed before this Court, and is unrelated to the substance of the

Opinion, the Court finds it appropriate to note in this manner.

4The Court accepts as true all of the well-pleaded facts in the FAC and draws all reasonable

inferences in favor of Force Partners. Platt v. Brown, 872 F.3d 848, 851 (7th Cir. 2017).

product distributors carry the products of a variety of manufacturers in their

inventory and also source products on a custom basis for “spec” commercial and

industrial projects. Id. ¶ 9. While the distributors directly purchase the lighting

products and controls from the manufacturers and the manufacturers’ exclusive sales

representative, contractors and end-users are the indirect purchasers of the products.

Id. ¶ 49.

The lighting and controls sold by “full line” sales representatives like Force

Partners and KSA include, among other products, exit and emergency lights and

signs, sports lighting, and wired and wireless controls. FAC ¶ 28. Force Partners

alleges that the relevant product market in this case is lighting and controls for

buildings and private roadways. Id.

II. Geographic Market

Lighting and controls manufacturers, like Acuity, contract with exclusive sales

representatives, like Force Partners and KSA, to cover a defined geographic territory.

FAC ¶ 29. A manufacturer’s designated sales representative is the only authorized

marketer of the designated brands in the specified area to downstream channels. Id.

Sales representative agencies have agreements that define their territories. Id. ¶ 30.

The relevant geographic market in this case is comprised of sixteen Illinois counties

in Northern Illinois and surrounding Chicago, including three counties in Northwest

Indiana (the Market). Id. ¶ 30. Sales representatives may represent more than one

manufacturer’s products in the same geographic territory. Id. ¶ 31. However,

manufacturers assign exclusive territories to just one sales representative. Id. ¶ 34.

Assigning exclusive territories to sales representatives enables manufacturers

to build and maintain brand sales through relationships with local distributors,

contractors, builders, and designers in the territory. FAC ¶ 34. These exclusive

contracts mean it is not easy to obtain a manufacturer’s products other than through

its exclusive sales representative. Id. In the relevant Market, over 75% of the trade

is handled by approximately 23 distributors, which in turn comprise approximately

90% of Force Partners and KSA’s customers. Id. ¶ 37.

For example, architects, lighting designers, and engineers develop

specifications for construction projects, and interact with sales representatives who

want their products specified for an upcoming project installation. FAC ¶ 47.

Architects and lighting designers usually list up to three acceptable alternative

manufacturers for each fixture type. Id. Sometimes these specifications list only one

manufacturer’s name, which indicates a “hard spec” with no substitution; other

specifications list as many as three manufacturers’ names, which means any one of

them is pre-approved and acceptable and invites competition to supply the specified

products. Id. Finally, some specifications reference a single manufacturer but state

“or equal,” meaning another manufacturer can be asked to compete and provide a

quote so long is it meets the technical requirements of the design. Id.

Sales representatives sell downstream through a few primary channels;

namely, stock and flow distributors and project/specification distributors. FAC ¶ 35.

Stock and flow distributors carry and sell inventory of a variety of brands in a

physical showroom, counter area, or warehouse that serves the “on-demand” needs of

small to mid-sized electrical contractors and a limited number of retail customers and

homeowners. Id. Project/specification distributors supply larger building projects and

provide materials management services to coordinate or direct goods to local staging

areas at the time that builders/contractors need the supplies. Id. Some distributors

deal in both stock and flow and project/specification work. Id.

Once distributors receive specifications for projects, they are expected to seek

bids from approved manufacturers’ representatives. FAC ¶ 49. Once the bids are

presented, the distributor is expected to submit the most complete package at the

best price that can be delivered in a timely manner. Id. Sales representatives can

provide budget quotes directly to contractors, but these quotes will include extra

margin for the distributor. Id. ¶ 36. Such quotes do not and cannot cut distributors

out of the sale because the distributors offer a consolidation point along with

financing, with terms that go back to the contractors. Id.

Force Partners alleges that distributors in the lighting market and their end

users benefit in numerous ways from competition among sales representatives like

Force Partners and KSA. FAC ¶ 50. These include the ability to identify the best price

and service options for their clients among available manufacturers, who expect

distributors to offer complete solutions for their lighting and control needs. Id.

III. Market Power

Between 2017 and August 2019, KSA and Force Partners were the top two

largest sales representatives supplying lighting and control products in the Market,

representing approximately 59.5% and 23%, respectively, of specified and approved

products in the project/specification market. FAC ¶ 43. The other two sales

representatives in the Market, PG enlighten and CLW, represented approximately

10% and 7.5% of product. Id.

IV. Power Point Presentation

In August 2019, Jim and his wife, Ashley, gave a PowerPoint presentation (the

Presentation) to all or most of the 23 most important lighting distributors in the

Market. FAC ¶ 73. Force Partners alleges that the goal of the Presentation was to

stop the distributors from doing business with Force Partners through a combination

of monetary inducements and threats to withhold critical products and services. Id.

The Presentation explicitly named Force Partners as a sales representative that the

distributors should boycott. Id. ¶ 77. Force Partners alleges that Defendants falsely

accused Force Partners of bypassing distributors to make sales directly to end-users

and contractors, thereby denying sales and profits to distributors. Id.

KSA subsequently rolled out a program by which, if a distributor wanted to

continue to receive KSA’s “best prices” and “services,” it would have to agree to be a

“Partner” of KSA (the Proposal). FAC ¶ 82. Stock and flow distributors were told that

they could not carry any of Force Partners’ brands on their shelves. Id. ¶ 83. The

biggest effect of such an agreement would be to take Eaton’s Cooper Lighting

products, an Acuity competitor, off these distributors’ shelves and significantly

reduce access to the Chicago market. Id. Project/specification distributors were told

that they had to rig bids to ensure that KSA won any multiple-name specification

bids that also included Force Partner. Id. ¶ 84. Where KSA brands and Force

Partners brands were specified for bidding on a project, the distributors were given

the choice of: (a) not quoting Force Partners brands at all, or (b) providing Force

Partners’ confidential pricing information to KSA so it could “match” the price. Id.

Force Partners claims that the goal of the Proposal’s terms was to take away business

away from Force Partners and drive it out of business. Id.

If the distributors did not agree to the Proposal, they would be deemed

“Associates” and would not be able to get KSA’s brands “best prices” or attendant

services. FAC ¶ 90. This would effectively bar the distributors’ ability to competitively

quote KSA brands and they would lose business to those distributors who were

willing to go along with the scheme. Id. Distributors informed Force Partners that

they were intimidated by KSA’s demands. Id. ¶ 94.

KSA left no copies of the Presentation with the distributors and did not allow

distributors to copy or photograph the Presentation. FAC ¶ 95. Nor has KSA ever

provided the distributors with any contracts to sign. Id. KSA said it would monitor

compliance by inspecting shelves at stock and flow distributors. Id. ¶ 97.

Acuity supported the Proposal. FAC ¶ 100. In August or September 2019, Jim

reported at a KSA sales meeting that Acuity’s then-CEO had reviewed the Proposal

presented in the Presentation, approved it, and suggested it could be used in other

markets. Id. At the request of a distributor, Acuity’s senior vice president of sales

attended the meeting with the distributor, during which he made it clear the Proposal

had Acuity’s backing. Id. ¶ 101.

According to Force Partners, the Proposal is not in the interests of distributors

or their customers. FAC ¶ 88. The specification community in the Market tends to be

brand-focused, and architects and designers often have preferred product lines

specified in their plans. Id. Chicago is known as a “line item” town where contractors

submit requests for quotes to distributors seeking between one-to-three “approved”

brand-specific quotes for ten-to-twenty different product categories as needed. Id.

After a distributor has obtained quotes from each of the specified brands via the

manufacturer’s sales representatives, the distributor can choose between the brand

and pricing options to provide the best value to the end-user or contractor. Id.

After KSA initiated the Proposal, Force Partners saw over a 20% decline in its

sales. FAC ¶ 110. As of the filing of the First Amended Complaint (FAC), Force

Partners suffered significant lost revenues. Id. ¶ 111.

Force Partners filed suit against the KSA Defendants and Acuity. In its FAC,

Force Partners asserts an illegal group boycott in violation of Section 1 of the

Sherman Act (Count I); horizontal conspiracy in violation of Section 1 of the Sherman

Act (Count II); attempted monopolization in violation of Section 2 of the Sherman Act

(Count III); exclusive dealing agreements in violation of Section 3 of the Clayton Act

(Count IV); violation of the Illinois Antitrust Act (Count V); violation of the IUDTPA

(Count VI); and a claim for tortious interference with prospective business relations

(Count VII).5 See FAC. Defendants now move to dismiss the FAC pursuant to Rule

12(b)(6).

5Force Partners mislabeled Count VII as Count VI.

Standard of Review

A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the

complaint. Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811,

820 (7th Cir. 2009). Under Rule 8(a)(2), a complaint must include only “a short and

plain statement of the claim showing that the pleader is entitled to relief.” Fed. R.

Civ. P. 8(a)(2). To survive a motion to dismiss, a complaint need only contain factual

allegations, accepted as true, sufficient to “state a claim to relief that is plausible on

its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly,

550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads

factual content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id. The allegations “must be enough

to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. The

allegations that are entitled to the assumption of truth are those that are factual,

rather than mere legal conclusions. Iqbal, 556 U.S. at 678–79.

Analysis

I. Section 1 of the Sherman Act (Counts I and II)

In Counts I and II, respectively, Force Partners asserts that Defendants forced

a group boycott and engaged in a horizontal conspiracy that constituted an

unreasonable restraint of trade in violation of Section 1 of the Sherman Act, 15 U.S.C

§ 1. FAC ¶ 122.

Section 1 of the Sherman Act provides that “[e]very contract, combination in

the form of trust or otherwise, or conspiracy, in restraint of trade or commerce . . . is

declared to be illegal.” 15 U.S.C. § 1. Section 1 does not prohibit reasonable restraints

of trade, but only outlaws unreasonable restraints of trade. State Oil Co. v. Khan, 522

U.S. 3, 10 (1977). To state a Section 1 claim, a plaintiff must allege: (1) a combination

or some form of concerted action between at least two legally distinct entities that (2)

unreasonably restrains trade in the relevant market, and (3) an accompanying injury.

