Opinion ID: 8414535
Heading Depth: 5
Heading Rank: 1

Heading: Graphic T-Shirt Suppliers

Text: Regarding graphic T-shirts, Geiger testified that from 2002 through 2006 Finazzo was the executive primarily responsible for vendors, vendor selection, and vendor pricing. He also stated that Finazzo had “the final say” regarding the number of graphic T-shirts ordered by Aéropostale. Dey App’x at 1400-01. Cunningham and Geiger both recounted that, in early 2005, Geiger recommended to Finazzo that Aéropostale shift 25% of the T-shirts it was buying from South Bay to overseas vendors in order to achieve “significant cost savings.” Id. at 639. Geiger believed that, for certain “core” graphic T-shirts with demand that was easy to predict, Aéropostale could accommodate the longer delivery time from overseas, 7 while taking advantage of lower costs. Id. at 639-40, 1384. Geiger estimated that Aé-ropostale could save $1.50 per T-shirt made overseas. Given the volume of T-shirts being sold, Cunningham estimated that this would have saved Aéropostale at least $5 million, while Geiger estimated savings of $6 million. ' Finazzo initially stated that “he would look into it.” Id. at 640. As the year progressed, Finazzo became “agitated” that Geiger continued to press him on the matter. Id. At one meeting where the topic was discussed, Finazzo smacked the table, told Geiger that the meeting was over, and slammed the door shut as he left. Finazzo never moved 25% of the graphic T-shirt business overseas as Geiger had directed. Geiger also testified that Aéropostale’s profit margin on graphic T-shirts during the time Finazzo was the head of merchandising tended to be less than the profit margin of other similar products Aéropos-tale sold. Geiger discussed these low margins at executive meetings attended by Finazzo. On many occasions, Finazzo would respond by hitting the table with his hands “and basically say[ing] why are people looking so closely at this?” Id. at 1381. Geiger recalled that Finazzo once declared that Geiger “wasn’t allowed to ask [Finaz-zo] any questions about graphic T-shirts for a month.” Id. Jennifer Heiser- — an Aéropostale employee who merchandised graphic T-shirts and reported to Finazzo — testified that the graphic T-shirt business in particular “was [Finazzo’s] baby” and that he was involved in that business “a lot more than [he was involved in] any other department.” Id. at 708. She also testified that she “really was not allowed to bring in other manufacturers [besides South Bay].” Id. at 707. Heiser believed that bringing in additional manufacturers would allow Aéropostale to obtain “the best price and the best quality” because vendors would be forced to bid against each other for Aéropostale’s business. Id. at 707-08. She stated that she therefore tried to place graphic T-shirt orders with vendors in Singapore. However, .Finazzo “discouraged” Heiser from placing orders in Singapore, such that she “really felt that [she] had to put all of [her] business with South Bay.” Id. at 707. On one occasion, when Heiser pushed Finazzo regarding the poor margins achieved by only using South Bay for graphic T-shirts, Finazzo “broke a pencil and said, we are using South Bay, end of story.” Id. at 718. Heiser ultimately placed 97-99% of her graphic T-shirt orders with South Bay. Heiser also testified that Jody Green— an associate merchandiser in men’s graphic T-shirts — often challenged Finazzo about the pricing of graphic T-shirts and asked why they could not use other manufacturers to get a better cost. Finazzo fired Green just three months after she started working at Aéropostale. John DiBarto — Aéropostale’s Divisional Merchandising Manager for the Men’s Division at the time of Finazzo’s scheme— testified that Finazzo “was responsible for negotiating prices on the graphic tee products with South Bay.” Id. at 1098. DiBarto stated that he did not try to negotiate prices with South Bay “[bjecause ... that was [Finazzo’s] thing. He controlled production. And that was ... his baby from the beginning, so ... we did whatever he wanted.” Id. Similarly, DiBarto never asked for an overall reduction in price from South Bay “[b]ecause it wasn’t going to happen. ... Those were variables that wouldn’t change, because they were [Fi-nazzo’s] ■... he’s in charge of that.” Id. at 1128-29. When employees tried to “mess[] with [pricing] a little bit, it wasn’t worth it, [Finazzo] would get angry.” Id. at 1129. For instance, when DiBarto asked Dey for a price breakdown of South Bay’s T-shirts by component to compare to another vendor, Finazzo and Dey yelled at him, saying “we’re not going to do this, why are you doing this, we’re not going to do business with anybody else but South Bay, don’t waste your time.” Id. at 1182-34. When Finazzo heard that Thomas Carberry — a new employee working under DiBarto— had questioned South Bay’s costing structure, Finazzo emailed DiBarto: “John, I would like to let you know that I hear that Tom Carberry is talking about South Bay to other people in the company. I will not tolerate that, and I will be swift in my actions.” Id. at 1144. In an October 21, 2006 email to DiBarto and others, Finazzo summarized his position on using South Bay as the primary graphic T-shirt supplier: “I will not change our vendor structure or the way we set up this business and I guess I can make that decision. I want South Bay to be the main T-shirt supplier.” Id. at 1175-76. Jill Kronenberg — the former head of the Women’s Division at Aéropostale — testified that prior to 2008, Aéropostale’s women’s graphic T-shirt business was split between South Bay and a vendor called Mias, with Mias having the majority of the business. Finazzo instructed Kronenberg to transfer business from Mias so that South Bay would have 50% of the women’s graphic T-shirt business. Finazzo issued this instruction despite the fact that the graphic T-shirts made by Mias were of better quality and lower priced. Although she did not want to move business away from Mias, Kronenberg ultimately did so in 2004 “[b]eeause it reached a point where ... basically [she] had no choice.” Id. at 994-95. Kronenberg voiced concerns with Finazzo about the decision to transfer more business to South Bay but was unable to change his mind.