next case on is sleepy's l l c versus select comfort first is that the district courts determination that there was no breach of contract pursuant to section four c was clearly erroneous and should be reversed and remanded and second that this is not an exceptional case under the act so as to warrant the section thirty five eight attorneys fees and i ask you a question i find this case puzzling in many regards one of them is you had these shoppers who went in they were  told disparaging disparaging remarks about your client were made and the court there's a difficulty there because that's not publication for purposes of slander or other defamation but i couldn't quite figure out ok let's assume that those comments to your employees or when they were to find out what was going on let's assume  that they were in fact made and they're not actionable one would think that the next step would be discovery of others to see if the same statements were being made to people who were not employees of yours i mean was there extensive discovery trying to find out if other if if others who had no connection with sleep is were being told that there were bugs in sleepy's matters i was not involved unfortunately in the discovery aspect of the case so i am not a position that i am fortunate that i can address that what i can say is that the theory of the case on the advertisements and the advertisements made reference to a distinction between the polymer and and the wood foundation noting that if you don't know the answer then you don't know the answer and that's why but i i was confused because it seems to me if the if you if you can if your if your competitor is out making derogatory statements about you to others even after twenty believe that's probably enough to allow you to go and take some depositions and find out whether they are making to others in which case it would have been i might have been actionable depending on what i understand with the court saying  i unfortunately just can't address that what i what i what i do want to focus on because i think the question that comes into play particularly on the section thirty five a lanham act is was this a bad faith claim was there no basis for it and and what i first asked the court to look at in that regard is is to take a look at even though we didn't agree with it the decision of judge platt because in that's an s p a special appendix fifty one through fifty five on this issue judge plaids analysis discussion of the lanham act claim while he disagrees with us is is written in a manner that  addresses and goes through all of the elements of what we focused on and discusses in turn the to be c s for under advertising and promotion first  advertisements that select comfort made that drew a distinction between the polymer and things that would that would work in box springs and on that issue the court said what we want to take a look at is what was the understanding of the term box springs in the in the advertising with the court found unfortunately was that box springs that there wasn't enough evidence from the courts perspective to make that distinction but the evidence that was put forward on that i'm sorry you know i'm sorry i know you have a limited about of time but that's another point of curiosity from my standpoint lanham fact was there was  previous appeal to this court that was in this room of judge plats roux earlier ruling in the case and my understanding from a footnote in the opinion is that the lanham act did part of the decision wasn't even a was not appealed to this court now is that right that is correct the lanham act decision we disagreed with it but there were so many other issues and the and the primary focus of this case was the breach of contract in the slander matters and we proceeded on that basis the lanham act was the tenth claim mentioned only once in the opening statement it was part of the case i'm not going to say it wasn't part of the case but to have thirty five a sanctions here is really the tail wagging the dog and the reason it's the tail wagging the dog is if you look at platz decision and it and his tone and if you further look at what the evidence was i just want to bring to the court's attention three types of evidence the first there was the advertising and there were extensive testimony the woodbox strike springs let me stop for just a second i did this is a complex case so and i said to time take full responsibility for this why don't we add for both sides at least five minutes to the argument time longer so as was the standard what's the difference but i would say that under either standard this doesn't fall as an exceptional case under it doesn't stand out we would submit with respect to the substantive strength or of our litigation position considering the governing law and facts of the case with the on reasonable manner in which the case was litigated the case was litigated on the lanham act issue by presenting state of mind evidence which this court in its prior decision said was or was not inadmissible hearsay because it went to the state of mind as to what consumers meant what they were focused on and the evidence that came  that the reference to the box springs in the advertisements with sufficient court didn't agree with that but there was a second part and the second part was the consistent pattern  from the secret shops of the denigration and the fact that that that pattern didn't just come from nowhere it came from one of the brands standard manual which is available if if the court wants to look at it at c a two twenty four shop after secret shop consistently the wood foundation was denigrated and so fashioned would seek short hells we argue that this was widely disseminated to the relevant purchasing public and part of a well in force policy to disparage through the oral statements by sales personnel it just wasn't that there were from time to time statements by the personnel it was that the statements by the personnel came from one the brand standard manual and two the training that was given to them a consistent pattern that we said constituted promotion under for the publication issue for self slander percent it seems like it's a big deal for you publication the district court said it doesn't count if it's made to the europe representatives and quote and cited the fashion boutique of short hills were suspended case but there are there are new york state court decisions that seem to be opposite to that publication the courts i believe said that that was because i would think another law of the case i suppose but i would think we're bound by what at least by what he  the court did not view as the this it meant to the