Court Opinion

ID: 2996737
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:31:04.544388+00
Date Added: 2024-06-11T12:03:40.691584
License: Public Domain

In the
 United States Court of Appeals
                 For the Seventh Circuit
                            ____________

No. 03-1592
TY INC.,
                   Plaintiff-Appellee, Counterdefendant-Appellee,

                                   v.

SOFTBELLY’S, INC., et al.,
           Defendants-Appellants, Counterplaintiffs-Appellants,

                                   v.

TY WARNER,
                                     Counterdefendant-Appellee.
                            ____________
           Appeal from the United States District Court for the
             Northern District of Illinois, Eastern Division.
             No. 00 C 5230—Charles R. Norgle, Sr., Judge.
                            ____________
   ARGUED OCTOBER 20, 2003—DECIDED DECEMBER 22, 2003
                            ____________

  Before POSNER, KANNE, and WILLIAMS, Circuit Judges.
  POSNER, Circuit Judge. Ty Inc., the manufacturer of
“Beanie Babies,” brought suit for trademark infringement
against Softbelly’s, Inc. and affiliated companies and in-
dividuals unnecessary to discuss separately. Softbelly’s
2                                                No. 03-1592

manufactures a very similar looking and feeling product
that it calls “Screenie Beanies.” They differ from Beanie
Babies mainly in having chamois bellies and being sold to
the public through computer stores for use in wiping com-
puter screens. The case was tried to a jury, but rather than
allow it to render a verdict the judge entered judgment as a
matter of law for Ty under Fed. R. Civ. P. 50. He awarded
Ty both injunctive relief and some $700,000 in damages. He
also dismissed Softbelly’s counterclaims, which Softbelly’s
had abandoned in the district court and (though it is any-
way too late) seeks halfheartedly to resuscitate on appeal.
Cf. Sokaogon Gaming Enterprise Corp. v. Tushie-Montgomery
Associates, Inc., 86 F.3d 656, 658 (7th Cir. 1996); Colburn v.
Trustees of Indiana University, 973 F.2d 581, 593 (7th Cir.
1992). Later he denied Softbelly’s motion to vacate the
judgment under Fed. R. Civ. P. 60(b)(3) on the ground of
witness tampering. Softbelly’s challenges this denial as well
as the judgment.
   The issues at the trial were three. The first was whether
“Beanies,” which Ty claims to be a common law trademark
owned by it (it has a registered trademark on “Beanie
Babies”), has become a generic term for small plush toys, in
the shape of animals, that are filled with bean-like materials
to give the toys a soft and floppy feel. If “Beanies” has
become a generic term—has become, that is, beanies— it
cannot be a legally protected trademark. The second issue
is whether, if “Beanies” has not become generic, the desig-
nation “Screenie Beanies” is likely to make consumers think
that Softbelly’s product is actually a Ty brand. The third
issue is whether “Screenie Beanies” dilutes the Beanies or
Beanie Babies trademarks.
 On the first issue, on which the burden of proof rested on
Ty because “Beanies” is not a registered mark, Mil-Mar Shoe
No. 03-1592                                                    3

Co. v. Shonac Corp., 75 F.3d 1153, 1156 (7th Cir. 1996); Filipino
Yellow Pages, Inc. v. Asian Journal Publications, Inc., 198 F.3d
1143, 1146 (9th Cir. 1999); Blinded Veterans Ass’n v. Blinded
American Veterans Foundation, 872 F.2d 1035, 1041 (D.C. Cir.
1989), Ty presented the following evidence in an effort to
prove that “Beanies” is not generic:
    (1) A survey by Dr. Henry Ostberg of 220 men and
    women over the age of 18, interviewed at nine different
    malls throughout the country, found that 60 percent of
    the respondents thought “Beanies” a brand name.
    Ostberg selected the age-18 cutoff because he was told
    by Ty that most of the purchasers of beanbag toys are
    over 18. If 60 percent of the relevant consuming public
    thinks “Beanies” a brand name, as many of 40 percent
    may think it generic—and in fact 36 percent of the
    respondents in Ostberg’s survey did. But the legal test
    of genericness is “primary significance,” Kellogg Co. v.
    National Biscuit Co., 305 U.S. 111, 118-19 (1938); Wesley-
    Jessen Division of Schering Corp. v. Bausch & Lomb Inc.,
    698 F.2d 862, 865 (7th Cir. 1983); King-Seeley Thermos Co.
    v. Aladdin Industries, Inc., 321 F.2d 577, 581 (2d Cir.
    1963); 2 J. Thomas McCarthy, McCarthy on Trademarks
    and Unfair Competition § 12:6 (4th ed. 2003); 5 id.
    § 32:192; and Ostberg’s results are evidence that the
    primary significance of “Beanies” is still as the name of
    Ty’s brand.
    (2) A linguist testified that 98 percent of the references
    in news articles to the word “Beanie” were to Ty’s
    products and that dictionaries do not list it as a generic
    (lower-case) word.
    (3) A statistician sampled eBay and Yahoo auctions and
    found that more than 80 percent of all references to
    “beanie(s)” were to Ty’s products.
4                                                No. 03-1592

