Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-03514/USCOURTS-cand-3_04-cv-03514-16/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 15:1 Antitrust Litigation

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

IN RE TABLEWARE ANTITRUST

LITIGATION

 /

THIS DOCUMENT RELATES TO

ALL ACTIONS

 /

No C-04-3514 VRW

ORDER

The court has before it motions in limine filed by

plaintiffs and defendants. As the court writes principally for the

parties, it will simply address seriatim certain issues raised in

those motions, without laying out the full factual background of

each of the motions. 

To the extent an issue is not addressed in this order, it

is because the court has concluded that the issue is not an

appropriate subject for a motion in limine or is not ripe for

decision and will, therefore, be deemed DENIED. The court

anticipates addressing such issues as they arise at trial, if

necessary, and outside the hearing of the jury, if appropriate. As

the parties are on notice of each other’s contentions regarding the

admissibility of certain evidence, the court expects counsel to be

well-prepared at trial to address issues of relevance, foundation

and admissibility. 

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(1) Plaintiffs’ motion to prevent defendants from obtaining trial

testimony from James Zimmerman (Doc #234)

Plaintiffs seek an order prohibiting Federated’s former

Chief Executive Officer, James Zimmerman, from testifying at trial. 

In lieu of Zimmerman’s live testimony, plaintiffs intend to read

into evidence Zimmerman’s invocation of the Fifth Amendment during

his deposition. Defendants assert they do not intend to ask

Zimmerman (a non-party who lives outside of California) to testify

at trial. Doc #262 at 2:10-11. Accordingly, this motion is DENIED

as moot.

(2) Plaintiffs’ motion to preclude expert testimony constituting a

legal conclusion (Doc #235)

Plaintiffs seek an order prohibiting defendants from

eliciting “legal conclusions” from expert witness Dr Daniel L

Rubinfeld. Defendants characterize plaintiffs’ motion as “utterly

unnecessary (and premature),” though they acknowledge that the

federal rules of evidence bar such testimony. Doc #262 at 2.

The court agrees with defendants that it should assess

whether specific testimony amounts to a legal conclusion at trial

rather than in the abstract. See United States v Noah, 130 F3d

490, 496 (1st Cir 1997) (“A court is not required to make judgment

calls about admissibility a priori and out of context.”). 

Accordingly, plaintiffs’ motion is DENIED. 

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(3) Plaintiffs’ motion to preclude defendants from presenting

evidence of plaintiffs’ failure to mitigate (Doc #236)

Plaintiffs move to preclude defendants from presenting

evidence of plaintiffs’ failure to mitigate damages, arguing that a

failure to mitigate defense is irrelevant in a price-fixing case. 

But plaintiffs disavowed their price-fixing theory during the

summary judgment proceedings, rendering this suit, in plaintiffs’

words, “a group boycott case.” Doc #161 at 8. As a result,

defendants no longer intend to assert that plaintiffs failed to

mitigate their damages. Doc #262 at 3. Accordingly, this motion

is DENIED as moot.

(4) Plaintiffs’ motion to preclude defendants from presenting

evidence regarding or referencing internal antitrust

compliance policies (Doc #237)

Plaintiffs seek to exclude evidence of defendants’

antitrust compliance policies and programs under FRE 403. 

Defendants view such evidence as relevant to rebutting plaintiffs’

circumstantial evidence of conspiracy.

The court finds that defendants’ compliance policies

pertain to this litigation, especially with respect to the socalled “mantra” invoked by defendants during the alleged

conspiracy. Plaintiffs maintain that defendants’ use of similar

language in speaking to the manufacturers about the rollout raises

an inference of coordination. Defendants, by contrast, assert that

their antitrust compliance policies account for the parallel

language, as they allegedly instruct retailers to recite this

phrase in order to avoid implicating the antitrust laws.

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Plaintiffs’ apparent impression that defendants’

alternative explanation would “confuse” the jury completely

misapprehends FRE 403. As defendants note, FRE 403 does not

protect a party from all prejudice, only unfair prejudice. See

Deters v Equifax Credit Info Servs, 202 F3d 1262, 1274 (10th Cir

2000). (The late Judge Robert Schnacke quipped: “Nobody is

interested in evidence unless it is prejudicial”). Although

evidence of defendants’ antitrust compliance policies may

“prejudice” plaintiffs by rendering their claim of conspiracy less

probable, such evidence is not unfair. See FRE 403 advisory

committee notes (defining “unfair prejudice” as “an undue tendency

to suggest decision on an improper basis, commonly, though not

necessarily, an emotional one”). See also United States v

Benedetti, 433 F3d 111, 118 (1st Cir 2005) (“Although this evidence

likely worked to the appellant's detriment, Rule 403 is concerned

not with prejudicial evidence, but with unfairly prejudicial

evidence.”). Accordingly, plaintiffs’ motion is DENIED.

