Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_03-cv-00148/USCOURTS-alsd-1_03-cv-00148-10/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 15:15 Antitrust Litigation

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IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

NORRIS ARMSTRONG, et al., )

 )

Plaintiffs, )

 )

v. ) CIVIL ACTION 03-0148-WS-C

 )

HRB ROYALTY, INC., et al., )

 )

Defendants. )

_______________________________________)

 )

HRB ROYALTY, INC., et al., )

 )

Plaintiffs, )

 )

v. ) CIVIL ACTION 03-0635-WS-C

 )

NORRIS ARMSTRONG, et al., ) 

 )

Defendants. )

ORDER

This matter is before the Court on two motions in limine filed by the Block defendants (“Block”)

to prevent plaintiff Armstrong Business Systems, Inc. (“ABS”) from presenting hearsay testimony to

support its claims of slander and intentional interference with business relationships. (Docs. 243, 267). 

The parties have filed briefs in support of their respective positions, (Docs. 244, 248, 252, 267, 273,

280), and the motions are ripe for resolution. After carefully considering the foregoing materials, the

Court concludes that the motions are due to be granted.

BACKGROUND

After it terminated the parties’ franchise agreements, Block set up offices and competed with

ABS during the 2004 tax season. ABS alleges that, in the course of this competition, Block made

certain derogatory statements about ABS and engaged in certain other conduct detrimental to ABS’s

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business. These allegations form the basis of ABS’s claims under Counts Ten through Twelve of the

third amended complaint for slander and intentional interference with business relationships. (Doc. 162

at 28-33). 

With limited exceptions, no representative of ABS purports to have heard a Block

representative make any objectionable remark concerning ABS. Several ABS representatives,

however, have testified that customers reported to them that they had heard Block representatives

make the objectionable remarks. ABS owner Norris Armstrong and general manager Shane

Armstrong have testified that they heard about the objectionable remarks from their employees, who in

turn heard about them from customers. The Armstrongs have also testified as to objectionable conduct

by Block representatives which they did not witness but heard about from others. Finally, Shane

Armstrong, based on reports he received from others, accuses Block representatives of making

derogatory statements about, and directing racial slurs at, ABS employees. Block seeks an order

precluding the plaintiff from presenting or suggesting the existence of “testimony by present or former

ABS employees that they were told by customers that representatives of Block made false or

disparaging statements concerning ABS” or “any hearsay testimony from Norris or Shane Armstrong of

purported defamatory statements or tortious conduct by Block or Block employees.” (Doc. 244 at 5;

Doc. 267 at 6).

DISCUSSION

ABS first argues that Block’s motions represent an “abuse” of the motion in limine device

because Block had argued on motion for summary judgment that ABS has no admissible evidence to

support its claims of slander and intentional interference. (Doc. 273 at 1). As the Court has previously

noted, “[a] motion in limine is a motion made prior to trial for the purpose of prohibiting opposing

counsel from mentioning the existence of, alluding to or offering evidence on matters so highly

prejudicial to the moving party that a timely motion to strike or an instruction by the court to the jury to

disregard the offending matter cannot overcome its prejudicial influence on the jurors’ minds.” O’Rear

v. Fruehauf Corp., 554 F.2d 1304, 1306 n.1 (5th Cir. 1977)(internal quotes omitted). Such a motion

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1ABS relies on Mid-America Tablewares, Inc. v. Mogi Trading Co., 100 F.3d 1353 (7th

Cir. 1996), but that case says only that the sufficiency of evidence to support a claim is properly raised

by motion for summary judgment rather than by motion in limine. Id. at 1362-63. Block does not

herein challenge the sufficiency of ABS’s evidence but rather the admissibility of certain portions of

that evidence. That, of course, is precisely the function of a motion in limine. 

2Block states that ABS never adequately identified any customers in its initial and amended

disclosures under Rule 26(a). (Doc. 244 at 2 & n.1). ABS says that it has “listed the subject potential

witnesses for trial,” (Doc. 273 at 2), but it identifies only one listed witness as a customer. (Id. at 3). It

is of course too late for ABS to cure any deficiency in this regard. 