    (4) In a phone survey conducted in 1999, more than 60
    percent of the respondents identified “Beanies” as
    relating to Ty or Beanie Babies.
    (5) Ty polices the use of “Beanie(s)” vigorously by filing
    lawsuits, sending cease and desist letters, and opposing
    trademark applications for the word or its cognates.
  This evidence was not conclusive. But Softbelly’s pre-
sented very little contrary evidence. In fact, the only evi-
dence it placed before the jury was a survey of 13- to 18-
year-old girls which found that many of them consider
“beanies” the name of the product rather than just Ty’s
brand name; the testimony of a teenage girl that she con-
siders “beanies” the name of the product; and a statement
by Ty Warner, Ty’s CEO, that refers to another firm’s
having sold a “Zoo Beanies” product in 1998. The judge was
right that Softbelly’s evidence was not enough, in the face of
Ty’s evidence, to create a triable issue whether “Beanies” is
generic. The testimony of one teenager proves nothing at all,
and the survey was worthless— 13- to 18-year-old girls
being an arbitrary subset of consumers of beanbag stuffed
animals. See Universal City Studios, Inc. v. Nintendo Co., 746
F.2d 112, 118 (2d Cir. 1984); 5 McCarthy, supra, § 32:159;
Robert C. Bird, “Streamlining Consumer Survey Analysis:
An Examination of the Concept of Universe in Consumer
Surveys Offered in Intellectual Property Litigation,” 88
Trademark Rep. 269 (1998). Softbelly’s argues that Ty Warner
has identified teenage girls as his product’s largest group of
consumers. Not so; in the testimony Softbelly’s cites, Warner
states that his prime market consists of girls 5 to 14, fol-
lowed by girls/women 14 to 80. (Of course, this testimony
also casts a shadow over Dr. Ostberg’s testimony for Ty.)
And Warner’s reference to “Zoo Beanies” proves nothing at
all, for the name might be an infringement of Ty’s trade-
mark.
No. 03-1592                                                5

  To determine that a trademark is generic and thus pitch it
into the public domain is a fateful step. It penalizes the
trademark’s owner for his success in making the trademark
a household name and forces him to scramble to find a new
trademark. And it may confuse consumers who continue to
associate the trademark with the owner’s brand when they
encounter what they thought a brand name on another
seller’s brand. (Think of Ostberg’s 60 percent—and there
would be a problem even if they were only 10 percent.) The
fateful step ordinarily is not taken until the trademark has
gone so far toward becoming the exclusive descriptor of the
product that sellers of competing brands cannot compete
effectively without using the name to designate the product
they are selling. Imagine the pickle that sellers would be
in if they were forbidden to use “brassiere,” “cellophane,”
“escalator,” “thermos,” “yo-yo,” or “dry ice” to denote
products—all being former trademarks that have become
generic terms. The problem is not that language is so
impoverished that no other words could be used to denote
these products, but that if no other words have emerged as
synonyms it may be difficult for a seller forbidden to use
one of the trademarked words or phrases to communicate
effectively with consumers.
  Sometimes a trademark owner will sponsor a generic term
precisely in order to avoid its mark becoming generic. Xerox
succeeded with “copier,” and “Sanka” was saved from
becoming generic by the emergence of “decaf” to denote the
product of which Sanka was for long the best-known brand.
But because “beanies” is so much shorter and punchier than
the alternatives that have emerged so far for designating the
product, such as “plush beanbag animals,” Ty may be
fighting a losing war to keep its “Beanies” trademark from
becoming “beanies” a generic term. But it won this battle.
  More precisely it won this battle on the basis of the evi-
dence that the judge permitted to be presented to the jury,
6                                                  No. 03-1592

