A California-based company that provided in-store music and messaging services to Kohl’s Corp. for the last decade is alleging the retailer still owes more than $390,000 after ending their agreement.
Disc Marketing LLC or DMI filed a lawsuit in the U.S. District Court for Eastern Wisconsin in November claiming the Menomonee Falls-based retailer refused to pay for nine months of service after cancelling the agreement between the two companies in April 2018.
Kohl’s filed an answer in federal court this week, contending it had substantially complied with the contract. The company also argued DMI had broken its own contract by revealing confidential information when it filed the lawsuit.
According to court records, Kohl’s initiated a request for proposals from multiple vendors, including DMI, more than a year before the end of the contract. Kohl’s says it notified DMI it would be switching vendors nine months before the end of the contract and the two sides have differing interpretations of how to conclude their business relationship.
Representatives of Kohl’s and Disc Marketing did not immediately respond to requests for comment on the case.
According to the complaint, the two companies originally signed a five-year agreement in 2008. The agreement called for Kohl’s to pay $33 per month per location. In exchange, Disc Marketing provided approved music along with 12 professionally produced messages, inserting those messages 125 per month. Additional insertions cost Kohl’s $10 per insertion.
The agreement initially called for month-to-month renewals after the five-year period, but in 2013 the deal was amended to run until terminated by either party, according to the complaint. The amendment also included a series of fee increases. Kohl’s was to pay $36.38 per month per location from Aug. 1, 2015 to July 31, 2018. It did not specify fees after July 31.
The amendment also required Kohl’s to provide 12 months of notice to terminate the deal “for convenience,” according to the complaint. Kohl’s could choose whether it would continue to receive the music and messaging services for the entire 12 months, but was required to pay the remaining fees.
Kohl’s provided notice in April 2018 that it was terminating the agreement on Aug. 1.
Disc Marketing continued providing services through July 31, with Kohl’s paying $43,428 per month. The company claims Kohl’s refuses to pay the $390,852 it allegedly owes to cover the period from August 2018 through the end of April 2019.
The company is seeking a judgment awarding it the allegedly outstanding amount plus interest and other costs and fees.
In its counterclaim, Kohl’s said both sides were required to sign a confidentiality agreement when the deal originally started. Kohl’s is seeking to have the case dismissed, arguing that agreement was broken with the filing of the lawsuit.