(5) Plaintiffs’ motion to preclude references to irrelevant

information regarding class representatives (Doc #238)

Plaintiffs seek to prevent defendants from referring to

class representatives’ relationships with counsel, involvement in

previous litigation and fee agreements with class counsel in this

litigation. Doc #238. Such evidence, plaintiffs contend, does not

pertain to the present suit and should thus be excluded under FRE

402 and 403. Defendants oppose categorical exclusion, emphasizing

that this evidence may be admissible to impeach the class

representatives’ credibility on cross-examination by showing the

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existence of bias, interest or prejudice. Udemba v Nicoli, 237 F3d

8, 17 (1st Cir 2001) (“bias is fertile territory for

cross-examination”). The class representatives’ fee arrangement,

in particular, is said to constitute “classic evidence of bias,

which is routinely permitted on cross-examination.” Crowe v

Bolduc, 334 F3d 124, 132 (1st Cir 2003) (cross-examination

regarding bias resulting from a contingent fee agreement was

appropriate).

The court declines to approve unconditionally defendants’

planned impeachment tactics, but at least agrees with defendants

that the court should defer ruling on this issue until it arises in

trial. Because referencing the class representatives’

relationships with counsel, involvement in previous litigation and

fee agreements with class counsel may be admissible for the purpose

of impeachment, categorical exclusion under plaintiffs’ motion is

inappropriate. Accordingly, plaintiffs’ motion is DENIED. 

(6) Plaintiffs’ motion to preclude evidence of or reference to any

adverse consequences to defendants that could result from a

judgment in favor of plaintiffs (Doc #239)

This motion aims to exclude references to the fact that

defendants “may suffer an adverse consequence from any potential

judgment in this case.” Doc #239 at 1. Defendants find this

motion over broad and unripe.

Plaintiffs are correct to observe that reference to

adverse consequences may be inadmissible, see e g, Rebolledo v

Herr-Voss Corp, 101 F Supp 2d 1034, 1036-37 (ND Ill 2000) (holding

evidence or argument that judgment against a manufacturer would

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cause financial harm or burden was inadmissible), but the court

finds it inappropriate to block such evidence via plaintiffs’

sweeping motion. 

During this litigation, both parties have emphasized that

Federated and May lost market share over the past few years,

especially with respect to the sale of tableware. This storyline

involves reference to defendants’ present financial standing, yet

plaintiffs’ vague motion threatens to cut-short this vital

evidence. 

In any event, defendants assert they have “no intention

of arguing that [they] will go out of business if [p]laintiffs

prevail.” Doc #262 at 7. The court finds no reason to rule in the

abstract before trial that all evidence of “adverse financial

consequences” should be excluded. Accordingly, plaintiffs’ motion

is DENIED.

(7) Plaintiffs’ motion to preclude reference to treble damages

under the Clayton Act (Doc #240)

Plaintiffs seek an order precluding defendants “from

referencing the fact that any damages awarded by the jury will be

trebled.” Doc #240 at 1. In response, defendants reason that

because “the jury may well be aware of the fact that damages are

trebled,” plaintiffs “can claim no unfair prejudice from the jury

learning of the Sherman Act’s treble damages provision.” Doc #262

at 7.

In antitrust actions, “courts have uniformly concluded

that mentioning treble damages and attorney[] fees to the jury is

improper.” HBE Leasing Corp v Frank, 22 F3d 41 (2d Cir 1994). See

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also CVD, Inc v Raytheon Co, 769 F2d 842, 860 (1st Cir 1985);

Arnott v American Oil Co, 609 F2d 873, 889 n15 (8th Cir 1979);

Noble v McClatchy Newspapers, 533 F2d 1081, 1090-91 (9th Cir 1975),

vacated on other grounds, 433 US 904 (1977); Pollock & Riley, Inc v

Pearl Brewing Co, 498 F2d 1240, 1242-43 (5th Cir 1974). 

Defendants attempt to hoist themselves over this wall of

precedent by a case whose age exceeds a half century, Bordonaro

Bros Theatres, Inc v Paramount Pictures, Inc, 203 F2d 676, 678 (2nd

Cir 1953) (ruling that references to Sherman Act treble damages “is

so usual a course in jury trials as to occasion no comment” where

the provision was referenced in the pleadings and in the statute

itself). Making matters worse for defendants, their exact argument

has already been rejected in HBE Leasing Corp v Frank, 22 F3d 41

(2d Cir 1994). 

