Loggerhead Tools, LLC v. Sears Holdings Corporation

Filing 456

MOTION by Defendants Apex Tool Group, LLC, Sears Holdings Corporation, Counter Claimants Apex Tool Group, LLC, Sears Holdings Corporation for judgment as a Matter of Law (Attachments: # 1 Table of Appendices, # 2 Appendix 1, # 3 Appe ndix 2-1, # 4 Appendix 2-2, # 5 Appendix 2-3, # 6 Appendix 2-4, # 7 Appendix 2-5, # 8 Appendix 2-6, # 9 Appendix 2-7, # 10 Appendix 2-8, # 11 Appendix 2-9, # 12 Appendix 2-10, # 13 Appendix 3 - PTX 1, # 14 Appendix 3 - PTX 3, # 15 Appendix 3 - PTX 4, # 16 Appendix 3 - PTX 51, # 17 Appendix 3 - PTX 119, # 18 Appendix 3 - PTX 157, # 19 Appendix 3 - PTX 175, # 20 Appendix 3 - PTX 467, # 21 Appendix 3 - PTX 503, # 22 Appendix 4 - DTX 1, # 23 Appendix 4 - DTX 2 , # 24 Appendix 4 - DTX 3, # 25 Appendix 4 - DTX 5, # 26 Appendix 4 - DTX 7, # 27 Appendix 4 - DTX 8R, # 28 Appendix 4 - DTX 9, # 29 Appendix 4 - DTX 9R, # 30 Appendix 4 - DTX 11, # 31 Appendix 4 - DTX 11R, # 32 Appendix 4 - DTX 23, # 33 Appendix 4 - DTX 24, # 34 Appendix 4 - DTX 74, # 35 Appendix 4 - DTX 75, # 36 Appendix 4 - DTX 212, # 37 Appendix 4 - DTX 213, # 38 Appendix 5)(Sernel, Marcus)

APPENDIX 2-3

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Could you go ahead and, just for the record,

9:2

state and spell your full name.

9:3

A. Sure. It's Jill Lowe, J I L L,

9:4

L O W E.

Lowe, Jill 2015-10-29

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9:5

Q. And could you give us your business

9:6

address?

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A. The -- I work out of my home

9:8

office. Would you like that address?

9:9

Q. If you're comfortable giving your

9:10

A. Yeah. That's fine. It's 2071

9:12
11:16 -12:2

home office on the record.

9:11

3

Alexander Drive, Batavia, Illinois 60510.

Lowe, Jill 2015-10-29

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background. Where did you attend school?

11:18

A. College?

11:19

Q. College, yes.

11:20

A. University of Illinois,

11:21

Champaign-Urbana.

11:22

Q. And what year did you graduate?

11:23

A. 1993.

11:24

Q. And what degree? What area was

11:25

your degree in?

12:1

A. Business administration with a

12:2
12:15 -13:15

So just start with a little bit of

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4

concentration in marketing.

Lowe, Jill 2015-10-29

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A. I was a sales assistant for General

12:18

Electric, the lighting division, out of Oak

12:19

Brook, Illinois.

12:20

Q. And what was the time period for

12:21

that, if you can remember?

12:22

A. I started in May of 1993 and was

12:23

there for six years.

12:24

Q. And where did you go from there?

12:25

A. From there, I went to Newell

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graduated college?

12:17

5/4/2017

Q. What was your first job after you

12:16

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Barcode

Q. All right. I'll get started.

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Rubbermaid. And I was part of the Rubbermaid

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Home Products Division, and my role was a sales

13:3

A. Six years.

13:6

Q. And what was the next position?

13:7

A. Next I went to O'Sullivan

13:8

Industries, which is a ready-to-assemble

13:9

furniture company.

13:10

Q. And what was your position there?

13:11

A. Sales manager. I covered most of

13:12

the Midwest area, predominantly the hardware

13:13

home center channel.

13:14

Q. How long were you there?

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13:16 -13:19

Q. And how long were you there?

13:5

5

manager for Ace Hardware.

13:4

A. A little under three years.

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Group, which now has become Apex Tool Group,

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13:20 -14:10

A. After that, I came to Danaher Tool

13:18

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Q. And what was your job after that?

and I have been here since about eight years.

Lowe, Jill 2015-10-29

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13:20

Q. Do you remember when Danaher became

13:21

Apex?

13:22

A. I don't recall the exact date of

13:23

it, but -- and I should know that. I just

13:24

can't recall right now, but, yeah. It was

13:25

midyear, but in the time that I've been here.

14:1

Q. Okay. And what was your position

14:2

when you started at Danaher?

14:3

A. When I started at Danaher, I was

14:4

director of sales and I handled the Sears

14:5

reported to you in that position?

14:8

A. I did.

14:9

Q. And who was your boss at the time?

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15:10 -15:13

Q. And did you have anyone that

14:7

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account for Danaher.

14:6

A. John Constantine.

Lowe, Jill 2015-10-29

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A. He is president of North America

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15:14 -15:25

title?

15:12

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Q. Do you know John Constantine's

15:11

Hand Tools for Apex Tool Group.

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Q. And I'm sure you do quite a few
things, but, in general, what is your role as

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business; and underneath my responsibility

15:19

would be sales, channel marketing, customer

15:20

service, forecasting. I do work with another

15:21

gentleman on the team -- the Apex team, that

15:22

is -- with new product development. But I work

15:23

kind of hand in hand with that person. And I'm

15:24

responsible for anything that we do with Sears

15:25
16:1 -16:14

A. My role is to manage our Sears

15:18

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the vice president of Apex?

or who Sears sells to.

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of our products that we sell with Apex, and

16:11

that would be our national-branded product as

16:12

well as any of our private label businesses.

16:13

And that's where I work with him on what we are

16:14

doing private label for Craftsman.

Lowe, Jill 2015-10-29

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Q. How long have you managed the Sears

16:23

business?

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17:7 -18:7

A. Roughly, eight years.

Lowe, Jill 2015-10-29
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What departments of Sears do you

17:8

work with?

17:9

A. We sell our products in the many

17:10

different channels within Sears. I mean,

17:11

predominantly I work with the tools division,

17:12

but there's many buyers within the tools

17:13

division that we would call on because of the

17:14

products that we have to sell.