See In re Delta Dental Antitrust Litig., 484 F. Supp. 3d 627, 632–33, 643 (N.D. Ill.

2020) (citing Denny’s Marina, Inc. v. Renfro Prods., Inc., 8 F.3d 1217, 1220 (7th Cir.

1993)); Am. Needle, Inc. v. Nat’l Football League, 560 U.S. 183, 191 (2010).

Courts engage in three types of analyses to determine whether the alleged

conduct has anticompetitive effects under Section 1: the per se analysis, the rule of

reason, and the quick-look approach. In re Delta Dental Antitrust Litig., 484 F. Supp.

3d at 633.

A. Per Se Violations

The Supreme Court has explained that restraints on trade that are “unlawful

per se” are those that “have such predictable and pernicious anticompetitive effect,

and such limited potential for procompetitive benefit,” that it is obvious they are an

unreasonable restraint of trade. Khan, 522 U.S. at 10. The per se rule applies to

restraints “that would always or almost always tend to restrict competition and

decrease output.” Leegin Creative Leather Prods., Inc., v. PSKS, Inc., 551 U.S. 877,

886 (2007) (internal citation omitted). The per se rule is reserved for restraints with

which courts have had considerable experience, such that they can predict with

confidence that the restraint would be invalidated in all or almost all instances under

the rule of reason. Id. at 886–87.

Where the alleged “anticompetitive conduct does not amount to a per se

violation of the Sherman Act, courts assess the defendants’ conduct under the Rule

of Reason analysis.” Neptun Light, Inc. v. City of Chi., 2018 WL 1794769, at *3 (N.D.

Ill. Apr. 16, 2018) (internal citations omitted).

B. Rule of Reason

Under the rule of reason, the factfinder “must decide whether the questioned

practice imposes an unreasonable restraint on competition, taking into account a

variety of factors, including specific information about the relevant business, its

condition before and after the restraint was imposed, and the restraint’s history,

nature, and effect.” Khan, 522 U.S. at 10 (internal citations omitted). Generally, this

requires a plaintiff to show the “defendant has market power—that is, the ability to

raise prices significantly without going out of business—without which the defendant

could not cause anticompetitive effects on market pricing.”6 Agnew v. Nat’l Collegiate

Athletic Ass’n, 683 F.3d 328, 335 (7th Cir. 2012) (internal citation omitted).

6The third test courts sometimes apply is the “quick look” analysis. As the Seventh Circuit

has explained, “the quick-look approach can be used when ‘an observer with even a

rudimentary understanding of economics could conclude that the arrangements in question

would have an anticompetitive effect on customers and markets,’ but there are nonetheless

reasons to examine the potential procompetitive justifications.” Agnew v. Nat’l Collegiate

Athletic Ass’n, 683 F.3d 328, 336 (7th Cir. 2012). Under the quick-look analysis, if the

defendant lacks legitimate justification for facially anticompetitive behavior, then the court

condemns the practice without ado without resort to analysis of market power. Id. Force

Partners does not argue that the Court apply the quick-look analysis here, so the Court does

not address it substantively. See FAC.

C. Horizontal and Vertical Conspiracies

Agreements within the scope of Section I of the Sherman Act may be

“horizontal” which are “between competitors at the same level of market structure,”

or “vertical” which are “combinations of persons at different levels of the market

structure, e.g., manufactures and distributors.” Unites States v. Topco Assocs., Inc.,

405 U.S. 596, 608 (1972). “Horizontal agreements among competitors, including

group boycotts, [are] illegal per se.” Toys “R” Us, Inc. v. F.T.C., 221 F.3d 928, 936 (7th

Cir. 2000). On the other hand, most vertical agreements are analyzed under the rule

of reason. See Hennessy Indus. Inc. v. FMC Corp., 779 F.2d 402, 404 (7th Cir. 1985)

(“Only those vertical arrangements that accompany or implement a price fixing

scheme are considered per se violations; other vertical arrangements must be tested

under the Rule of Reason.”) (internal citation omitted); see also Republic Tobacco Co.

v. N. Atl. Trading Co., 381 F.3d 717, 736 (7th Cir. 2004) (“Unlike horizontal

agreements between competitors, vertical exclusive distributorships . . . are

presumptively legal.”).

A hybrid of a vertical and horizontal conspiracy is known as a “hub-and-spoke

conspiracy,” in which the “hub” stands in a vertical relationship with the “spokes,”

which are in a horizontal relationship with each other. See In re Sulfuric Acid

Antitrust Litig., 743 F. Supp. 2d 827, 860 (N.D. Ill. 2010). More specifically, a “hub-

and-spokes conspiracy “requires a plaintiff to allege both that there was a central

coordinating party (the ‘hub’), and that each participant (along the ‘rim’) recognized

that it was part of the greater arrangement, and it coordinated or otherwise carried

out its duties as part of the broader group.” Marion Healthcare, LLC v. Becton

Dickinson & Co., 952 F.3d 832 (7th Cir. 2020). As the Seventh Circuit has explained,

“a hub-and-spokes conspiracy requires a ‘rim’ connecting the various horizontal

agreements.” Id.

D. Theories of Counts I and II and Bases of

Defendants’ Motions to Dismiss

Defendants argue that Force Partners fails to state an unreasonable restraint

on trade in violation of Section 1 of the Sherman Act in Counts I and II. R. 46, Acuity

Memo. Dismiss at 4–12; R. 48, KSA Memo. Dismiss at 6–15. It appears, based on

their motions to dismiss, that Defendants interpret the theories underlying Counts I

and II differently. On the one hand, the KSA Defendants distinguish between the two

Counts based primarily on the parties to the alleged conspiracy—Count I alleges a

conspiracy among all Defendants, whereas Count II alleges a conspiracy between

Defendants and the distributors. See KSA Memo. Dismiss at 8–13. On the other hand,

Acuity argues that all three antitrust claims (Counts I–III) should be dismissed

because the “exclusivity” agreements between Defendants and distributors do not

harm competition; Acuity does not challenge any allegations of a conspiracy among

Defendants only. Acuity Memo. Dismiss at 4–12.

The Court, having closely examined the FAC’s allegations and Force Partners’

responses, is somewhat perplexed by the theories underlying Counts I and II, which

seem to be two sides of the same coin. In its Response to the KSA Defendants’ motion

to dismiss, Force Partners clarifies that “Count I, alleging an illegal boycott under

the Sherman Act, and Count II, alleging a horizontal hub-and-spoke conspiracy under

the Act, 15 U.S.C. § 1, are appropriately pleaded and state causes of action against

the KSA Defendants under the same analytical and factual framework.” R. 57, Pl.

KSA Resp. at 10. This explanation tracks the titles of Count I (Unreasonable

Restraint of Trade, Illegal Group Boycott – Violation of § 1 of the Sherman Act) and

Count II (Unreasonable Restraint of Trade, Horizontal Conspiracy – Violation of § 1

of the Sherman Act). FAC at 26–27. But Force Partners also states in its Response

that “Count I alleges that the Defendants jointly coerced distributors into entering

into a group boycott as part of a hub and spoke conspiracy” and that “Count II alleges

[] a hub and spoke conspiracy.” Pl. KSA Resp. at 10 (emphasis added). And the

horizontal hub-and-spoke conspiracy alleged in Count II is supported by allegations

relating to Defendants’ conspiracy to coerce distributors to boycott Force Partners.

FAC ¶¶ 128–30. Based on the above, the Court finds Counts I and II to be legally

indistinguishable. For purposes of this Opinion, the Court considers Count I to allege

a vertical conspiracy based on an agreement among the Defendants, as well as

between Defendants and the distributors, but not to allege a horizontal hub-and-

spoke conspiracy. It considers Count II to allege a horizontal hub-and-spoke

conspiracy based on the conspiracy underlying Count I.

Force Partners alleges that both counts are per se violations of the antitrust

laws, or alternatively violate the rule of reason. FAC ¶¶ 122–23, 131–32. As Force

Partners concedes, because Defendants are a manufacturer and sales representative,

and the boycott of Force Partners was effectuated by distributors, the FAC pleads the

horizontal nature of the conspiracy via the hub-and-spoke model. Pl. KSA Resp. at

11. As stated above, the per se rule applies to horizontal group boycotts, but generally

the rule of reason applies to vertical group boycotts with no horizontal component.

See MM Steel, L.P. v. JSW Steel (USA) Inc., 806 F.3d 835, 849–50 (5th Cir. 2015)

(collecting cases); see also Republic Tobacco, 381 F.3d at 736 (“[V]ertical exclusive

distributorships . . . are presumptively legal.”). The Court therefore applies the rule

of reason to Count I (because without the hub-and-spoke conspiracy hook, it can only

be a vertical conspiracy) and the per se rule to Count II.

Having parsed out the claims at issue, the Court turns to Defendants’

arguments in support of dismissal of Counts I and II. The KSA Defendants argue

that: (1) Count I should be dismissed because Defendants are incapable of conspiring

with each other; (2) Count I also should be dismissed because Force Partners does not

allege an actionable anticompetitive agreement between the KSA Defendants and

Acuity; (3) Count II should be dismissed because Force Partners does not allege an

anticompetitive agreement between Defendants and the distributors; and (4) Counts

I and II should be dismissed because Force Partners fails to plead that the alleged

agreements caused a restraint of trade within the relevant product and geographic

markets. KSA Memo. Dismiss at 6–15. Acuity does not raise the arguments relating

to Defendants’ ability to conspire with each other, nor does it analyze whether Force

Partners alleges an actionable anticompetitive agreement between the KSA

Defendants and Acuity. See Acuity Memo. Dismiss. Instead, Acuity focuses on the

agreement between Defendants and the distributors, arguing that Counts I and II

fail because: (1) Force Partners fails to rebut the presumption that exclusivity

agreements are a legitimate form of competition; (2) the agreements are not exclusive;

(3) the KSA Defendants’ Proposal does not harm the competitive process; and (4)

because the agreements are terminable at will, they do not prevent Force Partners

from offering distributors a better deal. Id. at 4–12. The Court addresses each

argument in turn, examining the two motions’ arguments together wherever possible.