As is evident from the law’s development since our

decision in Bordonaro Brothers forty years ago,

today one could hardly say that reference to treble

damages “is so usual a course in jury trial as to

occasion no comment.” In this sense, time has

passed by the Bordonaro Brothers decision, and the

dominant and more-reasoned view is that juries

should not be made aware of trebling provisions.

Defendants thus fail to persuade the court to ignore

clear precedent. Nor do they give reason for the court to stray

from the skillful reasoning in HBE Leasing Corp and its progeny. 

Accordingly, plaintiffs’ motion is GRANTED.

(8) Plaintiffs’ motion to compel attendance of witnesses or, in

the alternative, to preclude live testimony (Doc #241)

Plaintiffs seek an order requiring defendants to make

available at trial, during plaintiffs’ case-in-chief, all

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individuals outside the court’s subpoena power that defendants have

identified as live witnesses for trial. Defendants have designated

three witnesses as potential live witnesses – Terry Lundgren, Janet

Grove, and Priscilla Cipollini – and agree to make these witnesses

available during plaintiffs’ case-in-chief so long as plaintiffs

provide “reasonable and specific notice as to when their testimony

is required” and “tender the required witness and travel fees,

including the costs associated with flying to San Francisco.” Doc

#262 at 8. Further, defendants request that if plaintiffs elect to

call any of these witnesses in their case-in-chief, the court

should permit defendants to conduct its full examination of these

witnesses during plaintiffs’ case-in-chief in order to avoid

burdening these witnesses with a return cross-country trip to San

Francisco to testify later during Federated’s case-in-chief. Id.

As defendants’ offer appears to moot this issue, the

court declines to rule on plaintiffs’ motion. If an agreement is

not reached, the court invites the parties so to inform the court

promptly. 

(1) Defendants’ motion to exclude Zimmerman’s deposition testimony

(Doc #224)

Defendants move to prohibit plaintiffs from 

referring to the invocation of the Fifth Amendment by Federated’s

former chief executive James Zimmerman during his deposition. Doc

#224. In Baxter v Palmigiano, 425 US 308 (1976), the Supreme Court

held that the drawing of the adverse inference from the invocation

the Fifth Amendment in civil suit is proper when incriminating

evidence is also presented. See id at 317-18. The Ninth Circuit

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interprets Baxter as warranting an adverse inference in the civil

context only if “independent evidence exists of the fact to which

the party refuses to answer.” Doe by & Through Rudy-Glanzer v

Glanzer, 232 F3d 1258, 1264 (9th Cir 2000). This proviso is said

to broker the competing interests of the party asserting the

privilege and those of the adverse party, “who is deprived of a

source of information that might conceivably be determinative in a

search for the truth.” SEC v Graystone Nash, Inc, 25 F3d 187, 190

(3d Cir 1994). 

Defendants contend that no independent corroborating

evidence exists to justify the court permitting adverse inferences

here. As set forth in Doe v Glanzer, 232 F 3d 1258, 1264-66 (9th

Cir 2000), in order to admit evidence of Zimmerman’s invocation of

the Fifth Amendment (and to permit the drawing of an adverse

inference), the court must find three threshold requirements

satisfied under FRE 104(a): the silence must be countered by

“independent evidence of the fact being questioned”; there must be

a substantial need for the information; and there must be no less

burdensome way to obtain it. Doe v Glanzer, 232 F 3d 1258, 1264-66

(9th Cir 2000). “[A] case-by-case analysis with a balancing test

which weighs the need for the information being sought * * *

against the afforded constitutional protections is exactly what the

law requires from the district court.” Id at 1267. Although

plaintiffs cite little in the way of corroborating evidence, the

court declines to determine that the testimony is entirely

inadmissible. The test articulated in Doe v Glanzer poses several

context-specific issues that are inappropriate for resolution on a

motion in limine. 

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Next, defendants argue that plaintiffs must establish an

“identity of interests” between Zimmerman and defendants to “ma[ke]

the adverse inference trustworthy,” citing Kontos v Kontos, 968 F

Supp 400 (SD Ind 1997) and Fujisawa Pharm Co Ltd v Kapoor, 1999 WL

543166, *9. The court first notes that neither of these cases has

been adopted by the Ninth Circuit. In any event, even though

Zimmerman was retired from his position as CEO at Federated when he

was deposed by plaintiffs, evidence suggests that their interests

remained aligned. In RAD Svcs, Inc v Aetna Casualty & Surty Co,

808 F2d 271 (3d Cir 1986), the Third Circuit analogized from FRE

801(d)(2)(D) to hold that drawing a negative inference from a

former employee’s refusal to testify is permissible so long as

there are factors “suggesting the retention of some loyalty by the

former employee to the party-employer.” 808 F2d at 275. 