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is in effect an evidentiary objection made in advance of trial, and the failure of a motion for summary

judgment as to an entire claim scarcely bars an objection to evidence offered in support of the claim.1 

ABS does not deny that it will rely on employees to testify as to what customers told them that

Block said, and on the Armstrongs to testify as to what employees told them that customers reported

that Block said. Instead, ABS insists that such testimony will not constitute hearsay because it will not

be “offered in evidence to prove the truth of the matter asserted.” Fed. R. Evid. 801(c). ABS’s theory

is that it has no interest in proving that the terrible things Block allegedly said about it are true, so that its

proposed testimony concerning such statements cannot satisfy the definition of hearsay. (Doc. 248 at

1). ABS has correctly quoted Rule 801 but incorrectly identified the critical statement.

There are four levels of statement implicated here:

• Block: “X”

• Customer: I heard Block say “X”

• Employee: I heard C say that she heard Block say “X”

• Armstrongs: I heard E say that he heard C say that she heard Block say “X”

Testimony by Block that it said “X” presumably would constitute the admission of a party opponent and

so not constitute hearsay. Fed. R. Evid. 801(d)(2). As Block apparently concedes, (Doc. 252 at 1-

2), testimony by a customer that she heard Block say “X” would not be hearsay because ABS would

not offer the customer’s testimony to prove “X” but to prove that Block said “X.” However, whether

or not ABS intends to call any customers as witnesses,2 it appears that it will primarily rely on ABS

representatives to prove Block’s alleged tortious statements and conduct. 

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Testimony by ABS employees that they heard customers say they heard Block say “X” would

constitute hearsay. ABS’s argument focuses on the “Block said ‘X’” portion of the customers’

statements, but ABS cannot prove that Block said “X” without proving that the customers heard Block

say it. Because ABS’s only proof that the customers heard Block say “X” is that the customers said

they did, ABS is necessarily offering their statements to prove the truth of the matter asserted (i.e., that

they heard Block say “X”), and that is classic hearsay. None of ABS’s cited cases is remotely to the

contrary. The challenged testimony by the Armstrongs simply adds a second level of hearsay. 

ABS’s suggestion that it will offer the disputed testimony to prove publication, malice, improper

motivation and damages, (Doc. 248 at 1, 3-6), is beside the point. The testimony may very well be

relevant to those issues, but it is not admissible as long as it fails the hearsay test. See Fed. R. Evid.

402 (“All relevant evidence is admissible, except as otherwise provided by ... these rules ....”); id. Rule

802 (“Hearsay is not admissible except as provided by these rules or by other rules prescribed by the

Supreme Court pursuant to statutory authority or by Act of Congress.”).

ABS ignores Block’s challenge to Shane Armstrong’s testimony concerning derogatory

statements about, and racial slurs directed to, ABS employees. With respect to the single example

Block discusses in brief, Armstrong’s proposed testimony is captured by the discussion above, because

he admits that his only awareness of the incident comes from the statements of ABS employees that

they heard the comment. (Doc. 267 at 5; id., Exhibit 3 at 74). Even though ABS presumably seeks to

prove only that Block made the offensive comment, it cannot do so without proving that the employees

heard the comment, and Armstrong has only hearsay (the employees’ say-so) to meet this burden. 

Although Block provides no additional examples, any that fit this mold will of course be governed by

the same result. This is true as well with respect to any testimony by Shane or Norris Armstrong that

they heard from employees that Block engaged in particular misconduct. (Doc. 267 at 3). 

CONCLUSION

For the reasons set forth above, Block’s motions in limine are granted. ABS and its counsel

are ordered not to present, or suggest the existence of: testimony by present or former ABS

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representatives that they were told by customers that representatives of Block made false or

disparaging statements concerning ABS; testimony by Shane or Norris Armstrong that they were told

by ABS representatives that representatives of Block made false or disparaging statements concerning

ABS or engaged in other tortious conduct concerning ABS; or testimony by Shane Armstrong that he

was told by ABS representatives that representatives of Block made derogatory statements about, or

directed racial slurs toward, any ABS representative.

DONE and ORDERED this 30th day of November, 2005.

s/ WILLIAM H. STEELE

UNITED STATES DISTRICT JUDGE

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