17:15

Craftsman & Diehard business, their brand

17:18

business. And in addition to that, there are

17:19

many other channels within Sears that I will be

17:20

11:13:58PM

what is called the KCB business, the Kenmore,

17:17

5/4/2017

In addition to that, I do work with

17:16

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A. Eric Broadaway is in charge of all

16:10

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products?

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16:22 -16:24

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Mr. Broadaway is over the -- is it the Sears

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just to make sure I have it right,

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Q. So you're over the product -- or

16:6

00:35:31

Broadaway. He would be over product.

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A. The gentleman's name is Eric

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you said you work with?

16:3

00:36:16

Q. And who is the other person that

involved with. So SHHO, which is Hometown

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Hardware Outlets, the external channel --

17:22

THE REPORTER: I'm sorry. SHHO,

17:23

which is? It was just too fast for me.

17:24

A. Pardon me. It is Hometown Hardware

17:25

Outlets.

18:1

THE REPORTER: Thank you.

18:2

sell to. And then there's other channels, like

18:5

AAFES, for example, which is the Army Exchange,

18:6

international. I mean, there is a lot of

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24:21 -25:11

various customers that they deem they want to

18:4

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A. The external channel that sells to

18:3

different channels within Sears.

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mind, go through it.

25:5

Q. Of course.

25:6

A. Yes. I have seen this document.

25:7

Q. Do you understand that counsel for

25:8

Apex has designated certain of the topics

25:9

listed in this document for you to testify

25:10

about?

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25:12 -25:17

A. Yes. Yes, I do.

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this -- these topics are Topics 12, 14 to 15,

25:14

19, 21, 25, 28 to 29, 31 to 34, and 37 to 39?

25:15

A. I don't know specific. I know

25:16

there's many that I need to testify, but I

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25:19 -26:9

Q. And my understanding is that

25:13

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don't know the specific numbers.

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25:19

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MR. BLOCK: I can actually help

25:20

with that, if it's helpful. So what we

25:21

discussed and, you know, what we sent you was

25:22

that Ms. Lowe would be testifying on behalf of

25:23

Apex for Topics 12, 14 to 15, 19, 21, 25, 28 to

25:24

29 --

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A. Again, let me just, if you don't

25:4

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Q. Have you seen this document before?

25:3

00:33:10

A. Mm-hmm.

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Deposition of Apex Tool Group, LLC?

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Tools, LLC Notice of 30(b)(6) -- Rule 30(b)(6)

24:25

00:33:34

Q. -- titled, Plaintiff Loggerhead

24:24

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A. Yes.

24:23

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Q. This is Exhibit 2 --

24:22

00:34:21

THE REPORTER: Wait. 14 to 15?

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MR. BLOCK: -- 19, 21, 25, 28 to

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29, 31 to 34, and 37 to 39. And then for

26:3

Topics 1, 35, and 46 to 47, Apex is designating

26:4

Ms. Lowe to the extent those topics relate to

26:5

financial information concerning revenues and

26:8

costs associated with the Max Axess Locking

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26:10 -26:13

Apex's sales of the Max Axess Locking Wrench,

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the marketing of the Max Axess Locking Wrench,

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Wrench, and Apex's relationship with Sears.

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you're prepared to testify about on behalf of

26:13

Sears? I apologize. On behalf of Apex?

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A. On behalf of Apex, yes.

Lowe, Jill 2015-10-29
29:9

Q. So I'll have you look at Exhibit 4,

29:10

which has the Bates number Apex 7774. Do you

29:11

see that document?

29:12

A. Yes, I do.

29:13

Q. And do you recognize this e-mail

29:14

chain?

29:15

A. Yes, I do.

29:16

Q. And the bottom e-mail is an e-mail

29:17

from Matthew McDonnell to you?

29:18

A. Actually, Matt McDonnell.

29:19

Q. Oh, I apologize. Matt McDonnell to

29:20

you. And this is dated February 22, 2012?

29:21

A. Yes.

29:22

Q. Is this the e-mail that you were

29:23

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referring to about the first communication that

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you heard about the Max Axess Locking Wrench?

29:25
18

A. Yes, that is correct.

Lowe, Jill 2015-10-29

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30:1

Q. And you mentioned that this was the

30:2

first e-mail you received about the Max Axess

30:3

Locking Wrench. Had you heard about the

30:4

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project before this e-mail?

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A. To the best of my knowledge, no.

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A. Matt McDonnell, at the time, was on

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5/4/2017

Q. Who is Mr. McDonnell?

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understanding, that these are the topics that

26:12

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Q. Ms. Lowe, is that your

26:11

00:32:13

the KCD team, and he was responsible for the
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Craftsman-branded product and he was the

30:10

responsibility.

30:13

Q. Do you see that he says, We may

30:14

have an opportunity on Bionic 2.0?

30:15

A. Yes.

30:16

Q. What did you understand him to mean

30:17

by that?

30:18

A. My understanding of that was that

30:19

he wanted to talk to Apex about creating a new

30:20

product that would basically have features and

30:21

benefits that would be unique to the Craftsman

30:22

brand.

30:23

Q. At this time, did you know what

30:24

product Bionic 2.0 referred to?

30:25

A. I did. I knew what the Loggerhead

31:1
31:11 -31:16

question would have been under his

30:12

20

director of hand tools. So the product in

30:11

Bionic tool was, yes.

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31:11
31:12

Lowe, Jill 2015-10-29

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00:09:43

31:17

Q. What did you understand that this
new product relationship would be with the

31:19

Loggerhead Bionic Wrench?

31:20

A. My understanding on that is the new

31:21

product would be something that would kind of

31:22

be a next generation of a tool that was out in

31:23

the marketplace, and it would be a competitive

31:24

tool that would have unique features and

31:25

benefits to it that would offer an advantage to

32:1

Craftsman over any tool that existed in the

32:2

marketplace.

32:3

Q. And you mentioned that you were

32:4

aware of Loggerhead's Bionic Wrench in the

32:5

marketplace?

32:6

A. I was, yes.

32:7

Q. Do you recall how you became aware

32:8

of the product?

32:9

A. I'm in Sears' stores all of the

32:10

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asking Apex to look at a new product.

