Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_03-cv-00148/USCOURTS-alsd-1_03-cv-00148-0/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 the plaintiffs’ motion in limine to exclude evidence and

testimony concerning legal advice. (Doc. 215). In response, Block unequivocally and repeatedly

asserts that it will not proffer any such evidence. (Doc. 228). Block’s representations, on which the

Court relies in deciding the instant motion, render that motion moot.

Despite the motion’s caption, the plaintiffs inject an additional, different objection with respect

to Brian H. Schmidt, one of Block’s in-house counsel. They complain that Schmidt should not be

allowed to testify that Block proposed to pay them the minimum amount required by paragraph 24

because the proposal constitutes a settlement offer and because Block successfully resisted the

plaintiffs’ efforts to discover the content and development of Block’s settlement position. (Doc. 215 at

6-8). 

Paragraph 24 requires payment of a “fair and equitable price” for the franchisee’s business,

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1Block represents, and the plaintiffs do not dispute, that they received similar letters with

respect to each of the franchises at issue herein. (Doc. 239 at 12).

2This is true even if the plaintiffs disagreed with Block’s calculation of the four components of its

payment, because the plaintiffs remained free to press for additional payment on that basis.

3Shmidt and his expected testimony were formally disclosed to the plaintiffs on or about June

14, 2004. (Doc. 216, Exhibit 6). The discovery deadline was August 30, 2004, (Doc. 151 at 1, ¶ 2),

over two months later, yet the plaintiffs apparently did not renew their motion to compel. Their failure

to pursue this discovery after being advised of the testimony that would (according to them) make it

discoverable would furnish independent grounds for denying their motion in limine as to Schmidt were

any such grounds needed.

-2-

“but no less than the total of” four items, including: (a) the depreciated book value of the franchisee’s

lien-free equipment; (b) the franchisee’s expended costs for usable supplies on hand; (c) 80% of the

franchisee’s total revenues for the 12-month period ending the previous April 30; and (d) certain offseason expenses in excess of off-season revenue. (Doc. 236, Exhibit 1 at 12-13, ¶ 24). Block

proposed to pay the plaintiffs, upon transfer of the franchise, what it calculated as the total of these four

items, and at the same time “agree[d] that this payment does not impair your client’s ability to further

pursue a claim for the ‘fair and equitable value’ pursuant to Paragraph 24 of the Franchise Agreement.” 

(Doc. 239, Exhibit 1 at 2).1 Because Block did not call upon the plaintiffs to give up any actual or

asserted right to additional compensation, Block’s proposal cannot constitute an offer to settle or

compromise the plaintiffs’ claim to a fair and equitable price.2

The plaintiffs suspect that Block’s proposal understates Block’s “settlement calculus” or

“settlement position.” They complain that Magistrate Judge Cassady’s April 2004 order, which denied

their motion to compel production of a due diligence report that Schmidt and/or Block utilized in

developing that settlement position, effectively prevents them from proving that position as a means of

justifying their rejection of the proposal (and, not incidentally, to prove that Block recognizes it owes

them more as a “fair and equitable price”). (Doc. 215 at 7-8). Accepting for argument the plaintiffs’

dubious position that they would be entitled to explore Block’s “settlement calculus” or “settlement

position” had Block tendered a settlement offer, the discussion above demonstrates that no settlement

offer was made.3 

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For the reasons set forth above, the plaintiffs’ motion in limine regarding evidence of Block’s

proposal to pay the four specific items required by paragraph 24 is denied. In all other respects, the

plaintiffs’ motion is denied as moot, without prejudice to their ability to raise a similar challenge should

Block’s assurances that they will not offer any evidence concerning legal advice be violated at trial.

 

DONE and ORDERED this 14th day of October, 2005.

s/ WILLIAM H. STEELE

UNITED STATES DISTRICT JUDGE

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