Electronic security system antitrust case transferred to federal court in Texas

By Justin Stoltzfus | Jun 12, 2018

NEW ORLEANS – A federal judge in the U.S. District Court for the Eastern District of Louisiana recently ordered a dispute claiming antitrust violations and violations of state commerce laws in the states of Louisiana, Texas and California transferred to the federal court in Texas.

NEW ORLEANS – A federal judge in the U.S. District Court for the Eastern District of Louisiana recently ordered a dispute claiming antitrust violations and violations of state commerce laws in the states of Louisiana, Texas and California transferred to the federal court in Texas.

The May 31 order by U.S. District Judge Eldon Fallon transferred the case filed by Security Data Supply against Nortek Security Control to the U.S. District Court for the Northern District of Texas. The plaintiff is a distributor of electronic security systems and the defendant is a manufacturer of electronic security systems. Wave, another defendant in the case, is also a wholesale distributor of electronic security systems and Ernest Bernard, also a defendant named in the filing, is a former sales representative at Nortek.

The court filing said Security Data Supply alleges that Bernard provided Wave with “preferential pricing” on Nortek products, “fudged numbers” in collusion with Wave and “accepted corporate bribes” in return. The filing also claims Security Data has lost 59 clients and nearly $10 million per year as a result.

The plaintiff is claiming violations of the Robinson-Patman Act and of state law on corporate bribery and violations of state trade practices.

In arguing the jurisdiction issue, the defendant claimed an improper jurisdiction because of Nortek's headquarters in California and the plaintiff claimed that since Nortek sells its products in Louisiana, the jurisdiction is proper. 

“For the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented,” the court wrote, citing 28 U.S.C. § 1404(a).

In further support of the transfer, the court said Bernard, in the course of the events outlined by the plaintiff, resided in the state of Texas. 

In addition, the court raised questions that indicated support for the defendant's claim that the Louisiana court lacks jurisdiction over Nortek. 

“There are also serious questions as to whether this court has jurisdiction over Nortek,” the court wrote. “Defendant Nortek is a corporate citizen of California and has its principle place of business in California. Additionally, it does not have a physical presence in the state of Louisiana. It is undisputed that Nortek does not have sufficient continuous and systematic contact with Louisiana to establish general jurisdiction.”

Fallon ordered the case transferred to the U.S. District Court for the Northern District of Texas. 

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