31:18

5/4/2017

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basically them -- them, meaning the KCD team --

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A. I understood that Bionic 2.0 was

31:15

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Wrench?

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2.0 to be a reference to the Loggerhead Bionic

31:13

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00:30:05

Q. Sure. So you understood the Bionic

time and that product was in the store.

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Typically, as a sales manager, you're going to

32:12

walk the store and see what product is out

32:13

there just to see what, you know, that customer

32:14

is doing in the marketplace, so I saw it on one

32:15

of my store visits.

32:16

Q. Is it common for Apex to create a

32:17

next generation of a tool that's out in the

32:18

marketplace?

32:19

A. It's very common for Apex to work

32:20

with the KCD team on brain innovation. It

32:21

doesn't necessarily mean it has to be next

32:22

generation of anything, but it's just

32:23

innovation within hand tools. We have proven

32:24

history of many products that we have done with

32:25

the KCD team to do that.

33:1

Q. Have some of these products been

33:2

next generation -- a next generation of a tool

33:3

come from tools that have been in the

33:6

marketplace since the 1940s. I mean, a lot of

33:7

innovation is kind of based off things that had

33:8

been done before, but you're just doing it

33:9

different and better and adding different

33:10

features and benefits to it. So we have

33:11

brought many different types of products to the

33:12
54:19 -54:24

A. I will tell you that many ideas

33:5

22

that was out in the marketplace?

33:4

marketplace under the Craftsman brand.

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correct?

55:18

A. He basically is responding and

55:19

putting his answers in red in my text.

Lowe, Jill 2015-10-29

00:00:49

00:12:21

56:9

Q. -- under Bionic Wrench, it says --

56:10

11:13:58PM

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your e-mail by annotating your e-mail; is that

55:17

5/4/2017

00:27:11

the top of the page, Mr. Pope is responding to

55:16

Printed:

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Q. And it looks like the e-mail, at

55:15

56:9 -57:3

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first page being Sears 405.

55:14

24

00:27:28

two-page document with the Bates number on the

54:24
55:14 -55:19

of in the middle of the document here -- a

54:23

23

introduced, as Exhibit 8 -- the stamp is kind

54:22

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stamp interferes with the text. I've

54:21

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Q. I'm trying to find the place. The

54:20

00:27:54

I guess, Mr. Pope says, Huge interest. Can you

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work miracles and get this in time for Q4?

56:12

It's good to reach for the stars. Do you see

56:13

that?

56:14

A. Yes, I do.

56:15

Q. Did Mr. Pope explain why there was

56:16

a huge interest?

56:17

A. The -- just so you know, this is

56:18

the same e-mail that we just looked at on the

56:19

previous page when I referenced that, and this

56:20

is Barry's response to me at this point in

56:21

time. This was not a surprise to me because I

56:22

had already had a conversation with Matt

56:23

McDonnell stating that he wanted this item for

56:24

Q4 and the quantity would be 175,000 units.

56:25

That was a conversation I had with

57:1
57:2

57:4 -57:22

that, yes, this is something that we want for

57:3
25

Matt. And Barry is just kind of reiterating
Q4.

Lowe, Jill 2015-10-29

00:00:50

57:4
57:5

00:13:10

line that we normally would follow. This did

57:11

come up rather late in the game in order to hit

57:12

a Q4. It typically takes, roughly, about seven

57:13

months to launch a new product.

57:14

So this is one where they did say,

57:15

you know, that's why he's putting a note in

57:16

there it's good to reach for the stars, because

57:17

this would be within that time frame. Have we

57:18

launched products earlier than seven months

57:19

before? Absolutely. But, you know, that's

57:20

just kind of when we go in and talk new

57:21

products, we kind of start with that and say

57:22

this is typically how long it would take.

Lowe, Jill 2015-10-29

00:00:47

60:18

A. Mm-hmm.

60:20

Q. -- a four-page e-mail beginning

60:21

with Bates number Apex 2293?

60:22

A. Yes, I see that.

60:23

00:14:00

Q. I've introduced, as Exhibit 10 --

60:19

11:13:58PM

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Craftsman brand team, there is a certain time

57:10

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we looked to launch new products with the

57:9

Printed:

00:25:32

A. No. And the reason being is when

57:8

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working miracles to get this in time for Q4?

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asked -- or that he thought it would take

57:6

26

00:26:22

Q. Did it surprise you that he

Q. If you turn to the last e-mail of

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Q. -- this is an e-mail from Mark Good

61:2

to quite a few people, including you, correct?

61:3

A. Yes.

61:4

Q. And that's on March 23rd, 2012?

61:5

A. Yes.

61:6

Q. Who is Mark Good?

61:7

A. Mark Good was the manager of

61:8

industrial design that worked for the KCD

61:9

Link > P495.1.2

A. Mm-hmm.

61:1

62:5 -62:12

the chain, so looking at page 4 --

60:25

27

60:24

Brands team.

Lowe, Jill 2015-10-29

00:00:22

00:14:47

62:5

Lowe, Jill 2015-10-29

00:00:51

00:15:09

Q. Were there any items that had to be

63:5

pushed out to get -- in order to work on the

63:6

Bionic 2.0?

63:7

A. There was an item that was on the

63:8

table at one point. In this e-mail, it states,

63:9

We removed the lighted adjustable from

63:10

development and generated more designs.

63:11

we've been more focused on Eclipse and the

63:12

Bionic.

63:13

launched in fourth quarter of 2012, and that

63:15

was the Max Axess Locking Wrench along with a

63:16

lighted adjustable wrench. The Eclipse

63:17

Multitool did get pushed out until 2013, but a

63:18

lot of that had to do with the design of the

63:19

product. The KCD team was not happy with what

63:20

was being proposed, so that got moved to launch

63:21

Link > Hide

I can let you know what was

63:14

103:14 -103:17

the next year.

Lowe, Jill 2015-10-29

00:00:13

00:16:00

Exhibit 22. That Apex -- that has the Bates
number, on the first page, of Apex 9011, and

103:17

11:13:58PM

Q. I've introduced a new document as

103:16

5/4/2017

103:14
103:15

Printed:

M3.34

A. Mm-hmm. Yes, I do.

63:4

29

Lowe_J-102915-2of3

and meet Quarter 4. Do you see that?

