LG Owes Millions to Marketing Services Firm for Unpaid Bills, Says Suit

LG Electronics USA and its Mobilecomm subsidiary owe marketing services company GS Line (GSL) “several million dollars” for unpaid or underpaid invoices spanning several years, alleged a fraud lawsuit (docket 2:23-cv-21528) Thursday in U.S. District Court for New Jersey in Newark.

LG retained plaintiff GSL, based in Altamonte Springs, Florida, on multiple occasions from 2015 to 2020 to provide marketing and promotion services, said the complaint. GSL regularly invoiced LG for its services and contracts were reviewed “by several layers of LG personnel,” including directors and vice presidents, it said. LG personnel also conducted several audits of GSL’s invoices and services, the complaint said. From 2015 to 2020, LG “voiced no objection to any GSL invoice or service,” it said.

Under terms of the contracts between the companies, GSL was to have been paid for its services within 60 days of LG’s receipt of its invoice, but LG “routinely failed to pay” the invoices within the required period, the complaint said. The complaint listed some invoice numbers for unpaid bills with amounts of $145,114.07; $353,700; $188,882.71; $400,000; $24,500; and $20,515.27.

When GSL pressed LG for payment of the overdue invoices in June or July 2020, “LG repeatedly demanded that GSL provide it with documents and other information,” the complaint said. “As GSL responded to one request, LG made another request, demanding still more documents and information,” it said. LG also questioned current and former employees about their business and professional relationships with GSL and its owners, the complaint said.

Though LG’s audits and investigations “uncovered no evidence of any wrongdoing by GSL,” the electronics company “repeatedly told others that GSL had engaged in unethical and unlawful conduct,” the complaint said. One of LG’s “false statements” occurred in early 2021 at a meeting attended by LG sales staff at which an officer of the company “falsely said that GSL had defrauded LG by charging for services it did not perform,” the complaint said.

During their working relationship, LG “repeatedly asked” GSL to provide services and “undertake financial obligations and costs on its behalf” and instructed GSL to invoice it for them, the complaint said. In 2019, LG directed GSL to pay about $917,000 to its vendor Genesco and to charge LG for the payment service, but LG has failed to pay GSL as promised, it said.

In October 2019, LG engaged GSL to manage a program offering a free LG TV to customers who bought certain other LG products, the complaint said. As part of the program, GSL bought 3,200 TVs from LG. The program was “less successful than the parties had expected” and when it ended, 1,086 TVs “remained in the possession of GSL,” the complaint said. Those TVs “belonged to GSL,” it said; the program didn’t require the return of the remaining TVs to LG, but LG requested that they be returned.

Because of a pending LG audit, and “because many GSL invoices to LG remained unpaid, GSL initially declined to return” the remaining TVs, the complaint said. Later, to show “good faith,” and “to encourage LG to pay GSL’s open invoices,” GSL offered to return the remaining TVs if LG agreed to reimburse it for storage and shipping charges.

An LG representative “assured GSL” that it would reimburse GSL for the storage and shipping charges, the complaint said. In August 2020, the companies executed an agreement under which GSL agreed to return the TVs to parties and locations specified by LG, and LG agreed to pay $90.90 for the shipping and storage of each TV, for a total $98,717.40. LG was obligated to pay the invoice by Nov. 2, 2020, but it has failed to do so, the complaint said.

The complaint claims breach of contract, breach of implied covenant of good faith and fair dealing, unjust enrichment, defamation and tortious interference with prospective economic advantage. GSI seeks an order enjoining LG from making false or defamatory statements about it; punitive and compensatory damages, including interest; and attorneys’ fees and costs. "We generally don’t comment on pending litigation such as this,” emailed John Taylor, senior vice president, LG Electronics USA, Friday.