as distinct from that evidence plus the evidence that the
judge excluded. The excluded evidence consisted of (1) the
results of a LEXIS search that revealed generic uses of the
term “beanie(s)” in newspapers; (2) an internal Ty memo
written by Warner himself in which he said “we want to
emphasize our Beanies are not just any Beanies—But spe-
cial. Set us apart from our competitors’ Beanies;” and (3)
other internal memos, reporting on trade shows, in which
employees of Ty used “Beanies’ ” in a generic sense,
as in: “Ganz—has product called FLOPPIES. They are a
larger version of the Beanies concept. Heard through rumor
mill that they are sold out of their ‘beanies’ until
November.” Or: “Plush Images Booth #3350—They had
‘beanies’ that were similar in look, but fabric was inexpen-
sive and it looked like a cheap knockoff of product.” The
judge excluded all this (and more) evidence tendered by
Softbelly’s because Softbelly’s had failed to include it in
the list of exhibits attached to the pretrial order. He also
excluded eBay screens indicating widespread use of
“beanies” in a generic sense on the separate ground that
Softbelly’s had failed to summarize these exhibits. The
source of his authority is unclear. It is not Fed. R. Evid. 1006,
as the judge thought, because that provision merely autho-
rizes summaries and empowers the judge, if summaries are
introduced, to require production of the materials summa-
rized. But we may assume that ordering the making of
summaries is inherent in a trial judge’s authority to manage
a lawsuit in an efficient manner.
  Nevertheless the judge was too severe in these rulings,
especially when his lenity toward Ty is weighed in the bal-
ance. The suit had been filed in 2000, but no trial date was
set until December 17 of the following year, when the judge
announced that trial would begin on February 1, 2002, only
six weeks later. The parties were surprised and jointly
No. 03-1592                                                 7

moved for a postponement of the trial to October 31 at the
earliest. The judge agreed only to postpone the trial date to
March 4, with the final pretrial order due on February 22,
though on Ty’s motion that deadline was postponed to
March 1. Although Ty had retained its expert witnesses long
before December 17 when the trial date was announced, it
did not disclose those witnesses to Softbelly’s until January
28.
   Rule 26(a)(2)(C) of the Federal Rules of Civil Procedure
requires disclosure of experts to the opposing party no later
than 90 days before trial. In a case such as this in which the
parties don’t learn the date of trial until fewer than 90 days
remain, literal compliance with the rule is not possible. But
it doesn’t follow that the parties should feel free to wait
until the eve of trial to disclose their experts. Ty took more
than a month to disclose its expert witnesses to Softbelly’s,
which as a result was unable to depose four of Ty’s experts,
though it might have been able to depose two of them the
week before the trial began.
  The district judge agreed that Ty had delayed unreason-
ably in disclosing its experts but he was content to adminis-
ter a slap on the wrist in the form of a $20,000 fine payable
by Ty to Softbelly’s, a payment that didn’t help Softbelly’s
prepare for trial. It would have been better had the judge
fixed a new deadline for Ty to disclose its experts, once the
90-day deadline had gone by the board. Indeed, in the
absence of such a deadline, it is not clear what rule Ty
violated that would authorize the imposition of a fine. But
that is a side issue (Ty is not protesting the fine); the
pertinent point is that the fine did nothing to repair the
harm to Softbelly’s from Ty’s last-minute disclosure. Yet
when Softbelly’s inadvertently omitted documents from the
exhibit list attached to the pretrial order, the judge, rather
than slapping Softbelly’s on the wrist, excluded so much of
8                                                 No. 03-1592