62:12
63:4 -63:21

00:23:32

completing those design attempts so we can try

62:11

28

M3.32

now on the Eclipse and Bionic replacement

62:10

Lowe_J-102915-1of3

generated more designs. We have been focused

62:9

00:24:23

from development for Craftsman and have not

62:8

M3.31

am sorry. We removed the lighted adjustable

62:7

Lowe_J-102915-1of3

Q. I'll start over. It says, Mark, I

62:6

00:24:45

it's a three-page document.

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30

104:5 -104:9

Lowe, Jill 2015-10-29
104:5

00:00:09

Lowe_J-102915-2of3

M3.35

00:16:22

00:23:10

Lowe_J-102915-2of3

M3.36

00:23:03

Lowe_J-102915-2of3

M3.37

several others copying you?

104:7

A. Yes.

104:8

Q. And this is from May 9th, 2012?

104:9
104:21 -104:24

00:23:19

Q. -- it's from Eric Broadaway to

104:6

31

00:16:13

A. Mm-hmm.

Lowe, Jill 2015-10-29

00:00:07

104:21

Q. And he goes on that we had design

104:22

changes from Craftsman on both of these as

104:23

32

106:3 -107:15

little as three weeks ago.

104:24

A. Mm-hmm.

Lowe, Jill 2015-10-29

00:01:55

00:16:29

106:3

Q. He then says that we think Sears

106:4

pays about $9.50 for the 8-inch Bionic, but

106:5

maybe less. Do you see that?

106:6

A. I do.

106:7

Q. Was this your view as well?

106:8

A. I don't know specifically the exact

106:9

price. I do know that I had had conversations

106:10

with Stephanie Kaleta related to kind of

106:11

generalities of what they were paying for

106:12

certain products. And that, too, is not -- I

106:13

mean, it's very normal that that comes in the

106:14

discussion when you're getting ready to price a

106:15

product to them.

106:16

Q. Had she told you, in any --

106:17

generally or specifically, what Sears was

106:18

paying for the Loggerhead Bionic Wrench?

106:19

A. I do recall that I did have a

106:20

conversation with her at one point that I

106:21

believe I put in an e-mail to other folks

106:22

within the company that gave me guidance on,

106:23

yes, what her existing pricing was, or a range

106:24

of her existing pricing, right.

106:25

Q. Did Ms. Kaleta explain why she was

107:1

telling you the existing pricing range?

107:2

A. I don't know if she specifically

107:3

said this is why I'm telling you this, but it

107:4

has more to do with what their margin

107:5

expectations would be for new product and,

107:6

again, very normal in the negotiation time

107:7

period whenever you're quoting anything new to

107:8

5/4/2017

11:13:58PM

Q. So she is telling you what her

107:10

Printed:

a customer.

107:9

current margins are and basically saying that

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107:11
107:12

to, Here is where I'm relatively around today

107:14

and here is where I would hope to be at

107:15
107:16 -109:15

A. She would be giving us guidance as

107:13

33

you all would need to match that or beat it?

tomorrow.

Lowe, Jill 2015-10-29

00:02:15

00:18:24

107:16
107:17

A. Yep.

107:20

Q. -- Locking -- or Max Axess Locking

107:21

Wrench.

107:22

A. Okay.

107:23

Q. So he said, The Craftsman has

107:24

dual-material handles and a locking ring

107:25

feature above the dipped handle, nonlocking

108:1

Bionic. Do you see that?

108:2

A. I do.

108:3

Q. Did you view this as him saying

108:4

that these are improvements over the Loggerhead

108:5

Bionic Wrench?

108:6

A. I view this as the Apex team

108:7

providing to the KCD team a product that has

108:8

different features and benefits that are not in

108:9

the marketplace today. So similar type

108:10

products did not have a locking feature, so

108:11

that definitely was a competitive advantage for

108:12

Craftsman, which is really the intent of this

108:13

opportunity.

108:14

Q. Did you view the dual material

108:15

handles also as a competitive advantage?

108:16

A. We would view that, yes, because

108:17

it's a much more comfortable grip in your hand.

108:18

Q. Were there any other distinguishing

108:19

features of the Bionic 2.0 over the Loggerhead

108:20

Bionic Wrench?

108:21

A. In addition to having the locking

108:22

feature and the dual-material handles, there

108:23

were also some -- and this -- I may not be

108:24

naming them all, but this is just what I

108:25

remember.

109:1

On the Max Axess adjustable wrench,

109:2

there are arrows that talk to how to do the

109:3

locking mechanism. There was also a scale

109:4

11:13:58PM

M3.38

Craftsman -- what became the Craftsman --

107:19

5/4/2017

Lowe_J-102915-2of3

The Craftsman -- and, again, this is the

107:18

Printed:

00:21:08

Q. And Mr. Broadaway goes on and says,

range so that when you're adjusting it, you

Page 11 of 22

Lowe J PLAYED on 5_4 20151029 PA DC PCC on 5-2-17
109:5

would know exactly what size you are. One side

109:6

was inch. The other side was a metric scale.

109:7

So that was also an added feature to that

109:8

product.

109:9

There may be more, but those are

109:10
109:11

head moved to get to the different sizes. So,

109:14

you know, visually it was a different-looking

109:15

Link > P350.1

different just from a standpoint of how the

109:13

111:13 -111:15

mean, the look of the product, too, was

109:12

34

really the four that I remember the most. I

product.

Lowe, Jill 2015-10-29

00:00:09

00:20:39

112:17 -112:19

Link > P350.1.1

Lowe, Jill 2015-10-29
112:17

00:00:05

00:20:48

Link > P350.1.2

00:18:39

Lowe_J-102915-2of3

M3.41

00:18:27

Lowe_J-102915-2of3

M3.42

00:18:08

Lowe_J-102915-2of3

M3.47

00:17:57

Lowe_J-102915-2of3

M3.48

For Craftsman 4Q Innovation from Apex?

Lowe, Jill 2015-10-29

00:00:12

00:20:53

113:1

Q. It says, We are able to quote both
an 8-inch and 6-inch Max Axess wrench. I know

113:3

we had only been talking about the 8-inch

113:4

before. We can deliver both sizes for 4Q.