E. Defendants’ Ability to Conspire with Each Other

(Count I, KSA Defendants)

The KSA Defendants contend that Count I fails because the alleged co-

conspirators, Jim, Ashley, KSA, and Acuity, are closely related individuals and

entities that cannot legally conspire with each other. KSA Memo. Dismiss at 7 (citing

Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752, 769 (1984)). Force Partners

concedes that Jim and Ashley—the President/CEO and then-Vice President of

Distribution of KSA, respectively—could not conspire with KSA, as it is “their own

company.” R. 57, Pl. KSA Resp. at 17; see Copperweld, 467 U.S. at 769 (a corporation

cannot conspire with its own officers and employees). However, Force Partners

maintains that the KSA Defendants together could—and did—conspire with Acuity.

Pl. KSA Resp. at 15–18.

The KSA Defendants argue that they could not have conspired with Acuity

because KSA is Acuity’s closely related sales representative, and Defendants share

the same economic interest: selling as many of Acuity’s products as possible. KSA

Memo. Dismiss at 7–8. In support, the KSA Defendants cite to a number of out-of-

Circuit decisions. Id. (citing F.B. Leopold Co. v. Roberts Filter Mfg. Co., 882 F. Supp.

433, 446–47 (W.D. Pa. 1995), aff’d, 119 F.3d 15 (Fed. Cir. 1997); Pink Supply Corp. v.

Hiebert, 788 F.2d 1313, 1316–17 (8th Cir. 1986); Card v. Nat’l Life Ins. Co., 603 F.2d

828, 834 (10th Cir. 1979); Boyce v. Penn Fishing Tackle Mfg., 1997 U.S. Dist. LEXIS

23293, at *14 (D.N.J. Sep. 8, 1997); The Sample Inc. v. Pendleton Woolen Mills, Inc.,

704 F. Supp. 498, 502 (S.D.N.Y. 1989)).

The KSA Defendants are correct that these cases, relying on Copperweld, stand

for the proposition that separate legal entities and individuals cannot conspire with

each other for purposes of § 1 of the Sherman Act where they are “so closely

intertwined in economic interest and purpose with [each other] as to amount to a

unified economic consciousness incapable of conspiring with itself.” Pink Supply, 788

F.2d at 1317. However, the Court agrees with Force Partners that the cases cited by

the KSA Defendants are distinguishable and that, based on the allegations in the

FAC, the Court cannot, at the motion to dismiss stage, find that that KSA and Acuity

are so closely intertwined that they amount to a unified economic consciousness. Pl.

KSA Resp. at 15–17. First, Force Partners accurately points out that each case cited

by the KSA Defendants in support of dismissal was decided at the summary judgment

stage, not at the motion to dismiss stage. Id. at 15. Next, Force Partners is also correct

that courts generally engage in a fact-intensive analysis about whether the

manufacturers and sales representatives were functionally distinguishable. Id. at

15–16 (citing Pink Supply, 788 F.2d at 1316–17 (discovery showed that the defendant

sales representatives’ role was only to generate sales for the defendant manufacturer

and they had no discretion over prices or terms or orders, and “[t]he representatives

therefore did not constitute an independent step in the . . . distribution process”)); see

also The Sample, 704 F. Supp. at 502 (same). As Force Partners argues in its

Response, here, the FAC alleges that sales representatives like KSA “can provide

budget quotes directly to contractors,” salespeople for representatives “focus on

calling on the contractors to influence which manufacturers they will select for

projects, and rely in such efforts on the sale representative’s value-add services and

their relationships with the contractors,” and lighting sales representatives “have

been described as ‘a separate breed of rep given their influence over how

specifications are written in many geographic markets.” Pl. KSA Resp. at 16–17

(citing FAC ¶¶ 36, 45). Additionally, unlike the cases cited by the KSA Defendants,

the alleged conspiracy in this case originated with the sales representative (KSA),

rather than with the manufacturer (Acuity). Id. at 17 (citing FAC ¶¶ 73–75, 100).

Given the above, as well as the allegation that KSA represents more than one

manufacturer, the Court cannot find, at the motion to dismiss stage, that the KSA

Defendants and Acuity’s actions uniformly served the same economic interest. The

Court finds that the FAC adequately alleges a Section 1 conspiracy among the KSA

Defendants and Acuity.

In their Reply,7 the KSA Defendants argue that Jim and Ashley should be

dismissed as defendants because Force Partners does not identify any party that they

conspired with, apart from KSA, which Force Partners concedes cannot form the basis

7Although the Court would usually decline to consider an argument or case asserted for the

first time in a reply, see Narducci v. Moore, 572 F.3d 313, 323 (7th Cir. 2009), the Court

touches on it briefly because Force Partners argued in its Response that Jim and Ashley are

individually liable because they conspired with Acuity, based on their relationship with

Acuity’s then-CEO. Resp. at 17 (citing FAC ¶ 74).

of a Section 1 conspiracy. R. 59, KSA Reply at 4. The Court agrees with Force Partners

that it has adequately alleged that Jim and Ashley are individually liable under

Section 1: the FAC alleges that Jim and Ashley were personally involved in the

alleged scheme, not only through their executive positions at KSA, but also by

personally making the Presentation in person to each distributor (and that an Acuity

representative attended at least one meeting at which the Presentation was given).

See FAC ¶¶ 73–74, 87, 101, 106); see Omni Healthcare, Inc. v. Health First, Inc., 2015

WL 275806, at *15 (M.D. Fla. Jan. 22, 2015) (the plaintiffs adequately alleged

individual defendants’ “active participation in the anticompetitive scheme, not

merely by using their executive positions . . . to authorize and approve the scheme,

but also by personally attempting to coerce physicians and practice groups” to “join

in a co-conspiring practice. . . . Those allegations suffice for individual antitrust

liability”) (citing United States v. Wise, 370 U.S. 405, 416 (1962)). Accordingly, the

Court finds that Force Partners has sufficiently alleged that each defendant is a co-

conspirator for purposes of Count I.

F. Actionable Agreement Between Defendants (Count I, KSA Defendants)

The KSA Defendants next argue that Count I should be dismissed because it

does not allege an actionable agreement between the KSA Defendants and Acuity.

The KSA Defendants raise three arguments: (1) Force Partners pleads no facts

plausibly suggesting that the KSA Defendants and Acuity entered into any

agreement for an unlawful purpose; (2) the allegation that KSA would “deny access”

to its brands to distributors “unless those distributors terminated their relationship”

with Force Partners is false; and (3) KSA has the right to unilaterally offer an

authorized distributor program and to stop dealing with any distributors that do not

wish to join the program. KSA Memo. Dismiss at 9–10.

Starting with the KSA Defendants’ second argument, the Court agrees with

Force Partners that it is improper, at the motion to dismiss stage, for the KSA

Defendants to seek dismissal on the basis that Force Partners’ allegation that KSA

would deny access to its brands is “false.” Pl. KSA Resp. at 21 (citing KSA Memo.

Dismiss at 10). As noted above, when evaluating a motion to dismiss, the Court must

accept the allegations in the complaint as true. Iqbal, 556 U.S. at 678.

Turning to the KSA Defendants’ first argument, the Court again agrees with

Force Partners. Force Partners alleges an agreement8 between Defendants—that

they jointly created the Presentation and the related scheme that was presented to

the distributors in August of 2019, which sought to cut off access to a market

necessary for Force Partners to be able to do business. Pl. KSA Resp. at 11 (citing

FAC ¶¶ 75, 77, 82–101). Put another way, Force Partners claims that Defendants’

Proposal is unlawful because its purpose was to drive Force Partners, a KSA

competitor, out of business by coercing the distributors to boycott Force Partners. Id.

The KSA Defendants argue that Force Partners’ allegations simply demonstrate that

the KSA Defendants were trying to compete for, and win, Force Partners’ customers

8The KSA Defendants do not argue that the FAC fails to allege that an agreement existed

between Defendants; rather, they contend that the purpose of any such agreement was not

unlawful. KSA Memo. Dismiss at 9–10. Nonetheless, Force Partners is correct that an

agreement need not be explicit to support a Section 1 claim. Pl. KSA Resp. at 18 (citing,

among other cases, Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 764 (1984)).

(distributors), by offering an authorized distributor program to the distributors. KSA

Memo. Dismiss at 9–10. Rather than constituting anticompetitive behavior, the KSA

Defendants contend that such a program actually enhances competition by cutting

prices. Id. (citing Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039, 1061 (8th

Cir. 2000)); KSA Reply at 2 (citing Speakers of Sport, Inc. v. ProServ, Inc., 178 F.3d

862, 865 (7th Cir. 1999)).

True, the Sherman Act does not prohibit, and in fact encourages, competition

that results in “productive efficiencies, higher output, and lower prices.” Viamedia,

Inc. v. Comcast Corp., 218 F. Supp. 3d 674, 689 (N.D. Ill. 2016), rev’d on other grounds,

951 F.3d 429 (7th Cir. 2020). In responding to the KSA Defendants’ third argument,

Force Partners contends that the KSA Defendants again ignore the allegations in the

FAC, which show that Defendants intended to—and indeed did—coerce distributors

to join the KSA Defendants’ program, thereby shutting Force Partners out of the

relevant geographic and product markets, which has the ultimate effect of increasing

prices. Pl. KSA Resp. at 19–20 (citing FAC ¶¶ 94, 98–101, 107–109). Reading the

allegations in the light most favorable to Force Partners, as it must, the Court finds

that Force Partners has adequately alleged an actionable agreement among

Defendants that suggests anticompetitive behavior harming Force Partners and the

market.