its evidence—even though there was no indication of any
prejudice to Ty, which was well aware of the documents
because they had been produced in discovery—as to make
the trial a farce.
  Now it is possible that because the final pretrial order was
due only three days before the trial was scheduled to begin,
Ty would not have had time to prepare fully to deal with
the additional documents that Softbelly’s wanted to present.
But the judge could have postponed the trial a few days and
should have done so anyway to enable Softbelly’s to
complete deposing Ty’s experts. Expedition in the conduct
of litigation is highly praiseworthy, but here passed over
into unjustifiable impatience. Ungar v. Sarafite, 376 U.S. 575,
589 (1964); United States v. Santos, 201 F.3d 953, 958-59 (7th
Cir. 2000); McAllister v. FDIC, 87 F.3d 762, 766 (5th Cir.
1996); Menendez v. Perishable Distributors, Inc., 763 F.2d 1374,
1379-80 (11th Cir. 1985).
  We do not criticize the judge for wanting to push the case
to a conclusion. When he set the trial date, the parties had
had more than a year to conduct discovery. Although he
didn’t give them much notice, maybe an unexpected slot
had appeared in his trial schedule (this happens all the time,
because many cases settle on the eve of trial) and he wanted
to fill it. And district judges have to wedge civil cases into
calendars dominated by criminal trials that must conform to
the Speedy Trial Act. But when a judge announces a trial
date on short notice, he must allow the parties at least the
bare minimum amount of time that they reasonably require
to get ready for the trial.
   Had Ty asked the judge to enter a final judgment in
its favor as a sanction for Softbelly’s having submitted an
untimely list of documents for trial, the judge would
doubtless have refused on the sound ground that sanctions
No. 03-1592                                                    9

should be proportioned to wrongs. Allen v. Chicago Transit
Authority, 317 F.3d 696, 703 (7th Cir. 2003); Bolt v. Loy, 227
F.3d 854, 856-57 (7th Cir. 2000); Nick v. Morgan’s Foods, Inc.,
270 F.3d 590, 597 (8th Cir. 2001); cf. Ball v. City of Chicago, 2
F.3d 752, 758 (7th Cir. 1993). The wrong here was minor in
culpability and consequences—indeed an understandable
result of the judge’s effort (which we do not criticize) to
hurry the case to trial. But because the omitted documents
were the heart of Softbelly’s case, the sanction of exclusion
that the judge imposed was tantamount to entering judg-
ment for Ty. The sanction was excessive, unreasonable, and
so must be reversed. Cf. Long v. Steepro, 213 F.3d 983, 986-
88 (7th Cir. 2000); Hathcock v. Navistar Int’l Transportation
Corp., 53 F.3d 36, 40-41 (4th Cir. 1995).
  The judge committed a different kind of procedural error
in excluding another item of Softbelly’s evidence. One of
Softbelly’s star witnesses was to be a man named Harold
Nizamian, a competitor of Ty for whom Ty Warner had
worked before forming his own business. Nizamian was
prepared to testify that as early as 1988, before Ty began
selling “Beanie Babies,” the word “beanie” was being used
in the trade names of other manufacturers of “plush bean-
bag animals” and indeed that the word had become generic.
On the Friday before the Monday on which the trial began,
Softbelly’s lawyer deposed Warner and in the course of the
deposition disclosed that Nizamian would be testifying that
“beanies” was a generic term. On Monday, when the lawyer
called Nizamian to schedule his testimony, Nizamian said
that he had been telephoned by Warner and was no longer
willing to testify. Putting two and two together, at the trial
Softbelly’s lawyer asked Warner whether he had told
Nizamian not to testify. Ty objected and the judge sustained
the objection.
10                                                No. 03-1592

