Lighting Designer Awarded $1.7M in Acuity Brands Arbitration (2024)

May 1, 2024

Prominent NYC lighting designer, Jack Bailey, receives big payday stemming from 18-year-old royalty agreement

In 2007, Acuity Brands expanded its specification product portfolio by acquiring Mark Lighting, a New Jersey-based indoor architectural lighting company. While this merger bolstered Acuity's portfolio with a well-regarded brand and a dedicated specifier following, it also brought with it a series of royalty agreements that many years later would present complex and expensive challenges.

In 2023, prominent New York City lighting designer Susan Brady initiated legal action against Acuity Brands, alleging at least $3 million in unpaid royalties from a 2002 agreement that licensed her designs to Mark Lighting for its Slot and Veil product lines.

Adding to that headache, recent documents obtained by Inside Lighting reveal a separate royalty dispute involving another distinguished New York City lighting designer, Jack Bailey. Although Bailey is a partner with the award-winning architectural lighting design firm, One Lux Studio, the legal dispute involves his separate business entity, JBLD, Inc., which had entered into a 2006 royalty agreement with Mark Lighting granting Bailey a 4% royalty on the SP Series perimeter lighting designs.

Bailey has contended that proper royalties were not paid over the years, particularly after the original fluorescent fixtures were redesigned into LED versions — a situation echoing similar claims made by Susan Brady in her case. Bailey's company, JBLD, is represented by Brooklyn attorney Michael Ferch, who also serves as the lawyer for Susan Brady in her case versus Acuity Brands. Brady's $3 million claim against North America’s largest lighting company is still under litigation.

Bailey’s $1.7 Million Award

During a late 2023 arbitration, Bailey alleged Acuity Brands breached their contract by failing to pay royalties on all applicable sales, including specific items they contended were covered under the agreement. Conversely, Acuity Brands sought repayment for what it described as royalties mistakenly overpaid due to a rate higher than the contract specified.

The arbitration initially supported both sides: Bailey was entitled to the royalties claimed, and Acuity Brands prevailed on its counterclaim regarding overpayments. The final award required Acuity Brands to pay Bailey damages of $1,251,031 and additional pre-award interest of $447,381, totaling $1,698,412. The interest was set at an annual rate of 9%, calculated from the due dates of each quarterly royalty payment.

Above:Excerpt from the agreement arbitrated by JAMS, Inc.

A key issue in the dispute was the identification of products under the "SP Series" eligible for royalties. Bailey argued that items like remote battery packs and rails should be included, a claim Acuity Brands successfully disputed. Despite objections from Acuity Brands, the arbitrator awarded interest, referencing New York law that typically allows for pre-award interest in breach of contract actions.

Bailey's request for an order compelling Acuity Brands to continue future royalty payments under the contract was denied, with the arbitrator citing the adequacy of the damages remedy. We interpret this to mean that there’s no recent order for Bailey to receive future royalty payments, but Bailey may still have the right to purse future royalties through arbitration or other legal means.

The 2006 Royalty Agreement

Eighteen years ago, Mark Lighting contracted with Bailey to develop a specific series of perimeter lighting fixtures known as the "SP Series." In exchange for Bailey's design work, the agreement stipulated that Bailey would receive two one-time payments of $5,000 each and a royalty of 4% on the net sales generated from the sale, lease, or other transfers of the products.

The royalties were structured to accrue whenever the products were sold, shipped, or invoiced—whichever occurred first. These royalties were due and payable on the 15th day following the end of each calendar quarter. The agreement also required Mark Lighting to maintain accurate records of all sales related to these products and granted Bailey the right to inspect these records to ensure compliance.

The SP Series – Mark Lighting’s Perimeter wall lighting product family:

Initially, the SP Series design as proposed by Bailey featured a 1-T8, 1-T5 or 2-T5 fluorescent perimeter wall wash system where linear lighting is recessed above the ceiling plane at the junction of the ceiling and wall. This design aimed not just for aesthetic enhancement but also included practical improvements. For instance, the lighting fixtures were made shallower than the existing models (reduced from eight inches to six inches deep), mitigating conflicts with ceiling infrastructure like piping and ductwork. This reduction was significant in the practical application in architectural designs, allowing more flexibility in building interiors without compromising structural elements.

Above: Excerpt from SP Series specification sheet

According to the arbitration documents, Bailey’s design transitioned from using steel to extruded aluminum for the housing of the fixtures, enhancing the ease of installation and the precision of the fixture alignments. In 2006, perimeter systems were notorious for being hard-to-install erector sets. This choice of material not only impacted the manufacturing process by simplifying the assembly and installation but also improved the overall durability and maintenance of the lighting systems.

Additionally, the design incorporated a snap-in lens system instead of a traditional louver, which supported better insulation and maintenance, and offered a cleaner aesthetic look. This change particularly affected the manufacturing process by requiring precise machining and fitting to accommodate the snap-in mechanism, ensuring that the lens securely fits and performs effectively without compromising the light distribution and insulation properties.

Enforcement of the Arbitration

JBLD Inc., owned by Bailey, recently filed documents in New York seeking enforcement of the arbitration settlement award against Acuity Brands. As arbitrators lack enforcement authority, it appears that the filing aims to confirm the arbitration's final award, enabling court-enforced collection if necessary. While Acuity Brands may appeal, courts typically uphold arbitration decisions barring exceptional circ*mstances.

In February, we sought comment from Acuity Brands' counsel, Sugarman Law, on this matter but received no response. In recent days, we contacted Acuity Brands directly and again received no comment. We also reached out to JBLD’s Attorney Michael Ferch, seeking comments from his client, Jack Bailey, to no avail.