agent as as being a bar the court then focused on the consent issue that he had so that the question then was was the consent was there consent to publication obviously it was all viewed through the first framework of the statement that was made to the age because that was what the evidence that was done so yes it is law the case here i i just want to get briefly if i could to the breach of contract issue because that's the other issue that i didn't want to address and i would just simply submit the court overlooked or ignored the overwhelming record here the overwhelming record when the court said it's ambiguous you've got to look at the peril evidence the court only looked at one aspect of the parallels there are three areas that the court should focus on one the negotiation of the agreement on that there was extensive testimony by adam blank as to how the clause of the what he called mutual representation to maintain the brand image in both his testimony and in his cover email that's defendant's exhibit four at a seven hundred fifty seven he said that this was an anti disparagement defamation clause that he provision to prevent any and parent infringement or adversely the character reputation or goodwill the brand image of the other party what's important here is not just the up or any other issue sleepy's would contact select comfort and select comfort apologized for separately after the january third meeting there's a volume of evidence  mr blank's testimony at a thirteen zero one that said that would select comfort said is there's no issue here in terms of needing an extra letter it's included in the contract that not disparag respect to this podium i have been lowering it consistently after mr sarkozy for quite some time on this case we've been at this for about ten years two judges have now decisively found in favor of select comfort i understand we were sent back to a second judge wants we have two judges who have decisively found in favor of select comfort we have a decision now that sleepy's brought and litigated this case for an improper purpose  warranted imposition of some fees under the lanham act we have a holding that sleepy spoliation evidence and a lot of this evidence related to the heart of the case related to these secret shops were sleepy sent not just low level employees not third parties they retained as agents to go to these shops these were their managers that they sent and then the shop reports didn't get preserved any recordings they claim to have made didn't get preserved they said they even told the court they've all been destroyed then we filed a motion they miraculously found him but anyway there is a holding that they did evidence and all this time and this decade of litigation there's not been a single consumer who has come to court during the trial who has testified via deposition that he or she heard anything negative disparaging slanderous product disparagement you name it from select comfort about sleepy's not one and in fact prior to the case being commenced when sleepy's was trying to leverage select comfort stay with them keep this agreement do an extension harry act the c e o of sleep he's now claims he was semi retired he didn't come testify mr bookbinder testified clearly he's the boss he was the boss the executive committee reported to him we have the transcript of him telling and asking the number one and number two people at sleepy's mr ackerman asking all salespeople let us know if you have ever heard any consumers complain reference or in any way talk about anything negative that a sly comfort sales person has said about select comfort products sold it's these let's find out he receives zero responses zero this is right before they commence the action let me ask you this yes you're extent is the read of those legal fees dependent on the fact that there was originally a there was one count in the in the  cause of alleged cause of action based on suppose hypothetically they never brought it in never heard of the lanham act and they never brought it there everything else they did i think we would have a path to legal fees through spoliation through bad faith bringing of the litigation the path we took them was through the lanham act so ye i'm more what's the word i'm more moved by the notion of there that you're saying there was bad faith which has nothing really to do with the end of act rather than the fact that  you know how often you read a complaint whether you're sitting on that side of this bench or this how often you read a complaint and some of those strangers when you get to the towards the end count seven or eight even the most absurd claims are made based on obviously doesn't apply some lawyer thought well you better put it that we see that all the time i saw it practice you see it in practice and my question is to what is the so called tail wagging the dog to what extent is the lanham act which really played a relic from what we now see played over of the bully small part in this and no part since since it went through this significant claim slander per se claims which are most of you know of the twelve they've claimed certainly most of them are actually product disparagement claims that they didn't plead but two or three slander percy claims quite frankly are not that concerning from when you're talking a big litigation between two companies but a lanham act claim where they're claiming there's this widespread dissemination that it is widespread that sly come for people have embarked on this pattern and this scheme to slander to denigrate sleepy's products which are actually select comfort products sold in sleepy when if you look at the exposure when you get the complaint and when you start getting into discovery and you have to talk and analyze the exposure limited instances of slander that are only said to an employee of the plaintiff there's really not a great avenue for damage there the breach of contract claim for example even if the theory of the contract was correct and how could possibly there be any damage to adversely affect their goodwill when a comment was only made to their employee so i'm not trying to downplay it but it was significant from i understand it right you're saying at least up and through until the prior proceedings in this court to you and to your client this was essentially a lot of cases and that was that was that we principal problem space that's with and we view that as the as the most significant claim we were dealing with yes can i go back to the slander personae yes i was asking opposing counsel about it seems as if the district court may have gotten iran about publication under new york law but then moved into the