G. Actionable Agreements Between Defendants and Distributors

(Count I, KSA Defendants)

For the reasons discussed above, the Court reads Count I as alleging a

conspiracy not only among Defendants but also between Defendants and the

distributors. See supra Section I.C. Therefore, the Court addresses KSA Defendants’

arguments as to the agreement between Defendants and the distributors as

pertaining to Count I rather than Count II. The KSA Defendants argue this

agreement is not actionable because: (1) Force Partners cannot allege that the

incentive program from KSA has been implemented and the FAC alleges that no

written contract has been offered to any distributor; and (2) KSA’s unilateral

invitation to join its authorized distributor program is neither an agreement nor an

antitrust violation. KSA Memo. Dismiss at 11–12.9

The KSA Defendants first argue that the FAC alleges only in a conclusory

manner that agreements existed between KSA and the distributors, which the KSA

Defendants contest is insufficient. KSA Memo. Dismiss at 11 (citing Twombly, 550

U.S. at 556). In response, Force Partners points to multiple paragraphs of the FAC

alleging that the program has been implemented among the distributors, as well as

the general timeline. Pl. KSA Resp. at 21–22 (citing FAC ¶¶ 12, 37–40, 46–47, 49, 73,

82–84, 97–99, 106–112, 129, 145, 147, 152). Although the KSA Defendants retort in

their Reply that these allegations, at most, “describe KSA unilaterally attempting to

persuade distributors to participate in its incentive program,” the Court disagrees.

KSA Reply at 7. In particular, Force Partners’ allegation that Jim told one distributor

that it was the “only one in town who had not agreed to KSA’s scheme” is sufficient

at the motion to dismiss stage to plausibly plead the existence of an agreement

9Acuity’s arguments about the validity of the alleged agreement all relate to its exclusivity,

which the Court addresses below, see supra Section II, as such arguments more properly align

with Force Partners’ Sherman Act Section 2 claim.

between Defendants and the distributors. FAC ¶ 107; In re Text Messaging Antitrust

Litig., 630 F.3d 622, 629 (7th Cir. 2010) (finding that circumstantial evidence of an

agreement can support an antitrust conspiracy and holding that at the motion to

dismiss stage, the test whether to dismiss turns on the complaint’s “plausibility”).

H. Restraint on Competition in the Market – Rule of Reason

(Count I, All Defendants)

Defendants contend that Force Partners fails to plausibly allege that the

agreements had an “anticompetitive effect on a given market within a geographic

area,” as required under the rule of reason (which, as discussed above, the Court is

applying to Count I). KSA Memo. Dismiss at 13–14 (quoting Agnew, 683 F.3d at 335);

R. 58, Acuity Reply at 4–5.10 Specifically, the KSA Defendants argue that Force

Partners’ Section 1 claim fails under the rule of reason because Force Partners does

not sufficiently allege a legally sufficient antitrust market, nor does it plead that the

distributor program forecloses competition. KSA Memo. Dismiss at 14. The Court

finds that, at this stage, the Force Partners has done enough in the FAC.

As an initial matter, for the reasons discussed below as to Force Partners’

Section 2 claim, the Court finds that Force Partners has adequately alleged a

sufficient relevant antitrust market. See infra Section II.

10As Force Partners notes in response to Acuity’s motion to dismiss, Acuity did not dispute

that the market at issue plausibly was alleged, nor did it challenge the claims of market

dominance and market power. Pl. Acuity Resp. at 4 n.1. A party waives an argument when

it raises it for the first time on reply. See Narducci, 572 F.3d at 323. However, because the

KSA Defendants raised these arguments in their opening motion to dismiss, the Court

substantively addresses them.

The Court therefore turns to the anticompetitive effect component. Force

Partners contends that it alleges that the result of Defendants’ program was to

foreclose access to the most important distributors in the market. R. 56, Pl. Acuity

Resp. at 11; see also FAC ¶ 73. That, submits Force Partners, is sufficient to establish

an anticompetitive effect, as no rule requires the foreclosure to be complete in order

to constitute an antitrust injury. Id. 10–11 (citing, among other cases, Roland, 749

F.2d at 392 (under Clayton Act, a plaintiff need only show “that the agreement was

likely to have a substantial though not necessarily immediate anticompetitive

effect”); United States v. Dentsply Int’l, Inc., 399 F.3d 181, 191 (3d Cir. 2005)

(ensuring that “key dealers” offer only the defendant’s products has a “significant”

effect in preserving defendant’s Section 2 monopoly, and serves as a “solid pillar of

harm to competition”); ZF Meritor, LLC v. Eaton Corp., 696 F.3d 254, 271–72, 285

(3d Cir. 2012) (coercive behavior by a dominant firm can support antitrust claim,

especially where the firm “may use its power to break the competitive mechanism

and deprive customers of the ability to make a meaningful choice”); Gulf States Reorg.

Grp., Inc. v. Nucor Corp., 466 F. 3d 961, 967–68 (11th Cir. 2006) (antitrust injury

sufficiently alleged where exclusion of one competitor from the relevant market is

inseparable from the alleged harm to competition)). Force Partners argues that it

cannot compete for access in response to the program initiated by Defendants because

it does not have the dominant market share that KSA and Acuity have. Id. at 11.

Force Partners has adequately alleged that KSA used its dominant market share to

force distributors to boycott Force Partners and its brands, thereby depriving

distributors and their customers from a meaningful choice in the market. See FAC

¶¶ 5, 9. The issue before the Court on a Rule 12(b)(6) motion is whether the complaint

contains factual allegations, accepted as true, which state a claim to relief that is

plausible on its face. The role of the Court is not to determine whether the evidence

supports the plaintiff’s claim. Here, in viewing the allegations of the FAC in the light

most favorable to Force Partners, as it must, the Court finds that it has plausibly

alleged that Defendants’ program harmed the competitive process.

Acuity also argues that Force Partners’ claim fails against it specifically,

because Force Partners, a sales representative, is not a competitor of Acuity, a

manufacturer. KSA Reply at 6. The Court notes that Acuity did not raise this

argument until its reply. A party waives an argument when it raises it for the first

time on reply. See Narducci v. Moore, 572 F.3d 313, 323 (7th Cir. 2009). Nonetheless,

the Court finds that, at this stage, Force Partners has adequately alleged that

Defendants’ program forced distributors to boycott KSA’s primary competitor and the

exclusive sales representative of Eaton/Cooper, “a very significant competitor to

Acuity” off of the shelves and out of competition for specifications. FAC ¶ 83.

Accordingly, for the purposes of the rule of reason analysis, the Court finds that Force

Partners has plausible alleged an anticompetitive effect as a result of Defendants’

program.

Based on the Court’s findings regarding the various components of Force

Partners’ Section 1 claim under Count I, the Court denies Defendant’s motion with

respect to Count I.

I. Hub-and-Spoke Agreement (Count II, All Defendants)

In Count II, Force Partners alleges that Defendants engaged in a conspiracy

to require distributors of electrical lighting equipment to deal exclusively with

Defendants, ultimately resulting in higher prices and reduced output. FAC ¶ 128.

Force Partners claims that this conspiracy is horizontal in nature, with Defendants

acting as the hub of the scheme and the distributors who were coerced into the boycott

as the spokes. Id. ¶ 130. As stated above, a hub-and-spoke conspiracy requires not

only vertical agreements between the hub (here, Defendants) and each spoke (here,

the distributors), but also a horizontal agreement among the various spokes with each

other. Marion Healthcare, 952 F.3d at 842.

Defendants, in both motions to dismiss, seek dismissal of Count II on the basis

that Force Partners does not plead a horizontal agreement, as it fails to allege any

agreement between the spokes—the distributors—but rather only alleges vertical

exclusive distributorships (which are addressed under the rule of reason, as discussed

above). KSA Memo. Dismiss at 13;11 Acuity Memo. Dismiss at 10–12. Defendants

maintain that Marion Healthcare controls because in that case, the Seventh Circuit

dismissed a complaint that failed, like the FAC here, to allege that the distributors

agreed to the manufacturer’s scheme to raise prices on the condition that their

competitors would do the same. Acuity Memo. Dismiss at 11–12 (citing Marion

Healthcare, 952 F.3d at 841–42).

11The KSA Defendants’ motion to dismiss raises this argument in just one sentence,

expanding upon the argument in reply. KSA Reply at 6–7.

Not surprisingly, Force Partners disagrees and insists that Count II pleads a

horizontal agreement. Pl. KSA Resp. at 23–27; Pl. Acuity Resp. at 13–17. Specifically,

Force Partners counters that it pleads sufficient facts to support an inference that

the distributors conspired among each other. Pl. Acuity Resp. at 16. Force Partners

contends that Marion Healthcare is distinguishable, and the Court agrees. In Marion

Healthcare, the plaintiff alleged no facts showing that the distributors played a role

in the anti-competitive pricing or “knowingly engaged in parallel anticompetitive

conduct;” rather, the plaintiff only alleged that the distributors enforced the terms of

the contracts negotiated between the manufacturer and another third party. 952 F.3d

at 843. That is not the case here with respect to the FAC: as discussed above, Force

Partners alleges that the distributors knowingly entered into agreements with the

Defendants to boycott Force Partners and its brands. See supra Section I.G (citing

FAC ¶¶ 12, 37–40, 46–47, 49, 73, 82–84, 97–99, 106–112, 129, 145, 147, 152)).

Force Partners leans heavily on Toys “R” Us, 221 F.3d 928. Pl. Acuity Rep. at

13–17. In that case Toys “R” Us had sent letters to major toy manufacturers,

indicating that it would not carry the manufacturers’ toys unless the manufacturers

agreed to withhold certain highly desirable toys from warehouse clubs. 221 F.3d at

935. The FTC found that it would not have made economic sense for any individual

manufacturer to capitulate to these demands unless it knew that its competitors

would also play along. Id. at 935–36. That finding, concluded the Seventh Circuit,

was supported by substantial evidence. Id. at 936. It was thus permissible to infer

that even if the manufacturers did not expressly agree to join a conspiracy with one

another, they had functionally joined the conspiracy because they were assured that

their competitors would all follow the same anticompetitive strategy. Id.