  We do not understand the judge’s ruling. If Warner asked
Nizamian not to testify, this would entitle the jury to infer
that Nizamian’s testimony would have supported
Softbelly’s contention that “beanies” had become a generic
term. “[A]n attempt by a litigant to persuade a witness not
to testify is properly admissible against him as an indication
of his own belief that his claim is weak or unfounded or
false.” Newark Stereotypers’ Union No. 18 v. Newark Morning
Ledger Co., 397 F.2d 594, 599 (3d Cir. 1968); see also Crabtree
v. National Steel Corp., 261 F.3d 715, 721 (7th Cir. 2001);
Aramburu v. Boeing Co., 112 F.3d 1398, 1407 (10th Cir. 1997);
Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 156 (4th Cir.
1995). Ty points out that whether a term is generic depends
on what consumers think, and that is true, but experienced
businessmen know a great deal about what consumers
think; that is personal knowledge, Central Illinois Light Co. v.
Consolidation Coal Co., 349 F.3d 488, 492-93 (7th Cir. 2003);
Agfa-Gevaert, A.G. v. A.B. Dick Co., 879 F.2d 1518, 1523 (7th
Cir. 1989); Kansas City Power & Light Co. v. Ford Motor Credit
Co., 995 F.2d 1422, 1432 (8th Cir. 1993), not hearsay that
would require a witness such as Nizamian to be qualified as
an expert before he would be permitted to testify to it.
Nizamian could easily have been qualified as an expert,
which does not require academic-type credentials, Tuf
Racing Products, Inc. v. American Suzuki Motor Corp., 223 F.3d
585, 591 (7th Cir. 2000); Circle J Dairy, Inc. v. A.O. Smith
Harvestore Products, Inc., 790 F.2d 694, 700 (8th Cir. 1986),
though Softbelly’s did not attempt to do so—and did not
have to.
  Warner admits that he telephoned Nizamian in order to
inquire whether he was going to testify, and after the trial
was over Softbelly’s lawyer deposed Nizamian who in
his deposition stated that Warner had told him that if he
testified it would cost Warner “a tremendous amount of
No. 03-1592                                                 11

money” and cause “a lot of problems;” that he (Warner)
“was involved in the Softbelly’s case and that if my state-
ment got into the case. . . it would be very damaging to
him.” Nizamian added that his situation with respect to
Ty was “delicate” because he and Warner had recently
discussed the possibility of doing business together and
“I realized after speaking to Ty that it was a very important
matter to him, and even though I didn’t understand all of
the particulars, I felt if he felt that strongly about it . . .
maybe it would be best if I did not go.” Nizamian did not
say that Warner had threatened him, but “because of the
seriousness in his voice and the importance to him, . . . I
figured I’d just rather not get involved.” Nizamian’s dep-
osition became the basis of Softbelly’s Rule 60(b)(3) motion,
and we shall get to that in a moment; our present point
is only that the judge should not have cut off the lawyer’s
cross-examination of Warner concerning his phone conver-
sation with Nizamian.
   These errors taken together require that there be a new
trial, but even if we disregarded them we would have to
remand for a new trial on likelihood of confusion. On this
issue Ty had the burden of proof, and while it presented
some evidence that consumers thought “Screenie Beanies”
a Ty product, a rational jury could have concluded other-
wise. Although the actual Screenie Beanies so closely re-
semble Beanie Babies that we were surprised that Ty didn’t
sue Softbelly’s for copyright infringement, the tag attached
to each Screenie Beanie does not resemble the distinctive Ty
tag very closely, the Screenie Beanies are sold through
different outlets, and the suggested retail price of Screenie
Beanies is twice that of most Beanie Babies—$10 versus $5.
Someone shopping for Beanie Babies would be unlikely to
be looking for them in a computer store and if he found
them there would wonder why they cost twice as much.
This evidence is no more conclusive against a finding of
12                                                No. 03-1592

