Fineman v. Armstrong World Industries, Inc.

• Citation: 774 F. Supp. 225
• Decision Date: 08 October 1991
• Docket Number: Civ. A. No. 84-3837.
• Parties: Elliot FINEMAN and The Industry Network Systems, Inc., Plaintiffs, v. ARMSTRONG WORLD INDUSTRIES, INC., Defendant.
• Court: U.S. District Court — District of New Jersey

774 F. Supp. 225

Elliot FINEMAN and The Industry Network Systems, Inc., Plaintiffs, v. ARMSTRONG WORLD INDUSTRIES, INC., Defendant.

Civ. A. No. 84-3837.

United States District Court, D. New Jersey.

June 20, 1991.

As Amended June 25 and October 8, 1991.

COPYRIGHT MATERIAL OMITTED

Steven M. Kramer, New York City, for plaintiffs.

Crummy, Del Deo, Dolan, Griffinger & Vecchione by John J. Gibbons, Newark, N.J. (Laurence H. Tribe, Cambridge, Mass., of counsel), Stryker, Tams & Dill by Edith K. Payne, Newark, N.J., and Covington & Burling by J. Randolph Wilson, Washington, D.C., for defendant.

                                              TABLE OF CONTENTS
                I.  FACTS AND BACKGROUND ..................................................... 228
                II. JUDGMENT NOTWITHSTANDING THE VERDICT
                    A. Standards Governing J.N.O.V. .......................................... 229
                    B. Plaintiffs' Tort Claims: The Connecticut Act .......................... 232
                    C. Plaintiffs' Tort Claims: Insufficient Evidence ........................ 243
                        1. Wrongful Conduct .................................................. 243
                        2. Proximate Cause ................................................... 249
                    D. Elliot Fineman's Individual Tort Claim ................................ 250
                    E. Punitive Damage Award ................................................. 254
                    F. Antitrust Claims ...................................................... 257
                        1. Resilient Market .................................................. 259
                        2. Monopoly Power in the Resilient Market ............................ 259
                        3. Use of Monopoly Power ............................................. 262
                        4. No Monopoly or Dangerous Probability of Success ................... 264
                CONCLUSION ................................................................... 266
                

OPINION

BISSELL, District Judge.

This matter arises pursuant to several motions made by the defendant in light of the jury verdict reached on April 19, 1991. Defendant Armstrong World Industries, Inc. ("Armstrong") has renewed its earlier motion to dismiss all claims of the plaintiff, for judgment notwithstanding the verdict (J.N.O.V.), and for a new trial in the alternative.

I. FACTS AND BACKGROUND

Trial in this action took place over nearly three months, generating considerable evidence. Necessarily, then, the following is merely a summary of the background and procedural history. Where relevant to the motions herein, additional facts and evidence will be considered.

Plaintiffs are Elliot Fineman, a New Jersey resident, and The Industry Network System, Inc. ("TINS"), a New Jersey corporation of which Elliot Fineman is the majority shareholder.¹ Defendant Armstrong is a large corporation which manufactures, inter alia, floor covering, more particularly "resilient" floor covering often called linoleum in common parlance. In the time period most pertinent to this litigation, Armstrong also manufactured carpeting. Armstrong's products are distributed through independent companies known as wholesalers or distributors who maintain warehouse stocks of such products and use their sales personnel to solicit retailers or others to purchase such products.

In 1982 and 1983, Elliot Fineman and TINS were developing a "video magazine" for the floor covering industry. Essentially, the plan was that TINS would sell the monthly video to floor covering distributors, who would in turn sell subscriptions to the program to retailers. A distributor would sign a "Letter of Intent" to become a TINS distributor, and then Fineman and his staff would run a two or three day training program at the distributors' place of business. This program would teach the salespeople how to sell the TINS magazine and how to improve sales overall. (See e.g. Px. 8001 at 15, TINS brochure describing sales program.)

The video was designed to be similar to a printed magazine, with "articles" on various topics. The plaintiffs described the video as follows:

The magazine consisted of four parts. The first segment featured Al Wahnon, the editor of the industry newspaper (Floor Covering Weekly) who went behind the scenes of current relevant news stories and discussed and analyzed them from the floor covering retailers point of view. The second section featured plaintiff Fineman talking to professionals, such as economists and professors, or people whose areas include consumer attitudes, styling, design and from time to time sports people to discuss motivation. The third segment featured senior vice president Gail Farrar who travelled on site to retail stores throughout the country with a television crew. She interviewed at their store those retailers who are doing things that are successful, outstanding and helping them accomplish key goals. The fourth section featured the local TINS Distributor who used that segment as a marketing tool. Profits were to be earned from the sale of the magazine subscriptions, advertising royalties and commissions from the sale of video equipment.