Notwithstanding his retirement, Zimmerman had maintained an office

at Federated that he used “occasionally” and Federated provided him

with “secretarial assistance.” Doc #274, Ex 3 (Zimmerman depo) at

6:21-25. Such facts suffice to suggest that Zimmerman retained

“some loyalty” to the company he ran for so many years. 

Accordingly, the court declines to exclude Zimmerman’s deposition

testimony on the ground that he lacked an identity of interests

with Federated.

Finally, defendants argue that Zimmerman’s assertion of

the privilege is irrelevant with respect to the alleged horizontal

agreement between defendants. Zimmerman’s indictment from the New

York Attorney General’s office arose from his statements concerning

vertical communications with Waterford, yet at his deposition,

Zimmerman invoked the Fifth Amendment in response to questions

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relating to horizontal, as well as vertical, communications. 

Hence, defendants contend that Zimmerman’s invocation of the Fifth

Amendment in response to questions about horizontal communications

were influenced by his criminal liability relating to vertical

communications and thus do not pertain to this litigation.

But defendants’ theory goes to the weight, not the

admissibility, of Zimmerman’s deposition testimony. Zimmerman’s

response to questions relating to horizontal communications between

defendants are relevant to proving a horizontal agreement. Whether

those responses were colored by other motives is an argument for

defendants to advance at trial. Further, defendants’ rigid divide

between vertical and horizontal communications does not square with

the evidence here in which the vertical communications remain

relevant to the extent they abetted the alleged horizontal

agreement. 

In sum, the court DENIES defendants’ motion to exclude

reference to Zimmerman’s deposition testimony. Nevertheless,

plaintiffs must establish a foundation for that testimony by

adducing independent evidence of the surrounding facts before any

portion of Zimmerman’s deposition testimony will be admitted. 

(2) Defendants’ motion to exclude Zimmerman indictment (Doc #225)

Defendants seek to exclude evidence of Zimmerman’s

indictment for perjury. Doc #225. Plaintiffs do not oppose

defendants’ motion, but “reserve the right” to rebut any evidence

proffered by defendants that may require reference to or

explanation of the indictment in order to avoid confusing or

misleading the jury. Doc #271. Because a dispute does not appear

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to exist between the parties, the court DENIES defendants’ motion

as moot.

(3) Defendants’ motion to exclude New York Attorney General

investigation and settlement thereof (Doc #227)

Defendants seek to prevent plaintiffs from referring to

the so-called “assurance of discontinuance” that each of the

defendants entered into with the New York Attorney General’s (NYAG)

office in July 2004. Pursuant to this assurance, the parties

agreed to “settle and resolve” the NYAG’s investigation. Paragraph

VII, L of the assurances purports to limit the admissibility of the

parties’ settlement. For example, Federated’s assurance mandates

the following: 

neither this Assurance nor any acts performed or

documents executed in furtherance of the Assurance

(1) may be deemed or used as an admission of, or

evidence of, the validity of any alleged

wrongdoing, liability or lack of wrongdoing or

liability; or (2) may be deemed or used as an

admission of or evidence of any such alleged fault

or omission of Federated in any civil, criminal or

administrative proceeding.

FRE 408 provides that “[e]vidence of (1) furnishing or

offering or promising to furnish, or (2) accepting or offering or

promising to accept, a valuable consideration in compromising or

attempting to compromise a claim which was disputed as to validity

or amount, is not admissible to prove liability or invalidity of

the claim or its amount.” FRE 408. This rule extends to

plaintiffs even though they were not a party to the settlement. 

See United States v Contra Costa County Water Dist, 678 F2d 90, 92

(9th Cir 1982). Accordingly, any reference to the assurance by

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plaintiffs for the purpose of establishing liability, to impeach

witnesses or to establish the validity of the amount of the claim

is improper under FRE 408(a). 

FRE 408 does not necessarily require exclusion, however, 

because plaintiffs may offer the existence of a settlement “for

another purpose.” United States v Hauert, 40 F3d 197, 199 (7th Cir

1994). For example, plaintiffs may use this evidence to explain

why in 2002, about a year after the manufacturers terminated their

relationship with Bed, Bath & Beyond, Waterford and Lenox decided

to begin selling various tableware products to Bed, Bath & Beyond. 