113:5
113:6
113:22 -114:4

M3.40

A. Yes.

113:2

37

Lowe_J-102915-2of3

Q. And so the subject is, Price Quote

112:19
113:1 -113:6

00:18:44

on the first page.

112:18

36

M3.39

two-page document with Bates numbers Sears 311

111:15

Lowe_J-102915-2of3

Q. And I'm marking, as Exhibit 23, a

111:14

35

111:13

00:18:53

Do you see that?
A. I do.

Lowe, Jill 2015-10-29

00:00:19

00:21:05

113:22

Q. So sometime between the e-mails we

113:23

saw earlier and the March time frame where you

113:24

were uncertain as to whether you could get the

113:25

Bionic 2.0 delivered for fourth quarter 2012

114:1

and now things have changed and Apex now knows

114:2

it can deliver the product for fourth quarter

114:3

38

120:21 -120:23

Link > P132.1

2012?

114:4

A. Based on this e-mail, yes.

Lowe, Jill 2015-10-29

00:00:11

00:21:24

Link > P132.1.1

a two-page document with -- beginning with a

120:23
122:8 -122:23

Q. And I've introduced, as Exhibit 25,

120:22

39

120:21

Bates number Apex 9334.

Lowe, Jill 2015-10-29

00:00:34

00:21:35

11:13:58PM

price, on the Bionic Wrench from Loggerhead,

122:10

5/4/2017

Q. So you go on and say, Their old

122:9

Printed:

122:8

was in the no -- low nine-dollar range, landed

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122:11

USA. That's why they asked for a cost of 9 to

122:12

Q. Is this what you were referring to

122:15

earlier in the e-mail that reflected the

122:16

discussion you had with Ms. Kaleta on what

122:17

their pricing for the Loggerhead Bionic Wrench

122:18

was?

122:19

A. I believe I had recalled having a

122:20

conversation with Stephanie where I got some

122:21

information, and I remember putting it in an

122:22

e-mail. And this is the e-mail that I was

122:23
123:8 -123:22

A. I do.

122:14

40

$10. Do you see that?

122:13

referring to, yes.

Lowe, Jill 2015-10-29

00:00:36

00:22:09

123:8
123:9

Link > P132.1.2

you see that?

123:15

A. I do.

123:16

Q. Did Ms. Kaleta explain why they

123:17

needed to be at least a dollar off of their

123:18

current landed price of 11.71?

123:19

A. Again, I would have to remember the

123:20

conversation exactly, but my assumption would

123:21

be that she has a margin goal that she wanted

123:22

to meet for this product.

Lowe, Jill 2015-10-29

00:00:46

00:22:45

124:24

Q. And if you go on to Item No. C, it

124:25

says, She understands there is a lot more to

125:1

this wrench, meaning locking feature and

125:2

cushion grip handle, but she also knows this is

125:3

made in Asia versus the Loggerhead that is made

125:4

in the USA. Do you see that?

125:5

A. I do.

125:6

Q. What did you mean by, But she also

125:7

knows this is made in Asia versus the

125:8

Loggerhead that is made in USA?

125:9

A. Typically, when buyers are looking

125:10

at product that is made in Asia versus made in

125:11

USA, they feel that the cost of the product is

125:12

going to be cheaper. So looking at this

125:13

11:13:58PM

M3.50

off their current landed price of 11.71. Do

123:14

5/4/2017

Lowe_J-102915-2of3

She stated we need to be at least one dollar

123:13

Printed:

00:16:47

price, meaning around 10.50. We quoted 11.15.

123:12

Link > P132.1.3

M3.49

at least where they are today for a landed

123:11

124:24 -125:18

Lowe_J-102915-2of3

you say, Stephanie feels like she needs to be

123:10

41

00:17:23

Q. And then, in the next paragraph,

e-mail, what I think was going through her mind

Page 13 of 22

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125:14
125:15

should be less because you're making it in

125:18

Link > P352.1

product; but at the same time, your costs

125:17

130:8 -130:16

definitely more features and benefits to this

125:16

42

was, yes, I understand that there are

Asia, not USA.

Lowe, Jill 2015-10-29

00:00:26

00:23:31

130:8
130:9

Lowe, Jill 2015-10-29

00:00:18

00:23:57

133:7

00:14:41

Lowe_J-102915-2of3

M3.54

new handle width on the 8-inch to be 120
millimeters or 4.75 inches. This is the same

133:12

handle width as the Loggerhead 8-inch. Do you

133:13

see that?

133:14

A. I do.

Lowe, Jill 2015-10-29

00:00:30

00:24:15

133:15

Q. Why did you explain to Ms. Kaleta

133:16

that the new handle range or the new handle

133:17

width is the same handle width as the

133:18

Loggerhead 8-inch?

133:19

A. Going back to my original

133:20

conversation with her on the handle width, in

133:21

order for her to fully understand what that

133:22

width would be, at this point in time, she

133:23

didn't have a prototype sample. So I was

133:24

referencing another product that she could

133:25

actually put her hands on to feel what that

134:1

width would be.

Lowe, Jill 2015-10-29

00:00:06

00:24:45

134:13

Q. Do you know why Apex chose to

134:14

change its handle width to be the same as the

134:15

Loggerhead 8-inch?

Lowe, Jill 2015-10-29

00:00:22

00:24:51

134:19

A. What the request was, from

134:20
11:13:58PM

M3.53

losing fastener-range fitness. We plan for the

133:11

5/4/2017

Lowe_J-102915-2of3

can bring the handles closer together without

133:10

Printed:

00:14:47

Q. Okay. So it says, We now know we

133:9

134:19 -134:25

M3.93

A. Yes, it is.

133:8

46

Lowe_J-102915-2of3

Q. And that's on May 16th, 2012?

130:16

134:13 -134:15

00:15:17

A. Yes, it is.

130:15

45

M3.52

you to Ms. Kaleta and others; is that right?

130:14

133:15 -134:1

Lowe_J-102915-2of3

Q. Okay. And this is an e-mail from

130:13

44

00:15:35

A. 318, yes, I see that.

130:12

Link > P352.1.4

M3.51

number Sears 318.