(Compl., ¶ 11).

In early 1983, when TINS first launched its magazine, it encountered some difficulties recruiting floor covering distributors to become TINS distributors. Fineman accused Armstrong of exerting pressure on Armstrong distributors to dissuade them from becoming TINS distributors. These accusations resulted in an "Agreement of Settlement" between TINS and Armstrong on January 12, 1984, signed in order to avoid litigation.

In the following months, Fineman solicited at least six Armstrong wholesalers. Of these, three became TINS distributors, one remained ready to do so, and two declined. Fineman and TINS filed the present action on September 14, 1984, alleging that one of the distributors that declined, Stern & Company of Windsor, Connecticut, did so as a result of renewed pressure from Armstrong.² Plaintiffs contended that TINS was in a precarious financial condition as a result of the earlier wrongful acts of Armstrong such that losing Stern caused the company to fold. Plaintiffs therefore sought damages from Armstrong under various theories, including tortious interference with contract and antitrust violations.

This Court conducted a jury trial from January 23, 1991 until April 18, 1991.³ The trial included testimony of more than 50 witnesses, a transcript of a thousand pages, conflicting opinions by expert witnesses, and a set of jury instructions of more than 80 pages. By the end of the trial, the only claims remaining were TINS' and Fineman's claim for tortious interference by Armstrong with TINS' business relationship with Stern and TINS' claims for monopolization and attempt to monopolize under § 2 of the Sherman Antitrust Act. On April 19, 1991, the jury returned a verdict in favor of the plaintiffs on all claims. On the tortious interference claim, the jury awarded $17.7 million to TINS and $2.275 million to Fineman in compensatory damages, and $200 million to TINS in punitive damages. The jury also awarded TINS $19.5 million in compensatory damages on the antitrust claims. Finally, the jury determined that $1.8 million was the "overlap" between the tort and antitrust damages awarded to TINS.⁴

Armstrong presently seeks judgment notwithstanding the verdict, or, in the alternative, a new trial.⁵

II. JUDGMENT NOTWITHSTANDING THE VERDICT

A. Standards Governing J.N.O.V.

Federal Rule of Civil Procedure 50(b) provides:

(b) Motion for Judgment Notwithstanding the Verdict. Whenever a motion for a directed verdict at the close of all the evidence is denied or for any reason is not granted, the court is deemed to have submitted the action to the jury subject to a later determination of the legal questions raised by the motion. Not later than 10 days after entry of judgment, a party who has moved for a directed verdict may move to have the verdict and any judgment entered thereon set aside and to have judgment entered in accordance with the party's motion for a directed verdict.... A motion for new trial may be joined with this motion, or a new trial may be prayed for in the alternative. If a verdict was returned the court may allow the judgment to stand or may reopen the judgment and either order a new trial or direct the entry of judgment as if the requested verdict had been directed....

Thus, a prerequisite to moving for a J.N.O.V. under Rule 50(b) is that the moving party must have moved for a directed verdict at the close of all the evidence. Associated Business Telephone Systems Corp. v. Greater Capital, 729 F.Supp. 1488, 1502 (D.N.J.), aff'd, 919 F.2d 133 (3d Cir.1990) (citing Skill v. Martinez, 91 F.R.D. 498, 515 (D.N.J.1981), aff'd, 677 F.2d 368 (3d Cir.1982)). In fact, "it is not enough if a party moves for a directed verdict at the close of their case. Rather, in order to preserve the right to move for a J.N.O.V., the moving party must renew his motion for a directed verdict at the close of all the evidence." (Id., citing United States for the Use and Benefit of Roper v. Reisz, 718 F.2d 1004, 1007 (11th Cir.1983)).

There are exceptions to the latter requirement, in certain circumstances where, as detailed in Skill:

(a) there has been substantial, if not literal compliance with the rule;

(b) where manifest injustice will otherwise occur since the verdict is totally without legal support;

(c) where the trial judge in effect excused the failure to renew the motion; and

(d) where the additional evidence was brief and inconsequential.

(Id., citing Skill, 91 F.R.D. at 515 n. 14). In the present matter, Armstrong made motions for directed verdict at the end of all the evidence. The motions included all of the arguments made in its motions for J.N.O.V. presently being considered.

The plaintiffs, however, strenuously object to the defendant's motion based on the Connecticut Business Opportunity Investment Act ("Connecticut Act") on procedural grounds, claiming that Armstrong has waived this "defense." Specifically, plaintiffs claim...