Defendants reply that Toys “R” Us, is inapplicable, as that “case involved

‘vertical agreements between Toys “R” Us, and the individual manufacturers,’ all of

which ‘promised to restrict distribution of [their] products to low priced warehoused

club stores,’ but only ‘on the condition that other manufacturers would do the same.’”

KSA Reply at 6 (quoting Toys “R” Us, 221 F.3d at 932); Acuity Reply at 11. They argue

that the FAC does not support an inference that the distributors agreed amongst

themselves to join the program or that the distributors joined only on the condition

that all other distributors would do the same. Acuity Reply at 12–14; KSA Reply at

7.

After briefing had concluded, Force Partners submitted additional authority in

support of its position that Force Partners adequately alleged a hub-and-spoke

conspiracy. R. 65, Mot. Suppl. Auth. (citing Preston Hollow Cap. LLC v. Nuveen LLC,

2021 WL 3542255, at *14 (S.D.N.Y. Aug. 10, 2021)). Defendants jointly responded to

the motion, arguing that Preston Hollow is distinguishable. R. 67, Resp. Suppl. Auth.

Although the facts of Preston Hollow are similar to those alleged by Force Partners,

the Court agrees with Defendants that there are key differences.

In Preston Hollow, the plaintiff, a municipal bond buyer, alleged its competitor

had organized a hub-and-spoke conspiracy to boycott the plaintiff. 2021 WL 3542255,

at *15. The plaintiff alleged that its competitor forced various underwriter-broker-

dealers (UBDs) to have the UBDs agree not to make future sales to the plaintiff. Id.

The competitor told the UBDs that it would stop doing business with them unless

they agreed to boycott the plaintiff. Id. The court found that it was “central to [the

competitor’s] efforts to orchestrate a boycott of [plaintiff] to let UBDs [] know that

UBDs were being offered the same choice of either doing business with [plaintiff] or

with [the competitor].” Id. The complaint contained numerous allegations of the

competitor’s statements to UBDs about its agreements with other UBDs. Id. (the

competitor told one UBD that its actions were “uniform across the street”; it told

another UBD that it was “going to every single bank and [UBD] today to examine

what is the extent [with plaintiff], and the policy going forward is that if . . . [they

were] actively doing business with [plaintiff, the competitor] will not be doing

business with [them]”; the competitor told a bank that it had “firm commitments from

four UBDs”; and two UBDs “specifically asked for and received assurances from [the

competitor] that all [UBDs] were complying.”).

Force Partners argues that it has alleged sufficient facts from which the Court

can infer that the distributors knew that other distributors entered into agreements

with KSA and that distributors would not have entered into such agreements without

assurances that other distributors agreed as well. Pl. KSA Resp. at 25; Pl. Acuity

Resp. at 16. Specifically, Defendants made the Presentation to the distributors in the

same month, August 2019. Pl. Acuity Resp. at 13 (citing FAC ¶¶ 5, 9, 70, 72–74, 77).

Moreover, Force Partners alleges that Jim told at least one distributor that it was the

“only one in town” who had not agreed to go along with the scheme. Pl. Acuity Resp.

at 14 (citing FAC ¶¶ 87, 103). Although these allegations show that the distributors

had a more active role in the scheme than the distributors in Marion Healthcare, the

Court finds that the FAC does not support the inference beyond a speculative level

that the distributors knew that the other distributors agreed to the Proposal, much

less that the distributors agreed to the Proposal only on the condition that other

distributors were doing so.

Although the Court agrees with Force Partners that entering into the

agreement with KSA was not in the distributors’ best interest, as having access to a

range of brands is important in the market, and the distributors told Force Partners

that their customers would be “angry if they could not get Force Partners brands,” Pl.

Acuity Resp. at 13 (citing FAC ¶¶ 47, 85, 98, 118), that is not enough. See Toys “R”

Us, 221 F.3d at 936 (entering into the agreement was not in the manufacturers’ best

interest and evidence presented that the manufacturers entered into the agreement

on the condition that other manufacturers also agreed); Preston Hollow, 2021 WL

3542255, at *15 (finding that the horizontal conspiracy was adequately alleged

because allegations supported reasonable inferences that “it would be more

advantageous for an individual UBD to join the conspiracy only if other UBDs agreed

to do so” and the defendant-competitor “recognized it was necessary to have a large

percentage of the leading UBDs agree to the boycott, but also for the UBDs to know

that their competitors had agreed to it”) (emphasis added).

The Court finds that Force Partners has not sufficiently alleged a horizontal

agreement in the context of Section 1 of the Sherman Act. Therefore, Count II is

dismissed. Force Partners did not request that it be allowed to amend its complaint

if any claims are dismissed; as such, the dismissal is with prejudice. See Haywood v.

Massage Envy Franchising, LLC, 887 F.3d 329, 335 (7th Cir. 2018) (“Nothing in Rule

15, nor in any of our cases, suggests that a district court must give leave to amend a

complaint where a party does not request it or suggest to the court the ways in which

it might cure the defects. To the contrary, we have held that courts are within their

discretion to dismiss with prejudice where a party does not make such a request or

showing.”).

II. Section 2 of the Sherman Act (Count III)

In Count III, Force Partners alleges that Defendants attempted to monopolize

the Market in violation of Section 2 of the Sherman Act. FAC ¶¶ 135–59. To state an

attempted monopolization claim, a plaintiff must adequately plead “(1) that the

defendant has engaged in predatory or anticompetitive conduct with (2) a specific

intent to monopolize and (3) a dangerous probability of obtaining monopoly power.”

Hon Hai Precision Indus. Co. v. Molex, Inc., 2009 WL 310890, at *2 (N.D. Ill. Feb. 9,

2009) (citing Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456 (1993)). The KSA

Defendants argue that Force Partners’ Section 2 claim fails because: (1) Force

Partners fails to allege sufficient exclusionary or anticompetitive conduct; and (2)

Force Partners has not pleaded a dangerous probability of success. KSA Memo.

Dismiss at 16–21. As noted above, Acuity focuses its argument on its premise that

Force Partners has not pled facts sufficient to show that the agreements between

KSA and the distributors were “exclusive.” Acuity Memo. Dismiss. at 4–7. The Court

disagrees with the KSA Defendants and Acuity.

To summarize, in Count III, Force Partners alleges that Defendants have

engaged in an attempt to acquire a monopoly in the Market and have used

anticompetitive means to do achieve this end; put another way, Defendants have not

achieved their monopoly in the market based upon superior products, business

acumen, or historical accident. FAC ¶¶ 136, 138. Force Partners further alleges that

Defendants “demonstrated a specific intent to monopolize the market by announcing

and implementing a scheme to eliminate competition from the market.” Id. ¶ 137.

The Court addresses the dangerous probability of success argument first,

before moving on to the exclusivity argument.

A. Dangerous Probability of Success

The KSA Defendants argue contend that Force Partners has not adequately

alleged a dangerous probability of success for two reasons: (1) Force Partners fails to

allege a relevant antitrust market; and (2) Force Partners fails to allege that KSA

has the required market power. KSA Memo. Dismiss at 19–21.

1. Antitrust Market

A plaintiff has the burden of defining the relevant market. Spectrum Sports,

506 U.S. at 455. “The outer boundaries of a product market are determined by the

reasonable interchangeability of use or the cross-elasticity of demand between the

product itself and substitutes for it.” Right Field Rooftops, LLC v. Chi. Baseball

Holdings, LLC, 87 F. Supp. 3d 874, 886 (N.D. Ill. 2015) (quoting Reifert v. S. Cent.

Wis. MLS Corp., 450 F.3d 312, 320 (7th Cir. 2012)). As Force Partners notes, in most

cases, “proper market definition can be determined only after a factual inquiry into

the commercial realities faced by consumers.” Queen City Pizza, Inc. v. Domino’s

Pizza, Inc., 124 F.3d 430, 436 (3d Cir. 1997); see also Avnet, Inc. v. Motio, Inc., 2015

WL 5307515, at *4 (N.D. Ill. Sept. 9, 2015) (“[B]ecause market definition is a deeply

fact-intensive inquiry, courts hesitate to grant motions to dismiss for failure to plead

a relevant product market.”) (internal citations omitted) (collecting cases). Motions to

dismiss based on a failure to define the market “may be granted only if the alleged

market makes ‘no economic sense under any set of facts.’” PepsiCo, Inc. v. Coca–Cola

Co., 1998 WL 547088, at *6 (S.D.N.Y. Aug. 27, 1998).

Force Partners defines the relevant market as “the lighting and controls for

buildings and private roadways,” sold by “full line” sales representatives like Force

Partners and KSA within a defined geographic market comprised of sixteen Illinois

counties in Northern Illinois and surrounding Chicago, including three counties in

Northwest Indiana. FAC ¶¶ 28, 30. As discussed above, Force Partners alleges that

lighting and controls manufacturers like Acuity contract with exclusive sales

representatives within certain geographic markets, so distributors (and their

customers) can only obtain manufacturers’ products through the exclusive sales

representatives. Id. ¶ 29. Specifications—which constitute approximately 65% of

Force Partners’ sales—sometimes list only one manufacturer’s name, sometimes list

up to three manufacturers’ names and invites competition, and some reference one

manufacturer but allow another manufacturer to provide a quote so long as it meets

the technical requirements of the design. Id. ¶¶ 44, 47.

The KSA Defendants do not contest that Force Partners adequately alleges a

geographic market, but instead focus their arguments on the product market,

contending that it is impermissibly vague because it provides insufficient information

about what products are included in the proposed market. KSA Memo. Dismiss at 19

(citing Cupp v. Alberto-Culver USA, Inc., 310 F. Supp. 2d 963, 971 (W.D. Tenn. 2004)).