To be sure, plaintiffs’ invocation of a permissible

purpose does not ipso facto guarantee admissibility. Even if

plaintiffs seek to use the assurance for a permissible purpose, the

court must weigh the unfair prejudice that may result from

introduction of the evidence with its probative value under FRE

403. Accordingly, while the court declines to preclude reference

to the assurance, it will require a party seeking to admit any such

evidence to seek leave to admit such evidence before introducing

such evidence.

A second issue, apart from the assurance agreement, 

is whether plaintiffs may refer to the NYAG’s investigation itself. 

Defendants argue that the investigation implicates FRE 404's

restriction on character evidence. FRE 404(b) provides that

“[e]vidence of other crimes, wrongs, or acts is not admissible to

prove the character of a person in order to show action in

conformity therewith.” But defendants’ theory neglects a threshold

question: whether the investigation constitutes an “other crime[],

wrong[] or act[].” Because the investigation pertains to the

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alleged conspiracy at issue here, not a prior, “other” antitrust

violation, it does not even implicate FRE 404(b). Accordingly, the

court DENIES defendants’ motion.

(4) Defendants’ motion to exclude hearsay statements emanating 

from Jeff Cooley (Doc #228)

Defendants move to exclude testimony by Bed, Bath &

Beyond employees regarding what Jeff Cooley, an executive at a nonparty manufacturer, heard another person say in reference to

Federated threatening to withdraw its business from Waterford if

Waterford sold to Bed, Bath & Beyond. Defendants argue that this

testimony constitutes hearsay included within hearsay under FRE 801

and 805. Although defendants articulate several independent bars

to admission, it remains uncertain the purpose for which plaintiffs

may proffer the evidence; hence, the court declines to rule on its

admissibility at this juncture. Accordingly, defendants’ motion is

DENIED.

(5) Defendants’ motion to exclude Todd Johnson’s testimony

regarding alleged Federated statements to non-party

manufacturers (Doc #229)

Defendant seek to preclude plaintiffs from introducing

Todd Johnson’s testimony that he heard from a tableware

manufacturer that an employee at Federated had threatened to cease

carrying that manufacturer’s product should they distribute to Bed

Bath and Beyond. Doc # 229. It is plain to the court that this

testimony may implicate the hearsay rules in several ways. 

Nevertheless, for reasons stated above, the court declines to rule

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on this issue in the abstract. Accordingly, defendants’ motion is

DENIED. 

(6) Defendants’ motion to exclude testimony and report of expert R

Noll (Doc #231)

Defendants move for the court to prevent Dr Noll from

testifying regarding a horizontal boycott for the reason that Dr

Noll did not provide a complete statement of his opinion regarding

this theory in his written expert witness report. 

FRCP 26(a)(2)(B) requires expert witnesses to provide a

written report that contains “a complete statement of all opinions

to be expressed and the basis and reasons therefor.” FRCP

26(a)(2)(B). An expert report is to be a detailed and complete

statement of the testimony of the expert on direct examination. 

FRCP 26 Advisory Committee Note to 1993 amendment. If a party’s

expert witness, without substantial justification, fails to

disclose such information, then FRCP 37(c)(1) provides that the

party “shall not, unless such failure is harmless, be permitted to

use [such information] as evidence at a trial.” FRCP 37(c)(1). 

Defendants’ argument fails because it hinges on an

oversimplified theory of the case. The vertical communications

remain relevant to the extent they abetted the alleged horizontal

agreement (though such communications cannot serve as an

independent ground for antitrust liability). As such, defendants’

distinction between horizontal and vertical communications elevates

form over substance. Moreover, in his expert report, Dr Noll

implies the existence of horizontal components to the boycott. See

e g, Noll expert report at 4 (“The common proof that the refusal to

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deal was anticompetitive is that it was the result of a collusive

agreement”), 21 (Lenox and Waterford reversed their decisions to

sell “to Bed, Bath & Beyond after receiving numerous and intense

complaints from Federated and May”). 

Granted, Dr Noll should have been more precise in setting

out the scope of his expert report. But this deficiency does not

rise to the level of violating FRCP 26(a)(2)(B) and is a matter

defendants can explore in cross-examination. Hence, the court

declines to circumscribe Dr Noll’s testimony as defendants propose

and defendants’ motion is DENIED.

IT IS SO ORDERED.

 

VAUGHN R WALKER

United States District Chief Judge

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