Crestron vs. Cyber Sound Lawsuits Settled

Arizona-based integrator Cyber Sound and Crestron Electronics have agreed to dismiss all claims and counterclaims against each other.

By CE Pro Editors, July 16, 2012

Cyber Sound & Security and Crestron Electronics have settled their lawsuits against each other.

Cyber Sound issued a short statement saying: "Cyber Sound is pleased to announce that it has today settled its lawsuit with Crestron Electronics, Inc. The parties agreed to dismiss all claims and counterclaims in the action with prejudice. This settlement permits us to do what we do best, serve our customers and satisfy their needs."

Crestron sued Cyber Sound, a Scottsdale, Ariz-based integrator and No. 14 in the CE Pro 100, in June 2011, alleging that the dealer abused its relationship with Crestron to “flip” customers to Savant Systems, then an up-and-coming Crestron competitor.

It is widely considered that Cyber Sound was simply caught in the crossfire between Crestron and Savant. Savant triggered the legal saga (detailed at end of story) when it sued Crestron in 2010 for alleged antitrust violations, among other things.

Crestron then filed a countersuit against Savant, at the same time suing Cyber Sound, which had once been a $1 million Crestron customer before shifting its business to Savant.

Crestron alleged that Cyber Sound breached its dealer agreement, which obliges the integrator to “exercise its best efforts to promote the use and sale of Crestron products.”

RELATED: What ‘Best Efforts’ Means in Dealer Contracts

Crestron also cited a number of allegedly “false and misleading statements” made by Cyber Sound employees, for example, that Crestron products were outdated and don’t work with Apple technology, and that “Crestron’s paranoia keeps them from succeeding.”

Cyber Sound Countersues

In response, Cyber Sound filed a countersuit against Crestron in October 2011 that largely echoed the original claims by Savant: that Crestron violated the Sherman Antitrust Act by “precluding Cyber Sound and other present or former dealers from handling the products of a new, and potentially major competitor, namely, Savant.”

After Cyber Sound took on the Savant line, Crestron terminated its dealer agreement with the firm. Cyber Sound claims that “Crestron had expressly advised it that it would terminate Cyber Sound if it began handling Savant products.” Then, Crestron demanded that all existing Crestron clients of Cyber Sound’s be handed over to a local competitor for servicing, says the counterclaim.

Initial Rulings on Antitrust, Defamation, Interference Claims

Crestron filed a motion to dismiss Cyber Sound's countersuit, and in February 2012, the Honorable Faith S. Hochberg ruled on that motion in the U.S. District Court of New Jersey, with a split decision.

She denied Cyber Sound's claim that Crestron violated the Sherman and Clayton Antitrust Acts. She ruled that Crestron did not impose an unreasonable restraint on trade because, among other things, it did not expressly prohibit Cyber Sound from carrying other lines. In fact, Crestron's dealer agreements, "are expressly non-exclusive and permit dealers to sell products manufactured by Crestron's competitors such as Savant," she wrote.

The court also denied a defamation claim by Cyber Sound. However, Judge Hochberg allowed an alleged Interference with Contract and Interference with Prospective Economic Advantage claim by Cyber Sound to continue.

Now that the two parties have settled their disputes, that case will not go to trial.

Meanwhile, the Savant vs. Crestron case continues. The two companies currently are in the discovery phase, with a trial slated for late 2013 or early 2014.

Savant vs. Crestron vs. Cyber Sound