likelihood of confusion than Ty’s evidence was in favor of
such a finding, but that is just to say that there was indeed
a jury question. We add that determining the likelihood
of confusion over a common and simple consumer product
is something quite within the ability of jurors, and so judges
should not be quick to remove it from them out of a war-
ranted distrust of their ability to decide complex commercial
or technical questions.
  And finally the judge’s ruling as a matter of law that
Softbelly’s use of the term “Beanies” diluted Ty’s “famous”
mark (dilution of famous marks now being a violation of
federal trademark law, 15 U.S.C. § 1125(c); Moseley v.
V Secret Catalogue, Inc., 537 U.S. 418, 420-22 (2003)) had scant
grounding in the evidence. We’ve held that “Beanies”
(assuming it isn’t generic) is indeed a famous mark within
the meaning of the federal law, Ty Inc. v. Perryman, 306 F.3d
509, 511 (7th Cir. 2002), and even more clearly is “Beanie
Babies.” Id. But there is great doubt whether Ty has proved
dilution in this case. After the district court’s ruling, the
Supreme Court held in the Victoria’s Secret case cited above
that the statute requires proof of “actual dilution,” implying
a need for trial-type evidence to determine, in the words of
the Court, whether there has been “any lessening of the
capacity of the Victoria’s Secret mark to identify and
distinguish goods or services sold in Victoria’s Secret stores
or advertised in its catalogs.” 537 U.S. at 434. We are not
sure what question could be put to consumers that would
elicit a meaningful answer either in that case or this one.
(We are not alone in having these doubts. Jonathan Moskin,
“Victoria’s Big Secret: Whither Dilution Under the Federal
Dilution Act?,” 93 Trademark Rep. 842, 853 (2003); 4
McCarthy, supra, § 24:94.2.) But in any event no evidence of
any sort was presented that would have enabled a trier of
fact to infer any lessening in the capacity of “Beanies” or
No. 03-1592                                                 13

“Beanie Babies” to “identify and distinguish” the plush
beanbag animals sold by Ty.
   Ty argues that no consumer survey or indeed any other
evidence is required when the allegedly diluting trademark
is identical to the allegedly diluted one, citing the following
passage in the Supreme Court’s opinion: “It may well be,
however, that direct evidence of dilution such as consumer
surveys will not be necessary if actual dilution can reliably
be proven through circumstantial evidence—the obvious
case is one where the junior and senior marks are identical.”
537 U.S. at 434. The Court did not explain and no one seems
to know what that “circumstantial evidence” might be. No
matter. Neither “Beanies” nor “Beanie Babies” is identical to
“Screenie Beanies.”
  So the case must be remanded. But the new trial (if one is
held—see next point) should be limited to liability, and not
revisit damages. Ty presented uncontradicted evidence of
Softbelly’s gross revenues from the sale of Screenie Beanies.
The burden then shifted to Softbelly’s to show what part of
those revenues represented cost rather than profit. 15 U.S.C.
§ 1117(a); Bambu Sales, Inc. v. Ozak Trading Inc., 58 F.3d 849,
854 (2d Cir. 1995); Maier Brewing Co. v. Fleischmann Distilling
Corp., 390 F.2d 117, 124 (9th Cir. 1968). Softbelly’s presented
no evidence and has no excuse for failing to do so. So if Ty
prevails on remand, it is entitled to the damages awarded at
the trial under review.
  We move now to the Rule 60(b)(3) issue. The rule autho-
rizes the district court to set aside a judgment on the basis
of fraud or other misconduct by a party. If it is fraud on the
court, the motion may be made at any time, but if it is just
fraud on an opposing party, the motion must be made
within a year after the judgment sought to be vacated
becomes final. We needn’t decide which type of fraud is the
basis of Softbelly’s motion, because the motion was made
14                                                No. 03-1592

within a year. We need not even decide whether the conduct
alleged as fraud—that Ty Warner had tampered with a
prospective witness for Softbelly’s, namely Nizamian
(Softbelly’s attached Nizamian’s deposition in support of its
motion)—is better described as “other misconduct” because
it did not involve deceit. Misconduct triggers the rule too.
Witness tampering is often described as a form of fraud,
King v. First American Investigations, Inc., 287 F.3d 91, 94 (2d
Cir. 2002) (per curiam); cf. Fernandez v. Leonard, 963 F.2d 459,
462 (1st Cir. 1992) (altering documents), and it is certainly
very serious—indeed, criminal—misconduct, 18 U.S.C. §
1512(b), and for relief under Rule 60(b)(3) the victim of the
fraud or other misconduct need show only that it affected
his ability to present his case, not that he would have won
had the fraud or misconduct not occurred. Lonsdorf v.
Seefeldt, 47 F.3d 893, 897 (7th Cir. 1995); Square Construction
Co. v. Washington Metropolitan Area Transit Authority, 657
F.2d 68, 72 (4th Cir. 1981); Rozier v. Ford Motor Co., 573 F.2d
1332, 1339 (5th Cir. 1978).
  The district judge’s response to the motion was perfunc-
tory. Without conducting a hearing to determine what
exactly Warner had told Nizamian, the judge denied relief
on the ground that Nizamian had said in his statement “that
the reason he would not testify was due to his own time
constraints. The witness also stated that he told Ty Warner
that he would testify and that Mr. Warner had made no
threats or attempted to dissuade the witness from testify-
ing.” It is true that Nizamian gave time constraints as one
reason for not testifying, but as is apparent from the pas-
sages that we quoted earlier from his deposition, that was
not the only reason. Indeed, the deposition suggests that it
was not the decisive reason. For it was in answer to the
question what the “specific reason” for his changing his
mind about testifying was that he said that he had “realized
after speaking to Ty that it was a very important matter to
No. 03-1592                                                   15

