In re Tableware Antitrust Litigation

• Citation: 484 F.Supp.2d 1059
• Decision Date: 13 March 2007
• Docket Number: No. C-04-3514 VRW.,C-04-3514 VRW.
• Court: U.S. District Court — Northern District of California
• Parties: In re TABLEWARE ANTITRUST LITIGATION This Document Relates to All Actions.

484 F.Supp.2d 1059

In re TABLEWARE ANTITRUST LITIGATION This Document Relates to All Actions.

No. C-04-3514 VRW.

United States District Court, N.D. California.

March 13, 2007.

COPYRIGHT MATERIAL OMITTED

Alex C. Turan, Henry A. Cirillo, Michael P. Lehmann, Furth Lehmann & Grant LLP, Richard Alexander Saveri, Cadio Zirpoli, Geoffrey C. Rushing, Guido Saveri, Lisa Saveri, Saveri & Saveri Inc., Craig C. Corbitt, Zelle, Hofmann, Voelbel, Mason & Gette LLP, Joseph M. Alioto, Alioto Law Firm, San Francisco, CA, for Plaintiffs.

Jeffrey A. Levee, Jones Day Los Angeles, CA, Phillip Aaron Proger, Toby G. Singer, Jones Day, Washington, DC, Thomas Demitrack, Jones Day, Cleveland, OH, Catherine E. Sison, Ronald J. Dolan, The May Department Stores Company Office of Legal Counsel, St. Louis, MO, David Dong-In Sohn, Skadden, Arps, Slate, Meagher & Flom LLP Tammy Albarran, Terri Garland Morrison & Foerster, Jeffrey C. Hallam, San Francisco, CA, Amy E. Richardson, Patrick Pearse O'Donnell, Joseph Collins Cavender, Justin Emerson Dillon, Harris, Wiltshire, Grannis LLP, Washington, DC, Dawn Michelle Irizarry, Proskauer Rose LLP, LA, CA, for Defendants.

ORDER

WALKER, Chief Judge.

Plaintiffs in these consolidated cases allege that May Department Stores Co ("May") and Federated Department Stores, Inc ("Federated"), which operate department stores across the United States, and Lenox, Inc ("Lenox") and Waterford Wedgwood, USA ("Waterford"), both of which produce fine tableware sold in the United States, conspired with one another to boycott Bed, Bath and Beyond, a competitor of May and Federated. Plaintiffs claim to have purchased fine tableware from May and Federated during the period of the alleged boycott and were thus injured because the boycott impaired competition in that product market. Plaintiffs bring suit under § 1 of the Sherman Act, alleging that defendants' conduct is condemned per se.

On November 17, 2006, Federated (joined by May) and Waterford moved for summary judgment asserting a variety of grounds. Doc # 116; Doc # 128. For reasons discussed below, the court GRANTS Waterford's motion for summary judgment and GRANTS IN PART and DENIES IN PART Federated's and May's motion for summary judgment.

I

In early 2000, both Waterford and Lenox considered expanding the distribution channels for their high-end tableware lines to include Bed, Bath & Beyond and other specialty retailers. Doc # 183 at Ex 67 ("In a perfect world, this [Bed, Bath & Beyond partnership] is the kind of new distribution that we should be exploring; otherwise, we will be forever in the grip of the department stores. However, we will have to assess the amount of angst at Federated compared with the prize before we decide whether or not to be a part of this [Bed, Bath & Beyond] test."). See also Doc # 180, Ex 10 (Mielke depo) at 48:8-51:15.

On March 7, 2001, Bed, Bath & Beyond and Waterford executives met and agreed to proceed with a test project. Doc # 180, Ex 10 (Mielke depo) at 74:12-75:9; Ex 32 ("A * * * meeting in New York when we agreed to proceed with the test * * * "). During subsequent meetings, Bed, Bath & Beyond and Waterford personnel finalized site plans for the opening of a fine china department at Bed, Bath & Beyond. Doc # 180, Ex 10 (Mielke depo) at 82:11-84:8; Doc # 179, Ex 5 (Johnson depo) at 144:1-16; Doc # 183, Ex 72.

Lenox also met with Bed, Bath & Beyond to discuss the prospect of distributing tableware. Doc # 179, Ex 2 (Gavin depo) at 50:19-53:6, 56:18-21, 58:15-24, 59:8-21; Ex 6 (Krangel Depo) at 94:8-98:23, 106:3-19; Doc # 180, Ex 14 (Scala depo) at 68:5-70:11, 71:12-19. Eventually, on March 30, 2001, Lenox agreed to participate in a test rollout with Bed, Bath & Beyond. Doc # 179, Ex 2 at 64:20-65:3; Doc # 183, Ex 59 ("We will be piloting a 7 store test program in Bridal tabletop products"). The parties confirmed specific product assortments at subsequent meetings. Doc # 179, Ex 2 at 139:20-142:2; Doc # 180, Ex 15 (Temares depo) at 59:9-63:22, 160:2-161:3; Doc # 179, Ex 5 (Johnson depo) at 73:20-74:9, 198:18-199:9.

Because Waterford had an interest in knowing the identities of the other manufacturers participating in the Bed, Bath & Beyond rollout, its executives had their "ear to the ground from day one about which manufacturers were going to be participating and who were not going to be participating." Doc # 179, Ex 10 (Mielke depo) at 156:8-14. Indeed, Waterford's Mielke testified that he probably mentioned the Bed, Bath & Beyond rollout during conversations with Lou Scala and Moira Gavin at Lenox. (Doc # 179, Ex 2 (Gavin depo) at 139:20-141:9); Doc # 180, Ex 10 (Mielke depo) at 153:24-157:7; Ex 60 ("Lenox and Waterford are anchoring the department.").