The court in Cupp held that the alleged product market, defined as “exclusive salon

hair care products . . . sold exclusively through salons under the advice of professional

hair stylists,” was “fatally vague,” because it did not include the names of the brands

and suppliers to be included in the market. 310 F. Supp. 2d at 970–71. It is true that,

in the FAC, Force Partners does not name every manufacturer’s brand sold in the

geographic market. But Force Partners does name the other sales representatives

that sell the lighting and control products in the geographic market, and lists the

specific lighting and control products sold by those sales representatives. FAC ¶¶ 28,

43. The Court finds, at the motion to dismiss stage, that Force Partners’ allegations

about the product market are sufficient as to what products are included in the

proposed market.

The product market is also legally insufficient, argue the KSA Defendants,

because Force Partners “did not ‘define its relevant market with reference to the rule

of reasonable interchangeability and cross-elasticity of demand.’” KSA Memo.

Dismiss at 19 (citing Queen City Pizza, 124 F.3d at 436); KSA Reply at 8. The Court

again disagrees. Force Partners alleges that distributors can only obtain the relevant

lighting and controls products (defined in paragraph 28 of the FAC) from a

manufacturer’s exclusive sales representative, and that there are relatively few full-

line sales representatives in this geographic market. FAC ¶¶ 28–29, 34. Therefore,

“it is not easy to obtain a sale’s representative’s products through other means or

channels.” Id. ¶ 34. The Court finds the product market is similar to that defined in

Hannah’s Boutique, which the court held were sufficient to withstand a motion to

dismiss. 2013 WL 4553313, at *5 (“Indeed, the relevant market here is also

particularly narrow—lacking interchangability—because it relates to dresses

obtained from particular designers.”). The Court finds that the FAC adequately

pleads a relevant geographic and product market.

2. Market Power

The KSA Defendants maintain that Force Partners’ allegations relating to

KSA’s percentage of business do not relate to the market alleged by Force Partners.

KSA Memo. Dismiss at 20–21. The Court agrees with Force Partners that, at the

motion to dismiss stage, it sufficiently pleads that KSA has market power. Pl. KSA

Resp. at 35. Force Partners alleges that all sales of the lighting and controls products

must go through a manufacturer’s exclusive sales representative, and that KSA is

the dominant sales representative in the market. Id. (citing FAC ¶¶ 5, 10, 37, 40, 43,

52; GN Netcom, Inc. v. Plantronics, Inc., 967 F. Supp. 2d 1082, 1085 (D. Del. 2013)

(motion to dismiss denied where, in response to the competitor’s entry, a company

with 75% of sales in a specialized market demanded that specialized distributors

agree to exclusive dealing program and many did)).

The Court finds that the Force Partners’ allegations about KSA’s market power

and coercive behavior towards the distributors satisfy the “dangerous probability of

success” element of a Section 2 claim. See, e.g., United States v. Dentsply Int’l, Inc.,

399 F.3d 181, 184, 187 (3d Cir. 2005) (denying motion to dismiss, observing that the

defendant “imposed” an exclusivity policy on its customers and caused inventory of

competing products to be removed from shelves and stating “[b]ehavior that might

otherwise comply with antitrust law may be impermissibly exclusionary when

practiced by a monopolist”).

B. Exclusive Agreements

Acuity argues that Force Partners has not pled facts sufficient to show that the

agreements between KSA and the distributors were “exclusive.” Acuity Memo.

Dismiss at 6–7. Rather, Acuity asserts that the Force Partners has alleged only a

loyalty program, not an exclusion from the marketplace. Id. at 6. Acuity contends that

“the ‘Partner’ program does not require that distributors must only do business with

KSA to qualify as a Partner; rather, distributors just must not do business with Force

Partners or two other firms.” Id. (emphasis in original). Similarly, the KSA

Defendants argue that Defendants’ “unilateral invitation to each distributor does not

constitute [an] agreement, much less an antitrust violation.” KSA Memo. Dismiss at

11 (emphasis in original). In support, the KSA Defendants note that the Seventh

Circuit has found that no actionable agreement exists where a supplier induces

dealers to follow its exclusive policy or guideline—and even terminates non-complaint

dealers. Id. at 11–12 (citing Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380,

393 (7th Cir. 1984)). The KSA Defendants note that the incentives offered to Partners

by Defendants, such as “best prices” and services” “represent[] robust competition,

not a conspiracy in violation of Section 1.” Id. at 12 (citing, among other cases,

Concord Boat, 207 F.3d at 1061). Moreover, both motions to dismiss point out that

the program contains an important exception: when a customer specifically requests

a Force Partners brand, then the distributor is allowed to sell the requested product

without harming its status as a KSA “partner.” Acuity Memo. Dismiss. at 7; see also

KSA Memo. Dismiss at 22 (citing Alarm Detection Sys. v. Orland Fire Prot. Dist., 129

F. Supp. 3d 614, 635 (N.D. Ill. 2015)). Without actual exclusion, reason Defendants,

there can be no substantial lessening of competition. Id.

Force Partners retorts that Defendants seek to recast the allegations in the

FAC. Pl. KSA Resp. at 22; Pl. Acuity Resp. at 8–9. Nowhere in the FAC, observes

Force Partners in response to Acuity’s motion to dismiss, does Force Partners allege

that the agreement is a “loyalty program.” Pl. Acuity Resp. at 8. Rather, insists Force

Partners, it has alleged that the terms “Partner” and “Associate” are meaningless. Id.

Similarly, Force Partners points out the term “best prices” is undefined and certainly

does not demonstrate competition rather than a conspiracy. Pl. KSA Resp. at 22. The

choice that was presented to distributors was to go along with the agreement or lose

meaningful access to KSA-represented brands, including Acuity. Id. at 37; Pl. Acuity

Resp. at 8. Moreover, Force Partners explicitly alleges that the choice offered was a

false one; distributors understood, and KSA’s history supported, that if distributors

did not agree to become KSA “Partners,” they would be “cut off” from the brands

represented by KSA. Id. ¶ 90. Force Partners maintains that all it is required to plead

is that there was an agreement, and that agreement was likely to have a substantial

though not necessarily immediate anticompetitive effect. Id. at 10 (citing Roland, 749

F.2d at 392).

The Court agrees with Force Partners that it has adequately alleged that the

agreements were “exclusive.” Force Partners alleges that the choice KSA offered its

distributors was really a Hobson’s choice (an illusion that multiple choices are

available when the only choice is to take what is available or nothing at all)—the

distributors must agree to boycott Force Partners or lose access to KSA-represented

brands, including Acuity. FAC ¶ 90. Stock and Flow distributors, according to the

FAC, were informed that they could not carry Force Partners’ brands on their shelves

at all, and spec distributors were told they had to “rig bids to ensure that KSA won

any multiple-name specifications that also included [Force Partners].” Pl. Acuity

Resp. at 8–9 (citing FAC ¶ 87). Furthermore, where KSA brands and Force Partner

brands were specified for bidding on a project, the distributors were given the choice

of not quoting Force Partners’ brand at all or providing Force Partners’ confidential

pricing information to KSA so it could match the price. Id. (citing FAC ¶¶ 80–81). All

in all, the Court finds that Force Partners has adequately alleged that the agreements

were exclusive. That, however, without more, does not mean that the agreements

violate antitrust laws.

Next, Acuity argues that the FAC fails to overcome the presumption that

exclusivity agreements are lawful. Acuity Memo. Dismiss at 4–5 (citing Paddock

Publ’ns, Inc. v. Chi. Tribune Co., 103 F.3d 42 (7th Cir. 1996); Republic Tobacco, 381

F.3d at 736); see also KSA Memo. Dismiss at 16. In fact, argues Acuity, as pled, the

agreements could not harm competition, as they themselves are a form of

competition. Id. at 6. In a now-familiar refrain, Force Partners responds that Acuity

misconstrues the allegations of the FAC: Force Partners does not allege that

exclusivity agreements are unlawful, but rather that Defendants set up a plan that

changed how distributors operate. Pl. Acuity Resp. at 4. In other words, Force

Partners alleges that Defendants coerced distributors into agreeing to the plan with

the aim of forcing a competitor out of the market. Id. at 4; Pl. KSA Resp. at 20.

As for Defendants’ argument that exclusive agreements are presumed valid,

that presumption is inapplicable here. “Exclusive dealing arrangements violate

antitrust laws only when they foreclose competition in a substantial share of the line

of commerce at issue.” Republic Tobacco, 381 F.3d at 737–38. “The objection to

exclusive-dealing agreements is that they deny outlets to a competitor during the

term of the agreement.” Roland, 749 F.2d at 393. As the KSA Defendants point out,

in Roland, the Seventh Circuit found that the district court improperly issued a

preliminary injunction where the defendant supplier induced the dealer to agree to

follow its exclusive policy and terminated a non-complaint dealer. Id. at 392–93.

However, the Court disagrees with the KSA Defendants that Roland requires that

the Court grant their motion to dismiss. Rather, the Court agrees with Force Partners

that Roland is of limited utility at this stage, given that it is a preliminary injunction

case, which not only applied a different standard than a Rule 12(b)(6) motion, but

also turned on whether there was in fact evidence of an anti-competitive agreement—

which the Seventh Circuit concluded there was not. Id. at 393–94. The decision did

not foreclose the plaintiff’s claim in Roland, the Court simply declined to impose a

preliminary injunction. Id. at 395–96 (“It should go without saying that . . . our

discussion of the merits of Roland’s antitrust claim is tentative. We do not exclude

the possibility that on the fuller record made in the trial on the merits Roland will

succeed in establishing its claim.”). The Seventh Circuit held that, to find that an

exclusive-dealing agreement is unreasonable, a plaintiff must show first, “that it is

likely to keep at least one significant competitor of the defendant from doing business

in a relevant market” and second, “that the probable (not certain) effect of the

exclusion will be to raise prices above . . . the competitive level, or otherwise injure

competition.” Id. at 394.

The Court agrees with Force Partners that the crux of the FAC is that the

program enacted by the Defendants, specifically the program’s exclusivity, is

unlawful because its purpose was to drive out of business a competitor, which, as

discussed in more depth below, Force Partners plausibly alleges would harm the

market.