him . . . [and] if he felt that strongly about it, . . . maybe it
would be best if I did not go.” Nizamian was not threat-
ened, but there is very little doubt—if his deposition is
believed, and the judge gave no reason to disbelieve it—that
Warner attempted to dissuade him from testifying.
  Witness tampering is extremely serious misconduct, as we
have said, and it would be particularly egregious if commit-
ted by a person of Warner’s wealth and standing in the
business community. We do not say that he did tamper with
Nizamian, that if he did it was the cause of Nizamian’s not
testifying, or that dismissal of the suit would be the only
appropriate sanction. And we are mindful of cases that say
that fraud, when alleged as a basis for relief under Rule
60(b)(3), must, as was traditionally the case when fraud is
alleged, be proved by clear and convincing evidence.
Lonsdorf v. Seefeldt, supra, 47 F.3d at 897; Metlyn Realty Corp.
v. Esmark, Inc., 763 F.2d 826, 832 (7th Cir. 1985); Greiner v.
City of Champlin, 152 F.3d 787, 789 (8th Cir. 1998); Smith v.
Reddy, 101 F.3d 351, 353 (4th Cir. 1996). These cases may be
inapplicable to witness tampering, if it is not fraud but other
misconduct. They may even be wrong, for as the Supreme
Court emphasized in Grogan v. Garner, 498 U.S. 279, 288-89
(1991), most federal fraud laws do not require proof by clear
and convincing evidence, but only by a preponderance of
the evidence. It is unclear to us why Rule 60(b)(3) should be
thought to set a higher standard.
  We need not decide; all we hold is that Nizamian’s dep-
osition, in conjunction with Warner’s admission to having
called Nizamian on the eve of trial to discuss the case,
required further investigation by the judge. Had the judge
concluded that Nizamian’s version of the phone conver-
sation was accurate, there would have been compelling evi-
dence of serious misconduct on Warner’s part, requiring a
16                                                  No. 03-1592

commensurately severe sanction, quite possibly dismissal of
Ty’s suit. Weibrecht v. Southern Illinois Transfer, Inc., 241 F.3d
875, 884 (7th Cir. 2001); Lightning Lube, Inc. v. Witco Corp., 4
F.3d 1153, 1178-79 and n. 15 (3d Cir. 1993). In hindsight it is
apparent that Softbelly’s should have protected itself against
Nizamian’s having a change of heart by taking his deposi-
tion before rather than after the trial, but Softbelly’s was
rushed in its trial preparations and in any event negligence
is not a defense to fraud or other deliberate wrongdoing.
E.g., Shropshear v. Corporation Counsel of City of Chicago, 275
F.3d 593, 597 (7th Cir. 2001); Eastern Trading Co. v. Refco, Inc.,
229 F.3d 617, 625 (7th Cir. 2000).
  Some other issues are raised, but they are either unimpor-
tant or likely to wash out at a new trial if one is held.
  The judgment for Ty and the order denying Softbelly’s
Rule 60(b)(3) motion are reversed and the case is remanded
for further proceedings consistent with this opinion. Circuit
Rule 36 shall apply on remand.
                                   REVERSED AND REMANDED.

A true Copy:
        Teste:

                            _____________________________
                             Clerk of the United States Court of
                               Appeals for the Seventh Circuit

                     USCA-02-C-0072—12-22-03