130:11

133:7 -133:14

Lowe_J-102915-2of3

four-page document beginning with the Bates

130:10

43

00:16:01

Q. I've introduced, as Exhibit 27, a

Stephanie Kaleta to us in the brand team, was
Page 14 of 22

Lowe J PLAYED on 5_4 20151029 PA DC PCC on 5-2-17
134:21
134:22

smallest width that we could decrease it to

134:24

without altering the range size that we had

134:25
137:20 -137:24

to be decreased. So we worked to determine the

134:23

47

basically this handle is too wide and it needs

quoted to them initially.

Lowe, Jill 2015-10-29

00:00:12

00:25:13

00:14:19

Lowe_J-102915-2of3

M3.57

00:14:07

Lowe_J-102915-2of3

M3.58

00:14:03

Lowe_J-102915-2of3

M3.59

00:25:40

00:13:52

Lowe_J-102915-2of3

M3.60

00:25:59

00:13:33

Lowe_J-102915-2of3

M3.61

00:26:01

00:13:31

Lowe_J-102915-2of3

M3.94

137:20
137:21

A. I believe I do, but let's

137:23

double-check this. But I believe the 8-inch

137:24
138:3 -138:4

pricing was?

137:22

48

Q. Do you remember what the final

was $10 and the 6-inch was $9.

Lowe, Jill 2015-10-29

00:00:04

00:25:25

138:3

49

138:16 -138:18

Link > P142.5

A. I know I have the document, and

138:4

I -- from my memory, I recall that's the price.

Lowe, Jill 2015-10-29
138:16

00:00:11

00:25:29

Q. This is Exhibit 29, and it is an

138:17

50

138:24 -139:7

11-page document beginning with Bates number

138:18

Apex 13362.

Lowe, Jill 2015-10-29
138:24

00:00:19

Q. At the top, it says, Annual Sales

138:25

Forecast COGS, GM. Do you see that?

139:1

A. I do see that, yes.

139:2

Q. Do you know what COGS is?

139:3

A. Cost of goods sold.

139:4

Q. And then do you know what the GM

139:5

153:16 -153:16

Link > P346.1
52

A. It would be gross margin stated in

139:7
51

and dollar sign is?

139:6

dollars.

Lowe, Jill 2015-10-29
153:16

155:9 -156:11

Link > P346.4.1

00:00:02

Q. And I've introduced Exhibit 31. I

Lowe, Jill 2015-10-29

00:01:18

155:9

Q. And you say, Both the Max Axess AW

155:10

and the Eclipse Multitool are laminate tools.

155:11

The punch presses to make the plates are shared

155:12

between these tools. Plates are the layers of

155:13

steel riveted together. The Type --

155:14

THE REPORTER: I'm sorry. Plates

155:15
155:16

make the plates is called a press. So in order

155:19

to keep presses running for Max Axess AW plates

155:20

11:13:58PM

riveted together. The type of machine used to

155:18

5/4/2017

Q. Plates are the layers of steel

155:17

Printed:

are the layers?

to hit these fourth quarter buy quantities, we

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Lowe J PLAYED on 5_4 20151029 PA DC PCC on 5-2-17
155:21

would not be able to also do the Eclipse. I

155:22

earlier when you were saying that you were

156:1

having to push the Eclipse into 2013?

156:2

A. That is correct.

156:3

Q. And so here you're saying it's

156:4

because the Eclipse and the Max Axess can't run

156:5

simultaneously since they use the same plates

156:6

for tooling; is that right?

156:7

A. Yeah. Basically, what we were

156:8

saying is, we needed to have all of the presses

156:9

running to run this volume on the Max Axess

156:10

Adjustable Wrench for the quantities that

156:11

156:12 -156:16

Q. Is this what you were referring to

155:25

53

A. Yes, I do.

155:24

Link > Hide

hope this will be acceptable. Do you see that?

155:23

Stephanie had requested.

Lowe, Jill 2015-10-29
156:12

00:00:15

00:27:19

Lowe, Jill 2015-10-29

00:00:48

00:27:34

00:11:02

Lowe_J-102915-2of3

M3.67

the Sears team, we say, In order to get the

156:24

quantity you want on this product, that means

156:25

that this other product we can't do. It is up

157:1

to you guys to decide what you would like us to

157:2

proceed with. So that decision ultimately came

157:3

from that team.

157:4

Q. And the KCD team decided to go with

157:5

the full order on the Max Axess Adjustable

157:6

Wrench and move the Eclipse into 2013?

157:7

A. From a product decision, yes. I

157:8

mean, obviously, they were having conversations

157:9

with the Sears Full Line Team, too, on what

157:10

they would want to purchase; but yes, that

157:11

decision came to us from the KCD team.

Lowe, Jill 2015-10-29

00:00:08

00:28:22

167:5

Q. Do you know if it's standard for

167:6

11:13:58PM

M3.95

team. So what we provide is, to the KCD and

156:23

5/4/2017

Lowe_J-102915-2of3

what to do. That decision comes from the KCD

156:22

Printed:

00:11:10

A. First of all, Apex doesn't decide

156:21

167:14 -167:16

M3.65

order and still doing the Eclipse Multitool?

156:20

56

Lowe_J-102915-2of3

decreasing the Max Axess Adjustable Wrench

156:16

167:5 -167:6

00:11:58

Axess Adjustable Wrench order instead of

156:15

55

M3.64

Eclipse to 2013 and fulfill the entire Max

156:14

156:20 -157:11

Lowe_J-102915-2of3

Q. Why did Apex decide to move the

156:13

54

00:12:13

Apex to conduct tests on non-Apex products?

Lowe, Jill 2015-10-29

00:00:12

00:28:30

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167:14
167:15

167:17 -168:16

Apex to test a lot of products in the

167:16
57

A. Yes. We -- it is very typical for
marketplace. That's not uncommon.

Lowe, Jill 2015-10-29

00:01:03

00:28:42

167:17

Q. When you say benchmark against a

168:1

Craftsman spec, is that a preexisting Craftsman

168:2

spec or do you mean to create a Craftsman spec?

168:3

A. Typically, any -- or I should say,

168:4

any Craftsman spec needs to be determined by

168:5

the KCD brand team, and then they would share

168:6

that with any manufacturer that would want to

168:7

manufacture any of their products.