On May 31, 2001, Lenox informed May about its plans to distribute through Bed, Bath and Beyond "as a `6 door test,' starting in 9/01," Doc # 182, Ex 44 at May 65281. Lenox further mentioned that Waterford would also be participating in the Bed, Bath & Beyond rollout. Doc # 179, Ex 7 (Locraft depo) at 179:13-16. The evidence suggests that this news spurred the retailers into action. Gregory Locraft, an executive at May, was "agitated, disappointed, concerned [and] upset" by this news. In a raised voice, Locraft exclaimed "you do what you have to do and we'll do what we have to do." Doc # 179, Ex 7 at 176:14-16. Soon thereafter, May executive Don Engelman called Carl Mielke at Waterford to confirm whether Waterford intended to participate in the Bed, Bath & Beyond rollout. Mielke told Engelman that Waterford was "working on something" with Bed, Bath & Beyond. Doc # 180, Ex 10 at 163:11-12.

The next day, Lenox contacted May executive Judith Hofer "to try to take care of the situation" and "settle things down." Doc # 179, Ex 6 at 206:16-25. Hofer was "very professional" in response, but reiterated Locraft's admonition, "you have to do what you need to do to grow your business and we need to do what we need to do." Id at 209:7-9.

About a week after the May 31 meeting, Federated contacted both Lenox and Waterford to complain about their participation in the rollout. Federated's Salus telephoned Lenox President Krangel and said he was "concerned" about the decision. Doc # 179, Ex 6 (Krangel depo) at 241:9-10. At the end of the conversation, Salus told Krangel: "[y]ou have to do what you have to do to grow your business and we have to do what we need to do with our business." Doc # 170, Ex 6 (Krangel depo) at 239:16-25, 236:19-244:17; Doc # 180, Ex 14 (Scala depo) at 148:5-149:19, 151:3-12.

On the same day, Federated president Terry Lundgren and executive Janet Grove telephoned Waterford CEO Chris McGillivary about the Bed, Bath & Beyond program, warning that it "was not going to help the relationship between the two companies." Doc # 179, Ex 9 (McGillivary depo) at 65:5-66:11. A few days later James Zimmerman, Federated's CEO, telephoned Anthony O'Reilly, Chairman of Waterford, to discuss Waterford's participation in the Bed, Bath & Beyond rollout. According to Waterford, Zimmerman said he "would advise against it." Doc # 180, Ex 19 at FED 001223; Ex 16 (Zimmerman depo) at 24:4-26:6, 29:4-30:3.

On June 12, 2001, Federated executives held an internal meeting during which the Bed, Bath & Beyond rollout was mentioned. Doc # 179, Ex 3 (Grove depo) at 129:13-130:14. One week later, Helaine Suval, a vice-president at Federated, sent an email summarizing the meeting as relayed to her from Federated's Dawn Robertson (Suval did not attend the meeting). The email states in pertinent part:

Waterford, Lenox and All-Clad have agreed to sell Bed, Bath & Beyond (6 stores). Major point of contention — [Federated's president] Terry Lundgren involved. Federated has threatened to drop them if they go ahead and sell BB & B. No new initiatives with them in stores[.]

Doc # 181, Ex 38. Robertson disputes the accuracy of the Suval email; although unable to recall what was said at the meeting, Robertson firmly relates what was not said. She contends that nobody at the meeting "stated that Lenox or Waterford, or any of their products, would be dropped by Federated or any of its stores, nor did any Federated [employee] at the meeting state that there would be no new initiatives with Lenox." Doc # 131, Ex T, ¶ 4. The point, of course, is that the evidence discloses conflicting versions of events, albeit both from Federated personnel.

Around June 12, 2002, May executive Tom Hayes had a meeting with Scala at Lenox, the substance of which Hayes relayed to Gregory Locraft. Doc # 179, Ex 7 at 215:20-23. According to Locraft's notes, Hayes maintained that he would not distribute several Lenox and Gorham brands if Lenox sold to Bed, Bath & Beyond. Doc # 179, Ex 7 at 218:17-21; Doc # 183, Ex 57.

The concerns of Federated and May appear to have borne fruit. Waterford's McGillivary told his subordinate, Carl Mielke, "[t]his is bad * * *, [w]e need to stop the test." Doc # 180, Ex 10 (Mielke depo) at 113:5-18. McGillivary remarked to Mielke "[w]e needed to find a way to stop this and we need to tell [Bed, Bath & Beyond] we can't do this test, and we can't tell them that it is because of Federated." Doc # 180, Ex 10 (Mielke depo) at 111:21-113:25, 115:22-116:10. Accordingly, Mielke drafted a script of what to tell Bed, Bath & Beyond, which McGillivary approved. Doc # 181, Ex 10 at 119:20-120:5, 130:22-131:7; Doc # 181, Ex 31-33.

On June 12, 2001, Mielke called James Peikon and Todd Johnson at Bed, Bath & Beyond and told them Waterford would not be able to participate in the test program. Doc # 179, Ex 5 (Johnson depo) at 78:3-79:18; Doc # 180, Ex 10 (Mielke depo) at 120:6-15, 130:22-134:21. According to Mielke, Peikon and Johnson told Mielke that his reasons were "bullshit," Doc # 180, Ex 10 at 133:3-25, and that "[t]hese F ___ up department stores will promise you guys anything if you don't sell us but will go right back to F ___ you up the like they always have." Doc # 181, Ex 32.

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