C. Terminable at Will

Acuity further asserts that because the agreements are terminable at will, they

do not prevent Force Partners from continuing to compete. Acuity Memo. Dismiss at

9–10 & n.15 (citing, among other cases, Paddock Publ’ns., 103 F.3d at 47; Roland

Mach., 749 F.2d at 395). Put differently, Acuity argues there are no barriers to Force

Partners’ ability to offer distributors a better deal, and that Force Partners does not

allege that it attempted to “woo a distributor out of the KSA ‘Partner’ program by

offering the distributor better prices or services of its own.” Id.; Acuity Reply at 9.

Force Partners counters that there is no rule that if an exclusive agreement can be

terminated in less than a year, no antitrust claim maybe asserted. Resp. at 12–13.

Although the Court must follow the Seventh Circuit’s precedent that

“[e]xclusive-dealing contracts terminable in less than a year are presumptively lawful

under section 3,” Roland Mach., 749 F.2d at 395, the Court agrees with Force

Partners that the facts alleged in the FAC overcome this presumption. Pl. Acuity

Resp. at 12. True, even though Force Partners does not explicitly allege that it offered

the distributors that were coerced into the program lower prices in order to “outbid”

KSA, Force Partners nonetheless claims that it spoke to the distributors after the

presentation, and “[a]ll of the Distributors reported that they could not afford to lose

access to KSA’s products.” FAC ¶ 98. Moreover, Force Partners alleges that, “[i]n an

effort to test the market, Force Partners has offered steeply discounted prices – prices

it is confident are lower than KSA’s – to win spec jobs in Northwest Indiana,” where

KSA controls about 90% of sales in the market, but that “[v]irtually none have been

successful.” FAC ¶¶ 55–56.

These allegations distinguish this case from Paddock Publ’ns, where the

Seventh Circuit affirmed dismissal of the plaintiff’s claims where the plaintiff did not

allege that it attempted to outbid its competitors, nor allege any other meaningful

restraint on trade. 103 F.3d at 44, 47. The statements Force Partners claims

distributors made to it after they agreed to Defendants’ program demonstrate that

the practical effect of the agreement—given KSA’s dominant market share—was that

the distributors could not terminate the agreement to participate at will and engage

with Force Partners. Dentsply, 399 F.3d at 193 (the defendant’s large market share

and conduct excluding competitors “realistically ma[d]e the arrangements . . . as

effective as those in written contracts” despite only consisting of a series of

independent sales”); Minn. Mining & Mfg. Co. v. Appleton Papers, Inc., 35 F. Supp.

2d 1138, 1144 (D. Minn. 1999) (considering “practical effect” rather than “form” in

determining whether agreement was terminable at will). The Court finds that,

regardless of whether the distributors could technically terminate the agreements at

will, the practical effect was that the distributors could not exit Defendants’ program

and contract with Force Partners instead.

D. Disparaging or False Statement to Distributors

Because the Court finds that Force Partners has adequately alleged that

Defendants’ agreements with the distributors are exclusive and harm the market,

the Court need not address Defendants’ argument that the allegations about KSA

Defendants’ false statements fail to state a Section 2 claim. KSA Memo. Dismiss at

17; Acuity Memo. Dismiss at 13.

The Court finds, in viewing the allegations of the FAC in the light most

favorable to Force Partners as the non-movant and drawing all reasonable inferences

in its favor, as the Court must, that Force Partners has plausibly stated a cause of

action for a violation of Section 2 of the Sherman Act.

III. Clayton Act (Count IV)

In Count IV, Force Partners alleges that the restrictive scheme imposed by the

Defendants violates Section 3 of the Clayton Act as an illegal exclusive dealing

agreement. FAC ¶¶ 160–64. The Clayton Act prohibits certain exclusive contracts for

the sale of goods. 15 U.S.C. § 14. Defendants again argue that Force Partners has

failed to plausibly plead a “substantial anticompetitive effect” as required by

Section 3 of the Clayton Act. KSA Memo. Dismiss at 21–22; Acuity Memo. Dismiss at

8. For the same reasons discussed above, supra Section I.H, at the motion to dismiss

stage, the Court finds that Force Partners has adequately alleged the program had a

substantial anticompetitive effect.

The KSA Defendants again offer additional arguments in support of dismissal,

contending that (1) Force Partners failed to allege the existence of an exclusive

dealing contract; (2) even if Force Partners did allege a contract, it was not for goods,

but rather for services; and (3) Force Partners fails to plead a relevant market. For

the reasons discussed above, see supra Sections II.A.1, II.B, the Court disagrees as to

the first and third arguments. And the Court easily discards the second argument as

well. Force Partners pleads that the agreements in place were to deny both goods and

services. FAC ¶ 119 (“Through coercive demands and threats, the Defendants agreed

between themselves to deny services, and effectively deny access to KSA brands to

Market Distributors unless those Distributors terminated their relationship with

and/or agreed to boycott Force Partners”) (emphasis added).

The Court therefore finds that Force Partners has plausibly alleged that

Defendants’ exclusive dealing agreement violated Section 3 of the Clayton Act. The

Court denies Defendants’ motions with regard to Count IV.

IV. Illinois Antitrust Act (Count V)

In Count V, Force Partners alleges that Defendants’ conduct also violates the

Illinois Antitrust Act, 740 ILCS 10/2. FAC ¶ 166. Force Partners asserts claims under

740 ILCS 10/3(1)–(4). Id. ¶¶ 167–72.

The Illinois Antitrust Act expressly requires harmonization with the federal

laws. 740 ILCS 10/11 (“When the wording of this Act is identical or similar to that of

a federal antitrust law, the courts . . . shall use the construction of the federal law by

the federal courts as a guide in construing this Act.”). That is, courts look to the

application of the federal counterpart to guide analysis of the state antitrust law

claims. State of Ill., ex rel. Burris v. Panhandle E. Pipe Line Co., 935 F.2d 1469, 1479–

80 (7th Cir. 1991) (Illinois courts “use the construction of federal antitrust law by

federal courts to guide their construction of . . . state antitrust laws”). Put another

way, if the federal claims are dismissed, the equivalent state claims should be

dismissed. VBR Tours, LLC v. Nat’l R.R. Passenger Corp., 2015 WL 5693735, at *16

(N.D. Ill. Sept. 28, 2015) (“Illinois Antitrust Act claims will stand or fall with

federal . . . claims based on the same underlying facts and legal theories.”).

As the KSA Defendants point out, claims under 740 ILCS 10/3(2) and (3), which

Force Partners pleads in paragraphs 169 and 171 of the FAC, are substantially

similar to, and construed in the same ways, as vertical conspiracy claims under

Sherman Act Sections 1 and 2, respectively. KSA Memo. Dismiss at 23 (Citing

Hannah’s Boutique, 112 F. Supp. 3d at 765 n.7); see also Acuity Memo. Dismiss at 4

n.2 (citing Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010)). And, claims under

740 ILCS 10/3(4), which Force Partners pleads in paragraph 172 of the FAC, are

substantially similar to, and construed in the same ways as, Clayton Act Section 3.

KSA Memo. Dismiss at 23 (citing Ray Dancer, Inc. v. DMC Corp., 594 N.E.2d 1344,

1350 (Ill. App. Ct. 1992)). Accordingly, for the same reasons that Force Partners’

Sherman Act Section 1 vertical conspiracy claim (Count I), Sherman Act Section 2

claim (Count III), and Clayton Act claim (Count IV) are plausibly alleged, these state

law claims likewise survive Defendants’ motions to dismiss.

However, the Court agrees with the KSA Defendants that Force Partners’

claim under 740 ILCS 10/3(1) must fail. KSA Memo. Dismiss at 23–24. Section 3(1)

of the Illinois Antitrust Act “is expressly limited to agreements between two classes

of persons: (a) those who are competitors and (b) those persons who, but for a prior

agreement, would be competitors.” 740 Ill. Comp. Stat. 10/3 Bar Committee

Comments–1967 (emphasis added). “Section 3(1) does not reach vertical agreements.”

Id.; see also Sportmart, Inc. v. No Fear, Inc., 1996 WL 296643, at *17 (N.D. Ill. June

3, 1996). For the reasons stated above, the Court finds that Force Partners has failed

to allege a horizontal agreement. See supra Section I.I. Force Partners does not

disagree that a Section 3(1) claim can be premised only on a horizontal agreement.

Rather, Force Partners simply states in opposition that it agrees that the same basic

law applies to its Illinois Antitrust Act claims as it does to the Sherman and Clayton

Act claims, and “[b]ecause those all are plausibly and properly pleaded, Count V

cannot be dismissed.” Pl. KSA Resp. at 38. Therefore, because Force Partners has

failed to adequately allege a horizontal agreement, its claim under Section 3(1) of the

Illinois Antitrust Act also fails.

For the foregoing reasons, Defendants’ motions to dismiss are denied as to

Force Partners’ Count V claims premised on 740 ILCS 10/3(2)–(4), but are granted to

as to the claim premised on 740 ILCS 10/3(1).

V. IUDTPA (Count VI)

In Count VI, Force Partners alleges that Defendants violated the IUDTPA,

815 ILCS 510/2, by disparaging the quality of the goods, services, or business of Force

Partners based on the Presentation, which conveyed to distributors that they should

boycott Force Partners based on the false statement that Force Partners was

bypassing distributors to make sales directly to end-users and contractors, thereby

denying sales and profits to distributors. FAC ¶ 176. Pursuant to the IUDTPA, “[a]

person engages in a deceptive trade practice when, in the course of his or her

business, vocation, or occupation, the person,” among other things, “represents that

goods or services have sponsorship, approval, characteristics, ingredients, uses,

benefits, or quantities that they do not have or that a person has a sponsorship,

approval, status, affiliation, or connection that he or she does not have.” 815 ILCS

510/2.