168:8

If a spec does not exist, let's

168:9

individual vendor, which would be us, to

168:11

determine and help them determine what that

168:12

spec may be. But a lot of times they already

168:13

have a spec that exists that they would just

168:14

pass to us and say if you want to make a

168:15

Craftsman adjustable wrench, this is the spec

168:16
187:2 -187:13

say, on an item, they might work with the

168:10

58

you need to hit.

Lowe, Jill 2015-10-29

00:00:34

00:29:45

187:2

Q. And if you go to the next page,

187:3

Item No. 2, he says, The root cause in a bigger

187:4

picture. This project started late with huge

187:5

quantities and high technical difficulty.

187:6

A. Yes, I see that.

187:7

Q. And then down in the next item, he

187:8

said that the total quantities this year of

187:9

320,000 pieces is way more than any other

187:10

A. Yes, I see that.

187:12

Q. Do you agree that this was a huge

187:13
187:17 -188:11

projects?

187:11

59

quantity for an order from Sears to Apex?

Lowe, Jill 2015-10-29
187:17

Printed:

5/4/2017

11:13:58PM

M3.73

meet a spec that they define.

167:25

Lowe_J-102915-2of3

tool that Craftsman will put their name on must

167:24

00:09:13

would perform the Craftsman spec, because every

167:23

M3.72

against a Craftsman spec to see how the tool

167:22

Lowe_J-102915-2of3

that's used -- that is used to benchmark

167:21

00:09:47

how well the tools perform. And a lot of times

167:20

M3.68

A. Typically, from a purpose to see

167:19

Lowe_J-102915-2of3

Q. And for what purpose?

167:18

00:10:50

00:01:13

00:30:19

A. Okay. Like I had mentioned before,

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187:18

we do a lot of volume with Sears on certain

187:19

items. But based on the fact that this was

187:20

developed a little bit later, you know, having

187:21

that amount of quantity that you have to

187:22

produce in a given amount of time to ship, this

187:23

would be a large number of pieces.

187:24

Q. Did Sears ever explain why they

187:25

wanted such a large order even though there was

188:1

a shorter time frame?

188:2

A. I mean, in their -- in their mind,

188:3

based on my conversations, again, with

188:4

Stephanie Kaleta, this is an item that they

188:5

wanted for DRTV. So the volume was driven by

188:6

their DRTV plans. And they had a lot of

188:7

history on items that they've run on DRTV in

188:8

the past, and that's where they get their

188:9

volume estimates from. But this type of volume

188:10

60

188:12 -189:2

they would never buy unless they were going to

188:11

put it on DRTV.

Lowe, Jill 2015-10-29
188:12

00:00:46

00:31:32

fact that it was innovative and was offering a

188:18

different feature benefit to the customer

188:19

that's not out in the marketplace today.

188:20

Obviously, with the negotiation on the price,

188:21

they liked that it hit the twenty-dollar price

188:22

point. And they have a lot of history with how

188:23

do items run on DRTV when it's $20 or below.

188:24

So I think that, in itself, was

188:25

something that, you know, the Sears Full Line

189:1

Team, beyond Stephanie, just really believed in

189:2

that they would be able to sell this product.

Lowe, Jill 2015-10-29

00:00:36

00:32:18

232:23
232:24

one, I've introduced, as Exhibit 53, a two-page
document beginning with Bates number Apex

233:1

17569?

233:2

A. Yes.

233:3

Q. And this is an e-mail chain with

233:4

the top e-mail being from you to Ms. Kaleta and

233:5

11:13:58PM

Q. If you want to back out of that

232:25

5/4/2017

M3.76

they just believed in the item. They liked the

188:17

Printed:

Lowe_J-102915-3of3

with her, I think it came down to the fact that

188:16

Link > P149.1.1

00:07:14

A. Thinking back to some conversations

188:15

Link > P149.1

M3.74

why she wanted this product on DRTV?

188:14

232:23 -233:6

Lowe_J-102915-2of3

Q. Did Ms. Kaleta ever explain to you

188:13

61

00:08:00

others?

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62

233:7 -233:19

A. Yes.

Lowe, Jill 2015-10-29

00:00:27

00:32:54

233:7

Lowe_J-102915-3of3

M3.78

A. Yes.

233:11

Q. Who is Tom Arvia?

233:12

A. Tom Arvia, at the time, was the

233:13

DMM, department merchandise manager, that was

233:14

responsible for mechanics hand tools. He was

233:15

not over general purpose tools. Stephanie

233:16

Kaleta reported in to a different individual.

233:17

Q. Was Tom Arvia at Sears?

233:18

A. Yes. He was part of the Sears Full

233:19
233:20 -235:16

00:06:11

is Tom Arvia?

233:10

63

M3.77

Wits, who you've just described, and the other

233:9

Lowe_J-102915-3of3

Q. One of the recipients is Aaron

233:8

00:06:38

Line Team.

Lowe, Jill 2015-10-29

00:02:01

00:33:21

233:20

Q. So in this e-mail, you're writing

233:21

to Stephanie and you say, The other call out

233:22

that I have for the script is I think we need

233:23

to make a call out on the number or fasteners

233:24

the tool can be used on. In the script, it

233:25

states the following: It does the work of two

234:1

sets of wrenches, metric and standard, so you

234:2

spend less time looking for tools and more time

234:3

getting things done. But can we quantify the

234:4

number of wrench sizes? I think we need to

234:5

just like we added to the packaging.

234:6

Do you see that?

234:7

A. Yes.

234:8

Q. When you say just like we added to

234:9

the packaging, are you referencing the graphic

234:10

that stated how many tool -- wrench sizes or

234:11

how many wrenches the Max Axess Locking Wrench

234:12

said one tool, 16 wrenches. So in this

234:16

particular message to Stephanie, I was stating

234:17

that there should be some mention of the fact

234:18

that this works on X number of wrenches in the

234:19

DRTV spot.

234:20

Q. Why did you say you think that you

234:21

need to add this to the script?

234:22

A. Because I think it's a -- I mean,

234:23

11:13:58PM

that we just referenced on the packaging that

234:15

5/4/2017

A. What I'm referring to was that icon

234:14

Printed:

could replace?

