Sacramento Stores Engage La-Z-Boy In Suit Over Licensing Agreement

Furniture World Magazine

The owners of four La-Z-Boy Furniture Galleries operating in the greater Sacramento metropolitan area have filed a multi-million dollar suit in Sacramento County Superior Court against La-Z-Boy, Inc., alleging that the company violated its licensing agreement. Their contention is that the written agreement between La-Z-Boy, Inc. and licensee Eugene N. Gordon, Inc. – owned by Jim and Liz Reego – provided the Reegos with the exclusive right to operate an outlet in the greater Sacramento area. The Reegos say that La-Z-Boy, Inc. violated the agreement when it allowed R.C. Willey to open a store in Rocklin, Calif., with a large La-Z-Boy in-store gallery outlet. “When R.C. Willey was allowed to open with what is, in essence, a La-Z-Boy Furniture Galleries outlet in-house, located clearly within our territory, it not only violated our licensee agreement, but in addition, eliminated the feasibility of our operating two profitable La-Z-Boy Furniture Galleries in the fast-growing South Placer market,” explained Jim Reego. In November 2005, the Reegos placed a sizable deposit on acreage in Rocklin for a new La-Z-Boy Furniture Galleries store. The site for their fifth La-Z-Boy Furniture Galleries store was planned for Blue Oaks and Highway 65. Today, that site sits just a quarter mile away from the new R.C. Willey store that opened on July 20, 2006. The Reegos contend that they have already lost several hundred thousand dollars in costs spent to develop the land for the new Rocklin store site. In addition, the owners believe they stand to lose millions of dollars in appreciation in the building and years of profits from operations. “For the past 25 years, we have always welcomed competition on the La-Z-Boy line from other retailers, such as Montgomery Ward, Breuners and currently JC Penney, to name a few,” said Reego. “But the elaborate La-Z-Boy in-store gallery at R.C. Willey with dozens of ‘vignetted’ room displays is indeed an outlet, which is in direct conflict with our exclusive rights based on our licensee agreement.” “Interestingly,” Reego added, “in Utah, where R.C. Willey has similar stores with the same large La-Z-Boy in-store galleries, they advertise them as ‘La-Z-Boy Galleries’ there. And because of this strong presence, La-Z-Boy, Inc. has not allowed a La-Z-Boy Furniture Galleries chain to open in Utah because La-Z-Boy executives contend that La-Z-Boy Furniture Galleries and La-Z-Boy Galleries cannot exist in the same market.” “Unfortunately, we have no other choice but to go to court to actively protect our licensing rights,” stated Reego. “Given that we have worked with La-Z-Boy for almost 25 years and the fact that we have operated a ‘Top 10’ furniture galleries store for each of the last 10 years, filing this lawsuit was a very difficult decision."