discussion of consent and the prior panel here talked to the judge leavelle talked a lot about con discussion i'll answer both of them i'll discuss both know the court didn't get it wrong and it doesn't matter anyway but it does not does not matter yes with respect to the publication agent this is this is a different situation than  like the tiger case and these other cases where parties have hired agents they have hired third parties they have or they're individuals that have someone that's doing some work for him here the agents are managers of the corporation what's the difference i think the difference is these employees these managers that was their only role they are the company they were the company when they went out they  were charged by sleepy c e o to go out and do these secret shops they were given scripts in new york this is recognized as distinction you're either an agent or you know they do not and in fact we couldn't find any cases in the  country in fact that recognized the distinction or discussed it the other way and said no that doesn't apply that was that distinguishable from a comparison shopping which i gather is a you know it's a profession people going out for one person saying what are they saying about their product and how do we what do we do about it i would think in that instance where you where you're hiring a third party to go do it secret shopping outfit  a private investigator that person or that entity is receiving that information as that person or that entity here all you have are individuals that were sent out by a company and are receiving the information solely in their role as managers of sleepy's not in any individual capacity whatsoever the information negative about sleepy's is being told to sleepy's itself  outside who are and so i just i'm having a hard time grasping the difference and i think you're on to this is where we roll into the consent issue is that they are charged by sleepy's with going out and obtaining this information they were charged by c p s to go out perform these secret shops they called it a blitz they wanted them to go do it they gave them scripts to go do it and the so they were not going out and doing it as you know individuals they were not going out and doing it to satisfy their curiosity and their sales process and the record of it was a part of those scripts and the of them in the record on appeal most of the scripts were not preserved that was i believe there was one script that we think we found but it went through it wasn't the true script it ended up tacked on to something else that was one of the issues we had in this case was that the scripts were in fact i recall now there's been a lot of this going on ten years of sometimes it takes me a moment but i believe the script that we found was a script that was responded to out and they come back and say oh this is what they said they would give no but the notes weren't preserved the notes disappeared and when they were when they did show up they wouldn't be in them the same way fitness i think it lowers that standard so judge sieverts award was good under the old standard it's certainly good under the octane fitness standard which just says it is the litigation stand out from ordinary litigation or was there litigation misconduct in this case judge saber found yes there was litigation misconduct that was the spoliation just say were also found that the litigation was coming for an improper purpose and an improper purpose was seen in the statements made by the c e o of sleepy's when he wanted to go out and generate enormous fabulous lawsuit against a comfort and he even said in there the rich simply wanted to do it he wanted to do it because it was going to hurt him in the industry and he said well it's not going to hurt him with consumers but it's going to hurt him in the industry and where it was going to hurt him was he's go a point that nobody you know none of these other retailers should do business with select comfort because this is what they do so will sue him for it so that was a big part of why judge saber awarded fees if you have note that sleepy's damages expert perform no separate analysis of damages based on the land and when was this happening relative to our decisions is this after before i should  notice before this beginning of the case beginning of the case lanham act was hardly addressed not only by a split by select comfort and select comfort noted that there were no great fabulous damages the came from the lanham act was a trial acker that the judge plot never commented on his decision at all there was no live fact witness testimony before judge seibert so judge seibert read this one take this one exhibit and from that and from that determined what sleepy's motive was but if you look at adam blank's testimony about what happened blank said and this is a a twelve ninety nine he spoke to acker after acker had this thing centrally calmed him down he said we were going to try to resolve this is business and partners and not jump into necessary litigation unnecessary litigation we agreed not even to discuss or pursue a lawsuit and even though in the tape actor said we should get adam blank involved and we should get an outside lawyer blank said we did not get an outside lawyer on what happened at that point was secret shops were undertaken because there had already been some information that there had been this disparagement the secret shops were undertaken then the process of what was done and it was consistent for secret shops throughout sleepy's history was the secret shopper would  record it or would take notes on it would send an e mail the e mail or or or the tape would be transcribed by one person sam who reported to mike bookbinder and you can see so many things in the record where there are in any particular format that harry acker acquired secret shops other a calls memos that cetera this was standard process the the tapes were then recycled now that there was extensive evidence that missing evidence would support the proposition that select comfort asserted the district or in any of its forms did it address spoliation she said no sanctions would be issued now she said no sanctions would be issued because of irrelevant based on the rest of her decision but she did not undertake a finding as to whether or not the threshold would be met i submit it wouldn't and i would submit that there is no basis for land in the act attorneys fees to come without following that step particularly in light of all the other bases supporting the land in  my colleagues have further questions thank you very much your honor thank you both your arguments we will reserve decision in this case