234:13

it is definitely a very large selling point to

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Lowe J PLAYED on 5_4 20151029 PA DC PCC on 5-2-17
234:24

the fact that you can buy one wrench for $20

234:25

and it does the work of 14 or 16 wrenches.

235:1

It's a powerful message. So it's something

235:2

that I felt should be gotten across on the DRTV

235:3

spot.

235:4

Q. Had you seen the -- I think you

235:5

said you had seen the Bionic Wrench packaging

235:6

previously?

235:7

A. Yes. Because it was in the Sears

235:8

stores, yes.

235:9

Q. And did you think that its image

235:10

that also talked about the number of wrenches

235:11

many different sizes or different tools is a

235:15

powerful message, yes. And I think that's used

235:16
236:1 -236:10

the fact that it works on or that it can cover

235:14

Link > P150.1

A. I think any tool that can speak to

235:13

64

it could replace also sent a powerful message?

235:12

on many other tools as well.

Lowe, Jill 2015-10-29

00:00:26

00:35:22

236:1
236:2

Kaleta; is that right?

236:8

A. Yes, it is.

236:9

Q. And it's from September 18th, 2012?

236:10

A. Yes.

Lowe, Jill 2015-10-29

00:01:50

00:35:48

236:22

a lawnmower blade might be a good shot for this

236:24

tool. A standard adjustable is more prone to

236:25

round that fastener because it gets worn from

237:1

being under the mower. This product will

237:2

better grab that fastener. We should also get

237:3

a close-up shot of the locking wrench [sic]

237:4

feature on this wrench; do you see that?

237:5

A. Yes.

237:6

Q. Where did you get the idea of using

237:7

changing a lawnmower blade for this shot?

237:8

A. That would have been discussions

237:9

that I had internally with my team; most

237:10

likely, Eric Broadaway. And I'm guessing that

237:11

11:13:58PM

Q. And then you go on to say, Changing

236:23

5/4/2017

M3.80

e-mail from you to Aaron Wits and Stephanie

236:7

Printed:

Lowe_J-102915-3of3

Q. And in this first page, it's an

236:6

Link > P150.1.2

00:03:44

A. Yes, I see that.

236:5

236:22 -238:14

M3.79

number Apex 17700?

236:4

65

Lowe_J-102915-3of3

two-page document beginning with the Bates

236:3
Link > P150.1.1

00:04:10

Q. I will introduce, as Exhibit 54, a

this came out after we saw -- I don't remember

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Lowe J PLAYED on 5_4 20151029 PA DC PCC on 5-2-17
237:12
237:13

prior to September 18th? The one that we just

237:14

talked about, I believe it was.

237:15

Q. I believe so.

237:16

A. So it's kind of taking a look at

237:17

that and saying, Do we feel that this script

237:18

will urge somebody to get off their couch to

237:19

come to the store to buy this product, and we

237:20

think that we need to convey uses that a lot of

237:21

people can relate to. So doing the lawn mower

237:22

is one that we felt would be a very good image

237:23

that people could relate to. And the other

237:24

feature that I had on here is because the

237:25

locking feature was not in the marketplace, I

238:1

wanted to make sure that we really zoned in on

238:2

that to make that call out for the DRTV shoot.

238:3

Link > Hide

the date that that script came out. Was that

Q. Was the lawn mower idea yours or

238:4

It might have been something I discussed with

238:7

Eric. I mean, I can't remember that. But it

238:8

definitely probably came from somebody at Apex.

238:9

Q. Were you -- are you personally

238:10

familiar with the challenges of changing a

238:11

lawnmower blade?

238:12

A. Me, personally, no, which is why I

238:13

said that it probably came from somebody else

238:14
238:24 -239:12

A. I can't -- it might have been me.

238:6

66

someone else on your team?

238:5

at Apex.

Lowe, Jill 2015-10-29
238:24

00:00:40

00:37:38

just what I was able to see in the store, and

239:5

that would have been the product, the

239:6

packaging, and that display that we talked

239:7

about before.

239:8

Q. Had you ever read anywhere Dan

239:9

Brown Sr.'s account that he invented the tool

239:10

by watching his son fail to change a lawnmower

239:11

blade with an improper tool?

239:12

A. I don't recall.

Lowe, Jill 2015-10-29
272:15

11:13:58PM

M3.85

think my exposure to the Loggerhead Bionic was

239:4

5/4/2017

Lowe_J-102915-3of3

A. Okay. I may or may not have. I

239:3

Printed:

00:01:14

Wrench?

239:2

Link > P154.1

M3.81

articles or write-ups of Loggerhead's Bionic

239:1

272:15 -272:17

Lowe_J-102915-3of3

Prior to this, had you seen any

238:25

67

00:01:54

00:00:10

00:38:18

Q. I'm introducing, as Exhibit 61, a

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272:16
272:17
68

273:25 -274:5

two-page document beginning with Bates number
Apex 18113.

Lowe, Jill 2015-10-29

Link > P154.2.1

00:00:18

00:38:28

00:00:41

00:38:46

278:3

competitor I can identify was the Loggerhead

278:5

sold through Amazon. Do you believe that the

278:6

only competitor for the Max Axess locking

278:7

wrench is the Loggerhead Bionic Wrench?

278:8

A. The way that this is stated from

278:9

Brian is that was his opinion. That I could

278:10

identify, that was the only one sold through

278:11

Amazon. There -- I mean, if you look at the

278:12

marketplace and look at what products similarly

278:13

do, that -- I mean, I look at it and say, Yeah,

278:14

Loggerhead is one. And, at that point in time,

278:15

I don't know if there were others that were out

278:16

there as well.
Play Time for this Script:

5/4/2017

00:39:32

Total time for all Scripts in this report:

Printed:

M3.88

Q. This says, For Max Axess, the only

278:4

Link > Hide

Lowe_J-102915-3of3

A. That is correct.

Lowe, Jill 2015-10-29

Link > P154.1.1

00:00:46

6-inch, correct?

274:5
278:3 -278:16

listed are Max Axess 8-inch and Max Axess

274:4

M3.87

for the following items, two of the items

274:3

Lowe_J-102915-3of3

where it's saying, Gathering competitive info

274:2

00:01:04

Q. Okay. And underneath the text here

274:1

69

273:25

00:39:32

11:13:58PM

Page 22 of 22