Defendants move to dismiss Count VI on the basis that because it sounds in

fraud, it must satisfy the heightened pleading requirement of Rule 9(b) and fails to

do so. Acuity Memo. Dismiss at 13–14 (citing Platinumtel Commc’ns, LLC v. Zefcom,

LLC, 2008 WL 5423606, at *1 (N.D. Ill. Dec. 30, 2008)); KSA Memo. Dismiss at 25–

26 (citing Nakajima All Co., Ltd. v. SL Ventures Corp., 2001 WL 641415, at *6 (N.D.

Ill. June 4, 2001); CardioNet, Inc. v. LifeWatch Corp., 2008 WL 567031, at *3 (N.D.

Ill. Feb. 27, 2008)). Force Partners concedes that Rule 9(b)’s heightened pleading

standard applies to its IUDTPA claims, as it does not dispute the standard in its

response briefs. See Pl. Acuity Resp. at 17–19; Pl. KSA Resp. at 39–41; see Bonte v.

U.S. Bank, N.A., 624 F.3d 461, 466 (7th Cir. 2010) (“Failure to respond to

an argument . . . results in waiver.”). The Court nonetheless agrees with Defendants

that Rule 9(b) is the proper standard under which to evaluate IUDTPA claims. See

CardioNet, Inc., 2008 WL 567031, at *2 (collecting cases). Rule 9(b) requires that,

“[i]n alleging fraud or mistake, a party must state with particularity the

circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). “Under Rule 9(b),

. . . IUDTPA . . . []claims must allege ‘the identity of the person making the

misrepresentation, the time, place, and content of the misrepresentation, and the

method by which the misrepresentation was communicated.’” CardioNet, Inc., 2008

WL 567031, at *3 (quoting Bankers Trust Co. v. Old Republic Ins. Co., 959 F.2d 677,

683 (7th Cir. 1992)).

Specifically, Defendants argue that Force Partners fails to provide any

information as to the “who, what, when, where and how of any fraudulent statements

by Acuity.” Acuity Memo. Dismiss at 13–14; KSA Memo. Dismiss at 25–26. Force

Partners retorts that it sufficiently alleges the time, place, and content of KSA’s

August 2019 PowerPoint Presentation. Pl. KSA Rep. at 40–41; Pl. Acuity Resp. at 18–

19. The Court disagrees. Although Force Partners alleges the general timeframe of

the presentations (August 2019), and the content (statement that Force Partners was

bypassing distributors to make direct sales to end-users), it fails to allege with

specificity the place of the statements—specifically, it alleges only generally that the

statement was made to the “distributors” but does not plead specifically to which

distributors the statements were made.

Additionally, assert Defendants, Force Partners’ IUDTPA claim fails because

Force Partners does not allege that Defendants made a commercially disparaging

statement about the quality of Force Partners’ goods or service. Acuity Memo.

Dismiss at 14; KSA Memo. Dismiss at 24–25. The KSA Defendants also argue that

the FAC suggests that the statement at issue may well be true, and thus is not

actionable under the IUDTPA. KSA Memo. Dismiss at 25.

Force Partners counters that it has plausibly alleged a claim under Section

2(a)(8) of the IUDTPA for disparagement of Force Partners’ services or business. Pl.

Acuity Resp. at 17–19 (citing, among other cases, World Kitchen, LLC v. The Am.

Ceramic Soc’y, 2015 WL 5461564 (N.D. Ill. Sept. 15, 2015) M&R Printing Equip., Inc.

v. Anatol Equip. Mfg. Co., 321 F. Supp. 2d 949 (N.D. Ill. 2004)); Pl. KSA Resp. at 39–

41 (citing same). As for the cases cited by Defendants, those cases, according to Force

Partners, are all distinguishable.

The Court agrees with Defendants and finds that Force Partners fails to allege

an actionable disparaging statement under the IUDTPA. The only allegedly false

statement pled with specificity is that “KSA claimed that Force Partners was

bypassing distributors to make sales directly to end-users and contractors, thereby

denying sales and profits to distributors.” FAC ¶ 77. This statement, even if false,

does not disparage Force Partners’ goods or services, which is required under the

IUDTPA. See Evanger’s Cat & Dog Food Co., Inc. v. Thixton, 412 F. Supp. 3d 889, 903

(N.D. Ill. 2019); see also Organ Recovery Sys., Inc. v. Pres. Sols., Inc., 2012 WL 116041,

at *6 (N.D. Ill. Jan. 16, 2012) (“The statements, however, must specifically disparage

a product or service and not just attack the reputation of the business or the person

selling it.”). Force Partners’ argument that the statement “disparaged the quality of

services that Force Partners provides to its distributors, by falsely claiming that

Force Partners’ services are not reliable because the company will go behind the back

of distributors to sell directly to end-user and contractors” is too far of a stretch. Pl.

KSA Resp. at 39. This is especially true because, as the KSA Defendants point out,

the statement is based on “an instance in which an end user asked to make a purchase

directly from a Force Partner’s brand” and that Force Partners “insisted” on

compensation for the relevant distributor when it “became aware of this situation.”

KSA Memo. Dismiss at 25 (citing FAC ¶ 78). In other words, the FAC suggests that

the statement may well be true, and thus not actionable under the IUDTPA.

The Court agrees with Defendants that Force Partners fails to state a claim

under the IUDTPA. Accordingly, Count VI is dismissed with prejudice.

VI. Tortious Interference with Prospective Business Relations

(Count VII)

In Count VII, Force Partners asserts a claim for tortious interference with

prospective business relations. FAC ¶¶ 180–90. Under Illinois law, in order to state

a claim for tortious interference with business relations, the plaintiff must allege: (1)

the existence of a valid business relationship; (2) defendant’s knowledge of the

plaintiff’s relationship or expectancy; (3) purposeful interference by defendant that

prevents it from happening or terminates the relationship; and (4) damages as a

result. Speakers of Sport, 178 F.3d at 865. “Under Illinois law, commercial

competitors are privileged to interfere with one another’s prospective business

relationships provided their intent is, at least in part, to further their businesses and

is not solely motivated by spite or ill will.” Imperial Apparel, Ltd. v. Cosmo’s Designer

Direct, Inc., 882 N.E.2d 1011, 1019 (Ill. 2008).

Defendants argue that the FAC pleads statements that only reflect

competition, and are therefore protected by the privilege of competition. KSA Memo.

Dismiss at 26–27; Acuity Memo. Dismiss at 14–15. This privilege, also referred to as

“lawful competition,” “privileged competition,” or “competitor’s privilege,” is “an

affirmative defense to the tort of intentional interference with prospective business

[relations].” Gen. Motors Corp. v. State Motor Vehicle Review Bd., 862 N.E.2d 209,

220 (Ill. 2007) (internal citations omitted). “It allows one to divert business from one’s

competitors generally as well as from one’s particular competitors provided one’s

intent is, at least in part, to further one’s business and is not solely motivated by spite

or ill will.” Id. (internal quotation and citation omitted).

To overcome this defense, Defendants insist Force Partners must have alleged

facts from which actual malice may be inferred. KSA Memo. Dismiss at 26–27; Acuity

Memo. Dismiss at 14–15. Force Partners fails to do so, as it states in conclusory

fashion that the “actions of the Defendants were undertaken with malice.” Acuity

Memo. Dismiss at 15; KSA Memo. Dismiss at 26–27.

Force Partners responds that it has plausibly pled that Acuity’s conduct was

not privileged. The privilege to compete, asserts Force Partners, does not encompass

spreading false rumors or deliberate disparagement. Pl. Acuity Resp. at 19–21 (citing

Imperial Apparel, 882 N.E. 2d at 1019 (“The privilege to compete does not, however,

encompass the use of improper competitive strategies that employ fraud, deceit,

intimidation, or deliberate disparagement.”) (citing Cohabaco Cigar Co. v. United

States Tobacco Co., 1998 WL 773696 (N.D. Ill. October 30, 1998)); Pl. KSA Resp. at

41–42 (citing same). As discussed above, the Court finds that the FAC at least

suggests that the one false statement pled in the FAC may be true, supra Section V;

however, Force Partners does plead that Defendants engaged in other improper

competitive strategies. For instance, Force Partners alleges that Defendants forced

the distributors to “secretly share Force Partner[s’] confidential pricing with KSA so

KSA can decide whether to match Force Partner[s’] prices – in the hopes of ensuring

Force Partners’ quotes are not presented to contractors or end users, putting Force

Partners out of business, and eventually being able to charge higher prices. Architects

and contractors requesting multiple bids are not advised that the bidding process is

a sham, as KSA will obtain its main competitor’s confidential pricing information.”

FAC ¶ 183; see also id. ¶¶ 173–174, 179. The court in Cohabaco Cigar found the

plaintiff had a cognizable Illinois tortious interference claim against a defendant who

spread “false rumors” and who “attempted to drive [plaintiff] out of business through

predatory pricing and other nefarious tactics.” 1998 WL 773696, at *8.

The Court finds that, in viewing the allegations of the FAC in the light most

favorable to non-movant Force Partners and drawing all reasonable inferences in its

favor, as it must, that, like the plaintiff in Cohabaco Cigar, Force Partners has

adequately alleged a claim for tortious interference with business relations.

Therefore, the motion to dismiss Count VII is denied.

Conclusion

For the reasons given above, Defendants’ Motions to Dismiss [45], [47], are

granted in part and denied in part. The Court grants Defendants’ motions as to Count

II (Sherman Act Section 1 horizontal conspiracy), Count V (the Illinois Antitrust Act

claim premised on 740 ILCS 10/3(1)), and Count VI (IUDTPA). Those claims are

dismissed with prejudice. Defendants’ motions are denied as to Count I (Sherman Act

Section 1 vertical conspiracy), Count III (Sherman Act Section 2), Count IV (Clayton

Act Section 3), Count V (the Illinois Antitrust Act claims premised on 740 ILCS

10/3(2)–(4)), and Count VII (tortious interference with prospective business

relations). The Court directs Defendants to answer the First Amended Complaint in

light of its ruling by March 18, 2022, and refers the case to Magistrate Judge Gilbert

for discovery supervision and settlement.

Dated: February 25, 2022 Canblee 7 ob. □

United States District Judge

Franklin U. Valderrama

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